The Contribution of International Air Transport to Ethiopia’s Tourism Sector

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Addis Ababa University


This paper examines whether there exists a relationship between tourism and air transport sectors in Ethiopia. It employs Vector Error Correction approach to assess how air transport sector contributes to tourism. It further shows the progress of the two sectors by utilizing a time series data of Ethiopia for the period 1974-2014. Impulse response and variance decomposition tests are also applied to see the interaction of tourism, air transport and economic growth in the country. The findings support the existence of relationship between the two sectors. The empirical tests further show the presence of positive and significant long run and short run relationship between tourism and air transport. Moreover the results of impulse response and variance decomposition indicate the permanent effect of air transport on tourism. The findings also point out the importance of infrastructure, economic growth, transport cost, domestic price and income of the originating country on the performance of the tourism in Ethiopia. There is also evidence that both tourism and air transport contribute to the overall growth of the economy. Thus, since the advancement in air transport leads to development of tourism both in the long run and short run, measures such as upgrading the already existing air fields, expansion of domestic airports, spreading out to new destinations and equipping the airlines with modern technology have to be considered by the authorities.



International Air Transport