IDEAS home Printed from https://ideas.repec.org/a/eee/trapol/v43y2015icp11-22.html
   My bibliography  Save this article

The impact of government failure on tourism in the Philippines

Author

Listed:
  • Manuela, Wilfred S.
  • de Vera, Manuel J.

Abstract

While the Philippines aspires to be one of the top tourist destinations in Southeast Asia, self-inflicted wounds like the failure of the government to comply with international aviation safety standards may derail the country from achieving its goals. This article estimates the short- and long-term impact of the US FAA downgrade of the Philippine civil aviation system in 2008 and the EU ban of Philippine carriers in 2010 on tourist expenditures, arrivals, and length of stay using monthly time series data. The econometric model, consisting of three equations due to the endogeneity of the tourist arrivals and length of stay variables in the tourist expenditures equation, is estimated simultaneously using the generalized method of moments. The results indicate that the US FAA downgrade and the EU ban impact monthly tourist receipts negatively in the short term while the downgrade also impacts tourist expenditures in the long term. Moreover, the ban impacts length of stay negatively in the short and long term while the downgrade impacts length of stay negatively only in the long term. The substantial decline in tourism receipts from 2008 to 2010 despite an increasing trend in tourist arrivals is due to the shorter stay of tourists, indicating that high-spending tourists have not returned following the downgrade and ban.

