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Globalisation as a driver of destination competitiveness

DOI:10.1016/j.annals.2013.07.010
Authors:
Stanislav H Ivanov at Varna University of Management
Stanislav H Ivanov
Craig Webster at Ball State University
Craig Webster
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In this research note, the authors analyse the relationship between destination competitiveness and globalisation. Destination competitiveness is measured with the World Economic Forum's Travel and Tourism Competitiveness Index, while globalisation is measured with the KOF Index of Globalisation. The authors apply a cross-sectional analysis with 127 countries and territories to determine if globalisation is linked with destination competitiveness levels. The analysis illustrates that globalisation is highly correlated with destination competitiveness. Tourism policy implications and directions for future research are also discussed.
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GLOBALISATION AS A DRIVER OF DESTINATION COMPETITIVENESS
Stanislav Ivanov
International University College, 3 Bulgaria Str., 9300 Dobrich, Bulgaria, tel: +359 58 655612,
fax: +359 58 605760, e-mail: stanislav.ivanov@vumk.eu
Craig Webster
University of Nicosia, 46 Makedonitissas Avenue, P.O. Box 24005, 1700 Nicosia, Cyprus, tel:
+357 22 351274, fax: +357 22 353682, e-mail: webster.c@unic.ac.cy
Corresponding author: Stanislav Ivanov
Abstract:
In this research note, the authors analyse the relationship between destination competitiveness
and globalisation. Destination competitiveness is measured with the World Economic Forum’s
Travel and Tourism Competitiveness Index, while globalisation is measured with the KOF Index
of Globalisation. The authors apply a cross-sectional analysis with 127 countries and territories to
determine if globalisation is linked with destination competitiveness levels. The analysis
illustrates that globalisation is highly correlated with destination competitiveness. Tourism policy
implications and directions for future research are also discussed.
Key words: destination competitiveness; World Economic Forum; Travel and Tourism
Competitiveness Index; globalisation
2
Stanislav Ivanov works in the Department of Tourism at the International University College (3
Bulgaria str., 9300 Dobrich, Bulgaria, tel: +359 58 655612, fax: +359 58 605760. Email:
<stanislav.ivanov@vumk.eu>). His research interests include economic impacts of tourism,
destination marketing, tourism and politics. Craig Webster is in the University of Nicosia. His
research interests include the political economy of tourism, the sociology of tourism, and public
opinion analysis.
3
GLOBALISATION AS A DRIVER OF DESTINATION COMPETITIVENESS
Destination competitiveness has long been one of the major focal points of tourism research
(Botti et al., 2009; Crouch, 2011; Dwyer et al., 2004; Dwyer & Kim, 2003; Enright & Newton,
2005; Kozak et al., 2010; Ritchie & Crouch, 2005). Research has identified various drivers
(determinants, factors) of destination competitiveness such as tourist resources, tourism
infrastructure, general economic conditions in a country, political stability, and tourism
governance to name just a few. A destination competitiveness driver attracts visitors to a
destination and/or facilitates choices of, travel to and stays in a destination. The process of
globalisation (Bhagwati, 2005; Rodrick, 2011; Stiglitz, 2003), and the resulting levels of
globalisation of a destination could be considered as a driver of destination competitiveness,
because it facilitates travel to and stay in the destination. More globalised destinations should be
more competitive on the tourist market as they would have fewer restrictions to foreign travellers
and investors. In light of the above discussion, this research note empirically investigates whether
the level of globalisation of a tourist destination influences its competitiveness on the global
tourism marketplace.
[Insert Table 1 about here]
Table 1 presents the concepts, variables and data sources used in the analysis. In line with
previous studies (Kayar & Kozak, 2010; Mazanec & Ring, 2011; Webster & Ivanov, 2014)
destination competitiveness is modelled with the World Economic Forum’s (hereafter “WEF”)
Travel and Tourism Competitiveness Index (TTCI) (WEF, 2013). The TTCI index is based upon
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three sub-indices which reflect 14 pillars (in WEF terminology) of travel and tourism
competitiveness summarised in Table 2. The WEF measures the tourism competitiveness of 140
countries. For 2013, the country with the highest value of the overall index is Switzerland (5.66)
while the lowest value is for Haiti (2.59). Despite the criticisms towards it (Wu et al., 2012), the
TTCI is currently the most important source of measures of destination competitiveness on a
global scale.
