A Panel Data Analysis of International Tourism Demand = Evidence for South Korea

다국어 초록 (Multilingual Abstract)

This paper examines the elasticity of critical decision variables with respect to the international inbound tourism demand for South Korea from 14 countries of origin over the period 2005-2012 in the panel data framework. The methodology uses panel ordinary least squares as well as the panel unit root and panel cointegration test to solve the non-stationarity problem and examine long-run relationships among variables. The empirical results show that most of the variables have the expected signs and are statistically significant. The results also reveal that tourism demand is elastic with regard to income, tourism price and distance, but it is inelastic regarding real exchange rate, openness and population. More importantly, it turns out that the income of the origin countries and trade openness are the main determinants of international tourism demand for South Korea. This can be concluded because the coefficients of income of origin countries are greater than one and that of tourism price is 0.51. In consideration of the study results, it is necessary for the government to improve the infrastructure of international tourism to enhance the quality of services for tourists. These should be the priority areas for policy decision makers to attract more international tourists for South Korea in the future.