Suggested Citation

  • Manuela, Wilfred S. & de Vera, Manuel J., 2015. "The impact of government failure on tourism in the Philippines," Transport Policy, Elsevier, vol. 43(C), pages 11-22.
    • Handle: RePEc:eee:trapol:v:43:y:2015:i:c:p:11-22
    DOI: 10.1016/j.tranpol.2015.05.016
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0967070X15000724
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tranpol.2015.05.016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Paitoon Kraipornsak, 2011. "The world economy, competition, external shocks and demand for international tourist arrivals in Thailand," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 4(1), pages 93-108.
    3. Chia-Lin Chang & Thanchanok Khamkaew & Roengchai Tansuchat & Michael McAleer, 2011. "Interdependence of International Tourism Demand and Volatility in Leading ASEAN Destinations," Tourism Economics, , vol. 17(3), pages 481-507, June.
    4. Russell Smyth & Ingrid Nielsen & Vinod Mishra, 2009. "'I've been to Bali too' (and I will be going back): are terrorist shocks to Bali's tourist arrivals permanent or transitory?," Applied Economics, Taylor & Francis Journals, vol. 41(11), pages 1367-1378.
    5. Paresh Kumar Narayan, 2005. "The structure of tourist expenditure in Fiji: evidence from unit root structural break tests," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1157-1161.
    6. Christopher Edmonds & James Mak, 2006. "Terrorism and Tourism in the Asia Pacific Region: Is Travel and Tourism in a New World After 9/11?," Economics Study Area Working Papers 86, East-West Center, Economics Study Area.
    7. Porter, Julie, 2011. "Regional Economic Resilience and the Deepwater Horizon Oil Spill: The Case of New Orleans' Tourism and Fishing Clusters," Spatial and Organizational Dynamics Discussion Papers 2011-12, CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve.
    8. Ana C.M. Daniel & Paulo M.M. Rodrigues, 2012. "Assessing the Impact of Shocks on International Tourism Demand for Portugal," Tourism Economics, , vol. 18(3), pages 617-634, June.
    9. Wilfred Dolfsma, 2011. "Government Failure — Four Types," Journal of Economic Issues, Taylor & Francis Journals, vol. 45(3), pages 593-604.
    10. Deluna, Roperto Jr & Jeon, Narae, 2014. "Determinants of International Tourism Demand for the Philippines: An Augmented Gravity Model Approach," MPRA Paper 55294, University Library of Munich, Germany.
    11. António Gomes de Menezes & Ana Moniz & José Cabral Vieira, 2008. "The Determinants of Length of Stay of Tourists in the Azores," Tourism Economics, , vol. 14(1), pages 205-222, March.
    12. Gabriel Ahlfeldt & Bastian Franke & Wolfgang Maennig, 2009. "Terrorism and the Regional and Religious Risk Perception of Foreigners: The Case of German Tourists," Working Papers 024, Chair for Economic Policy, University of Hamburg.
    13. A. Özlem Önder & Aykan Candemir & Neşe Kumral, 2009. "An Empirical Analysis of the Determinants of International Tourism Demand: The Case of Izmir," European Planning Studies, Taylor & Francis Journals, vol. 17(10), pages 1525-1533, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tsung-Hung Lee & Chung-Jen Fu & Mei-Hsiang Chen, 2023. "Elucidating International Travelers’ Tourism Image of Taiwan: A Qualitative Approach," Sustainability, MDPI, vol. 15(3), pages 1-16, January.
    2. Muhammad Amin Hasan & Mr. Abdullah & Muhammad Arsalan Hashmi & Ali Sajid, 2022. "International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 177-187.
    3. Manuela Jr., Wilfred S. & Rhoades, Dawna L. & Curtis, Tamilla, 2019. "Market power at the Seattle-Tacoma International Airport: The case of Alaska Airlines," Transport Policy, Elsevier, vol. 76(C), pages 90-99.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Constantinos Katrakilidis & George Konteos & Nikolaos Sariannidis & Chrysi Manolidou, 2017. "Investigation of Convergence in the Tourist Markets of Greece," European Research Studies Journal, European Research Studies Journal, vol. 0(4A), pages 707-729.
    2. Svetlana Gurieva & Irina Kuznetsova & Ekaterina Yumkina & Sergey Manichev & Elena Sidorenko, 2017. "Emotional Intelligence and Behavior Styles of Russian Middle Managers in Business Communication," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 679-693.
    3. Kumar Narayan, Paresh & Narayan, Seema & Popp, Stephan, 2010. "Energy consumption at the state level: The unit root null hypothesis from Australia," Applied Energy, Elsevier, vol. 87(6), pages 1953-1962, June.
    4. Hooi Hooi Lean & Russell Smyth, 2006. "Asian Financial Crisis, Avian Flu And Terrorist Threats: Are Shocks To Malaysian Tourist Arrivals Permanent Or Transitory?," Monash Economics Working Papers 11/06, Monash University, Department of Economics.
    5. Narayan, Paresh Kumar & Liu, Ruipeng, 2011. "Are shocks to commodity prices persistent?," Applied Energy, Elsevier, vol. 88(1), pages 409-416, January.
    6. Hillebrand, Eric & Schnabl, Gunther & Ulu, Yasemin, 2009. "Japanese foreign exchange intervention and the yen-to-dollar exchange rate: A simultaneous equations approach using realized volatility," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(3), pages 490-505, July.
    7. Bansal, Ravi & Kiku, Dana & Yaron, Amir, 2016. "Risks for the long run: Estimation with time aggregation," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 52-69.
    8. Kutuk, Yasin, 2022. "Inequality convergence: A world-systems theory approach," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 150-165.
    9. Smoluk, H. J. & Neveu, Raymond P., 2002. "Consumption and asset prices: An analysis across income groups," Review of Financial Economics, Elsevier, vol. 11(1), pages 47-62.
    10. Alessandra Canepa & Fawaz Khaled, 2018. "Housing, Housing Finance and Credit Risk," IJFS, MDPI, vol. 6(2), pages 1-23, May.
    11. Isaiah Andrews & Anna Mikusheva, 2016. "Conditional Inference With a Functional Nuisance Parameter," Econometrica, Econometric Society, vol. 84, pages 1571-1612, July.
    12. Jessica M. Mc Lay & Roy Lay-Yee & Barry J. Milne & Peter Davis, 2015. "Regression-Style Models for Parameter Estimation in Dynamic Microsimulation: An Empirical Performance Assessment," International Journal of Microsimulation, International Microsimulation Association, vol. 8(2), pages 83-127.
    13. Jarle Aarstad & Olav Andreas Kvitastein & Stig-Erik Jakobsen, 2019. "What Drives Enterprise Product Innovation? Assessing How Regional, National, And International Inter-Firm Collaboration Complement Or Substitute For R&D Investments," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-25, June.
    14. Alex Cukierman & Anton Muscatelli, 2001. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability?," Working Papers 2002_4, Business School - Economics, University of Glasgow, revised Mar 2002.
    15. Li, Yuming, 1998. "Expected stock returns, risk premiums and volatilities of economic factors1," Journal of Empirical Finance, Elsevier, vol. 5(2), pages 69-97, June.
    16. Pastor, Lubos & Stambaugh, Robert F., 2003. "Liquidity Risk and Expected Stock Returns," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 642-685, June.
    17. Carlos Medel, 2017. "Forecasting Chilean inflation with the hybrid new keynesian Phillips curve: globalisation, combination, and accuracy," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 20(3), pages 004-050, December.
    18. Hansen, Lars Peter & Heaton, John & Luttmer, Erzo G J, 1995. "Econometric Evaluation of Asset Pricing Models," The Review of Financial Studies, Society for Financial Studies, vol. 8(2), pages 237-274.
    19. Lily Y. Liu, 2017. "Estimating Loss Given Default from CDS under Weak Identification," Supervisory Research and Analysis Working Papers RPA 17-1, Federal Reserve Bank of Boston.
    20. Carranza, Luis J. & Cayo, Juan M. & Galdon-Sanchez, Jose E., 2003. "Exchange rate volatility and economic performance in Peru: a firm level analysis," Emerging Markets Review, Elsevier, vol. 4(4), pages 472-496, December.

    More about this item

    Keywords

    C32; L83; L93; Tourism; Air transport safety; US FAA downgrade; EU ban;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:trapol:v:43:y:2015:i:c:p:11-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30473/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.