[Insert Table 2 about here]
[Insert Table 3 about here]
Globalisation is modelled with the KOF Index of Globalisation (2012), developed by Dreher
(2006), and is used in this analysis in line with previous studies (Ivanov & Webster, 2013;
Leibrecht et al., 2011). The KOF index is a composite index consisting of three sub-indices, each
consisting of indicators that measure the economic, social, and political dimensions of
globalisation (see Table 3). The composite index weighs each sub-index differently, emphasising
the economic (weight 0.36) and social (weight 0.37) aspects of globalisation over the political
ones (weight 0.27). The index ranges between one and one hundred with higher values denoting
greater levels of globalisation of the country. The KOF index measures the globalisation level of
187 countries, and for 2012, the highest value is for Belgium (92.76) while the lowest is for
Timor-Leste (23.44).
The cross-sectional analysis models destination competitiveness as a function of globalisation of
countries and a number of control variables. Population size, economy size, tourism GDP, and
5
per capita GDP are in natural logarithm form to avoid skewness of results in favour of countries
with large populations (China, India), economies (USA, Japan, China), tourism GDP (USA,
France, Spain, Italy) or per capita GDP (Luxembourg, Norway, Iceland, Qatar). The values of
these variables are calculated as average annual values from 2000-2010 (or 1999-2009 depending
on data availability) in order to eliminate short-term fluctuations caused by unexpected events
like 9/11, SARS, swine and bird flu outbreaks, the 2004 tsunami in South-East Asia, the world
economic crisis. The Human Development Index for 2012 is used to identify the potential
impacts of the level of human development of the destination on its competitiveness. Dummy
variables denote regions of the world and less developed countries. The final data set includes
127 countries for which data are available for all the variables.
[Insert Table 4 about here]
[Insert Table 5 about here]
Table 4 illustrates the bivariate correlations between the globalisation indices and TTCI. Results
show a very strong and statistically significant relationship (r=0.867) between the composite
globalisation index and TTCI. On the globalisation sub-index level, we see that destination
competitiveness is more highly correlated with social (r=0.862) and the economic (r=0.718)
globalisation than political (r=0.429) globalisation. Table 5 presents the regression results when
all control variables are taken into account. Findings reveal that globalisation has a strong,
positive and statistically significant impact on destination competitiveness. Most notably,
economic globalisation seems more important than social and political globalisation. We also
find that less developed countries are more competitive than other countries in the analysis, while
6
countries in Africa, Asia, Latin America and the Caribbean seem less competitive. Furthermore,
results reveal that destinations with higher Human Development Index are more competitive.
Other variables do not have statistically significant impact on competitiveness. Both models in
Table 5 have very high explanatory power, explaining nearly 87% of variations in the overall
TTCI.
The results are not surprising. High economic (e.g. tariffs, foreign direct investment restrictions),
social (e.g. local population’s intolerance towards foreigners) and political (e.g. visas) barriers
could effectively decrease the attractiveness of a destination to potential visitors and its
competitiveness in relation to other destinations that do not impose such barriers. Therefore, we
can assume that countries with liberal political regimes would have higher destination
competitiveness. On the other hand, countries with liberal regimes tend to avoid strict regulations
of the tourism industry and often do not have national tourism organisations or if they have such,
these organisations have limited responsibilities (Webster et al., 2011). However, WEF’s TTCI
includes as a pillar “prioritisation of travel and tourism” (see Table 2 and WEF, 2013: 8) which
goes beyond the liberal paradigm in tourism destination management. Thus, it is not the political
philosophy of the government per se, but the actual actions it undertakes towards globalisation of
the country that contribute to its tourism industry competitiveness.
