economies

Article
Impact of Investment in Tourism Infrastructure Development
on Attracting International Visitors: A Nonlinear Panel ARDL
Approach Using Vietnam’s Data
Quang Hai Nguyen 1,2

1 Faculty of Business Administration, University of Econmics and Law, Ho Chi Minh City 71309, Vietnam;
nhquang@[Link]
2 Vietnam National University, Ho Chi Minh City 71309, Vietnam

Abstract: Investment in tourism infrastructure development to make destinations and services

increasingly attractive is considered a key measure in developing a country’s tourist destinations. This
paper investigates the impact of investment in tourism infrastructure components on international
visitor attraction using data from Vietnam for the period 1995–2019. The results of analyzing panel
data by the nonlinear Autoregressive Distributed Lag (ARDL) approach show that, in the long-run,
investing in the three components of tourism infrastructure, namely transport and communications
infrastructure, the hotel and restaurant industry, and recreation facilities, has a strong and positive
impact on international visitor attraction. In addition, different short-run impacts of the three tourism
infrastructure components on the whole market and each major international visitor market are
also found.






Keywords: tourism infrastructure; attracting international visitors; transport and communications
Citation: Nguyen, Quang Hai. 2021.
Impact of Investment in Tourism
infrastructure; hotel and restaurant industry; recreation facilities
Infrastructure Development on
Attracting International Visitors:
A Nonlinear Panel ARDL Approach
Using Vietnam’s Data. Economies 9: 1. Introduction
131. [Link] Tourism plays a vital role in the economic growth of many countries, contributing to
economies9030131 the development of related services and infrastructure. Thus, the development of tourism
affects the progress and prosperity of the national economy (Sinclair 1998). International
Academic Editor: Ralf Fendel
tourists bring foreign currencies to destination countries, increase residents’ incomes,
create jobs, improve living standards, and contribute to expanding and strengthening
Received: 18 August 2021
international economic relations. Tourism development has become an important goal for
Accepted: 9 September 2021
most governments, especially in developing countries. Therefore, studying and proposing
Published: 14 September 2021
policies to develop tourism has become an issue of interest to both governments and
researchers in recent years.
Publisher’s Note: MDPI stays neutral
According to Boers and Cottrell (2007), the demands of tourists in the 21st century
with regard to jurisdictional claims in
are very specialized and varied, so tourists are not simply satisfied with conventional
published maps and institutional affil-
iations.
travel experiences. To meet the unique and diverse demands of tourists, Dujmovic and
Vitasovic (2014) argue that it is important to develop new tourism products and destina-
tions, providing tourists with more sources of inspirational experience. Matias et al. (2007)
point out that factors driving tourism’s growth and development have been identified and
improved, including improved income and wealth, improved traffic, changes in lifestyles
Copyright: © 2021 by the author.
and consumption values, entertainment space, international globalization, immigration,
Licensee MDPI, Basel, Switzerland.
special events, education, information and communications technology, marketing, pro-
This article is an open access article
motion of tourist destinations, infrastructure in general, and tourism infrastructure in
distributed under the terms and
conditions of the Creative Commons
particular. Therefore, it can be said that improving tourism infrastructure to increase the
Attribution (CC BY) license (https://
attractiveness of the destination is an essential factor in attracting tourists. The studies
[Link]/licenses/by/ of Tribe (2004), Naudé and Saayman (2005), and Seetanah et al. (2011) point out that a
4.0/). country’s infrastructure determines its potential attractiveness as a tourist destination.

Economies 2021, 9, 131. [Link] [Link]

Economies 2021, 9, 131 2 of 19

Furthermore, recent studies have shown that tourism infrastructure has a positive impact
both directly and indirectly on the quality of life of residents through sustainable tourism
development (Mamirkulova et al. 2020). Therefore, there have been studies related to
tourism infrastructure, although this issue is not always entirely the focus of research, such
as those considering the role of infrastructure in tourism development (Prideaux 2000; Jo-
vanović and Ilić 2016), infrastructure impact on tourism development (Seetanah et al. 2011;
Yu 2016), the relationship between infrastructure and tourism (Suleiman and Albiman
2014; Mandić et al. 2018), the impact of transport infrastructure on tourism development
(Khadaroo and Seetanah 2007a, 2007b, 2008; Seetanah and Khadaroo 2009; Ouariti and
Jebrane 2020), relationship between tourism infrastructure and international visitor flows
(Lim et al. 2019), and the relationship between foreign direct investment and tourism
development (Selvanathan et al. 2012; Khoshnevis Yazidi et al. 2015; Samimi et al. 2017).
These studies have shown the impact of infrastructure, or some of its components, on
tourism development in various contexts. However, to the best of our knowledge, studies
considering the full impact of tourism infrastructure components such as transport infras-
tructure, social infrastructure, and environmental infrastructure on attraction to tourists are
rare. This is the driving force for this study, examining the role of investment in tourism
infrastructure development and in attracting international tourists, using empirical data
from Vietnam.
Vietnam is a developing country located in Southeast Asia with many historical relics
and famous landmarks, notably including eight UNESCO heritage sites. The tourism
industry plays a vital role in the development of the economy. Therefore, it is seen as
a key economic sector. According to the Vietnam National Administration of Tourism,
Vietnam National Administration of Tourism (2020), in 2019 the tourism industry directly
contributed to 9.2% of Vietnam’s GDP, including the vital role of international tourists.
However, despite having diversified and abundant tourism resources, if investment in
tourism infrastructure development is limited, Vietnam will become an unattractive tourist
destination and will be unable to compete with regional destinations such as Thailand,
Malaysia, or Singapore.
This study aims to determine the impact of investment in tourism infrastructure devel-
opment on attracting international tourists. The important contribution of this paper will be
a detailed description of the different roles of investment in transport and communication
infrastructure development, the hotel and restaurant industry, and recreation facilities in
attracting international tourists, with an updated sample to 2019. Research results are
expected to contribute both theoretically and practically, providing necessary implications
to attract future tourism development investment.
After the introduction section, the structure of the study includes four further sections:
Section 2 presents a literature review; Section 3 presents the methodology and data; Sec-
tion 4 presents the research results and discussion; and finally the article ends with the
conclusion in Section 5.

