Tourism and openness to trade in Singapore: evidence using aggregate and country-level data
Abstract:Tourism has been identified as one of the key growth sectors in Singapore's economy. Given that the city state has been recognized as one of the most open economies in the world, this study explores the causality relationships between tourism and openness to trade, using aggregated variables – total visitor arrivals and data on trade components (merchandise and services) – and their respective disaggregated data by country for each of Singapore's top five trading partners – Malaysia, China, the USA, Japan and South Korea. The study shows bidirectional causality between international visitor arrivals in Singapore and openness to merchandise trade. However, the causality pattern varies among Singapore's major trading partners if country-level data are used. The overall findings imply that further trade liberalization with Singapore's major trading partners may not necessarily encourage visitor arrivals from those countries, but can be seen as an important catalyst for the growth and development of the tourism sector. Conversely, an increase in tourism activities could also encourage the host country to open itself to more international trade. Furthermore, it is imperative to liberalize the service sector in Singapore to facilitate greater openness in merchandise trade, given that a large proportion of services constitutes the goods trade.
Document Type: Research Article
Publication date: December 1, 2010
Tourism Economics, published bimonthly, is a peer-reviewed journal devoted to the economics and finance of tourism worldwide. Articles address the components of the tourism product (accommodation; restaurants; merchandizing; attractions; transport; entertainment; tourist activities); and the economic organization of tourism at micro and macro levels (market structure; role of public/private sectors; community interests; strategic planning; marketing; finance; economic development).
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