International Tourism Demand: The Case of the Mexican Market (1980-2000)

Abstract

The purpose of this paper is to present two models of aggregate demand functions of international travel for the case of the Mexican tourism market: the first one for total international demand and the second one exclusively for the sectoral demand of business tourism, with emphasis on the effects produced by the North American Free Trade Agreement (NAFTA). The aim is to assess the impact of some macroeconomic variables that scholars of the functional relationship of tourism demand such as Yiu-Man (1993), Sheldon (1993), Crouch (1995), Frechtling (1996), Muñoz-Marín and Pérez Amaral (2000), Smeral (2000) and Hoti, León and McAleer (2004), among others, consider of greater weight in the international demand for tourism services.
For the parametric estimation of the functional coefficients, by means of the ordinary least squares (OLS) method, use is made of data provided by secondary sources existing in different governmental agencies, as well as the theoretical foundation offered by economic principles. The international tourism demand function is described by means of an exponential function; in order to evaluate the impact of NAFTA, business tourism is incorporated into a linear, one-equation model. The elasticity of demand, based on various variables, is then evaluated at the point of averages.