The Impact of Government Expenditure on Tourist Arrivals to Tourism

Tourism is a very important industry in the economic development. The importance of this sector is clearly visible to the existence of the World Tourism Organization (UNWTO), which is an agency of the United Nations responsible for promoting tourism. To promote tourism sector the country should allocate a portion of its expenditure in the tourism sector. Malaysia also provides for government expenditure in the tourism sector to make the sector grow in line with other sectors. Government spending on tourism in Malaysia is seen constantly increasing over time. This study was to examine the effects of government spending on tourism. In addition, this study also examines the impact of tourism spending to top 10 countries to Malaysia. To achieve these objectives, the annual data from 1980 - 2010 is used. The study using ARDL (Autoregessive Distributed Lag) method to achieve those objectives. The study found significant long-term relationship between government spending and tourism revenue. Moreover, of the 10 countries surveyed found 5countries regarding the positive and significantly affected by government spending in tourism, including Singapore, China, Japan, United Kingdom and United State.