2. Literature Review
Tourism is viewed as one of the fastest growing fields over recent decades, especially
in emerging and developing economies. According to Thapa (2012), although the tourism
industry has obviously grown, it is important to maintain and develop it with a sustainable
strategy for further expansion. Investment in infrastructure development, emphasizing
tourism infrastructure, is considered one of the critical factors to help achieve this goal.
Scholars and policymakers agree that infrastructure development plays a key role in main-
taining visitor arrivals and overall economic growth (Suleiman and Albiman 2014; Yu 2016).
“The maintenance of local tourism infrastructure is becoming an increasingly important
prerequisite for the country’s competitiveness” (Petrova et al. 2018, p. 259). Moreover,
widespread and efficient infrastructure is an important factor in ensuring the efficient func-
tioning of the economy (Bookman and Bookman 2007). Conversely, weak infrastructure can
Economies 2021, 9, 131 3 of 19

disrupt a country’s economic development and international competitiveness (Tribe 2004;

Hope 2010).
Tourism infrastructure is a type of infrastructure consisting of facilities and services
performed within a particular locality to meet the needs of local residents and specific
purposes (Goeldner and Ritchie 2009). “It is considered as the physical element that is
designed and erected to cater to visitors” (Jovanović and Ilić 2016, p. 289). Tourism
infrastructure has the potential to increase competition and promote tourism by providing
travel facilities for tourists (Suleiman and Albiman 2014). Further, Lim et al. (2019, p. 187)
pointed out that “tourism infrastructure increases tourism demand trends”. The scope of
tourism infrastructure is wide and involves all the factors that can facilitate and promote
a destination’s tourism development (Swarbrooke and Horner 2001). In a broad sense,
tourism infrastructure encompasses all of the means that tourists use when they leave
home, arrive at their destination, and return home (Lohmann and Netto 2017).
Tourism infrastructure has long been considered a part of tourism and plays a key
role in attracting tourists. Seetanah et al. (2011, p. 92) emphasize “the role of service infras-
tructure in creating product experience and shaping the overall image of a destination for
tourists”. Thus, tourism infrastructure is the basis of tourism development. Investment in
tourism infrastructure is important in increasing tourist arrivals, and contributes to visitor
satisfaction and motivation. As a component of regional tourism, tourism infrastructure is
of particular importance for long run tourism growth and the general progress of tourist
destinations by providing the required services to tourists. The apparent relationship be-
tween tourism development and infrastructure has been confirmed in theory and practice
by many authors.
The literature provides different views on the number and type of components repre-
senting tourism infrastructure, which can be classified in many various ways.
Pearce and Wu (2015) divide tourism infrastructure into two types, namely hard and
soft, which Hope (2010, p. 91) called “social and economic infrastructure”. According
to Enimola (2010, p. 121), “the social infrastructure sub-sector covers some social services
like the provision of education, information, town and country planning, health services
and other social welfare services in the society”; while “the economic infrastructural sec-
tor embraces a group of hard-core economic activities which relate to the production
of energy and power, transportation services, water and communication services and
others” (Ayodele and Falokun 2003, p. 74). From the model of Pearce and Wu (2015),
Bagheri et al. (2018, p. 89) have shown that “to systematize the tourism sector within the
soft infrastructure, an amalgamation of diverse factors is shaped, including hospitality,
interpretation, and person-to-person encounters that tourists experience”. According to
Bagheri et al. (2018, p. 89), “Thapa (2012) has also added professional human resources to
the sub-set of soft infrastructures, emphasizing the human factor as the most important
infrastructure element in developing countries”.
Approaching the components of tourism infrastructure, Raina (2005) divides it into
four categories, namely: “1. Physical; 2. Cultural; 3. Service; 4. Governance”. Ouariti
and Jebrane (2020, p. 5) indicated that physical infrastructure includes “hotels, motels,
restaurants, transportation, communications, water, electricity”; cultural infrastructure in-
cludes “culture, heritage, fairs and festivals, local art and music, dress and dance, language
and food”; service infrastructure includes “banking facilities, travel agencies, insurance
agencies, tourist guides”; governance infrastructure includes “law and order machinery,
customs and immigration”.
From the perspective of tourism infrastructure types, Ouariti and Jebrane (2020, p. 5)
point out that “the Tourism and Transport Forum (2012) affirms that tourism infrastructure
is the supply chain of transport infrastructure, social and environmental infrastructure
collaborating at a regional level to create an attractive tourism destination”. Among
the three components of tourism infrastructure proposed by the Tourism and Transport
Forum (2012), social infrastructure is financed mainly by the private sector, while the state
mainly controls the environmental and transport infrastructure. The state is responsible
Economies 2021, 9, 131 4 of 19

for investing directly in the construction and development of this sector. Today, many
countries that want to achieve high business results by attracting more international
tourists often focus on increasing investment in the construction and development of
tourism infrastructure.

2.1. The Role of Transport Infrastructure and Communications Infrastructure

Although scholars approach elements of tourism infrastructure from different per-
spectives, it is undeniable that transport infrastructure is an important representation of
tourism infrastructure and directly impacts the tourism infrastructure that attracts visitors.
Kaul (1985, p. 496) stated that “transport plays an important role in the successful creation
and development of new attractions as well as the healthy growth of existing ones. Provi-
sion of suitable transport has transformed dead centers of tourist interest into active and
prosperous places attracting multitudes of people”. Indeed, the transport system performs
the task of connecting areas with each other, as well as with tourist attractions, and becomes
a factor in the competitiveness of the destination. International visitors often go to desti-
nations where transportation systems are available and well developed. Prideaux (2000,
p. 53) argues that “if the ability of tourists to travel to preferred destinations is inhibited by
inefficiencies in the transport system there is some likelihood that they will seek alternative
destinations ”. Hence, investment in transport infrastructure development has been an
issue of concern for governments for many years.
Along with transport infrastructure, communications infrastructure also plays a vital
role in attracting tourists. Communications play an essential role in the development
and sustainability of tourism. This helps travelers obtain destination information, make
informed decisions about where to go, and helps countries and travel agencies promote
and recommend their destinations. Pearce and Wu (2015) indicate that transportation,
tourism facilities, and communications are the main components of hard infrastructure.
Raina (2005) thinks that traffic and communications are elements in the physical compo-
nents of tourism infrastructure, along with hotels, motels, and restaurants. Many recent
empirical studies have demonstrated the role of transport infrastructure and communi-
cations in attracting tourists, resulting in transport infrastructure and communications
infrastructure proving to be important factors affecting the number of tourists visiting
(Khadaroo and Seetanah 2007b); transport infrastructure is a significant determinant of
tourism inflows into a destination (Khadaroo and Seetanah 2008), transport capital hav-
ing contributed positively to the number of tourist arrivals in both the short-run and the
long-run (Seetanah and Khadaroo 2009), the construction of transportation infrastructure
promoting the tourism industry (Yu 2016); thus, infrastructure and transportation are im-
portant components of the tourism supply chain (Ghaderi et al. 2018); developing transport
infrastructures such as highways, airports, and railway stations, has a positive impact on
overnight stays in all types of accommodation (Ouariti and Jebrane 2020). Furthermore,
Tang (2020) argues that improving transport infrastructure is an important component of
trade facilitation and “trade facilitation has improved the efficiency of the inbound tourism
market, especially the indicator of infrastructure” Tang (2020, p. 51).

