The impact of exchange rate regimes on Islamic selected countries's international tourism flows: gravity technique

Tourism industry as one of the world`s highest earning industries can play an important role in economic growth. Tourism, including services that have a significant impact on economic and social activities. In this way, despite to be mentioned of the currency regime as one of the factors affecting tourism, a little researchs be done on the effect of exchange rate regimes on tourism flows. In this study, been paid the impact of exchange rate regimes on tourism flows motivated by recent developments on exchange rate regimes classification. In this study, gravity models and panel data techniques used to estimate the number of tourists arrival from all over the world to the Islamic selected countries; Bahrain, Iran, Irak, Egypt, Turkey, Saudi Arabia, United Emirates of Arabia, Kuwait, Qatar, Lebanon, Jordan, Syria, Oman and Yemen during 1993-2013. The results show that fixed exchange rate regime has demonstrated significant and positive impact on tourism and exchange rate stability is very important to attract international tourists. Although, trade, gross domestic production, distance, common language, colonial and population has positive effect and the real effective exchange rate, nominal exchange rate and trade agreement has negative effect on tourism flows. All coefficients the exception of colonial and having commercial agreements variables are statistically significant.