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Title: Impact of economic factors and a political conflict on international tourism demand in Nepal: a vector error correction model

Authors: Raju Pokharel; Jagdish Poudel; Robert K. Grala

Addresses: Department of Forestry, Mississippi State University, Box 9681, Mississippi State, 39762-9681, USA ' School of Forestry and Wildlife Sciences, Auburn University, Auburn, AL 36849, USA ' Department of Forestry, Mississippi State University, Box 9681, Mississippi State, MS 39762-9681, USA

Abstract: A vector error correction model (VECM) was used to determine short- and long-term relationships of the number of international tourists visiting Nepal during 1962-2012 with gross domestic product (GDP) per capita in China, India, Nepal, Sri Lanka, the UK, and the USA; exchange rate of Nepalese rupee (NPR) to the US dollar (USD); and Maoist insurgency. Three foreign economies, India, Sri Lanka, and the USA, had a short-term associations with the annual international tourist arrivals in Nepal. In the long-term, economic growth in Nepal, Sri Lanka, and the USA was associated with international arrivals in Nepal, whereas the economic growth in China, India, and the UK had no long-term associations. The Maoist insurgency had a negative association with international tourist arrivals in the short term, but the relationship was ambiguous in the long term. Nepal's short-term tourism policies should focus on a strategic marketing in regional countries such as China, India, and Sri Lanka, whereas long-term policies should focus on improving Nepal's safety perception and marketing efforts in all countries with a substantial economic growth.

Keywords: currency exchange rate; gross domestic product; GDP; international tourist arrivals; political conflict.

DOI: 10.1504/IJTP.2018.090319

International Journal of Tourism Policy, 2018 Vol.8 No.1, pp.18 - 41

Available online: 05 Mar 2018 *

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