Elasticity of the Number of World Cruise Tourists Using the Vector Error Correction Model

Abstract

Along with the growth of the marine tourism industry, the number of global cruise tourists is rapidly increasing; the competition among regions to attract cruise tourists is increasing. The current study aims to verify that the global cruise tourism industry can be sustainable through its inherent power for long-term balanced convergence within the industry and can flexibly respond to external shocks such as COVID-19. This study applies the Vector Error Correction Model (VECM) to estimate the long-term balance function that determines the number of world cruise tourists. This study reveals that the number of world cruise tourists finally converges to long-term balance if the number of world cruise tourists at present is lower than the one at long-term equilibrium. In summary, the results of the VECM in the present study suggest the presence of an “invisible hand” in the global cruise tourism industry converging to a long-term balance. A few previous studies have suggested ways to increase global cruise tourists and promote the cruise tourism industry through qualitative methods, however, little research has estimated the decision function of the number of cruise tourists at a long-term equilibrium point. This study shows the dynamic characteristics of the cruise tourism market using the VECM.