Dynamic Panel Data Analysis of International Tourism Demand in Turkey

Turkey, located on the Mediterranean coast, is one of the most important tourism destinations, attracting attention with its historical and cultural texture. Owing to the foreign tourists, the tourism sector is one of the leading sectors that provide foreign exchange rate income to the Turkish economy. The aim of this study is to reveal the factors that determine Turkey’s international tourism demand. For this purpose, the data of 24 countries which send tourists to Turkey for the 2010-2017 periods has been used. The number of arriving foreign visitors was used as the proxy of international tourism demand. Dynamic panel data analysis was applied because of the changing structure of tourist preferences. By using the lagged dependent variable as an explanatory variable, tourists’ loyalty and the word-of-mouth effect on tourism demand can be measured. It was determined that previous demand, income per capita, accommodation supply and the political stability of Turkey positively affect the tourism demand while relative prices, terrorist incidents and the coup attempt in 2016 negatively affect the tourism demand. Finally, it is revealed that bilateral exchange rates have no effect on tourism demand