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Pandemic and Economy: An Econometric Analysis Investigating the Impact of COVID-19 on the Global Tourism Market

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  • Ioannis-Panagiotis Varzakas

    (Department of Economics, University of Thessaly, 38333 Volos, Greece)

  • Theodore Metaxas

    (Department of Economics, University of Thessaly, 38333 Volos, Greece)

Abstract

With the outbreak of the COVID-19 pandemic, the global tourism market has become one of the most affected sectors of the economy. In this research, the literature on the economic effects created by COVID-19 on a global level is first studied and the measures and restrictions that governments are obliged to take in order to suppress and prevent the spread of the coronavirus are analyzed. Next, there is an attempt to empirically estimate a system of equations regarding the two channels of influence of COVID-19 on tourism, making use of cross-sectional data, and specifically for a sample of 38 countries that launched vaccination up until the end of 2020. The explained results confirm that tourism is directly affected by the spread of COVID-19, due to the effort of travelers to avoid illness, but also due to the measures taken by governments to limit it. Tourism is also indirectly affected, due to the negative impact on income. Using 3SLS, an equation was developed to calculate the direct and indirect impact of COVID-19 on tourism. Notably, the dependent variable (tourism expenditure) exhibited a positive correlation with the independent variable (GDP) and a negative correlation with the total COVID-19 cases. Consequently, it was determined that a unit increase in the COVID-19 variable led to a reduction in international tourism expenditure by USD 859,237. Finally, there is a concern, and further investigation is needed, regarding the effect of vaccination against COVID-19 on tourism, which, while it is expected to be negative, is not confirmed by the results.

Suggested Citation

  • Ioannis-Panagiotis Varzakas & Theodore Metaxas, 2024. "Pandemic and Economy: An Econometric Analysis Investigating the Impact of COVID-19 on the Global Tourism Market," Tourism and Hospitality, MDPI, vol. 5(2), pages 1-14, April.
    • Handle: RePEc:gam:jtourh:v:5:y:2024:i:2:p:19-303:d:1370039
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    References listed on IDEAS

    as
    1. Prayag, Girish & Chowdhury, Mesbahuddin & Spector, Samuel & Orchiston, Caroline, 2018. "Organizational resilience and financial performance," Annals of Tourism Research, Elsevier, vol. 73(C), pages 193-196.
    2. Serhan Cevik, 2022. "Going Viral: A Gravity Model of Infectious Diseases and Tourism Flows," Open Economies Review, Springer, vol. 33(1), pages 141-156, February.
    3. B. James Deaton & Brady J. Deaton, 2020. "Food security and Canada's agricultural system challenged by COVID‐19," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 143-149, June.
    4. World Bank, 2020. "The World Bank Annual Report 2020 [Rapport annuel 2020 du Banque Mondiale]," World Bank Publications - Books, The World Bank Group, number 34406.
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