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An Empirical Investigation on Macroeconomic Determinants of Tourist Arrivals to Sri Lanka

Author: 
Rashika Mudunkotuwa and Hettige Don Karunaratne
Subject Area: 
Social Sciences and Humanities
Abstract: 

The study investigates the macroeconomic determents of tourist arrivals in Sri Lanka, using annually series of the corresponding variables. To achieve the objectives both time series technique and econometrics techniques were used to analyze data. The statistical techniques used include the unit root Augmented Dickey Fuller test in order to fulfill the objective of stationary for all the time series. The results from granger causality test revealed that past behavior of gross domestic production, gross domestic per capita income, government expenditure on capital and net lending, imports of goods, exports of goods and foreign direct investment are significant factors which determine the present behavior of tourist arrivals in Sri Lanka. The regression analysis it showed that all macroeconomic variables are strongly linear associated with tourist arrivals. The VECM model has revealed that there exists long run relationship between tourist arrivals and those variables. The results derived in this study can be effectively used for implementation of new strategies to attract more tourists to Sri Lanka.

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