2.2. The Role of the Hotel and Restaurant Industry

The hotel industry provides hotel services and organizes short-term accommodation
rental services at hotels, campsites, motels, student motels, and guest houses, etc., including
restaurant services. In general, the hotel industry provides accommodation and food
services for tourists. The hotel and restaurant industry is considered a major component of
hospitality and an important components of tourist infrastructure. Hospitality, especially
in its commercial incarnation as the “hotel”, has emerged as the hub, or the most vital
segment, of infrastructure facilities for the travel and tourism industry anywhere around
the globe. Raina (2005) considers that, along with transportation, hotels, motels, and
restaurants are the physical elements of tourism infrastructure. Meanwhile, the Tourism
and Transport Forum (2012) points out that hotels are a significant component of tourism’s
Economies 2021, 9, 131 5 of 19

social infrastructure and Pearce and Wu (2015) consider them part of the hard infrastructure
of tourism.
Like transportation infrastructure, the hotel industry’s role (including the restaurant
industry) in attracting tourists and developing the tourism industry is evidenced by many
recent empirical studies. It is also considered an important component in the tourism
supply chain (Ghaderi et al. 2018) and many studies have used rooms as a proxy for
tourism infrastructure (Khadaroo and Seetanah 2007b, 2008; Seetanah and Khadaroo 2009;
Seetanah et al. 2011; Lim et al. 2019).

2.3. The Role of Recreation Facilities

It can be seen that recreational facilities provide attractions, sightseeing, places, and
entertainment for visitors during their trip, so is an indispensable component in the tourism
infrastructure. Mandić et al. (2018, p. 42) emphasized that “Recreational facilities are an
integral part of physical infrastructure which is an indispensable pillar of overall economic
and tourism development”. Mandić et al. (2018, p. 44) also indicate that “the development
of tourism infrastructure and recreational facilities is associated with tourism development
(UNWTO 2007; Sharpley 2009)”. Adapting the tourism infrastructure model of Jafari and
Xiao (2016), Mandić et al. (2018, p. 43) point out that “the physical infrastructure of direct
relevance to tourism includes recreational facilities that, along with hotels and other forms
of accommodation, spas, and restaurants, form the central tourism infrastructure”. In
addition, Raina (2005, p. 192) states that “culture and art are also considered elements of
the culture which is a component of tourism infrastructure”. Therefore, it can be seen that
recreational facilities together with transport and communication infrastructure and the
restaurant and hotel industries play a part in tourism infrastructure. Each part will promote
tourism development by creating attractiveness and enhancing the competitiveness of
a destination.

2.4. The Influence of Uncertain Factors

According to Vanegas Sr and Croes (2000, p. 951), many qualitative factors influence
tourism consumption decisions, such as “special events, political instability, social conflicts,
air travel problems, travel restrictions, economic recession and other factors”. Typically,
dummy variables are introduced to explain the impact of special events that may temporar-
ily affect tourism demand. According to Lin et al. (2015, p. 39), “Greene (2008, p. 106)
proposed a dummy variable is a variable that takes the value of one for some observations
to indicate the presence of an effect or membership in a group and zero for the remaining
observations”. Song and Li (2008, p. 217), after reviewing articles on tourism demand
modeling and concluded that “researchers should develop some forecasting methods that
can accommodate unexpected events in predicting the potential impacts of these one-off
events through scenario analysis”. Therefore, it can be seen that, in addition to the quan-
titative variables of investment in tourism infrastructure development, it is necessary to
use dummy variables to represent uncertain factors to consider their effects on attracting
international visitors.

3. Methodology and Data

3.1. Specification Research Model
From the literature review, this study hypothesizes that investment in tourism in-
frastructure such as transport and communication infrastructure, hotel and restaurant
industry, and recreation facilities, will positively impact on attracting international visitors
to Vietnam, while dummy variables indicate the temporary influence of special events.
This relationship is shown by Equation (1) below.

VAi,t = f ( TCt , HRt , EFt , Dumi,t ) + Ui,t (1)

where VAi,t is the visitor arrivals from source country i in year t; TCt is the capital invested
in transport and communications infrastructure in year t; HRt is the capital invested in the
Economies 2021, 9, 131 6 of 19

hotel and restaurant industry in year t; RFt is the capital invested in recreation facilities
in year t; Dumi,t are the dummy variables representing qualitative factors from source
country i at time t; Ui,t is the disturbance term that captures all the other factors that may
influence the number of visitor arrivals from source country i at time t.
The international visitor arrivals can be divided into several categories, i.e., “sightsee-
ing tourists, business tourists and tourists of other types” (Tang 2020, p. 38) and there can
be heterogeneity between them. However, because there are not enough specific data for
these objects, heterogeneity between them is not considered.
This study uses regression analysis with a log-log model to estimate the impact of
tourism infrastructure development investment on attracting international tourists to
Vietnam. In fact, the log-log model is often used to estimate the parameters in order
to evaluate the impact level of the independent variable on the dependent variable, be-
cause then the effect can be obtained directly from the coefficients (Witt and Witt 1995;
Song et al. 2009). Furthermore, the natural logarithmic transformation also reduces data
instability (Enders 2004; Studenmund 2006).
There are many techniques to estimate the coefficients of the factors affecting the
number of visitors in order to fit the data. Initially, the ordinary least squares (OLS) tech-
nique was used commonly for both time series or panel data (such as in the study of
Vanegas Sr and Croes 2000; Kulendran and Witt 2001; Lim 2004; Croes and Vanegas Sr 2005;
Muñoz 2007). However, OLS regression requires the series to be stationary, otherwise it
will lead to spurious regression (Granger and Newbold 1974). One of the technique
considered to solve the non-stationary series problem is the cointegration test. The
cointegration technique describes “the existence of an equilibrium, or stationary, rela-
tionship among two or more time-series, each of which is individually non-stationary”
(Banerjee et al. 1994, p. 136). Furthermore, “cointegration techniques permit the estimation
and testing of the long-run equilibrium relationships” (Lim and McAleer 2001, p. 1618;
Dritsakis 2004, p. 118). Two common estimators for the technique are fully modified ordi-
nary least squares (FMOLS) and dynamic ordinary least squares (DOLS). These estimators
need to satisfy one fundamental assumption: the variables included in the models are
all non-stationary at level, but stationary at first difference and cointegration of order 1.
This technique has been applied in several studies which meet the qualifications (e.g.,
Dogru et al. 2017). However, these conditions are not always met. Moreover, according to
Narayan and Narayan (2005, p. 429), “methods of cointegration are not reliable for small
sample sizes”. To overcome these limitations, Pesaran and Shin (1999) proposed an ARDL
modeling approach. This method is superior regardless of whether the variables exhibit
I(0), I(1), or a mixture of both. Song et al. (2003, p. 365) state that “one of the advantages of
the general ARDL is that a modern econometric technique, known as error correction, can
be readily incorporated into the modeling process”. Given these advantages, the ARDL
estimation technique has been widely used in recent studies (Song et al. 2003; Lee 2011;
Otero-Gómez et al. 2015; Lin et al. 2015; Shafiullah et al. 2018; Kumar et al. 2020).
Based on the above analysis, the nonlinear panel ARDL approach is applied in this
study. “Nonlinear ARDL model in panel form which is also a nonlinear representation of
the dynamic heterogenous panel data model that is suitable for large T panels” (Salisu and
Isah 2017, p. 261). The panel ARDL method also helps to estimate the long-run and short-run
relationships for the general sample, as well as the short-run cross-sectional coefficients for
each subject, even when the variables are non-stationary and/or show no cointegration. The
nonlinear panel ARDL model used in this study is presented in the form of Equation (2) below:
The panel ARDL method also helps in estimation.
q1 q2 q3
∆lnVAi,t = µi + ∑ ϑ1ij ∆lnVAi,t− j + ∑ ϑ2ij ∆lnTCt− j + ∑ ϑ3ij lnHRt− j
j =1 j =0 j =0
q4
+ ∑ ϑ4ij lnRFt− j + ϕoi + ϕ1i lnVAi,t−1 + ϕ2i lnTCt−1 + ϕ3i lnHRt−1 (2)
j =0
+ ϕ4 lnRFt−1 + Dumi,t + ε i,t
i = 1, 2, . . . N; t = 1, 2, . . . T
 ∆ , = + ∆ , + ∆ +

