International and domestic tourism are leading economic activities in the world today.
Tourism has been known to generate goods and services directly and indirectly, attract
foreign currency, stimulate employment, and provide opportunities for investment. It has also
been recognized as an important means for achieving economic development. Substantial
research has been conducted to evaluate the role of international tourism, and its associated
volatility, within and across various economies. This paper applies several recently
developed models of multivariate conditional volatility to investigate the interdependence of
international tourism demand, as measured by international tourist arrivals, and its associated
volatility in the four leading destinations in ASEAN, namely Indonesia, Malaysia, Singapore
and Thailand. Each of these countries has attractive tourism characteristics, such as
significant cultural and natural resources. Shocks to international tourism demand volatility
could affect, positively or negatively, the volatility in tourism demand of neighbouring
countries. The empirical results should encourage regional co-operation in tourism
development among ASEAN member countries, and also mobilize international and regional
organizations to provide appropriate policy actions.
|