Results have important managerial implications for tourism policy makers. Globalisation of a
country can be used as a driver of its competitiveness—a destination can become more
competitive when it is more open to the world in economic, social, and political aspects.
Nevertheless, globalisation should not be embraced unconditionally—as Ivanov & Webster
7
(2013) reveal, the level of globalisation of the country does not necessarily mean that its tourism
industry would increase the economic welfare of the local population. Further research should
delve deeper into the measures of destinations’ competitiveness and what social, political, and
economic phenomena are linked with it. More specifically, the political choices that countries
make in terms of how they integrate themselves into the global village should be investigated to
see how specific political choices are linked with the competitiveness of destinations for global
tourism. Research could also shed light whether destination sustainability influences positively its
competitiveness.
REFERENCES
Bhagwati, J. (2005). In defense of globalization. Oxford: Oxford University Press.
Botti, L., Peypoch, N., Robinot, E., & Solonadrasana, B. (2009). Tourism destination
competitiveness: The French regions case. European Journal of Tourism Research, 2(1),
5-24.
Crouch, G.I. (2011). Destination competitiveness: An analysis of determinant attributes. Journal
of Travel Research, 50(1), 27-45.
Dreher, A. (2006). Does globalization affect growth? Evidence from a new Index of
Globalization. Applied Economics, 38(10), 1091-1110.
Dwyer, L., & Kim, C. (2003). Destination competitiveness: determinants and indicators. Current
Issues of Tourism, 6(5), 369–414.
Dwyer, L., Mellor, R., Livaic, Z., Edwards, D., & Kim, C. (2004). Attributes of destination
competitiveness: a factor analysis. Tourism Analysis, 9(1–2), 91–101.
8
Enright, M., & Newton, J. (2005). Determinants of tourism destination competitiveness in Asia
Pacific: Comprehensiveness and universality. Journal of Travel Research, 43(4), 339-350.
Ivanov, S., & Webster, C. (2013). Tourism’s impact on growth: The role of globalisation. Annals
of Tourism Research, 41, 231-236.
Kayar, C.H., & Kozak, N. (2010). Measuring destination competitiveness: An application of the
Travel and Tourism competitiveness index (2007). Journal of Hospitality Marketing and
Management, 19(3), 203-216.
KOF Index of Globalisation (2012). Retrieved July 20, 2012, from Swiss Federal Institute of
Technology Zurich Web site: http://globalization.kof.ethz.ch/
Kozak, M., Baloglu, S., & Bahar, O. (2010). Measuring destination competitiveness: multiple
destinations versus multiple nationalities. Journal of Hospitality Marketing &
Management, 19(1), 56-71.
Leibrecht, M., Klien, M., & Onaran, Ö. (2011). Globalization, welfare regimes and social
protection expenditures in Western and Eastern European countries. Public Choice,
148(3-4), 569-594.
Mazanec, J.A., & Ring, A. (2011). Tourism destination competitiveness: second thoughts on the
World Economic Forum reports. Tourism Economics, 17(4), 725–751.
Ritchie, J.R.B., & Crouch G.I. (2005). The competitive destination: a sustainable tourism
perspective. Oxford: Oxford University Press.
Rodrik, D. (2011). The globalization paradox: democracy and the future of the world economy.
New York: W.W. Norton & Company.
Stiglitz, J. (2003). Globalization and its discontents. New York: W.W. Norton & Company.
9
Webster, C., & Ivanov, S. (2014). Transforming competitiveness into economic benefits: Does
tourism stimulate economic growth in more competitive destinations? Tourism
Management, 40, 137-140.
Webster, C., Ivanov, S., & Illum, S. (2011). The paradigms of political economy and tourism
policy: NTOs and state policy. In J. Mosedale (Ed.), Political Economy and Tourism (pp.
55-73). New York and Oxford: Routledge.
World Economic Forum (2013). The Travel & Tourism Competitiveness Report 2013. Geneva:
WEF. Retrieved March 24, 2013, from WEF Web site:
http://www3.weforum.org/docs/WEF_TT_Competitiveness_Report_2013.pdf
Wu, W.-W., Lan, L.W., & Lee, Y.-T. (2012). Critiquing the World Economic Forum's concept of
destination competitiveness: A further analysis. Tourism Management Perspectives, 4,
198-206.