+ + + , + + (2)
Economies 2021, 9, 131 7 of 19
+ + , +,

i = 1, 2, …N; t = 1, 2, … T
where µi is the group-specific effect; i is the source country; t is the number of periods
where μi is the group-specific effect; i is the source country; t is the number of periods
(year); −1 < ϕ1 < 0 is the error correction term’s coefficient; ε i,t is the error term; is the
(year); −1 < < 0 is the error correction term’s coefficient; , is the error term; is the
first difference operator; j is the lag order decided by the Akaike Information Criterion
first difference operator; j is the lag order decided by the Akaike Information Criterion
(AIC); ln is the natural logarithm. For each cross-section, the long-term slope (elasticity) of
(AIC); ln is the natural logarithm. For each cross-section, the long-term slope (elasticity)
capital investment in transport and communications infrastructure, the hotel and restaurant
of capital investment in transport and communications ϕ infrastructure,
ϕ ϕ the hotel and res-
industry, and recreation facilities is calculated as − ϕ2i , − ϕ3i , − ϕ4i , respectively, and with the
taurant industry, and recreation facilities is calculated 1i as1i − 1i, − , − , respectively,
expectation of a positive coefficient. Therefore, the short-term estimate of capital investment
and with the expectation of a positive coefficient. Therefore, the short-term estimate of
in transport and communications infrastructure, the hotel and restaurant industry, and
capital investment in transport and communications infrastructure, the hotel and restau-
recreation facilities are ϑ2ij , ϑ3ij , ϑ4ij , respectively.
rant industry, and recreation facilities are , , , respectively.
3.2. Data
3.2. Data
The measurement of tourist attraction to Vietnam in this study is based on international
The measurement of tourist attraction to Vietnam in this study is based on interna-
tourist arrivals, as used by many previous studies to measure tourism demand (Khadaroo
tional tourist arrivals, as used by many previous studies to measure tourism demand
and Seetanah 2007a; Seetanah and Khadaroo 2009; Seetanah et al. 2011; Mandić et al. 2018).
(Khadaroo and Seetanah 2007a; Seetanah and Khadaroo 2009; Seetanah et al. 2011; Mandić
The international visitor arrivals were collected from the ten largest source markets and
et al. 2018). The international visitor arrivals were collected from the ten largest source
the remaining
markets and the markets for 25
remaining years (1995–2019)
markets to form panel
for 25 years (1995–2019) data panel
to form with 275
dataobservations
with 275
(N = 11 and T = 25). Data on international visitors to Vietnam by source
observations (N = 11 and T = 25). Data on international visitors to Vietnam by source countries
coun- in
the period 1995–2018 were collected from the VNAT. The ten countries
tries in the period 1995–2018 were collected from the VNAT. The ten countries with the with the most
significant number of visitors to Vietnam in the period 1995–2019 are China,
most significant number of visitors to Vietnam in the period 1995–2019 are China, Korea, Korea, Japan,
the United
Japan, States (US),
the United StatesMalaysia, Australia,
(US), Malaysia, the United
Australia, Kingdom
the United (UK),(UK),
Kingdom Singapore, France,
Singapore,
and
France, and Germany, respectively. These ten source countries accounted for 70.08%visitor
Germany, respectively. These ten source countries accounted for 70.08% of total of
arrivals to Vietnam
total visitor arrivals from 1995–2019
to Vietnam from(Figure 1). (Figure 1).
1995–2019

Germany
France
Singapore
UK
Australia
Malaysia
US
Japan
Korea
China

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000

2019 2015 2010 2005 2000 1995

Figure 1. Visitors from ten major international markets in the period 1995–2019.
Figure 1. Visitors from ten major international markets in the period 1995–2019.

The data
The data series
series covers
covers 25
25 years
years from
from 1995–2019
1995–2019 and
and the
the summary
summaryof
of variables
variablesused
used in
in the model is described in Table 1 below.
the model is described in Table 1 below.
Table 1. Summary of variables used in the model.

Variable Measure Description Data Source

World Tourism Organization
VA Visitor arrivals Total number of visitor arrivals per annum
(UNWTO) and VNAT
Transport and Social investment in transport; storage,
TC GSO of Vietnam
communications infrastructure and communications
Social investment in the hotel and restaurant industry or
HR Hotel and restaurant industry GSO of Vietnam
accommodation, food and beverage service activities
Social investment in recreation, culture, and sport or
RF Recreation facilities GDO of Vietnam
recreation, entertainment, and the arts
Note: Data on social investment capital is converted to fixed prices; the original year was 1994.
 Social investment in recreation, culture, and
RF Recreation facilities sport or recreation, entertainment, and the GDO of Vietnam
arts
Note: Data on social investment capital is converted to fixed prices; the original year was 1994.
Economies 2021, 9, 131 8 of 19
According to the GSO of Vietnam, the investment capital of the activities in Table 1
for the period 1995–2009 are based on the original year, 1994. However, from 2010–2019
the fixed price is for 2010. Therefore, the fixed price of 2010–2019 is converted to the orig-
According
inal year price by to the
the conversion
GSO of Vietnam, the investment
coefficient capital
of the original of the
year 2010activities in Table year
to the original 1 for
the period
1994 1995–2009
according are based(3)
to the Equation onbelow.
the original year, 1994. However, from 2010–2019 the
fixed price is for 2010. Therefore, the fixed price of 2010–2019 is converted to the original
Conversion coefficient of the original
year price by the conversion coefficient of the original year 2010 to the original year 1994
according to the Equation (3) below. Value in year n at the 2010 price (3)
year 2010 to the original year, 1994 =
Conversion coefficient Value in 2010
of the based on the original 1994 price
original
Value in year n at the 2010 price (3)
year 2010 to the original year, 1994 = Value in 2010 based on the original 1994 price
Source: Vietnam Ministry of Planning and Investment (2012).
Source: Vietnam Ministry of Planning and Investment (2012).
Between 1995 and 2019, there were three years of negative growth in international
Between 1995 and 2019, there were three years of negative growth in international
tourist arrivals to Vietnam: 1998, 2003, and 2009 show −11.4%, 7.6%, and −11.5%, respec-
tourist arrivals to Vietnam: 1998, 2003, and 2009 show −11.4%, 7.6%, and −11.5%, respec-
tively, due to the Asian financial crisis in the late 1990s, the SARS epidemic in 2003, and
tively, due to the Asian financial crisis in the late 1990s, the SARS epidemic in 2003, and the
the global recession in 2008–2009. However, the following year, the number of interna-
global recession in 2008–2009. However, the following year, the number of international
tional tourists to Vietnam increased again and offset previous declines (Figure 2).
tourists to Vietnam increased again and offset previous declines (Figure 2).

