FDIp
Step 2: Computation of competitive weight (CW i )
5.4. Impact of competitors’ variables
5.4.2 Individual countries
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Table 19. Impact of competitors variables on international demand for Nigeria’s tourism (individual country results)
lnarrivals=f(lngdp, lnriskngr, lnriskcpt, lnpricengr, lnpricecpt, lnfactyngr, lnfactycpt)+
Canada South Africa UK USA France
lngdp 0.1201 0.0262 0.1771 0.3483 0.0783
(0.0208)*** (0.0090)*** (0.0100)*** (0.0359)*** (0.0158)***
lnriskngr 0.05825 - 0.6215 - 0.4897 - 0.5420 - 0.8424
(0.0903)*** (0.0660)*** (0.0378)*** (0.0799)*** (0.0698)***
lnriskcpt 0.9121 1.0593 0.6754 0.8025 1.3603
(0.1331)*** (0.0925)*** (0.0573)*** (0.1230)*** (0.0981)***
lnpricengr -0.0282 - 0.0233 0.0147 -0.0231 -0.0190
(0.116)** (0.0099)** (0.0056) (0.0083) (0.0110)
lnpricecpt -0.0152 0.0559 0.0156 0.0381 0.0009
(0.0128) (0.0119)*** (0.0063)** (0.0086) (0.0121)
lnfactyngr 0.0410 0.0099 0.0055 0.0349 0.0275
(0.0039)*** (0.0033) (0.0017)*** (0.0028)*** (0.0033)***
lnfactycpt 0.0247 0.0648 0.0147 0.0098 0.0459
(0.0079)*** (0.0057)*** (0.0041)*** (0.0064) (0.0070)***
Constant -0.3832 -0.2560 -0.1669 -0.8350 -0.4060
(0.0559) (0.0468)*** (0.0258) (0.0555)*** (0.0490)***
R2 0.9864 0.9839 0.9947 0.9922 0.9870
Root MSE 0.0020 0.0017 0.0010 0.0015 0.0019
Chi – square
2980.41 2567.05 9256.87 5279.94 3595.63
(0.0000) (0.0000) (0.0000) (0.0000) (0.0000)
N 40 40 40 40 40
+ see section 4.3.3 for full description of variables
*significant at 10per cent, ** significant at 5per cent, *** significant at 1per cent [ ] – p-value for Chi-square for overall significant
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For the facility parameter, the elasticity values are lower for models with competitors‟
variables. While the own facility elasticity are 0.04, 0.01, 0.01, 0.03 and 0.03 for Canada, South Africa, UK, USA, and France respectively when competitors‟ variables are included;
they are 0.05, 0.02, 0.05 and 0.05 respectively in the model without competitors‟ variables.
Considering the specific effects of competitors‟ variables, competitors‟ risks are not significant for UK, USA and France; competitors‟ prices are not significant for tourist from Canada and France while competitors‟ facility is not significant for tourist from France.
For the risk variable, cross risk elasticity is higher than own price risk elasticity for all origin countries. While a 10% increase in the risk level in Nigeria is associated with a decrease of 5.83% in international tourists‟ arrivals from Canada in Nigeria, a 10% decrease in risk level in other similar countries in West Africa is associated with a decrease of 9.12% in international tourists‟ arrivals from Canada to Nigeria. For South Africa, 10% increase in risk level in other competing West African countries is associated with a rise of 10.59% in their international tourists‟ arrivals in Nigeria which the same quantum of increase in risk level in Nigeria is associated with a decrease of just 6.22% in international arrivals from South Africa. In the same vein, 10% fall in risk level in Nigeria will increase international arrival from UK, USA and France in Nigeria by 4.90%, 5.42% and 8.42% respectively. While the same percentage fall in risk level in other similar West African countries will lead to increase in international arrivals in Nigeria by 6.75%, 8.03% and 13.60% respectively. Thus general improvement in the risk rating of West Africa as a region will reduce international tourists‟
arrivals in Nigeria from all the five origin countries.
