628 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650

Annals of Tourism Research, Vol. 43, pp. 628–633, 2013

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GLOBALISATION AS A DRIVER OF
DESTINATION COMPETITIVENESS

Stanislav Ivanov
International University College, Bulgaria
Craig Webster
University of Nicosia, Cyprus

Destination competitiveness has long been one of the major focal points of tour-
ism research (Botti, Peypoch, Robinot, & Solonadrasana, 2009; Crouch, 2011;
Dwyer & Kim, 2003; Dwyer, Mellor, Livaic, Edwards, & Kim, 2004; Enright & New-
ton, 2005; Kozak, Baloglu, & Bahar, 2010; Ritchie & Crouch, 2005). Research has
identified various drivers (determinants, factors) of destination competitiveness
such as tourist resources, tourism infrastructure, general economic conditions in
a country, political stability, and tourism governance to name just a few. A destina-
tion competitiveness driver attracts visitors to a destination and/or facilitates choices
of, travel to and stays in a destination. The process of globalisation (Bhagwati,
2005; Rodrick, 2011; Stiglitz, 2003), and the resulting levels of globalisation of a
destination could be considered as a driver of destination competitiveness, because
it facilitates travel to and stay in the destination. More globalised destinations
should be more competitive on the tourist market as they would have fewer restric-
tions to foreign travellers and investors. In light of the above discussion, this re-
search note empirically investigates whether the level of globalisation of a tourist
destination influences its competitiveness on the global tourism marketplace.
Table 1 presents the concepts, variables and data sources used in the analysis. In
line with previous studies (Kayar & Kozak, 2010; Mazanec & Ring, 2011; Webster &
Ivanov, 2014) destination competitiveness is modelled with the World Economic
Forum’s (hereafter ‘‘WEF’’) Travel and Tourism Competitiveness Index (TTCI)
(WEF, 2013). The TTCI index is based upon three sub-indices which reflect 14 pil-
lars (in WEF terminology) of travel and tourism competitiveness summarised in
Table 2. The WEF measures the tourism competitiveness of 140 countries. For
2013, the country with the highest value of the overall index is Switzerland
(5.66) while the lowest value is for Haiti (2.59). Despite the criticisms towards it
(Wu, Lan, & Lee, 2012), the TTCI is currently the most important source of mea-
sures of destination competitiveness on a global scale.
Globalisation is modelled with the KOF Index of Globalisation (2012), devel-
oped by Dreher (2006), and is used in this analysis in line with previous studies
(Ivanov & Webster, 2013; Leibrecht, Klien, & Onaran, 2011). The KOF index is
a composite index consisting of three sub-indices, each consisting of indicators
that measure the economic, social, and political dimensions of globalisation (see
Table 3). The composite index weighs each sub-index differently, emphasising
the economic (weight 0.36) and social (weight 0.37) aspects of globalisation over
the political ones (weight 0.27). The index ranges between one and one hundred
with higher values denoting greater levels of globalisation of the country. The KOF
index measures the globalisation level of 187 countries, and for 2012, the highest
value is for Belgium (92.76) while the lowest is for Timor-Leste (23.44).
 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650 629

Table 1. Concepts, Variables, and Primary Data Sources

Concept Variable Primary data source

Dependent variable
Destination WEF Overall Travel and World Economic
competitiveness Tourism Competitiveness Forum
Index (2013)
Independent variables
Globalisation Composite globalisation index 2012 KOF Index of
1. Globalisation index Globalisation

Disaggregate globalisation index

2.1. Economic
globalisation
2.2. Social globalisation
2.3. Political globalisation
Population size Log average population United Nations
(2000–2010)—both sexes
combined, as of 1st July of
the respective year
Economy size Log average GDP (1999– United Nations
2009) in US$ in 2011
prices
Tourism GDP Log average Travel and World Travel and
tourism GDP (2000–2010) Tourism Council
in US$ in 2011 prices
Economic wealth of Log average per capita GDP Authors’
local population (1999–2009) in US$ in calculations
2011 prices
Human Development Human Development Index United Nations
(2012)
Tourism share in Average share of tourism Authors’
country GDP GDP (1999–2009) calculations
Geographic region Dummy variables for Breakdown of world
geographic regions regions adopted
from United
Nations’
classifications
Less developed country Dummy variable United Nations

