The Nature of the Relationship Between International Tourism and International Trade: the Case of German Imports of Spanish Wine

Abstract

This article deals with the relationship between international trade and tourism. We focus on the effect that German tourism to Spain has on German imports of Spanish wine. Due to the different stochastic properties of the series under analysis, which display different orders of integration, a methodology is used based on long memory regression models, where tourism is supposed to be exogenous. The period covered is January 1998 to November 2004. The results show that tourism has an effect on wine imports that lasts between two and nine months. Disaggregating the imports across the different types of wine it is observed that only for red wines from Navarra, Penedús and Valdepeñas, and to a certain extent for sparkling wine, tourism produces an effect on future import demand. From a policy-making perspective our results imply that the impact of tourism on the host economy is not only direct and short-term but also oblique and delayed, thus reinforcing the case for tourism as a means for economic development.