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
20,000 18,009 40.00
18,000
16,000 30.00
14,000 20.00
12,000 16.20
10,000 7944 10.00
8,000
6,000 5050 0.00
3478
4,000 2140 –7.56 -10.00
1351 –11.49
2,000 –11.40
0 -20.00
1995 2000 2005 2010 2015 2019

Inbound tourist (Thousand) Growth (%)

Figure 2. Changes in international visitors to Vietnam in the period 1995–2019. Source: Data from UNWTO and VNAT.
Figure 2. Changes in international visitors to Vietnam in the period 1995–2019. Source: Data from UNWTO and VNAT.
Particularly for the Chinese source market, the largest market to Vietnam in recent
years, there are also special events such as in 1995, when the relationship between China
and Vietnam had not been normalized, so visitors from China to Vietnam faced difficulties
obtaining visas; in 2015, China placed an oil rig in Vietnamese waters, straining relations
between the two countries and severely affecting tourism. In this study, the above events
are considered unstable factors which affected tourists’ decision to visit Vietnam. Therefore,
the dummy variable used is the value 1, and the remaining cases are assigned the value 0.
More details about the methodological use relating to dummy variables can be found in
Song and Lin (2010) or Lin et al. (2015). Table 2 below presents descriptive statistics of the
variables in the model with 275 observations (11 source markets over 25 years).

Table 2. Descriptive statistics variables.

Ln(VA) Ln(TC) Ln(HR) Ln(RF)

Unit 1000 person Billion VND Billion VND Billion VND
Mean 12.3131 10.3976 8.5841 8.0096
Maximum 15.5745 11.1848 9.5693 8.9410
Minimum 9.5076 9.1832 7.7227 6.7178
Standard Deviation 1.2666 0.6630 0.5147 0.6452
Coefficient of Variation 0.1029 0.0638 0.0600 0.0806
Observations 275 275 275 275
Source: Author’s calculation using Eviews.
Economies 2021, 9, 131 9 of 19

4. Research Results and Discussion

4.1. The Test Results, Stationarity and Cointegration
Before estimating the parameters, stationarity and cointegration tests were performed
to show that the nonlinear panel approach ARDL is appropriate for the data. The unit root
test is a popular method for stationary tests for both annual time series and panel data.
The stationarity test is conducted in both “individual intercept” and “individual intercept
and trend” in test equations. There are many types of unit root test for panel data such
as Levin, Lin and Chu t (LLC) and Breitung t-stat with common unit root process; I’m,
Pesaran and Shin W-stat (IPS), ADF—Fisher Chi-square (ADF), and PP—Fisher Chi-square
(PP) with individual unit root process. The panel data in this study are balanced so that
both hypotheses can be applied. The LLC test is chosen for the hypothesis “common unit
root process” and the hypothesis “individual unit root process” is chosen for the IPS test.
The results of panel unit root tests for logarithms of variables are summarized in Table 3.

Table 3. Results of stationarity test.

Intercept Intercept and Trend

LLC IPS ADF PP LLC IPS ADF PP
lnVA I(1) *** I(1) *** I(1) *** I(1) *** I(0) ** I(1) *** I(1) *** I(1) ***
lnTC I(0) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) ***
lnHR I(1) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) *** I(1) ***
lnRF I(0) *** I(0) *** I(0) ** I(1) *** I(1) *** I(1) *** I(1) *** I(1) ***
Source: Author’s calculation using Eviews. Note: LLC, Levin, Lin & Chu; IPS, I’m, Pesaran and Shin W-stat; ADF,
ADF—Fisher Chi-square; PP, PP—Fisher Chi-square; ** and *** for statistically significant at the 0.05 and 0.01
levels, respectively.

According to Table 3, most of the series are non-stationary at level, but stationary at first
difference, except for lnVA in LLC test of intercept and trend; lnTC in LLC test of intercept;
and lnRF in LLC, IPS and ADF of intercept. Based on the majority of the results, it can be seen
that the series are non-stationary at level but stationary at first difference, so a cointegration
test should be performed to consider the long-term relationship between variables.
To analyze the cointegration relationship between variables in the panel data model,
this study chooses the Pedroni and Kao tests because they are more comprehensive and
universal. Cointegration tests are conducted for both “individual intercepts” and “individ-
ual intercept and individual trends” in the Pedroni test. By contrast, it is only conducted in
the case of individual intercepts in the Kao test. The Pedroni test used seven test statistics
(four tests for within-dimension and three tests for between-dimension). The Schwarz
Information Criterion (SIC) automatically chooses the lag length with Newey-West auto-
matic bandwidth selection and Bartlett kernel. Table 4 below presents the results of panel
cointegration analysis.

Table 4. Results of panel cointegration test.

Individual Individual Trend and

Method Statistic
Intercept Individual Intercept
Pedroni test Panel v-Statistic 1.0575 2.8684
Panel rho-Statistic −0.7207 −1.0157
Panel PP-Statistic −3.0080 *** −8.0608 ***
Panel ADF-Statistic −2.4028 *** −2.3750 ***
Group rho-Statistic 0.4850 1.1146
Group PP-Statistic −3.1699 *** −5.8950 ***
Group ADF-Statistic −2.3379 *** −3.7839 ***
Kao test t-Statistic −0.7738
Note: *** for statistically significant at the 0.01 levels, respectively; deterministic trend specification: Individual
intercept for Pedroni test and Kao test; Four tests for within-dimension of Pedroni test are weighted statistics.
Source: Author’s calculation using Eviews.
Economies 2021, 9, 131 10 of 19

According to the results of the Pedroni test in Table 4, 4/7 tests are significant at the
0.01 level for both “individual intercept” and “individual trend and individual intercept”.
This means that most cointegration tests in the Pedroni test result in the cointegration series.
However, the Kao test gives the opposite result, meaning that the Kao test result does not
give cointegration series at the level of 0.05, so is not compelling evidence to conclude
clearly that series shows cointegration. Because of lnVA, lnTC, lnHR, and lnRF containing
both I(0) and I(1), and when the existence of long-run associations is unclear, the ARDL
technique is the most appropriate.

4.2. Estimated Results

This study uses the Pooled Mean Group (PMG) estimator to estimate the impact
of investment in tourism infrastructure development on attracting international visitors
to Vietnam. The PMG estimator is a well-known technique used in the estimation of a
dynamic heterogeneous panel data model. Furthermore, by design, in addition to the panel
regression results, the PMG also generates results for the individual units (Blackburne
and Frank 2007). Thus, computing the impact of tourism infrastructure development on
attracting international visitors can assess both long-run and short-run responses for the
general sample and each sample (each source market). First, the parameters are estimated
by the PMG estimator for the general sample (panel data) with Automatic selection in three
maximum lags, Akaike info criterion (AIC) in the Model selection method, and Linear
trend in trend specification. Table 5 below summarizes the regression results by the PMG
estimator for the general sample for both long-run and short-run.

