Open Access Open Access  Restricted Access Subscription Access

Trend Analysis of Foreign Direct Investment in Tourism Industry in India:An Empirical Study


Affiliations
1 Assistant Professor, Department of Commerce, Shaheed Bhagat Singh College, University of Delhi, India
2 Visiting Faculty, School of Open Learning, University of Delhi, India
 

This study attempts to investigate trends of foreign investment in India’s tourism industry on the basis of data on past trends and pattern of FDI flows in this sector. Research adopts both qualitative and quantitative approach on the basis of different secondary sources such as reports, articles, tourism and travel reports, tourism ministries publications to study trends in tourism industry. Then, Granger Causality test is used to study the causal relationship between India’s economic growth and FDI in tourism sector. Time series analysis techniques and Linear regression model are used to establish relation between FDI flows in Indian tourism and identify independent factors. For time series analysis, stationarity is tested by applying ADF unit root test. Regression assumptions are also tested and appropriate regression model was fitted using Eviews statistical software. Factors impacting FDI inflows in tourism industry are studied by using regression analysis on the basis of identified independent variables. Results reveal that the Government individual spending and inflation have a key role in impacting FDI inflows positively. While other factors like total tourist visits, exchange rate, GDP contribution of Tourism and Per Capita GDP have an insignificant impact but cannot be altogether ignored and are of significance when taken together. The existing trend and inflows in tourism sector are not encouraging enough thus require much needed effort in direction of promoting India as an investment destination for foreign investors. Authors findings are interesting as they indicates the Govt’s spending are important contributors among other factors and hence, to encourage tourism should support through infrastructural development and strategic planning.

Keywords

FDI, Trend Analysis, Stationarity, Heteroskedasticity.
User
Notifications
Font Size

  • Bezic, H., & Radic, M. N. (2017). Tourism foreign direct investment led tourism gross value added: a co-integration and causality analysis of Croatian tourism. Economic 30(1). 1443-1460. https://doi.org/10.1080/ 1331677x.2017.1340173
  • Boora, P. S., & Dhankar, S. (2017). Foreign Direct Investment and its impact upon the Indian Hospitality Industry. African Journal of Hospitality, Tourism and Leisure. 6 (1) . 1-17.
  • Deshwal, P. (2015). Tourism Industry: An Instrument of Indian Economic Growth through FDI. International Journal of Scientific Research and Management, 3(2). 2137-2140.
  • Djordjevic, S., Ivanovic , Z., & Bogda, S. (2015). Direct Foreign Investment and lack of positive effects on economy. UTMS Journal of Economics 6 (2): 197–208.
  • Fact Sheet on Foreign Direct Investment. (2019, February). Retrieved from IBEF: https://www.ibef.org/download/fdi-factsheet-27february-2019.pdf
  • Fauzel, S., Seetanah, B., & Sannassee, R. (2017). Analysing the impact of tourism foreign direct investment on economicgrowth: Evidence from a small island developing state. Tourism Economics Vol. 23(5), 1042-1055.
  • Huyen, L. B. (2015). Factors Affecting Foreign Direct Investment in Thanh Hoa Province. VNU Journal of Science: Economics and Business, 31(2): 26-37.
  • Ilie, G. (2015). Foreign Direct Investment in Tourism Sector,. Knowledge Horizons-Economics. Vol. 7(3), 9-13.
  • Işik, C. (2015). Foreign Direct Investment in Tourism: Panel Data Analysis of D7 Countries. Athens Journal of Tourism, 2(2). 93-104.
  • Ivanovic, Z., Baresa, S., & Bogdan, S. (2011). Influence of Foreign Direct Investment on Tourism in Croatia. UTMS Journal of Economics. 2(1). 21-28
  • Jože Perić, & Radić, M. N. (2016). Development Impact of FDI in Hotel: Case Study of Terme Tuhelj in Croatia. ALMATOURISM. 7( 13). 66-78.
  • Khan, M. A. (2015). FDI in tourism sector in India International Journal of Multidisciplinary Research and Development. 2(3). 258-264
  • Petanlar, S. K., Rasekhi, S., & Ebrahimzadeh, S. (2016). The Effect of Foreign Direct Investment on Employment in Tourism Industry: A Case Study of Selected Countries. International Journal of Management, Accounting and Economics Vol. 3, No. 9, 459-472.
  • Rao, D. S. (2014). Emerging Trends in Hospitality and Tourism. International Journal of Research Granthaalayah. 1(1). 1-8.
  • Rios Morales, R., Gamberger, D., Jenkins, I., & Smuc, T. (2011). Modelling investment in the tourism industry using the World Bank's good governance indicators. Journal of Modeling in Management, 6 (3). 279-296.
  • Senkuku, A. M., & Gharleghi, B. (2015). Factors Influencing Foreign Direct Investment Inflow in Tanzania. International Journal of Business and Management, 10( 7). 4856. doi:10.5539/ijbm.v10n7p48
  • Sharma, A., Johri, A., & Chauhan, A. (2012). FDI: An Instrument of Economic Growth & Development in Tourism Industry. International Journal of Scientific and Research Publications. 2(10). 1-6.
  • Shekhar, kumar, s., & attri, k. (2017). Incredible India: SWOT analysis of Tourism Sector. In Development Aspects In Tourism and Hospitality Sector (pp. 175-189). New Delhi: Bharti Publications.
  • Suneel, K., Shekhar, & Kamlesh, A. (2018). The Economic Contribution of Tourism Industry in India: An Appraisal. International Journal of Applied Hospitality and Tourism Research, 1-12.

Abstract Views: 28

PDF Views: 18




  • Trend Analysis of Foreign Direct Investment in Tourism Industry in India:An Empirical Study

Abstract Views: 28  |  PDF Views: 18

Authors

Suneel Kumar
Assistant Professor, Department of Commerce, Shaheed Bhagat Singh College, University of Delhi, India
Anjali Gupta
Visiting Faculty, School of Open Learning, University of Delhi, India

Abstract


This study attempts to investigate trends of foreign investment in India’s tourism industry on the basis of data on past trends and pattern of FDI flows in this sector. Research adopts both qualitative and quantitative approach on the basis of different secondary sources such as reports, articles, tourism and travel reports, tourism ministries publications to study trends in tourism industry. Then, Granger Causality test is used to study the causal relationship between India’s economic growth and FDI in tourism sector. Time series analysis techniques and Linear regression model are used to establish relation between FDI flows in Indian tourism and identify independent factors. For time series analysis, stationarity is tested by applying ADF unit root test. Regression assumptions are also tested and appropriate regression model was fitted using Eviews statistical software. Factors impacting FDI inflows in tourism industry are studied by using regression analysis on the basis of identified independent variables. Results reveal that the Government individual spending and inflation have a key role in impacting FDI inflows positively. While other factors like total tourist visits, exchange rate, GDP contribution of Tourism and Per Capita GDP have an insignificant impact but cannot be altogether ignored and are of significance when taken together. The existing trend and inflows in tourism sector are not encouraging enough thus require much needed effort in direction of promoting India as an investment destination for foreign investors. Authors findings are interesting as they indicates the Govt’s spending are important contributors among other factors and hence, to encourage tourism should support through infrastructural development and strategic planning.

Keywords


FDI, Trend Analysis, Stationarity, Heteroskedasticity.

References





DOI: https://doi.org/10.20968/rpm%2F2019%2Fv17%2Fi1%2F145651