The cross-sectional analysis models destination competitiveness as a function of

globalisation of countries and a number of control variables. Population size, econ-
omy size, tourism GDP, and per capita GDP are in natural logarithm form to avoid
skewness of results in favour of countries with large populations (China, India),
economies (USA, Japan, China), tourism GDP (USA, France, Spain, Italy) or per
capita GDP (Luxembourg, Norway, Iceland, Qatar). The values of these variables
are calculated as average annual values from 2000–2010 (or 1999–2009 depending
on data availability) in order to eliminate short-term fluctuations caused by unex-
pected events like 9/11, SARS, swine and bird flu outbreaks, the 2004 tsunami in
South-East Asia, the world economic crisis. The Human Development Index for
2012 is used to identify the potential impacts of the level of human development
of the destination on its competitiveness. Dummy variables denote regions of the
630 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650

Table 2. TTCI Sub-indices and Pillars of Destination Competitiveness

Sub-index Pillar

Travel and tourism 1. Policy rules and regulations

regulatory framework sub- 2. Environmental sustainability
index 3. Safety and security
4. Health and hygiene
5. Prioritisation of travel and tourism
Travel and tourism business 6. Air transport infrastructure
environment and 7. Ground transport infrastructure
infrastructure sub-index 8. Tourism infrastructure
9. ICT infrastructure
10. Price competitiveness in the travel and tourism industry
Travel and tourism human, 11. Human resources
cultural, and natural 12. Affinity for travel and tourism
resource sub-index 13. Natural resources
14. Cultural resources

Source: World Economic Forum (2013).

Table 3. KOF Index of Globalisation

Sub-index Indicators

Economic globalisation 1. Trade (percent of GDP)

2. FDI (percent of GDP)
3. Portfolio investment (percent of GDP)
4. Income payments to foreign nationals (percent of GDP)
5. Hidden import barriers
6. Mean tariff rate
7. Taxes on international trade (percent of current revenue)
8. Capital account restrictions
Social globalisation 9. Telephone traffic
10. Transfers (percent of GDP)
11. International tourism
12. Foreign population (percent of total population)
13. International letters (per capita)
14. Internet users (per 1000 people)
15. Televisions (per 1000 people)
16. Trade in newspapers (percent of GDP)
17. Number of McDonald’s restaurants (per capita)
18. Number of Ikeas (per capita)
19. Trade in books (percent of GDP)
Political globalisation 20. Embassies in country
21. Membership in international organisations
22. Participation in UN Security Council missions
23. International treaties

Source: KOF Index of Globalisation (2012).