For competitors‟ price, the cross price elasticity of international tourism demand in Nigeria is significant for South Africa, UK and USA, but not significant for Canada and France. The result indicates that only price level in Nigeria is important for international tourists from
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price level in West Africa region will pull tourists away from Nigeria to other similar destinations in West Africa, thereby reducing international tourism from South Africa in Nigeria.
For competitors‟ facility, cross facility elasticity is not significant for tourists from USA. The cross facility elasticity are -0.02, -0.06, -0.01 and -0.05 for Canada, South Africa, UK and France respectively. Concerning the tourists from Canada, 10% increase in relevant facility and infrastructure in Nigeria is associated with increase of 0.41per cent in arrivals in Nigeria while the same level of increase in other similar countries in West Africa is associated with decrease of 0.25%. Thus, a general increase in facility level in West Africa region will lead to a net increase in international arrivals from Canada in Nigeria. On the contrary, 10per cent increase in facility level in West Africa region will pull tourists from other similar West African countries to Nigeria by 0.10% and 0.28% for South Africa and France respectively, and also push tourists away from Nigeria to other similar West African countries by 0.6% and 0.5% respectively. The net effect is a decrease in international tourists‟ arrivals from South Africa and France in Nigeria following general improvement in tourism infrastructure in West Africa region. For UK, the net effect is nil as 10% increase in tourism facility in Nigeria and other similar West African countries is associated simultaneous with pull and push of tourists into and away from Nigeria by 0.1%.
b. Individual country results for the impact of competitors variables on international demand for Nigeria’s business tourism
Table 20 contains the impact of competitor‟s variables on International business tourism arrivals from each of the five countries of origin. The overall significance of the models is better than those without competitors‟ variables. The coefficient of multiple determinations is about 99per cent for all the five origin countries compared to 96.8%, 93%, 96% and 92%
obtained for Canada, South Africa, UK, USA and France respectively in models without competitors‟ variables. The inclusion of competitors‟ variables also reduces the root mean square errors from 0.0076, 0.0082, 0.0061, 0.0079 and 0.0107 to 0.0040, 0.0030, 0.0021, 0.0033, and 0.0039 respectively. The overall Chi-square values also increased from 127.73, 602.84, 1377.32, 116.03 and 531.35 to 4402.40, 4419.63, 10790.82, 5799.05 and 4389.07 for each origin listed above respectively.
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Table 20. Impact of competitors variables on international demand for Nigeria’s business tourism (individual country results)
lnarrivals=f(lngdp, lnriskngr, lnriskcpt, lnpricengr, lnpricecpt, lnfactyngr, lnfactycpt)+
Canada South Africa UK USA France
lngdp 0.2013 0.0821 0.3255 0.5048 0.1366
(0.0492)*** (0.0169)*** (0.0219)*** (0.0868)*** (0.0311)***
lnriskngr -1.8169 - 1.7128 - 1.5370 - 2.0283 - 2.3241
(0.1794)*** (0.1145)*** (0.0787)*** (0.1819)*** (0.1415)***
lnriskcpt 2.7375 2.7079 2.1465 2.9853 3.5996
(0.2749)*** (0.1613)*** (0.1204)*** (0.2842)*** (0.1985)***
lnpricengr -0.0592 - 0.0301 0.0087 -0.0027 -0.0174
(0.0217)*** (0.0173)* (0.0117) (0.0177) (0.0222)
lnpricecpt 0.0016 0.1188 0.0079 0.0437 0.0351
(0.0260) (0.0214)*** (0.0134) (0.0189)** (0.0243)
lnfactyngr 0.0781 0.0421 0.0099 0.0644 0.0376
(0.0073)*** (0.0058)*** (0.0036)*** (0.0061)*** (0.0068)***
lnfactycpt -0.0669 -0.1333 -0.0504 -0.0529 -0.1091
(0.0165)*** (0.0101)*** (0.0088)*** (0.1468) (0.0140)***
Constant -0.6673 -0.3569 -0.1924 -1.3928 -0.6649
(0.1028)*** (0.0810)*** (0.0535) (0.1259)*** (0.1013)***
R2 0.9896 0.9902 0.9955 0.9922 0.9895
Root MSE 0.0040 0.0030 0.0021 0.0033 0.0039
4402.40 4419.63 10790.82 5799.05 4389.07
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All the income variables are significant at 1per cent with income elasticity of international business tourism values of 0.20, 0.80, 0.33, 0.50 and 0.14 for Canada, South Africa, UK, USA and France respectively. The inclusions of competitors‟ variables reduce the income elasticity. The values are 0.35, 0.27, 0.41, 0.73 and 0.31 respectively when competitors‟
variables are not included. However, international business tourism is still income inelastic.
