Relationships between international tourism and modes of foreign market access

This paper studies how enhanced tourism affects trade and FDI. Our analysis is distinct because interactions among tourism, trade, and FDI are examined comprehensively by relating the research on tourism-FDI relationships with the different trade-FDI relationships. The analysis uses bilateral data (i.e., inbound tourism, imports, and inward FDI) between Japan and 29 countries/areas during 1996-2011. Our analysis shows that the relative importance of inward FDI on imports increases with a rising number of inbound foreign tourists. The results suggest the effectiveness of policy instruments related to trade and FDI promotion, and that stimulating foreign tourism should be evaluated comprehensively, but not independently.