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The impact of government failure on tourism in the Philippines

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  • 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
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    Cited by:

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    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.

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    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

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