Tourism Market Concentration Index
Our index is a measure of the variety of tourism arrivals across a host country’s tourism partners. The range of the index is from 0 to 1. A country with an overweight of tourism arrivals concentrated in very few countries will have an index value close to 1, whereas a country that hosts tourists equally with all markets will have an index value close to 0. Therefore, the index is a measure of the dependency of tourism arrivals on a few markets, which can provide risks for the sustainability of tourist arrivals and earnings. For example, if such a country faces a political clash with its dependent tourism market, then this tourism partner can increase barriers, put sanctions, or increase restrictions on visa applications to the host country. Indeed, this can even be a more serious issue in today’s political and economic environment in the Middle East and Eastern Europe.
At this stage, we calculate the index only for the specified subset of 131 countries in the Tourism Statistics Database of the World Tourism Organization (UNWTO) over the period 1995–2019. Following the World Bank’s Herfindahl–Hirschman export market concentration index (World Bank, 2013, p. 26), we calculate the Herfindahl–Hirschman market concentration index for the tourist arrivals as follows:
In Equation (1), X is the total number of tourist arrivals from reporter country i, x is the number of tourist arrivals to country i from the destination market j, and n is the number of partner markets that have at least one observable tourist arrivals in the country i.
World Bank. (2013, September). Online trade outcomes indicators: User’s manual (Version 1.0), Washington, DC: World Bank.