Increasing Tourist Arrivals: Do Capital Investment and Government Spending Matter?

  • Kafigi Jeje Institute of Accountancy Arusha


The contribution of tourism sector on economic growth has been noticed in many economies around the globe. Countries strive to improve their tourism sectors by employing strategies that seek to attract a sizable amount of tourist arrivals. Literature suggests that both capital investment in travel and tourism, and government spending on travel and tourism service are crucial factors in promoting the competitiveness of the sector. However, little is known as whether the two factors influence the number of arrivals. Therefore, this study sought to establish the contribution of both government spending and capital investment in influencing tourist arrivals. The study employed data from 150 countries focusing on the years 2010 to 2018. Based on the multiple regression analysis, this study confirms that there exist positive linear relationships between number of arrivals and capital investment in travel and tourism for the years 2010 to 2018. Nevertheless, the study finds that government spending does not influence the number of arrivals. Therefore, governments need to study and understand the interconnectedness between government spending and capital investment in order to carefully allocate their resources in advancing the competitiveness of the investment climate of their respective tourism sectors.

Author Biography

Kafigi Jeje, Institute of Accountancy Arusha

Department of Business Management


Ardahaey, F. T. (2011). Economic Impacts of Tourism Industry. International Journal of Business and Management, 6 (8), pp. 206-215.

Bardarova, S., Jakovlev, Z., & Koteski, C. (2013). Investment of Human Capital in Tourism and Hospitality with a Specific Reference of R. Macedonia. Journal of Process Management – New Technologies, International, 1 (4), pp. 74-81.

Bezuidenhout, H., & Grater, S. (2016). The Dimensions of FDI in the Tourism Sector in Africa. The Journal of Applied Business Research, 32 (4), pp. 1115-1136.

Du, D., Lew, A. A., & Ng, P. T. (2016). Tourism and Economic Growth. Journal of Travel Research, 55 (4), pp. 454-464.

FaladeObalade, T. A., & Dubey, S. (2014). Managing Tourism as a Source of Revenue and Foreign Direct Investment Inflow in a Developing Country: The Jordanian Experience. International Journal of Academic Research in Economics and Management Sciences, 3 (3), pp. 16-42.

Işik, C. (2015). Foreign Direct Investment in Tourism: Panel Data Analysis of D7 Countries. Athens Journal of Tourism, 2 (2), pp. 93-104.

Jucan, C. N., & Jucan, M. S. (2013). Travel and Tourism as a Driver of Economic Recovery. Procedia Economics and Finance, 6, pp. 81-88.

Khan, A., Bibi, S., Lorenzo, A., Lyu, J., & Babar, Z. U. (2020). Tourism and Development in Developing Economies: A Policy Implication Perspective. Sustainability, 12 (4), pp. 1-19.

Kweka, J., Morrissey, O., & Blake, A. (2003). The Economic Potential of Tourism in Tanzania. Journal of International Development, 15 (3), pp. 335-351.

Liu, Z. (2003). Sustainable Tourism Development: A Critique. Journal of Sustainable Tourism, 11 (6), pp. 459-475.

Munyanyi, W., & Chiromba, C. (2015). Tax Incentives and Investment Expansion: Evidence from Zimbabwe’s Tourism Industry. AD-minister, 27, pp. 27-51.

Nawaz, M. A., & Hassan, S. (2016). Investment and Tourism: Insights from the Literature. International Journal of Economic Perspectives, 10 (4), pp. 581-590.

Obadić, A., & Pehar, L. (2016). Employment, Capital and Seasonality in Selected Mediterranean Countries. Zagreb International Review of Economics & Business, 19 (Special Conference Issue), pp. 43-58.

Ohlan, R. (2017). The Relationship between Tourism, Financial Development and Economic Growth in India. Future BusinessJournal, 3 (1), pp. 9-22.

Paramati, S. R., Alam, M. S., & Lau, C. K. (2018). The Effect of Tourism Investment on Tourism Development and CO2 Emissions: Empirical Evidence from the EU Nations. Journal of Sustainable Tourism, 26 (9), pp. 1587-1607.

Puah, C.-H., Jong, M.-C., Ayob, N., & Ismail, S. (2018). The Impact of Tourism on the Local Economy in Malaysia. International Journal of Business and Management, 13 (12), pp. 151-157.

Selimi, N., Sadiku, L., & Sadiku, M. (2017). The Impact of Tourism on Economic Growth in the Western Balkan Countries: An Empirical Analysis. International Journal of Business and Economic Sciences Applied Research, 10 (2), pp. 19-25.

Shakouri, B., Yazdi, S. K., Nategian, N., & Shikhrezaei, N. (2017). The Relation between International Tourism and Economic Growth. Journal of Tourism & Hospitality, 6 (4), pp. 1-7.

Suhel, S., & Bashir, A. (2018). The Role of Tourism toward Economic Growth in the Local Economy. Economic Journal of Emerging Markets, 10 (1), pp. 32-39.

Tsai, H., Song, H., & Wong, K. K. (2009). Tourism and Hotel Competitiveness Research. Journal of Travel & Tourism Marketing, 26 (5-6), pp. 522-546.

UNCTAD. (2010). Promoting Foreign Investment in Tourism. New York and Geneva: United Nations Conference on Trade and Development.

Van der Schyff, T., Meyer, D., & Ferreira, L. (2019). Analysis of the Impact of Tourism Sector as a Viable Response to South Africa’s Growth and Development Challenges. Journal of International Studies, 12 (1), pp. 168-183.

Van Truong, N., & Shimizu, T. (2017). The Effect of Transportation on Tourism Promotion: Literature Review on Application of the Computable General Equilibrium (CGE) Model. Transportation Research Procedia, 25, pp. 3096-3115.

Wamboye, E. F., Nyaronga, P. J., & Sergi, B. S. (2020). What are the Determinants of International Tourism in Tanzania? World Development Perspectives, 17,