Impacts of foreign trade on international tourism demand for Iran (Cases of India, Pakistan and Turkey)

The significance of tourism’s economic impact in developing countries is to such an extent that De Kadt dubbed it their “passport to development”. Hence, factors influencing the demand for this industry have been always the center of attention of researchers and planners. In this vein, foreign trade is known to have a significant impact on tourism demand, and the New Trade Theories (NTT) accentuate the role it plays in tourism development. In this study, India, Pakistan and Turkey are selected as Iran’s main foreign trade partners and as origins for traveling to Iran. The model is estimated by GMM approach in the Gravity model framework. Empirical results of the paper indicate that international trade has a positive and significant effect on tourism demand in the destination country. Moreover the geographical distance and price ratio variables are proved to have negative and significant impacts on Iran’s foreign tourism demand over the study period.