Intra-Continental and Intercontinental Service Trade in the Travel and Tourism Industry

Abstract

This study investigates the features and determinants of the international travel and tourism service trade between the European, Asian and North American markets from 2000 to 2005. The evolution of bilateral service trade in each of these markets indicates that travel and tourism within continents plays an important role in 36 countries. The study first employs the Breusch–Pagan LM (Lagrange multiplier) test, the Hausman test and the Hausman–Taylor over-identification test to choose the appropriate empirical method. The empirical results reveal that the supply–pull effect from parent countries (the economic size of tourist origins) plays an important role in improving the tourism service exports of the various destinations. In addition, the home countries' exports of travel services are inelastic to the appreciation of their own currencies. Moreover, distribution infrastructures and the adjacency and RTA (ASEAN) dummies are found to have significantly positive contributions in terms of enhancing Asian tourism service exports, whereas the European Union (EU) and NAFTA discourage European and North American tourism exports, respectively.