For the own risk elasticity, the variable is significant for all origin countries at 1per cent as against the model without competitors variables in which own risk parameter is significant for only South Africa and UK. The parameter values indicate that 10per cent increase in risk level in Nigeria is associated with a decrease of 18.2per cent, 17.1per cent, 15.4per cent, 20.3per cent and 23.2per cent in business tourism arrivals in Nigeria from Canada, South Africa, UK, USA and France respectively. This means the international business tourism in Nigeria is own risk elastic.
For the own price parameter, the variable is significant for only Canada and South Africa with elasticity values of -0.06 and -0.03 respectively. The inclusion of the competitors‟
variables have reduced magnitude of own price elasticity of international business tourism arrivals. The own price elasticity parameter is significant at 1per cent for all origins. The coefficients of elasticities are 0.08, 0.04, 0.01, 0.06 and 0.04 for Canada, South Africa, UK, USA and France respectively. These elasticities are lowered than those obtained when competitors variable are not included for Canada and USA, but increased the values obtained for the remaining three origins.
The impact of the competitors‟ variable, competitors risk and competitors facility are significant at 1per cent for all origin countries while competitors price is only significant for South Africa and USA at 1% and 5% respectively . The magnitude of parameter of competitors risk is higher than that of Nigeria risk for all the five origins. The cross risk elasticity of international business tourism arrival in Nigeria indicates that 10% increase in risk level in competing West African destination will increase international business tourism arrivals from Canada, South Africa, UK, USA and France in Nigeria by 27.4%, 27.1%, 21.5%, 29.9% and 36.0% respectively. Since these values are higher than the associated decrease in international business tourism arrivals in Nigeria following the same percentage increase in the risk level in Nigeria, improved risk rating of West Africa region in the global business tourism market will be associated with net increase in international business tourism
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arrivals in Nigeria. Similarly, if risk rating of West African region should worsen in the global business tourism market will lead to net fall in international business tourism arrivals in Nigeria.
For the competitor‟s price parameter, the cross price elasticity of international business tourism arrivals from South Africa and USA in Nigeria are 0.12 and 0.04 respectively. Out of these two countries only South Africa has significant own price elasticity of 0.03 lower than the corresponding cross price elasticity value. Thus, a general increase in the price level in West Africa region will lead to net income in international business tourism arrivals from South Africa while a general decrease in price level will lead to net decrease. For competitor facility parameter, the cross elasticity of international business tourism demand in Nigeria are -0.07, -0.13, -0.05, -0.05 and -0.11 for Canada, South Africa, UK, USA and France respectively. This suggests that 10% improvement in the level of tourism related facility and infrastructure in the competing West African countries will lead to a decrease of 0.67%, 1.33%, 0.50%, 0.53% and 1.09% respectively in international business tourism arrivals in Nigeria compared to the own price elasticity; these impact are lower for Canada and USA but high for all other origin countries. Thus, a general improvement in tourism facilities in West Africa region will lead to net increase in international business tourism arrivals from Canada and USA in Nigeria but net decrease in those from the other three origins.
