Policy and Political effects on Tourism Development

Abstract

This study used Markov regime switching-cum-trend and the Fourier component models to explore tourism development in Taiwan and found that during the Severe Acute Respiratory Syndrome (SARS) outbreak, tourism policy adjustments and political environment based on political relations with China, risk-increasing timing or lag timing can create systemic shifts in tourism development. Among these shifts, policy adjustments have a positive effect on the development of tourism from a low- to high-level regime. This result is different from the previous literature's conclusion that the effect of policy adjustment is insufficient and that SARS and political risks had a negative effect on tourism development from a high- to low-level regime. However, the political environment effect is limited to visitors from mainland China, Hong Kong, and Macao. This study confirms the adverse effects on sustainable tourism development when the risks in the international political environment increase.