Economic determinants of international tourism demand in Ghana

Ghana’s tourism industry has witnessed steady growth over the past two to three decades, which has translated into increasing tourism receipts. This paper examines the economic determinants of international tourism demand in Ghana using data on tourist arrivals from the country’s major generating markets outside Africa from 1995 to 2014. We employ the Panel Autoregressive Distributed Lag (ARDL) estimation approach. The long run estimates suggest that income of tourists denoted by the GDP per capita of their respective origin countries, tourism prices in Ghana, substitute prices in an alternative destination (Nigeria), and the level of trade between Ghana and the origin countries are significant determining factors of international tourism demand in Ghana. In the short run, the substitute price showed a negative and statistically significant effect on tourism demand; implying tourists from the origin countries consider Ghana and Nigeria as complementary destinations in the short run. The error correction coefficient indicates that about 11 percent of deviations in tourism demand are corrected every year, signalling a sluggish adjustment process towards long run equilibrium. The study recommends that government policies should focus on strengthening the macroeconomic fundamentals of the economy, promote trade with the origin countries, and diversify the tourism markets.