The Impact of Institutional Quality and Instability on Tourism in Asian Countries

Abstract

[eng] Asia is one of the most attractive destinations for tourists due to its abundance of natural and cultural resources. Especially, the tourism industry has developed rapidly in some countries, such as Thailand and Indonesia. However, there are significant diversities in economics, cultures and politics varying across different Asian sub-regions which have substantial impacts on tourism demand based on previous studies. However, there are only a few country-specific studies considering the institutional quality and instability as key elements for the tourism development in Asia. Therefore, this research mainly focuses on analysing the effect of institutional quality and instability on the tourism demand to Asia and comparing it within different Asian sub-regions and with other global regions by using PPML techniques based on the gravity models from costumer theory and including around 200 destination and origin countries in the sample. The results demonstrate that quality of the institutions and instability have complex influences on tourism demand to Asia differing across sub-indicators, sub-regions and origins of the tourists, while their impacts to Asian tourism demand are also different from those to other global regions. This study indicates that Asian countries should place different emphases on improving institutional quality and instability based on their actual conditions when it comes to developing tourism and achieving higher growth.