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Table 1
Concepts, Variables, and Primary Data Sources
Concept
Variable
Primary data source
Dependent variable
Destination competitiveness
WEF Overall Travel and Tourism
Competitiveness Index (2013)
World Economic Forum
Independent variables
Globalisation
Composite globalisation index
1. Globalisation index
2012 KOF Index of Globalisation
Disaggregate globalisation index
2.1. Economic globalisation
2.2. Social globalisation
2.3. Political globalisation
Population size
Log average population (2000-2010)—both
sexes combined, as of 1st July of the respective
year
United Nations
Economy size
Log average GDP (1999-2009) in US$ in 2011
prices
United Nations
Tourism GDP
Log average Travel and tourism GDP (2000-
2010) in US$ in 2011 prices
World Travel and Tourism Council
Economic wealth of local
population
Log average per capita GDP (1999-2009) in
US$ in 2011 prices
Authors’ calculations
Human Development
Human Development Index (2012)
United Nations
Tourism share in country GDP
Average share of tourism GDP (1999-2009)
Authors’ calculations
Geographic region
Dummy variables for geographic regions
Breakdown of world regions adopted
from United Nations’ classifications
Less developed country
Dummy variable
United Nations
11
Table 2
TTCI Sub-indices and Pillars of Destination Competitiveness
Pillar
1. Policy rules and regulations
2. Environmental sustainability
3. Safety and security
4. Health and hygiene
5. Prioritisation of travel and tourism
6. Air transport infrastructure
7. Ground transport infrastructure
8. Tourism infrastructure
9. ICT infrastructure
10. Price competitiveness in the travel and tourism
industry
11. Human resources
12. Affinity for travel and tourism
13. Natural resources
14. Cultural resources
Source: World Economic Forum (2013)
12
Table 3
KOF Index of Globalisation
Indicators
1. Trade (percent of GDP)
2. FDI (percent of GDP)
3. Portfolio investment (percent of GDP)
4. Income payments to foreign nationals (percent of
GDP)
5. Hidden import barriers
6. Mean tariff rate
7. Taxes on international trade (percent of current
revenue)
8. Capital account restrictions
9. Telephone traffic
10. Transfers (percent of GDP)
11. International tourism
12. Foreign population (percent of total population)
13. International letters (per capita)
14. Internet users (per 1000 people)
15. Televisions (per 1000 people)
16. Trade in newspapers (percent of GDP)
17. Number of McDonald’s restaurants (per capita)
18. Number of Ikeas (per capita)
19. Trade in books (percent of GDP)
20. Embassies in country
21. Membership in international organisations
22. Participation in UN Security Council missions
23. International treaties
Source: KOF Index of Globalisation (2012)
13
Table 4
Bivariate Correlation Results
Destination
competitiveness
Pearson correlation
(Significance)
Globalisation index
0.867***
(0.000)
Economic globalisation
0.718***
(0. 000)
Social globalisation
0.862***
(0.000)
Political globalisation
0.429***
(0.000)
N=127
*** Significant at 1%-level
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Table 5
Regression Model Results
Model variables
Dependent variable: Destination competitiveness
Standardised coefficients
(significance)
Model 1
Composite globalisation
index
Model 2
Disaggregate globalisation
indices
(Constant)
(0.782)
(0.848)
Population size
0.023
(0.944)
0.048
(0.885)
Economic wealth of local population
0.308
(0.312)
0.296
(0.345)
Tourism GDP
0.160
(0.673)
0.158
(0.681)
Tourism share in country GDP
0.146
(0.167)
0.143
(0.181)
Africa
-0.125
(0.109)
-0.120
(0.136)
Asia
-0.077
(0.142)
-0.093
(0.133)
Latin America and the Caribbean
-0.096*
(0.052)
-0.093*
(0.067)
Northern America
0.035
(0.316)
0.032
(0.356)
Oceania
0.024
(0.470)
