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FDIp

Step 2: Computation of competitive weight (CW i )

5.4. Impact of competitors’ variables

5.4.1. Panel results

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Table 17. Impact of competitors’ variables on international demand for Nigeria’s tourism (panel results)

lnarrivals=f(lngdp, lnriskngr, lnriskcpt, lnpricengr, lnpricecpt, lnfactyngr, lnfactycpt)+ OLS Panel Fixed Effect Panel Random Effect

lngdp 0.1253 0.0523 0.0530

(0.0067)*** (0.0243)* (0.0241)**

lnriskngr -0.6601 -0.7663 -0.7651

(0.7218) (0.0976)*** (0.0980)

lnriskcpt 1.0243 1.2446 1.2422

(0.9843) (0.1602)*** (0.1610)***

lnpricengr -0.0053 -0.0208 -0.0206

(0.1030) (0.0030)*** (0.0032)***

lnpricecpt -0.0160 0.0174 0.01171

(0.0959) (0.0116) (0.0113)

lnfactyngr

0.0235 0.0221 0.0222

(0.0350) (0.0103)* (0.0103)**

lnfactycpt -0.0316 -0.0508 -0.0506

(0.0549) (0.0078)*** (0.0077)**

Constant -0.3590 -0.3485 -0.3486

(0.5177) (0.0567)*** (0.0774)***

R2 0.3650 0.9559 0.9559

F-value/ Wald Chi-square

56.71 582.03 4086.95

(0.0000) (0.0000) (0.0000)

Model selection tests

7003.02(1) 0.35(2) 3835.22(3)

(0.0000) (0.9998) (0.0000)

N 200 200 200

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Of all the three, competitors‟ prices are not significant. This is due to the dominance effect of price variable in the holiday tourism in the aggregate model, as shown in the next sub-section. Both competitors‟ risks and competitors‟ facilities are significant at 1per cent. The cross risk elasticity of international tourism arrival in Nigeria is 1.24 which indicates that 10per cent increase in risk levels in other competing West Africa destination is associated with 12.4per cent increase in tourism arrivals in Nigeria. One plausible explanation is that the highly risk averse tourists that come to West Africa have preference for countries that are perceived to have lower risk level than Nigeria. However, whenever there is increase in risk level in those countries, Nigeria becomes attractive and they choose Nigeria over those competing destinations.

Considering the competitors facility, the result indicates that the absolute value of cross facility elasticity of international tourists‟ arrivals in Nigeria is -0.05 which suggests that a rise of 10% in facility of other competing West Africa destinations is associated with a fall of 0.5% in international tourism arrival in Nigeria. Though, tourism facility in Nigeria is poor and could not generate enough pull of foreign tourist, significant improvement in tourism facility in other competing West African countries that have similar facility with Nigeria will push some of the tourists to those competing countries.

b. Panel results for the impact of competitors’ variables on international demand for Nigeria’s business and holiday tourism

Table 18 contains the impact of competitors‟ variables on international business and holiday tourisms in Nigeria. All panel models have better fit than the pooled model. As evidenced by the coefficient of multiple determination and the F/Wald values. There is no sufficient evidence for choosing either the pooled regression or the fixed effect model over the random effect model. Thus, the remaining discussion is based on the random effect model as before.

All parameters are significant except the competitors‟ prices for holiday tourism. The income elasticity is 0.12 for business tourism while it is 0.11 for holiday tourism. This implies that 10per cent increase in tourist income is associated with an increase of 1.2% in international business tourism arrivals in Nigeria and an increase of 1.1% in international holiday tourism arrivals in Nigeria. The impacts are lower than those obtained when competitors‟ variables are not included. This suggests that omission of competitors‟ variables lead to overestimation of some of the included parameters.

