Determinants of regional-international tourist attraction
among the member countries of ECO

University essay from Luleå/Business Administration and Social Sciences

Abstract: Tourism is widely believed to be the most rapidly growing industry in both
developing and developed countries, consider tourism as one means for
creating new jobs and reducing unemployment in different regions. The ECO
region (Iran, Turkey, Pakistan, Kirghizstan, Azerbaijan, Turkmenistan,
Afghanistan, Uzbekistan and Kazakhstan) is geographically vast and well
endowed with potential economic resources in different fields/sectors.
Yet, this inherent potential does not manifest itself in the form of
reasonable levels of economic and social development in the ECO countries
as a group.

In this study we examined the impacts of different variables on tourism
flow between the founders of the ECO organization (Iran, Turkey and
Pakistan). We used a panel data gravity specification for this region. We
stayed focus on regionalization in tourism attraction among the member
countries of ECO of how they can affect tourism attraction and economic
indicators (GDP, Exchange rate and etc.). Having applied Panel Data, we
estimate the model for a number of variables, which stands for the three
countries of the ECO region in six cases over the period 1985-2005. Case 1
that is defined by Dum1 emphasizes on the unity of the three major
countries of the ECO region (Iran, Turkey and Pakistan). Case 2 is defined
by Dum2 to express on Turkey as the most successful ECO member in tourist
attraction. Dum3 was chosen as case 3 for Iran to indicate this country as
a neighboring country with Turkey and Pakistan and being a more attractive
country in the field of eco, ethic and heritage tourism. Dum1 was devoted
to case 4 to focus on being the members of ECO and the economical
structural similarity by using the Dummy variable which has been multiplied
to the Linder's coefficient. In the cases of 5 and 6 the effect of
economical structural similarity and being member of ECO were analyzed
simultaneously for Turkey and Iran using a value obtained by multiplying
Linder coefficient to dum2 and dum3 respectively.

The estimated results expressed that the dissimilarity in the economical
structure and the distance have a negative effect on tourism attractions
between the ECO member countries. The obtained results of the estimation
of the gravity model analyses a bilateral estimation in the trade and
tourism industry between two countries. According to the gravity model for
international trade, the amount of trade and the tourism flow between two
countries is explained by their economic size (GDP), population (openness),
geographical distance and a set of variables as the exchange rate which was
carried out in this research. More specifically, the amount of trade
between two countries is assumed to increase in their sizes, as measured by
their national incomes and their GDPs, and decrease in the cost of
transport, as measured by the distance between their capitals or economic

The random effect in the six cases of the research expresses the
significance of the unity among the countries in the ECO region. Number of
tourist arrivals in the ECO region clarifies their success towards their
unity and the high range of potential in attracting tourists, so on this
theoretical basis it can be concluded that the union ship among the ECO
members were positively effective at the "95" confidence level. The GDP
variable showed a positive and significant effect on tourism arrivals among
the countries of ECO. As a rule, the more the GDP of a country increases,
they achieve more revenue and income, so civilians can easily take trips,
but as their GDP increases, it causes problems in the bilateral tourism
flow. This variable also defined the amount of income and welfare among
the ECO region along with the revenue and the facilities. In despite of
the positive effect of GDP, the member countries of the ECO region seem to
have no economical similarities between them. If the ECO member countries
could be able to raise a union ship towards their economical and structural
similarities they can surly manage to reduce the lacking in their bilateral
tourist flow.

In respect to the estimations, distance ought to be another affecting
variable in the bilateral tourist arrival among the countries of the ECO
region, obviously the shorter the distance is between the destinations, the
more incoming tourists they have, as the distance gets longer, the less
tourist arrivals they might have, that’s because the tourist wont have
enough motivation to take a trip to the far distance countries. This
phenomenon even causes trouble for the countries which have a lack in their
transportation infrastructure. Therefore, according to the theoretical
estimation, the obtained results of the distance occurred negative effect
between the member ship countries of ECO, the confidence level of the
negative effect was "%95".

The dummy variables which were estimated in this research indicate the
unity between the member countries of ECO, in regards to their union ship
they have increased their tourist attractions and they have also showed
themselves very successful in the bilateral tourist arrivals. The estimated
results expressed that the dissimilarity in the economic structure and the
distance have a negative effect on tourism attractions between the ECO
member countries. The dummy variables (1, 2, and 3) were laid in the model
to emphasis on the presence of the ECO member countries and their effect on
the tourism industry which the results were obtained significantly positive
among all the members in the confidence level of "%95".
Due to the economic dissimilarities among the member countries of ECO, the
Linder's coefficient which expresses the economic demand similarity between
the countries, were multiplied to the dummy variables (1, 2and 3) in order
to reduce the dissimilarity lacking among the members. The estimation of
results obtained completely significant effects on this aspect and it
proves, as the ECO regions get close to the standard economical
infrastructures, the more the successful they become in the field of
sustainable tourism development.

The important aspect to consider is that the sustainable tourism
development at the ECO region requires a consistent approach at national
levels in order to implement the necessary partnership between the member
ship countries of ECO, the central government and the private sectors. The
high lighted issue is that regional tourism development objectives and
national strategic objectives must also complement each other, the lacking
in the economic similarities in this region should not stop the countries
from their major aim of cooperating with each other and this does not mean
that all the their trading flows should be put an end to it.