Measuring The Effect of Revealed Cultural Preferences on Tourism Exports

The aim of this article is to propose a novel method for measuring the effect of cultural preference on bilateral tourism receipts. The method applied is inspired from Disdier et al. (2010). Using the UNESCO classification and data on bilateral trade in cultural product, a proxy for cultural preferences is constructed. The variable is used in a gravity model for tourism trade, which is estimated using a two-step procedure to avoid issues of endogeneity. The dataset used is a panel of 12 OECD countries for the period of 11 years. The variable for cultural preferences eliminates the problems with traditional methods, which by using dummy variables to account for cultural preferences, assume that the latter are time invariant and symmetrical. The cultural variable constructed is found to be significant in explaining bilateral tourism exports with an elasticity of 0.39.