Immigration and Tourism Demand in Australia: A Panel Data Analysis

Compared to other OECD countries Australia depends heavily on immigration as a source of population growth. This can have implications for its tourism industry. This paper investigates whether immigration leads to an increase in inbound tourism to Australia. Tourism arrivals were regressed against, GDP per capita, real exchange rate, population of the origin country, and the number of Australian resident born overseas, which was used as a proxy for immigration. A panel of dataset from 1992 to 2006 for nine of the main markets of Australia, namely New Zealand, UK, USA, Japan, China, Hong Kong, Singapore, Malaysia and South Korea was used. A log linear model was specified and estimated. The results strongly support the hypothesis that immigration is a major determinant of total inbound arrivals to Australia.