Table 5. Results of regression by the PMG estimator for the general sample.

Variable Coefficient t-Statistic p-Value

Long-Run Equation
LnTC 0.7836 4.0925 *** 0.0001
LnHR 0.7503 7.5976 *** 0.0000
LnRF 0.4026 3.0775 *** 0.0028
Dum −0.3533 −2.9951 *** 0.0036
Short-Run Equation
COINTEQ01 −0.4743 −3.9677 *** 0.0002
∆LnVA(−1) 0.1314 0.7826 0.4361
∆LnVA(−2) 0.2049 1.0379 0.3023
∆LnTC −0.1881 −0.8512 0.3971
∆LnTC(−1) −0.1081 −0.5081 0.6127
∆LnTC(−2) −0.3618 −1.5872 0.1162
∆LnHR −0.2994 −2.1350 ** 0.0357
∆LnHR(−1) −0.3207 −2.3850 ** 0.0193
∆LnHR(−2) −0.3747 −2.6398 *** 0.0099
∆LnRF 0.0073 0.0944 0.9250
∆LnRF(−1) 0.3680 4.8035 *** 0.0000
∆LnRF(−2) 0.2761 5.5745 *** 0.0000
∆ Dum −0.0309 −0.5882 0.5579
∆ Dum(−1) −0.0466 −1.2999 0.1972
∆ Dum(−2) 0.0266 0.6770 0.5003
C −2.6244 −3.8043 *** 0.0003
@Trend −0.0059 −0.6470 0.5194
Statistics
Standard error of regression = 0.0814; Sum squared residual = 0.5565; Log likelihood = 445.9467; Akaike info
criterion = −1.8542; Schwarz criterion = 0.6579; Hannan-Quinn criterion: −0.8460. Note: LnVA is dependent
variable; ** and *** for statistical significance at 0.05 and 0.01 levels, respectively. Source: Author’s calculation
using Eviews.

As shown in Table 5, the Log-Likelihood is large; Standard error of regression, Sum

squared residual, and Akaike info criterion, Schwarz criterion, and Hannan-Quinn criterion
statistics are relatively small, so the model is appropriate and fits with the data. For the long-
Economies 2021, 9, 131 11 of 19

run equation, all variables of interest are significant at the 0.01 level, so they are accepted.
The estimated coefficients have the same sign as the initial expectation. Investment in
tourism infrastructure such as transport and communications infrastructure, the hotel and
restaurants industry, and recreation facilities, all positively impact attracting international
visitors to Vietnam. Meanwhile, uncertainty factors have been negatively affected.
In the short-term equation, the coefficient of cointegrating equation has a negative
sign (−0.4743) and is significant at the 0.01 level. This means that the variables converge to
the long-run equilibrium, and the convergence rate is 47.43%. The lnTC and Dummy are
not significant at the 0.05 level for all lags. By contrast, the variable lnHR is significant at
the level, the first difference, the second difference, and lnRF at first difference and second
difference, to be more specific, the sign of the coefficients of the negative lnHR and the
sign of the positive lnRF coefficients. These findings imply that no significant impact of
investment in transport and communications infrastructure has been found on attracting
international visitors to Vietnam in the short-term. In comparison, there is a positive effect
of investment in recreation facilities, while investment in the hotel and restaurant industry
has the opposite effect in the short-run.
Table A1 in Appendix A.1 provides short-run coefficients across cross-sections of the
10 source countries. Accordingly, there are nine source markets moving towards long-run
equilibrium, except the US (where the Cointegrating Equation is positive). Additionally,
there is at least one coefficient at one level in the short-run of significance at 0.05 or 0.01
for the variables of interest in each source country, except lnTC in the Korean source
market. These coefficients indicate the different short-run roles of investments in tourism
infrastructure in attracting international visitors to different source markets. At lag 3, the
coefficients of lnTC, lnHR, and lnRF are significant in most source markets. Considering
this lag, investment in transport and communications infrastructure has different positive
and negative roles for each source market in the short-run. To be more specific, investment
in transport and communications infrastructure has an active role in source markets in
descending order, Germany, the US, Japan, and China. The source markets with a negative
role in ascending order are Australia, the UK, France, Malaysia, and Singapore. As for
the role of investment in transport and communications infrastructure, investment in the
hotel and restaurant industry also has different positive and negative roles for each source
market in the short-run. The source markets where it has an active role in descending
order are the US, Germany, Japan, respectively. The source markets where it has a negative
role in ascending order are Australia, the UK, France, Malaysia, China, and Singapore,
respectively. Meanwhile, investment in recreation facilities plays an active role in all source
markets. In descending order, these are China, France, Germany, Japan, Korea, the UK,
Australia, and the US, respectively. The coefficients of dummy variables with different
signs in source markets indicate the short-run impact of different uncertainties on source
markets. Positive effects were found in the short-run in China, Korea, Malaysia, Australia,
the UK, Singapore, and France. In contrast, the negative effects were found only in Japan,
the US, and Germany.

4.3. Diagnostic Test and Robustness Check

To further consider the reliability and validity of the model estimate, diagnostic
tests are considered. There are two critical diagnostic tests for the panel PMG/ARDL
method in Eview: coefficient diagnosis and residual diagnostic. However, according to
Wooldridge (2015), based on the asymptotic theory, when there is a sufficient number
of observations, it is not necessary to test the normal distribution of the residuals. With
275 observations, this study omits the residual diagnostic and only performs the coefficient
diagnostic by coefficient confidence intervals and the Wald test, with the Null Hypothesis
that the coefficients are all equal to 0. The results of the diagnostic coefficients are presented
in Table 6 below.
Economies 2021, 9, 131 12 of 19

Table 6. Coefficient diagnostics.

Coefficient Confidence Intervals

95% Confidence Intervals 99% Confidence Intervals
Variable Coefficient
Low High Low High
LnTC 0.7836 0.4029 1.1644 0.2790 1.2883
LnHR 0.7503 0.5539 0.9467 0.4900 1.0105
LnRF 0.4026 0.1424 0.6627 0.0578 0.7473
Dum −0.3533 −0.5878 −0.1187 −0.6641 −0.0424
Wald test
Null Hypothesis: C(1) = C(2) = C(3) = C(4) = 0
F-statistic: 43.9951 ***; Chi-square = 175.9803 ***
Note: *** for statistical significance at the 0.01 levels, respectively. Source: Results of Wald test.

