Turkey’s outbound tourism jumps
Posted by meb at March 10th, 2008
Tourism statistics in Turkey usually come down to figures of foreign visitor arrivals and expenditures. Seemingly never-ending charts list the origins of the nearly 24 million tourists who visited Turkey last year, making it one of the top-10 world destinations.
Ferda Halıcıoğlu, a professor of economics at İstanbul Yeditepe University, is used to these charts and the empirical papers they yield.But as a developing country and an important tourism destination, Turkey has also been a significant source of tourist outflows in recent years.
Underscoring that “the tourist outflows from Turkey deserve to be analyzed empirically too,” Halıcıoğlu recently released a paper on the subject, to be published in a forthcoming issue of the Tourism Economics journal.
In his “Econometric Analysis of Aggregate Outbound Tourism Demand of Turkey,” Halıcıoğlu proposes focusing on tourist outflows from Turkey over the 1970-2005 period and on the way they relate to real income and relative prices. “I tried to offer the idea that a developing country such as Turkey can be regarded as both a tourist destination and [tourist] generating country,” Halıcıoğlu said in an interview with Today’s Zaman.
Tourist outflows boosted by travel restriction decrease
“Outbound tourism in developing countries is regarded as a waste of valuable foreign reserves,” Halıcıoğlu warns in his introduction, citing various methods by which authorities tend to restrict outbound tourism demand. “All these outbound tourism restrictions are aimed at preserving the foreign reserves for essential imports and foreign debt reductions.”
Turkey resorted to such restriction policies until the 1980s, Halıcıoğlu further notes. “However this development policy failed in the late 1970s, causing massive bottlenecks in industries and foreign reserves deficits. … Easing the traveling restrictions abroad, and the relatively faster economic development in Turkey, have stimulated significantly the outbound tourist demand since the 1980s.”
In his study, Halıcıoğlu uses macroeconomic figures from international and government institutions to establish telling ratios and growth rates. Figures from the annual tourism statistics of the Turkish Statistics Institute (TurkStat) reveal that the outbound tourism demand increased from 515,000 people with an expenditure of $12 million in 1970, to 1.65 million people with an expenditure of $104 million in 1980 and to 8.02 million people with an expenditure of $ 2.87 billion in 2005.
“The share of tourism expenditures in the gross domestic product [GDP] appears to be very minimal, [amounting to] only 0.77 percent in 2005,” Halıcıoğlu observes. These tourism expenditure ratios were 0.06 percent and 0.14 percent in 1970 and 1980, respectively. “Nevertheless, the average growth rate of outbound tourism demand in the period of 1970-2005 is 9.38 percent, whilst the real GDP growth in the same period is just 4.06 percent, indicating that there exists a substantially strong outbound tourism demand.”
Halıcıoğlu’s approach resorts to econometrics rather than sociology. Hence, his motivation is to identify the determinants of Turkey’s outbound tourism demand in the light of increasing numbers of Turks holidaying abroad. Moreover, as the author notes, “the bounds testing procedure to co-integration [which roughly tells whether an economic relationship such as the determinants of tourist outflows from Turkey reaches to a stable equilibrium point and whether this equilibrium point is sustained in the long-run] has not been used previously in the literature to estimate any outbound tourist demand.”
Turkish tourists expected to double in a decade
Using that method, Halıcıoğlu explains that tourist outflows from Turkey are related to real income and relative prices. Ultimately, his empirical results suggest “income is the most significant variable in explaining the total tourist outflows from Turkey” and that “there exists a stable outbound tourism demand function.” In other words, Halıcıoğlu argues that as Turkey’s income grows, so does the demand for foreign holidays. “For example, I argue that, on average, if Turkey’s income rises by 10 percent, demand for foreign holidays increases by 8.1 percent,” he says. “Similarly, if dollar-adjusted relative prices go down, then the demand for foreign holiday increases. For example if the relative prices decrease by 10 percent, foreign holiday demand rises by 1.2 percent.”
As a result, the impact of income increments on outbound tourism demand is a lot greater than falls in relative prices, and vice versa. “Turkey has a big potential for generating millions of tourists [with] a population of over 70 million. By 2015, the number of Turks traveling abroad may exceed 16 million,” Halıcıoğlu notes.
The results also provide important policy recommendations, Halıcıoğlu told Today’s Zaman. “Obviously, my research [speaks to] policymakers at home and in those countries who receive Turkish tourists. … Policy makers at home should not be concerned that Turkey is wasting its hard-earned money on vacationing [abroad]. Those countries who receive Turkish tourists should realize that Turkey will continue to generate substantial numbers of tourist in the future; therefore, they should provide appropriate provisions for Turks if they want to make money out of Turkish tourists.”
Like many developing countries, Turkey has been contributing to the growth of international tourism demand and, among others, Halıcıoğlu expects the extent of this contribution to be more apparent in the coming years, “once the travel restrictions such as harsh visa procedures imposed on Turkish citizens are lifted in the course of Turkey becoming a full member of the European Union.” Halıcıoğlu goes as far as to conclude that the number of Turks traveling abroad for holidays will double in less than a decade if the current average growth rate for the outbound tourism demand holds.
source: Today’s Zaman
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