0.025
(0.467)
Less developed country
0.109**
(0.023)
0.113**
(0.022)
Human Development
0.267**
(0.048)
0.276**
(0.044)
Globalisation index
0.256***
(0.002)
Economic globalisation
0.113*
(0.075)
Social globalisation
0.155
(0.104)
Political globalisation
0.042
(0.423)
Excluded variables
Collinearity Statistics
Tolerance
Europe
0.000
0.000
Economy size
0.000
0.000
Model summary
R
0.939
0.939
R Square
0.881
0.881
Adjusted R Square
0.869
0.867
Standard Error of the Estimate
0.25247
0.25441
Number of countries (N)
127
127
*Significant at 10%-level; ** Significant at 5%-level; *** Significant at 1%-level
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Günümüzde turist eğilimlerinde değişimlerin olduğu gözlenmektedir. Bu bağlamda değişen turizm ve turistlerin yapıları nedeniyle turistler klasik turizm türlerinden ziyade eşsiz ve otantik deneyimler yaşamayı, yeni lezzetleri ve kültürleri deneyimlemeyi amaçlamaktadırlar. Yeni deneyimler arayan ziyaretçiler için önemli bir kaynak olarak görülen gastronomik kimlik kavramı, bir toplumun sadece yemeklerini değil aynı zamanda geçmişten günümüze yaşadığı kültürü de en iyi şekilde yansıtmaktadır. Turistlerin yaşadığı eşsiz deneyimlerin gerek yerel kalkınmaya gerekse destinasyon rekabetine olumlu etkilerinin olacağı düşünülmektedir. Destinasyonun sahip olduğu özgün değerlerin yanında bu araştırmada itibarın aracı rolü ölçülerek incelenmiştir. Bu araştırma Rize’de yaşayan yerel halkın gastronomik kimlik, destinasyon rekabeti ve destinasyon itibarına yönelik bakış açılarını belirlemek amacıyla hazırlanmıştır. Araştırmada nicel araştırma yaklaşımı benimsenmiştir. Araştırmanın örneklemini Rize’de yaşamakta olan yerel halk oluşturmaktadır. Veriler anket tekniği kullanılarak elektronik olarak toplanmıştır. Yapılan analizler neticesinde Rize’nin gastronomik kimliği destinasyon rekabetinde etkili olduğu, destinasyon itibarının ise aracı rol olarak etkili olduğu belirlenmiştir. Yapılan araştırmanın literatüre katkı sağlayacağı ve Rize gastronomik kimliği için yapılacak araştırma ve planlamalara katkı sağlayacağı düşünülmektedir.
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Destination competitiveness since 2010: research themes, approaches, and agenda
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Purpose This study aims to provide a systematic review of the literature on destination competitiveness. It explores research themes and approaches, and outlines an agenda for future research. Design/methodology/approach One hundred and eighty-three journal articles on destination competitiveness published in English since 2010 were collected. Content analysis was performed. Findings The authors found that sustainable development and smart tourism were popular themes related to destination competitiveness. Recent studies still relied heavily on Ritchie and Crouch’s (2000) model or Dwyer and Kim’s (2003) model. The authors also offer constructive insights for future research, proposing that research seek more input from residents, take an advanced integrated approach between supply and demand, adopt more core theories, focus on less researched types of destinations, explore the further contribution of smart tourism and adopt a negative lens to study the antecedents and consequences of destination competitiveness. The adoption of a longitudinal study approach is also suggested. Originality/value This paper contributes to the literature because of the scope of its review and perspective of discussion. Previous review papers have only focused on the factors and indicators of tourism destination competitiveness in different settings. We extend our literature review to research themes and approaches, and make suggestions for future research directions.