 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650 631

world and less developed countries. The final data set includes 127 countries for
which data are available for all the variables.
Table 4 illustrates the bivariate correlations between the globalisation indices
and TTCI. Results show a very strong and statistically significant relationship
(r = 0.867) between the composite globalisation index and TTCI. On the globali-
sation sub-index level, we see that destination competitiveness is more highly cor-
related with social (r = 0.862) and the economic (r = 0.718) globalisation than
political (r = 0.429) globalisation. Table 5 presents the regression results when
all control variables are taken into account. Findings reveal that globalisation has
a strong, positive and statistically significant impact on destination competitiveness. Most
notably, economic globalisation seems more important than social and political
globalisation. We also find that less developed countries are more competitive than
other countries in the analysis, while countries in Africa, Asia, Latin America and
the Caribbean seem less competitive. Furthermore, results reveal that destinations
with higher Human Development Index are more competitive. Other variables do
not have statistically significant impact on competitiveness. Both models in Table 5
have very high explanatory power, explaining nearly 87% of variations in the over-
all TTCI.
The results are not surprising. High economic (e.g. tariffs, foreign direct invest-
ment restrictions), social (e.g. local population’s intolerance towards foreigners)
and political (e.g. visas) barriers could effectively decrease the attractiveness of a
destination to potential visitors and its competitiveness in relation to other destina-
tions that do not impose such barriers. Therefore, we can assume that countries
with liberal political regimes would have higher destination competitiveness. On
the other hand, countries with liberal regimes tend to avoid strict regulations of
the tourism industry and often do not have national tourism organisations or if
they have such, these organisations have limited responsibilities (Webster, Ivanov,
& Illum, 2011). However, WEF’s TTCI includes as a pillar ‘‘prioritisation of travel
and tourism’’ (see Table 2 and WEF, 2013, p. 8) which goes beyond the liberal par-
adigm in tourism destination management. Thus, it is not the political philosophy
of the government per se, but the actual actions it undertakes towards globalisation
of the country that contribute to its tourism industry competitiveness.
Results have important managerial implications for tourism policy makers. Glob-
alisation of a country can be used as a driver of its competitiveness—a destination
can become more competitive when it is more open to the world in economic, so-
cial, and political aspects. Nevertheless, globalisation should not be embraced

Table 4. Bivariate Correlation Results

Destination competitiveness
Pearson correlation (Significance)

Globalisation index 0.867***

(0.000)
Economic globalisation 0.718***
(0. 000)
Social globalisation 0.862***
(0.000)
Political globalisation 0.429***
(0.000)

N = 127.
***
Significant at 1%-level.
632 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650

Table 5. Regression Model Results

Standardised Standardised
coefficients coefficients
(significance) (significance)
Model variables Model 1 Composite Model 2 Disaggregate
globalisation index globalisation indices

Dependent variable:
Destination competitiveness (0.782) (0.848)
(Constant)
Population size 0.023 (0.944) 0.048 (0.885)
Economic wealth of local 0.308 (0.312) 0.296 (0.345)
population
Tourism GDP 0.160 (0.673) 0.158 (0.681)
Tourism share in country 0.146 (0.167) 0.143 (0.181)
GDP
Africa 0.125 (0.109) 0.120 (0.136)
Asia 0.077 (0.142) 0.093 (0.133)
Latin America and the 0.096* (0.052) 0.093* (0.067)
Caribbean
Northern America 0.035 (0.316) 0.032 (0.356)
Oceania 0.024 (0.470) 0.025 (0.467)
Less developed country 0.109** (0.023) 0.113** (0.022)
Human Development 0.267** (0.048) 0.276** (0.044)
Globalisation index 0.256*** (0.002)
Economic globalisation 0.113* (0.075)
Social globalisation 0.155 (0.104)
Political globalisation 0.042 (0.423)
Excluded variables Collinearity Statistics Tolerance
Europe 0.000 0.000
Economy size 0.000 0.000
Model summary
R 0.939 0.939
R Square 0.881 0.881
Adjusted R Square 0.869 0.867
Standard Error of the 0.25247 0.25441
Estimate
Number of countries (N) 127 127

*Significant at 10%-level; **Significant at 5%-level; ***Significant at 1%-level.

unconditionally—as Ivanov and Webster (2013) reveal, the level of globalisation of

the country does not necessarily mean that its tourism industry would increase the
economic welfare of the local population. Further research should delve deeper
into the measures of destinations’ competitiveness and what social, political, and
economic phenomena are linked with it. More specifically, the political choices that
countries make in terms of how they integrate themselves into the global village
should be investigated to see how specific political choices are linked with the com-
petitiveness of destinations for global tourism. Research could also shed light
whether destination sustainability influences positively its competitiveness.
 Research notes and reports / Annals of Tourism Research 43 (2013) 624–650 633

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Received 28 March 2013; revised 19 July 2013; accepted for publication 31 July 2013

doi:http://dx.doi.org/10.1016/j.annals.2013.07.010