Domestic and international visitor expenditure and growth in the Christchurch economy

Fieger, Peter and Rice, John (2016): Domestic and international visitor expenditure and growth in the Christchurch economy.

Abstract

The city of Christchurch is the main gateway to New Zealand’s South Island and attracts a significant number of tourists every year. In 2010 and 2011, significant damage to the city’s building stock and infrastructure occurred as a result of two successive earthquakes. Consequently, Christchurch’s tourist arrivals and associated tourist spending declined significantly. However, the rebuilding efforts since 2011 and the re-opening of tourist facilities and infrastructure have led to a steady increase in visitor arrivals and expenditure. This paper investigates whether tourism expenditure as well as the prevailing exchange rate influence local gross domestic product for the city of Christchurch. We separate domestic and international expenditure analysis into two different vector auto-regression models followed by causality analysis to determine the direction of relationships between these three variables. Our results show that increased domestic and international visitor spending is followed by a measurable and significant increase of local GDP. Exchange rates have a small but non-significant impact on international tourist spending. We conclude that stimulating tourism is an essential element to achieve substantial economic growth in Christchurch.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tourism economics; New Zealand tourism
• Subjects: L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

References

Alodadi, A., & Benhin, J. (2015). Religious tourism and economic growth in oil-rich countries: Evidence from Saudi Arabia. Tourism Analysis, 20(6), 645-651.

Balaguer, J., & Cantavella-Jorda, M. (2002). Tourism as a long-run economic growth factor: the Spanish case. Applied economics, 34(7), 877-884.

Belloumi, M. (2010). The relationship between tourism receipts, real effective exchange rate and economic growth in Tunisia. International journal of tourism research, 12(5), 550-560.

Brida, J. G., & Risso, W. A. (2009). Tourism as a factor of long-run economic growth: An empirical analysis for Chile. European Journal of Tourism Research, 2(2), 178.

Granger, C. W. J. (1969). "Investigating Causal Relations by Econometric Models and Cross-spectral Methods". Econometrica. 37 (3): 424–438.

Hanrahan, J., & McLoughlin, E. (2015). Planning for the economic impacts of tourism in Ireland: A local authority perspective. Tourism Analysis, 20(6), 665-676.

Infometrics. (2016) http://www.infometrics.co.nz/product/regional-economic-profile/ retrieved in September 2016

Jaforullah, M. (2015). International tourism and economic growth in New Zealand. Tourism Analysis, 20(4), 413-418.

MBIE. (2016). http://www.mbie.govt.nz/info-services/sectors-industries/tourism/tourism-research-data/monthly-regional-tourism-estimates/previous-regional-tourism-series/regional-tourism-indicators retrieved retrieved October 2016

New Zealand Now (NZN), (2016). https://www.newzealandnow.govt.nz/investing-in-nz/opportunities-outlook/economic-overview retrieved October 2016

Oh, C. O. (2005). The contribution of tourism development to economic growth in the Korean economy. Tourism management, 26(1), 39-44.

Önder, I., & Gunter, U. (2016). Forecasting tourism demand with Google trends for a major European city destination. Tourism Analysis, 21(2), 203-220.

RBNZ. (2016). http://www.rbnz.govt.nz/statistics/b1 . Retrieved in September 2016

Shan, J., K. Wilson (2001) Causality between trade and tourism: empirical evidence from China. Applied Economics Letters, 8(4), pp. 279-283

SNZ (2016). Statistics New Zealand, www.stats.govt.nz retrieved in October 2016.

Sohel Azad, A. S. M., Chheang, V., & Ahsan, A. (2014). External shocks and tourist arrivals to Cambodia. Tourism Analysis, 19(3), 311-321.

Tang, C. F., & Tan, E. C. (2015). Does tourism effectively stimulate Malaysia's economic growth? Tourism Management, 46, 158-163.

Tourism New Zealand, (2015), http://www.tourismnewzealand.com/about/about-the-industry/ , retrieved September 2016.

Wray, M., & Croy, W. G. (2015). Film tourism: Integrated strategic tourism and regional economic development planning. Tourism Analysis, 20(3), 313-326.