Research On Impact Of Transboundary Tourism On Mongolian Economy

Mongolia is one of the unique destinations in the world to travel.Mongolia has 403 travel companies,320 hotels,317 resorts and tourist camps and employing the graduates from over 56 educational establishments.Number of tourists grew by 17.3%in 2017 to 474,094 tourists but still it just reached the previous level of 2012.Mongolia is trying to attract tourists while worldwide tourism revenue is increasing almost every year.For mining-driven country like Mongolia,tourism sector is a good opportunity to avoid heavy dependence on mining sector.Tourism in Mongolia was extremely limited by the Communist Government but has been expanding following the 1990 Democratic Revolution in Mongolia in the wake of the collapse of the USSR and the Revolutions of 1989.Mongolia is a unique and relatively unexplored travel destination that offers a great combination of scenic natural features,a wide variety of untouched landscapes,nomadic life style and culture.Travel organizations in Mongolia date back to half a century ago,but the private sector-based tourism is barely twenty years old.Mongolia takes an active part in United Nations World Tourism Organization,of which it is a member party.As the economy is expanding,Mongolia is looking for a way to develop other sectors other than mining.One of the economic sectors with the most realistic opportunity to develop rapidly is truly tourism sector.The study is made to study economic impact of tourism in Mongolia,to measure and estimate that influence.Generally,this study covered literature review on impact of tourism on economy,Mongolian tourism industry overview,and econometrics modelling of tourism impact on economy and shows how tourism contribute to other economic sectors in Mongolia.First,the study investigated the relationship between number of tourist and GDP in Mongolia.The econometrics model is built by only 2 variables.The reason why this paper uses only 2 variables in the model is built to assess long run relationship among tourism and GDP.We will use Johansen Cointegration Model to assess relationship between tourism and GDP with Maximum Eigenvalue and Trace tests.A unit root test tests whether a time series variable is non-stationary and possesses a unit root.Once the unit root is confirmed for the time series data,the next step is to find whether there exists some long run equilibrium relationship among the variables that are nonstationary in levels but stationary at the first differences.The result says tourism sector has a positive relationship with GDP but it's not statistically significant.In other words,current tourism sector is not such an impactful sector to GDP but it contributes.Furthermore,the study investigated how tourism sector effects to GDP sectors.The study found a positive relationship between number of tourists and GDP sectors such as wholesale&retail trade,transportation,accommodation&food service and arts&entertainment sectors.The reason why we will choose these sectors is because in previous literatures these sectors are known sectors which tourism affects most.Therefore,we will test if tourism has any impact on these sectors in case of Mongolia.According to test result,Tourism has positive impact on hotel&accommodation and art&entertainment sectors with no lag.With one-year lag,Tourism has positive impact on all these sectors except agriculture and transportation sectors.Tourism has negative impact on only agriculture sector.Also,if number of tourists rise this year,it is likely to increase more next year.Lastly,the study investigated direct,indirect and induced impact of tourism sector on economy by utilizing Input-Output model.Mongolian National Statistical Office publishes Input-Output table once in five years.We will use the last I-O table which is published in 2015.Mongolian I-O table has 20 sectors but tourism sector is not included in that model.Therefore,we will estimate tourism sector multipliers using research of Ulaanbaatar City Tourism Department(UCTD).UCTD conducted survey among local tour operators and calculated tourist expenditures from 2008-2017.According to the result,tourist average expenditure in Ulaanbaatar city was USD 891 and 58.9%of total tourist expenditure has spent on wholesale and retail trade.Also,tourists spend 24.5%,5.6%,2.8%,7.3%of their money on accommodation,art and entertainment,transportation and fishing and hunting sectors respectively.In 2015,tourism sector had total input impact of USD 491.6 million(induced-273.5)on economy.I-O test result shows that investment in tourism sector will lead to investment in other sectors.Therefore,Development in tourism sector can reduce income inequality and diversify economy which is one of the hard challenges for a mining-driving country like Mongolia.The study concludes that current Mongolian tourism sector hasn't become a big sector which can impact a whole economy.However,as tourism sector expands,it can contribute to the economy through several sectors.Mongolian tourism sector can develop into a sector which can reduce high dependence on mining sector.To the further extent,Mongolia lacks sufficient tourism data.Better data means better policy.Therefore,Mongolia should gather every possible data and it's not only useful to policy makers but also important to researchers to make a better research.