Table 6 provides the values of the coefficients at the 95% and 99% confidence intervals.
Accordingly, the maximum and minimum values of lnTC, lnHR and ln RF are all greater
than 0. In contrast, the values of Dummy are all less than 0. The Wald test gives significance
at 0.01 level for both F and Chi-squared statistics. Therefore, the null hypothesis is rejected
and the alternative hypothesis is accepted, meaning that the estimated coefficients in the
model are all non-zero, and they are all necessary for the model. This evidence lends
support to the reliability and validity of the estimated model.
Next, the robustness check is performed by comparing the estimated results among
PMG/ARDL, cointegration regression and OLS for panel data (assuming the cointegration
series from the Pedroni test result). In the OLS method, Random Effects Model (REM)
is selected from the Pooled OLS model, Fixed Effect Models (FEM) and REM. In the
cointegration regression, the FMOLS estimator is chosen because there is a quite large
difference in the long-term coefficient of variance in lnVA (Table 2). The estimated results
by FMOLS and OLS methods are detailed in Table A2 in Appendix A.2. The coefficients
estimated by PMG/ARDL, FMOLS and OLS methods are compared in Table 7.

Table 7. Differences in coefficients estimated by PMG/ARDL, FMOLS and OLS.

Difference of PMG with

Variable PMG/ARDL FMOLS REM
FMOLS REM
LnTC 0.7836 *** 0.7066 *** 0.7393 *** 0.0770 0.0443
LnHR 0.7503 *** 0.5691 *** 0.5442 *** 0.1812 0.2061
LnRF 0.4026 *** 0.0981 0.0691
Dum −0.3533 *** −0.2122 ** −0.2237 *** −0.1411 −0.1296
Note: ** and *** for statistical significance at the 0.05 and 0.01 levels, respectively. Source: Estimation results from
PMG/ARDL, FMOLS and OLS.

According to Table 7, although the methods produce different estimation results, the
signs of the coefficients are similar. To be more detailed, lnTC has quite similar results (bias
of no more than 10%), lnHR has a maximum bias of 27.4% and Dummy variable has a
bias of no more than 40%. Particularly, lnRF estimated by FMOLS and REM do not reach
significance at the 0.05 level. Despite certain differences, it is believed that the results from
the PMG/ARDL are more appropriate because of the advantage of PMG/ARDL discussed
above, and the cointegration series is still in doubt.

4.4. Discussion
The above findings indicate that investment in tourism infrastructure components
positively impacts attracting international tourists to Vietnam. In the long-run, increasing
1% of investment capital in transport and communications infrastructure, the hotel and
restaurant industry, and recreation facilities will increase international visitors to Vietnam
by 0.7836%, 0.7503%, and 0.4026%, respectively. This indicates that capital investment
Economies 2021, 9, 131 13 of 19

in transport and communications infrastructure and the hotel and restaurant industry
plays a crucial role in attracting international visitors. This evidence lends support to
the view that investments in transportation and hotels have played an important role
in attracting international tourism, as many earlier studies have found (Khadaroo and
Seetanah 2007a, 2007b, 2008; Prideaux 2000; Seetanah et al. 2011). In this study, the role
of investment in transport and communications infrastructure (coefficient 0.7836) and
investment in the hotel and restaurant industry (coefficient 0.7503) in Vietnam is higher in
some areas such as in Mauritius, where the coefficient is found to be 0.36 for investment
in transport infrastructure and 0.56 for the investment and hotel industry (Khadaroo
and Seetanah 2007b) or 0.32 for investment capital in transport infrastructure and 0.54
for investment and the hotel industry (Seetanah et al. 2011); in 26 island economies, the
results are 0.064, 0.16, 0.074 and 0.28 for investment in road, air, communications, and
the hotel and restaurant industry, respectively (Khadaroo and Seetanah 2007a); and in
28 countries representing Europe, Asia, America, and Africa, these are 0.13, 0.18, 0.06 and
0.22, respectively, for investment in road, air, port and hotel (Khadaroo and Seetanah 2008).
The impact coefficient of the hotel and restaurant industry in this study is lower than that
of the hotel accommodation infrastructure in Singapore, from 0.839 to 0.855 in the study
by Lim et al. (2019). However, it must also be seen that the different roles of the hotel
and restaurant industry depend not only on each country, but also on how the variable
that represents it is measured. This role is appropriate because Vietnam is a developing
country with great tourism potential and scenic beauty. However, the terrain is difficult,
and transportation infrastructure and hotel availability are still limited. With the efforts
of the government and the community, the transport and communications infrastructure,
as well as the hotel and restaurant facilities in Vietnam, have been significantly improved,
creating a favorable environment for tourists, and strongly enticing international visitors to
Vietnam. The research results also show that the government and private sector investors
cannot expect to see a fast Return on Investment. Their investment in transport and
communications infrastructure and hotel and restaurant facilities will only be evident in
the long-run. This can be explained by the long lead-in time required by infrastructure
works and hotel developments. The impact, therefore, takes time to be fully demonstrated.
However, it should be noted that transport and communications infrastructure investment
attract visitors and develops other areas of the economy and society, including the hotel
and restaurant industry and recreation facilities.
Cross-section short-run coefficients show that, in the short term, the role of investment
in the hotel and restaurant industry is decreasing, in this order source markets: the US,
Germany, Japan, Australia, the UK, France, Malaysia, China, and Singapore. Meanwhile, the
order for investment in transport and communications infrastructure is as follows: Germany,
the US, Japan, China, Australia, the UK, France, Malaysia, and Singapore, respectively. This
is consistent with the idea that inhabitants of developed countries are accustomed to modern,
high-quality transport infrastructure and high-quality restaurants and hotels. Consequently,
they prefer to find similar infrastructure in other countries. In contrast, tourists from less
developed countries tend to be less demanding of these infrastructures.
Research results also show that investment in recreation facilities is also important to
attract international arrivals to Vietnam. Although its role in the long-term is not equal
to that of the other two areas of tourism infrastructure in this study, it is effective in both
the long-run and short-run. Investment in recreation facilities will directly make destina-
tions more attractive. Formica (2002) states that without attractions, tourism destinations
could not exist; attractions are the basis for visitation. These findings are consistent with
Vengesayi et al. (2009), suggesting that attractions are the main reason people visit specific
destinations and not others. The role of investment in recreation facilities in attracting inter-
national visitors in this study is empirical evidence supporting the tourism infrastructure
model of Mandić et al. (2018). Accordingly, recreational facilities with hotels and other
forms of accommodation, spas, and restaurants form the main tourism infrastructure.
Economies 2021, 9, 131 14 of 19

Usually, investment in modern amusement parks will require considerable investment

capital. In contrast, investment in developing conservation and ecological tourist areas
may require a smaller amount of capital if considered per unit area. The above order of
roles of investment in recreation facilities in the short-run implies that in general, visitors
want to improve recreation facilities in Vietnam, but visitors from China, France, Germany,
and Japan require much more improvement than visitors from Korea, the UK, Australia,
and the US. This finding is indicative of visitor preferences from source markets.

