Political Violence and Volatility in International Tourist Arrivals: The Case of Sri Lanka

Abstract

In recent years, a growing body of literature has emerged exploring the link between dramatic fluctuations in tourist arrivals to particular destinations and events such as political violence and financial shocks. Sri Lanka is one such destination that provides a fascinating case study of this link. That is, international tourist arrivals to Sri Lanka have experienced notable fluctuations during the nearly three decades of civil war, particularly between 1983 and 2009. For the first time, an attempt is made in this study to model the conditional mean and conditional variance of the logarithm of monthly tourist arrivals to Sri Lanka. The results reveal a significant seasonal effect in tourist arrivals to Sri Lanka. First, the study demonstrates the existence of a large volatility in monthly tourist arrivals into Sri Lanka from 1978, stemming from the negative publicity in the print and electronic media and the travel warnings issued by Western countries relating to in-country conflict. Furthermore, the results suggest that major war-related incidents are strong enough to reduce the tourist arrival numbers by 5.2% per month compared to a period when peace is restored in the country.