How FDI and Oil Prices Affect Sustainable Tourism Developments: Evidence from 24 Asia-Pacific Countries
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Abstract
This study uniquely estimates how foreign direct investment (FDI) and oil prices influence both short-term and long-term tourism developments using a panel Autoregressive Distributed Lag (ARDL) model. Analyzing a sample of 575 annual observations from 24 Asia-Pacific countries between 1997 and 2020, the study finds that a 1% increase in FDI growth rate leads to a 3.62% short term increase in tourism growth rate. Similarly, a 1% increase in oil price results in a 0.2% increase in tourism growth rate in the current year and 0.14% in the long term. These findings align with existing literature, highlighting the region's advantage in attracting FDI. It is consequently recommended that policymakers establish clear FDI policies for the tourism sector, to improve infrastructure, enhance the competitiveness of local business, and implement macroeconomic policies to manage oil price volatility, promoting sustainable tourism development.
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