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Does Economic Globalization Shape the International Tourism Structure? A Cross-National Panel Data Estimation
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Economic globalization, the primary mechanism of globalization, has driven the flourishing of international tourism. However, little research has empirically revealed how it affects international tourism from a structural perspective. Based on network theory, this study applies network analysis and fixed-effects panel data estimation techniques to examine the impact of economic globalization on the structure of international tourism and the moderating role of uncertainty avoidance as an inertia factor in this relationship. The statistics are derived from panel data for 47 countries from 1995 to 2018. The empirical results indicate that there is a positive relationship between economic globalization and countries’ network prominence in both outbound and inbound tourism, and the effects vary under different degrees of uncertainty avoidance. This study offers insights and practical implications for policymakers, tourism marketers, and transnational tourism corporations to formulate tourism recovery strategies against the de-globalization caused by the COVID-19 pandemic.
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Tourism destination competitiveness: The French regions case
Article
Full-text available
  • Mar 2009
In this paper we assess and compare tourism destinations in terms of their performance. The proposed efficiency assessment procedure is based on Data Envelopment Analysis (DEA) and precisely on the Directional Distance Function. This methodology is here explained as easiest as possible and it is applied to the evaluation of the twenty-two French regions. The motivation for the analysis lies in the fact that these destinations have to (or will have to) face a decrease in their competitiveness. Then, the aim of the paper is to start a reflection on the performance of the 22 French regions; for that, its only objective is to measure the efficiency of these destinations. Indeed, knowing what the best practices are is good news for Destination Management Organizations and tourism institutions in the perspective of a benchmarking procedure. The paper still tries to explain the scores.
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Transforming competitiveness into economic benefits: Does tourism stimulate economic growth in more competitive destinations?
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This research note investigates the impact of a destination's competitiveness upon tourism's contribution to economic growth using a cross-section with 131 countries. Destination competitiveness is measured with the World Economic Forum's Travel and Tourism Competitiveness Index, while tourism's contribution to economic growth is measured with the growth decomposition methodology. Results reveal that destination competitiveness has no statistically significant impact on tourism's contribution to economic growth. Tourism policy implications and directions for future research are also discussed.
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Tourism’s Impact on Growth: The Role of Globalisation
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Globalisation is a political, economic, and social phenomenon and there are many who are in favor of it and many opposed to it. In this piece, the authors analyze the relationship between tourism and globalisation. The authors analyze 167 countries and territories for the years 2000-2010 to determine if globalisation has been linked with increases in per capita tourism’s contribution to economic growth. The analysis illustrates that there is no correlation between globalisation and the average per capita economic growth contribution of tourism for the years 2000-2010.
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The Competitive Destination: A Sustainable Tourism Perspective
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The Evolving Nature of Competition and Sustainability Conceptual and Theorectical Perspectives Part I: The Competitive Destination Part II: The Sustainable Tourism Destination A Model of Destination Competitiveness The Macroenvironment: Global Forces Shaping World Tourism The Competitive (Micro)Environment: The Destination and the Tourism System Core Resources and Attractors: The Essence of Destination Appeal Supporting Factors and Resources: Elements that Enhance Destination Appeal Destination Policy, Planning and Development Destination Management: The Key to Maintaining a Sustainable Competitive Advantage Qualifying and Amplifying Determinants: Parameters that Define Destination Potential The Destination Audit: Putting the Model to Work.
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The Globalization Paradox: Democracy and the Future of the World Economy
Article
  • Jan 2011
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras-the gold standard, the Bretton Woods regime, the "Washington Consensus"-brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets.
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Determinants of Tourism Destination Competitiveness in Asia Pacific: Comprehensiveness and Universality
Article
Recent conceptual work on tourism destination competitiveness has proposed a comprehensive approach that adds industry-level competitiveness attributes to more conventional tourism destination attributes. This study builds on these ideas by generating sets of both attributes, developing a methodology for assessing their relative importance and examining the degree to which their relative importance varies across locations. Survey data were gathered from tourism industry practitioners in three closely competing destinations in Asia Pacific and were subjected to statistical testing. The results provide strong empirical support for the inclusion of both industry-level and destination attributes in studies of tourism competitiveness. The results also question approaches to competitiveness that assume that the relative importance of attributes is common across locations, suggesting, rather, that the importance of competitiveness attributes may vary across locations, depending on product mix and target market segments, especially in complex, multifaceted industries such as tourism.
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