ABSTRACT
The tourism industry is a significant contributor to the world economy and needs to be carefully evaluated for impact by influencing factors such as external shocks. Several practical implications are associated with the testing of the unit root hypothesis in the context of foreign tourist arrivals in India. For instance, if the unit root process is followed, it implies that shocks to foreign tourist arrivals are permanent in nature rather than temporary. This study employed a battery of time series unit root tests in an attempt to examine whether foreign tourist arrivals in India from 17 major source countries between 1981 and 2012 were permanently or temporarily affected by shocks. The empirical results of this study revealed that shocks to foreign tourist arrivals in India from eight source countries have only a temporary effect and shocks form rest of nine countries have permanent impact. It may therefore be concluded that the government should focus on long-term solutions for those eight source countries where the null hypothesis of unit root is rejected in order to promote international tourist arrivals rather than implementing temporary measures.