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Table 18. Impact of competitors’ variables on international demand for Nigeria’s business and holiday tourism (panel results)

lnarrivals=f(lngdp, lnriskngr, lnriskcpt, lnpricengr, lnpricecpt, lnfactyngr, lnfactycpt)+

Business Tourism Holiday Tourism

Pooled Estimates

Panel Fixed Effect

Panel Random Effect

Pooled Estimates

Panel Fixed Effect

Panel Random Effect

lngdp 0.2942 0.1160 0.1175 0.2906 0.1077 0.1094

(0.0159)*** (0.0527)* (0.0525)** (0.0155)*** (0.0512) (0.0509)**

lnriskngr -1.8292 -2.0884 -2.0862 -1.8708 -2.1367 -2.1342

(1.7378) (0.2270)*** (0.2279)*** (1.6913) (0.2350)*** (0.2329***

lnriskcpt 2.6883 3.2258 3.2211 2.6461 3.1996 3.1925

(2.3684) (0.3706)*** (0.3723)*** (2.3079) (0.3784)*** (0.3803)***

lnpricengr 0.0047 -0.0331 -0.0327 0.0780 -0.0393 -0.0396

(0.2482) (0.0061)*** (0.0064)*** (0.2414) (0.052)*** (0.0056)***

lnpricecpt 0.0295 0.0522 0.0515 0.0984 0.0164 0.0415

(0.2312) (0.0256) (0.0250)** (0.2251) (0.0253) (0.0247) lnfactyngr

0.0319 0.0285 0.0285 0.0330 0.0295 0.0295

(0.0841) (0.0238) (0.0238) (0.0817) (0.0240) (0.0239) lnfactycpt -0.0622 -0.1090 -0.1086 -0.0160 -0.0640 -0.0636

(0.1322) (0.0172)*** (0.0179)*** (0.1285) (0.0169)** (0.0167)***

Constant -0.6051 -0.5793 -0.5795 -0.5075 -0.4811 -0.4813

(1.2452) (0.1285)** (0.1300)*** (1.2122) (0.1239)** (0.1273)

R2 0.3484 0.9586 0.9586 0.3358 0.9346 0.9346

F-value/

Wald Chi-square

54.15 [0.0000]

621.24 [0.0000]

4361.84 [0.0000]

54.22 [0.0000]

384.03 [0.0000]

2695.91 [0.0000]

Model selection

8593.57(1) 0.34(2) 3844.64(3) 8003.86(1) 0.40(2) 3840.13(3)

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The risk parameters are significant at 1per cent with the value of -2.09 and -2.13 for business and holiday tourisms respectively. This suggests that 10% increase in risk level in Nigeria is associated with a decrease of 20.9% and 21.3% in business and holiday tourism respectively.

This result makes more rational sense than the non significance of risk parameter obtained in the model without competitors variables. The own price elasticity of international tourists‟

arrivals in Nigeria are -0.03 and -0.04 for business and holiday tourism arrivals respectively.

The elasticity is lower (higher) than the values of -0.05 (-0.01) obtained respectively for model without competitors‟ variables. The own facility elasticity of about 3per cent is about 4per cent lower than those obtained for both tourism types in models without competitors‟

variables. All competitors‟ variables are significant for business tourism while competitors risk and competitors‟ facilities are significant for holiday tourism. The cross price elasticity for business tourism is 0.05, approximately the same as the own price elasticity, for this type of tourism. This suggests that business tourists place comparable importance on price levels in Nigeria as well as in other competing countries in West Africa.

For competitors‟ risk, the cross risk elasticity of international tourism arrival in Nigeria is 3.22 for business tourism and 3.19 for holiday tourism. Thus, while 10% increase in risk level in Nigeria will reduce international business tourism arrivals in Nigeria by 20.9%, equivalent increase in risk level in other competing West African countries will increase this type of international arrivals by 32.2per cent. Similarly, 10per cent decrease in risk level in Nigeria will generate increase of about 21.3per cent in international holiday tourism; an equivalent decrease in other competing destinations in West Africa will generate a decrease of 31.9per cent in this tourism type. These results suggest that an improvement in the risk rating of West Africa as a region will lead to net push of international tourists from Nigeria to other West African countries, while a worsen risk rating will lead to net push of international tourists from other competing West African countries to Nigeria. For the impact of competitors‟

facilities on international business and holiday tourism arrivals in Nigeria, the cross facility elasticities are -0.11 and -0.06 respectively. With these values, the own facility elasticity is lower than the cross facility elasticity. These results indicate that a general increase in tourism related facility in West Africa will push tourists from Nigeria to other similar West African countries while if the facility should worsen the rating of West Africa region will push business and holiday tourists from similar West African countries to Nigeria.

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