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FDIp

Step 2: Computation of competitive weight (CW i )

6.1. Summary

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CHAPTER SIX

SUMMARY, CONCLUSION AND RECOMMENDATION

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(Bankole, 2005; Bankole and Odularu, 2006). The thesis is premised on Lancaster‟s demand theory which enables inclusion of non-price variables like facilities, risk and competitors‟

parameters in the tourism demand model.

The background section, chapter two, reveals the general characteristics of tourism sector as well as the specific characteristics in Nigeria and in West Africa. Tourism infrastructure requirements include primary infrastructure such as hotels, restaurants and recreational facilities as well as supportive physical infrastructure and basic services like transportation, telecommunications, energy, water and waste management facilities and services (UNCTAD, 2007). There is clearly a geographic pattern to tourism resources in, and tourism flows, to Africa. West and Central Africa have the least number of arrivals on the continent (Gauci et al., 2002). In West Africa, tourism is an increasingly crucial activity in terms of contribution to economic growth and social development as the tourism industry has grown considerably in the last few years (Ige and Odularu, 2008). West Africa is blessed with enormous ethnic diversity and a multifarious natural and cultural heritage characterized by deep-rooted traditions and generally harmonious cultural interaction.

Institutional structure for Nigeria tourism can be traced back to 1976 when the government established the Nigeria Tourism Board (NTB). Tourism management is under the Ministry of Culture and Tourism and its eight parastatals. Unlike crude oil, Nigeria‟s tourism assets are scattered across the country. The cultural elements of Nigerian tourism include: cultural events, religious activities, collection of arts and artifacts (in museums), ancient walls and buildings, and other historic sites.

The literature review section examined conceptual, theoretical and empirical issues. There is a conceptual problem with tourism as definition depends on purpose. However, the most relevant definition of tourism for this thesis is that of the United Nations World Tourism Organisation (UNWTO). International tourism encompasses the activities of visitors who make temporary visits across international borders, outside their usual place of work and residence and stayed for more than 24 hours. The primary purposes of travel can be holiday, visiting friends and relatives, business, convention or meetings, health, education, religion or sport. Tourism thus involves: short-term travel, at least for one day and not more than one year and expenditure on transport, accommodation, purchases and services, from when the visitor leaves home, until he/she returns.

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Theoretical explanation of tourism demand, like demand for all other goods and services, has long been based on the neoclassical demand theory. This has been criticised to be inadequate in analysing quality-based goods, like tourism, in which consumer demand depends on the characteristics of the goods. Alternative theories that have been developed in an attempt to analyse quality-based goods include hedonic model, Rosen‟s model, Houthakker-Thiel approach, Ladd-Zober model, Becker‟s household production approach, Dixit-Stiglitz model, Chamberlin‟s monopolistic model, and Lancaster‟s model. The Lancaster‟s model has been recommended for tourism demand studies (Papatheodorou, 2001; Giacomelli, 2006a).

The most common measure of international tourism demand has been international tourist arrivals; other measures include: international tourist expenditures/receipts, international tourist arrivals/departures, travel export/import, the number of international tourist-nights spent at tourist accommodation and average length of stay (Witt and Witt, 1995; Song and Li, 2008). For the independent variables, main factors affecting tourism demand in recent empirical studies include: income of tourist, relative tourism price between destination and origin country, substitute tourism price in competing destinations and exchange rates as well as political and health risk.

This study makes use panel regression models to obtain parameter estimates of the model derived based on Lancaster framework. The main findings are summarised according to the specific objectives as follows:

Computation of competitive indices and competitive weight

The most culturally similar country to Nigeria in West Africa is Ghana, followed by Sierra Leone, The Gambia and Benin Republic. The Natural Similarity is divided into climate, elevation and biomes. The most similar countries in terms of climate are Cote d‟lvoire, Guinea-Bissau Benin, Senegal and The Gambia in that order of similarity. In terms of elevation, the similar country to Nigeria is Liberia, Togo, Guinea and Ghana in order of

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competitor‟s share of 0.10, 0.09 and 0.09 respectively, followed by Burkina Faso, Senegal and Sierra Leone with share of 0.07 each. The weakest competitor is Cape Verde with a competitor‟s share of 0.04, followed by Mali, Liberia and Mauritania with a share of 0.05 each.

International demand for Nigeria’s tourism

The aggregate results indicate that 1per cent increase in per capita income of tourists on average is associated with 0.15% increase in tourism arrivals in Nigeria. The own price elasticity of international tourism demand in Nigeria is -0.03. The own facility elasticity of international tourism demand in Nigeria is 0.04. The individual origin result indicates that the income parameters are 0.12, 0.14, 0.15, 0.19 and 0.33 for tourists from South Africa, France, Canada, UK, and USA respectively. The risk parameter is significant only for South Africa and UK with elasticity values of -0.05 and -0.04 respectively. The own price elasticity of international tourism demand in Nigeria are -0.01, -0.02 and -0.03 for UK, South Africa and France respectively. The corresponding values are -0.04 and -0.05 for USA and Canada respectively. Increase of 10% in tourism related infrastructure in Nigeria is associated with rise of 0.16%, 0.20%, 0.46%, 0.52% and 0.53% for tourist for UK, South Africa, USA, France and Canada respectively.

International business and holiday tourism demand for Nigeria

For the aggregate model, the income elasticity of international business tourism arrivals in Nigeria is 0.35 while it is 0.25 for holiday tourism respectively. For price, the parameter of holiday tourism is not significant while the own price elasticity of international business tourism in Nigeria is -0.05. The parameter of facility is 0.08 for business tourism and 0.07 for holiday tourism.

For the individual country results, the income elasticity for business is 0.35, 0.27, 0.41, 0.73 and 0.31 for Canada, South Africa, UK, USA and France respectively. The equivalent figures for holiday tourism are 0.21, 0.20, 0.28, 0.41 and 0.20 respectively. The risk variable is significant for business and holiday tourism from South Africa with the elasticity coefficient of -0.14 and -0.07 respectively. For UK, risk variable is significant only for business tourism with elasticity coefficient of -0.12.

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Impact of competitors’ variables on international demand for Nigeria’s tourism

For the aggregate model, the cross risk elasticity of international tourists‟ arrivals in Nigeria is 1.24. The coefficient of competitors‟ facility indicates that a rise of 10per cent in facility of other competing West Africa destination is associated with a fall of 0.5per cent in international tourism arrival in Nigeria. The cross price elasticity is only significant for business tourism, with the value of 0.05.

For the individual country results, 10per cent increase in risk level in competing West African destination will increase international business tourism arrivals from Canada, South Africa, UK, USA and France respectively in Nigeria by 27.4per cent, 27.1per cent, 21.5per cent, 29.9per cent and 36.0per cent respectively. The cross price elasticity of international business tourism arrivals from South Africa and USA in Nigeria are 0.12 and 0.04 respectively. For competitors‟ facility parameter, 10per cent improvement in the level of tourism related facility and infrastructure in the competing West African countries will lead to a decrease of 0.67per cent, 1.33per cent, 0.50per cent, 0.53per cent and 1.09per cent for tourists from Canada, South Africa, UK, USA and France respectively.