EFFECT OF IN-BOUND TOURISM ON ECONOMIC INDICATORS IN RWANDA: A PANEL DATA APPROACH

Abstract

Approximately 333 million people are employed globally and tourism contributes approximately 7% of global exports, making it one of the greatest sectors of the global economy. This study investigates the factors that influence foreign tourist arrivals in Rwanda, taking into account economic indicators like relative prices, trade openness, home country income, and exchange rates. This work estimates the Arellano-Bond dynamic panel data estimation technique with panel data analysis from 2007 to 2019 for eight important source nations to Rwanda using a quantitative procedure. The findings indicate that there would be a 0.93 rise in tourist arrivals for every 1% increase in the income levels of the nations hosting the tourists, as measured by lnGDP. On the other hand, a decrease of roughly 0.29 in tourist arrivals would accompany every 1% increase in relative costs, as shown by lnRP, indicating that higher prices often discourage travel. With a coefficient of 0.0036, the favorable exchange rate variable, EXR, has a positive influence on this. Trade openness (lnTO) had a negligible impact. These findings give useful lessons to policy makers on competitive pricing strategies and improved international relations that would advance the tourism industry in Rwanda.