The Effect of Economic and Political Stability on Tourism Demand in Turkey: ARDL Border Test Approach

Tourism has become one of the most developed industries in recent years because it provides advantages in completing under and overground infrastructure investments, eliminates income differences among regions, generates income and employment,and maintains balance of international payments . Tourism demand is determined by several factors including economic (economic stability, foreign currency, and income distribution), political (political stability, political relations, and international agreements), and social (fashion, crafts, and urbanization) factors. The most important of these are economic and political stability and the environment of confidence these factors generate. Countries with high economic and political stability have more tourist visits, while countries with less economic and political stability receive less tourist demand because of economic downturns and terrorist actions. This study examines the effect of economic and political stability on tourism demand by using data between the periods of 2002–2015 and the Autoregressive Distributed Lag Bound Test (ARDL) boundary test approach analysis. The results of the analysis suggest a positive relationship between economic stability and tourism demand. Moreover, the study reveals a negative relationship between inflation (consumer price index) and real foreign currency rates.