Assessing the Economic Impacts of Tourism Markets and Activities Diversification: Evidence From a New Dynamic Regression Approach

Abstract

This paper undertakes an exploration of how the diversification of tourism markets and activities exerts its influence on economic growth, particularly in New Zealand. By employing a dynamic autoregressive distributed lag method, this study uncovers the interplay between tourism diversification and economic growth dynamics in New Zealand. Empirical results show that it is only the diversification of European markets that generated positive economic growth. However, the diversification of tourism activities emerges as a potent driver of favorable economic expansion. The evidence suggests that a strategic emphasis on augmenting tourism diversification from European markets holds the potential to magnify the positive economic impact of the tourism sector. Additionally, the proposition of enhancing diversification in tourism activities emerges as a key avenue for bolstering New Zealand’s economic growth prospects. This study bridges a gap in the existing literature and furnishes policymakers with insights on how to harness the potential of tourism diversification.