Abstract: The aim of this study is to establish the macroeconomic determinants of tourism sector performance in Malawi. Specifically, the study focuses on macroeconomic factors that affect in-bound international tourist receipts. It is hypothesised that the levels of per capita income for tourists’ source countries, nominal exchange rate, the levels of investment in the tourism sector; and political and economic stability of Malawi and/or neighbouring countries in the sub-region might be the main determinants. For estimation, the paper considers data spanning from 1980 to 2013 for the above-named variables. Ordinary Least Squares method is employed to analyse the relationship between the four variables and the level of international tourist receipts, used as a dependent variable. Upon testing, co-integration was established amongst the variables, although individually, the variables portrayed varying levels of integration. This enabled the paper to analyse both short and long run relationships in the model.
The results show that in the short-run, all variables are insignificant save for political and economic instability, which shows a negative relationship to tourist receipts, though weakly significant. Nevertheless, the long run equilibrium relationship shows that a rise in per capita income for source countries has a significant positive impact on tourist receipts in Malawi. In addition, political instability has a long-run, significant negative impact on receipts. But exchange rate and investment coefficients portray no significant impact.
Keywords: co-integration, in-bound tourists, Ordinary Least Squares, tourism-led growth hypothesis.
Title: Macroeconomic Determinants of Tourism Sector Performance in Malawi
Author: Richard Zidana
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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