Please use this identifier to cite or link to this item: http://repository.kln.ac.lk/handle/123456789/17060
Title: Tourism in Sri Lanka and a computable general equilibrium (CGE) analysis of the effects of post-war tourism boom
Authors: Fernando, Sriyantha.
Issue Date: 2015
Publisher: München, Germany
Citation: Fernando, S. (2015). Tourism in Sri Lanka and a computable general equilibrium (CGE) analysis of the effects of post-war tourism boom. (Ph.D Thesis), Griffith Bussines School, Griffith University, Australia.
Abstract: The main objective of this study is two-fold. First, it aims to undertake a systematic and comprehensive analysis of the performance of the Sri Lankan tourism sector using historical data and policy documents and to present a historical narrative on tourism. Second, it aims to analyse the effects of the post-war tourism boom on the Sri Lankan economy within an economy-wide framework by developing a computable general equilibrium (CGE) model, labelled as SLCGE-Tourism. In the process of achieving the above objectives the study addressed two knowledge gaps related to Sri Lankan tourism as identified in the literature. The first knowledge gap is that there is a lack of systematic historical analysis of Sri Lankan tourism both in terms of policy and data. This study contributes significantly in addressing this knowledge gap by undertaking a number of complementary analyses. Firstly, it undertakes a systematic and comprehensive analysis of post-independence tourism promotion strategies in the economic development process. It shows that Sri Lanka had many post- independence advantages, especially given its strategic location in the Indian Ocean and on the major air and sea routes between Europe and the Far East. However, it missed opportunities due to inward-oriented development policies implemented by successive governments until 1977 and the three decade long civil war and other political violence ending in 2009 Secondly, it carries out two systematic econometric studies on tourism demand and volatility within the Sri Lankan context by using well-recognised econometric techniques. In the first econometric study, data on monthly tourism arrivals is used to model volatility of tourist arrivals for the first time in the case of Sri Lanka and as such this represents a contribution to the tourism literature in Sri Lanka. As generally accepted, and in common with many other tourist destinations, the empirical results of this study demonstrate that the Sri Lankan tourism industry is very sensitive to political violence, exchange rate changes, and seasonal variations. The analysis suggests that significant increases in political violence lowered tourist arrivals in Sri Lanka and created a substantial amount of volatility in tourism demand. The second econometric study explores empirically whether the targets set in the recent Tourism Development Strategy (TDS) by the Sri Lankan government are achievable or realistic by using a simple econometric model. The econometric analysis suggests that tourist arrivals to Sri Lanka would increase by 26 per cent per year if a peaceful environment can be maintained in Sri Lanka. This is broadly consistent with the targets set out in the TDS without the benefit of systematic modelling work. The second knowledge gap was that there was a lack of an integrated economy-wide modelling model capable of use for examining the impact of tourism on the Sri Lankan economy. This study has addressed this knowledge gap by developing a tourism-focused SLCGE–Tourism model. Its usefulness has been demonstrated by examining the economy- wide effects of the recent tourism boom and associated policy targets on the Sri Lankan economy in the second part of the thesis. The projected results of the model support the view that tourism can play a major role in the post-war development in Sri Lanka in terms of economic growth and employment generation. However, both the macro and sectoral results demonstrate that the expansion of tourism will not assist the economy without imposing some negative impacts on some other sectors in the economy. It is clear from the results of policy simulations carried out with the model that a tourism boom may lead to ‘Dutch disease’ type effects. The manufacturing export sectors, such as wearing apparel, may suffer as a result of an appreciation of the real exchange rate due to the tourism boom. The results also demonstrate that positive effects of a tourism boom on the economy would be much stronger if supply side constraints facing the tourism sector were able to be removed (or at least reduced significantly). The empirical findings of this study have important policy implications and the modelling of the Sri Lankan tourism sector using the newly developed tourism-focused SLCGE–Tourism model opens up new areas for future research.
URI: 
http://repository.kln.ac.lk/handle/123456789/17060
Appears in Collections:Commerce and Financial Management

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