c. Individual country results for the impact of competitors variables on international demand for Nigeria’s holiday tourism
Table 21 contains the extended model of international holiday tourism arrivals in Nigeria, when compared to the equivalent model without competitors‟ variables, the coefficient of determination increased for all origin countries. For the extended models, the R2 is approximately 99per cent for Canada and 98per cent for the remaining four origins. The R2 in
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Table 21. Impact of competitors variables on international demand for Nigeria’s holiday tourism (individual country results)
lnarrivals=f(lngdp, lnriskngr, lnriskcpt, lnpricengr, lnpricecpt, lnfactyngr, lnfactycpt)+
Canada South Africa UK USA France
lngdp
0.2831 0.0898 0.0516 0.5040 0.1411
(0.0455)*** (0.0168)*** (0.0266)*** (0.9612) (0.0316)***
lnriskngr
-1.6738 -1.7370 -1.6623 -2.0651 -2.3588
(0.1623)*** (0.1217)*** (0.1203) (0.1978)*** (0.1701)***
lnriskcpt
2.3622 2.6309 2.3195 2.7352 3.5326
(0.2499)*** (0.1707)*** (0.1766)*** (0.3104)*** (0.2362)***
lnpricengr
-0.0241 -0.0453 -0.0656 -0.0699 -0.0639
(0.0195) (0.0183)** (0.0177)*** (0.0188)*** (0.02612)***
lnpricecpt
0.0968 0.0427 0.0308 0.1128 0.0433
(0.0236)*** (0.0220)* (0.0190) (0.0204)*** (0.0275)
lnfactyngr
0.0756 0.0400 0.0091 0.0656 0.0390
(0.0065)*** (0.0061)*** (0.0056) (0.0065)*** (0.0082)***
lnfactycpt
-0.0002 -0.0846 -0.0269 -0.0067 -0.0569
(0.0150)*** (0.0106)*** (0.0121)** (0.0160) (0.0158)***
Constant
-0.5690 -0.2566 -0.1208 -1.2968 -0.5635
(0.0919)*** (0.0863)*** (0.0834) (0.1367)*** (0.1217)***
R2 0.9876 0.9807 0.9844 0.9872 0.9791
Root MSE 0.0036 0.0033 0.0030 0.0035 0.0043
Chi-Square
3737.32 2287.29 2638.44 3486.85 1892.68
(0.0000) (0.0000) (0.0000) (0.0000) (0.0000)
N 40 40 40 40 40
+ see section 4.3.3 for full description of variables
*significant at 10per cent, ** significant at 5per cent, *** significant at 1per cent [ ] – p-value for Chi-square for overall significant
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The income variable is significant at 1per cent for all origins. The income elasticity of international holiday tourism arrivals in Nigeria ranges from 0.09 for South Africa to 0.50 for USA. Thus, the international demand for Nigeria international business tourism is income inelastic. The risk parameter is also significant at 1per cent for all origins. The own risk elasticity coefficient are -1.67, -1.74, and -1.66 for Canada, South Africa and UK respectively. The corresponding values for US and France are -2.07 and -2.36 respectively.
When compared with international business tourism, international holiday tourism has higher own risk elasticity for all origins except South Africa. The price elasticity of international holiday tourism is significant at 1per cent for all origin except Canada. Increase of 10per cent in price level in Nigeria is associated with a decrease of 0.5per cent, 0.7per cent, 0.7per cent and 0.6per cent in international holiday tourism arrivals from South Africa, UK, USA and France respectively. This implies that the international demand for Nigeria holiday tourism is highly own price inelastic.
The own facility elasticity is significant at 1% for all origins except UK. An increase of 10%
in tourism related facility and infrastructure is associated with increase of 0.8%, 0.4% 0.7%
and 0.4% in international business tourism arrivals in Canada, South Africa, UK, USA and France respectively. Concerning the competitors‟ variables, competitors risk is significant at 1per cent for all origins. The cross risk elasticity of international holiday tourism arrivals is 2.4, 2.6 and 2.3 for Canada, South Africa and UK respectively. The corresponding figures for USA and France are 2.9 and 3.5 respectively. The absolute value of competitors‟ risk coefficient is higher than that of Nigeria risk coefficient for all origins. These suggest that a general increase in risk level in all West African countries will lead to net increase in international business tourism arrivals in Nigeria from the five origin countries.
Coefficient of competitors‟ price variable is significant at 1per cent for Canada and USA and
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international business tourism demand is more sensitive to competitors‟ variable than the international holiday tourism demand.
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CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATION