Covariates of International Tourism in Asia: A Fixed Effects-Driscoll and Kraay Approach

Tourism sector has become an integral part of overall economy of countries around the globe mostly in developing regions. Accordingly, this paper investigates the covariates of tourism in 14 Asian countries for period 2000-2012. These covariates include Infrastructure, Human development index, Exchange rate and Consumer price index. Using an improved variant of fixed effects model (with Driscoll and Kraay standard errors), the effect of tourism on national income is found positive. Thus, econometric concerns of autocorrelation and heteroskedasticity have been accounted for. Recommendations include the policy step to invest infrastructure, human capital and to curtail fluctuations in general price level and exchange rate to harness tourism sector of the sample countries.