5. Conclusions and Implications

Attracting international tourists is an essential task for countries as international
tourists bring significant income, foreign currency, and jobs to countries, especially potential
tourism countries. Therefore, to attract tourists and implement an appropriate pricing
policy, investing in tourism infrastructure development to make the destination more
competitive and attractive are critical measures. This is the reason why this study examines
the impact of investment in tourism infrastructure development on attracting international
tourists from empirical research in Vietnam through panel data from 1995 to 2019.
The three types of tourism infrastructure used in this study are transport and commu-
nications infrastructure, restaurants and hotels, and entertainment infrastructure. After
testing the stationarity and cointegration of the data, this study used the ARDL approach to
examine the impact of three tourism infrastructure components on attracting international
visitors to Vietnam in the long-run and short-run. In the long-run, investment in tourism
infrastructure components has a positive and robust impact on attracting international
visitor arrivals. The most decisive impact is investment in transport and communications
infrastructure, followed by investment in the hotel and restaurant industry, and finally
investment in recreation facilities. However, the short-run impacts of these three types of
tourism infrastructure also differ in both sign and magnitude. In addition, different impacts
of the three tourism infrastructure components in the short-run on attracting international
visitors in general and in each of the leading international visitor markets to Vietnam are
also found.
The contribution of this study impinges on two aspects. Firstly, from a theoretical
perspective, this study enriches the role of investment in tourism infrastructure in tourism
development with three components: transport and communications infrastructure, hotel
and restaurant industry, and recreation facilities. Second, from a practical perspective, the
study points out the different impacts of components of tourism infrastructure and their
specific impact on attracting international visitors to Vietnam as the basis for policies for
tourism development.
Overall, investment in transport and communications infrastructure drives economic
growth and social development. However, the significant impact on tourism growth in
Vietnam revealed in this study justifies the need for government investment in transport
infrastructure and information and communications. Besides, investment in the hotel
and restaurant industry will provide accommodation, food and beverage services for
tourists, especially international tourists. Furthermore, investment in recreation facilities
will make the destination more attractive to visitors. Therefore, the positive and vital
role of investment in the three tourism infrastructure components is shown in this study
because they are the most critical components in the tourism product chain experienced by
tourists. On the other hand, although Vietnam has substantial tourism potential, its tourism
infrastructure is still limited, so investing in components of tourism infrastructure becomes
increasingly pressing to attract visitors in general and international visitors in particular.
Unlike an investment in transport and communications infrastructure that is primarily
financed by government funds, investment in the hotel and restaurant industry, as well as
recreation facilities, can mobilize the resources of the entire society, especially the private
sector, because this is a highly commercialized and profitable sector, and is not prohibitively
subject to government control. Thus, internationally and in Vietnam in particular, there is
an urgent need for investment incentives for the private sector to help develop these areas.
Economies 2021, 9, 131 15 of 19

Although some valuable results have been obtained, this study still has some limita-
tions. Due to data limitations, this study only explores the role of investment in three groups
of components without separating each component in detail as well as from different capital
sources to see the different roles of the economy sectors. In addition, heterogeneity among
visitor arrival groups has not been considered. These issues may provide opportunities for
further study.

Funding: This research was funded by University of Economics and Law, Vietnam National Univer-
sity, Ho Chi Minh, Vietnam, under grant number 3-2021.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Data on international tourists to Vietnam is collected from various
sources, accessible from: [Link]
%C6%A1ng%20m%E1%BA%A1i%2C%20gi%C3%A1%20c%E1%BA%A3; [Link]
vn/[Link]/statistic/sub/6; [Link]
topic. Investment data is available in the GSO statistical yearbooks, accessible from: [Link]
[Link]/du-lieu-va-so-lieu-thong-ke/2020/02/nien-giam-thong-ke-1997/; [Link]
[Link]/du-lieu-va-so-lieu-thong-ke/2020/02/nien-giam-thong-ke-2000/; [Link]
vn/du-lieu-va-so-lieu-thong-ke/2020/02/nien-giam-thong-ke-2005/; [Link]
du-lieu-va-so-lieu-thong-ke/2019/10/nien-giam-thong-ke-2010-2/; [Link]
lieu-va-so-lieu-thong-ke/2016/06/nien-giam-thong-ke-2015/; [Link]
va-so-lieu-thong-ke/2021/07/nien-giam-thong-ke-2021/.
Acknowledgments: The author is grateful to the three anonymous reviewers and academic editor
whose comments have contributed to improving the quality of this paper.
Conflicts of Interest: The author declares no conflict of interest.

Appendix A
Appendix A.1. Result of Cross-Section Short-Run Coefficients

Table A1. Cross-section short-run coefficients.

China Korea Japan US Malaysia

COINTEQ01 −0.2188 *** −0.5408 *** −0.1571 *** 0.2442 *** −0.9303 ***
∆LnVA(−1) 0.4138 *** 0.6812 *** 0.4094 *** 0.1804 ** 0.3772 ***
∆LnVA(−2) 0.5513 *** 0.3598 ** −0.1618 *** −0.7762 *** 0.5502 ***
∆LnTC −1.3162 *** −0.4403 0.2158 *** −0.0069 −0.1595
∆LnTC(−1) 1.6776 *** −0.2047 −0.7786 *** 0.0590 −0.2536 *
∆LnTC(−2) 0.3185 *** −0.4225 * 0.4404 *** 0.4836 *** −0.8196 ***
∆LnHR −0.8777 *** −0.1762 * −0.0300 *** 0.2010 *** −0.1345 **
∆LnHR(−1) 0.2177 *** −0.3818 *** −0.4700 *** 0.0903 ** −0.2748 ***
∆LnHR(−2) −0.9323 *** −0.1601 * 0.0671 *** 0.4512 *** −0.6735 ***
∆LnRF −0.1209 *** 0.3317 *** 0.2365 *** 0.1692 *** −0.5142 ***
∆LnRF(−1) 0.5206 *** 0.7553 *** 0.1835 *** 0.2281 *** −0.1185 *
∆LnRF(−2) 0.5467 *** 0.2941 *** 0.3317 *** 0.1021 *** 0.0653
∆ Dum −0.3408 *** −0.0330 ** −0.2453 *** −0.2100 *** 0.1738 ***
∆ Dum(−1) −0.2570 *** 0.0271 −0.0453 *** −0.1173 *** 0.0158
∆ Dum(−2) 0.2051 *** 0.0286 ** −0.1513 *** −0.1475 *** 0.0540 ***
C −1.2348 *** −3.2720 −0.7252 ** 0.9469 −5.9835
@Trend 0.0188 *** 0.0309 *** −0.0044 *** 0.0224 *** 0.0201 ***
Economies 2021, 9, 131 16 of 19

Table A1. Cont.

Australia UK Singapore France Germany

COINTEQ01 −0.2230 *** −0.4722 *** −1.0421 *** −0.9949 *** −0.3443 **
∆LnVA(−1) −0.7976 *** −0.0621 ** 1.1662 *** −0.1767 *** −0.3478
∆LnVA(−2) 0.3498 *** −0.0883 *** 1.7735 *** −0.1197 *** 0.1028
∆LnTC 0.5289 *** 0.3891 *** −1.7959 *** 0.0749 * 0.2754
∆LnTC(−1) 0.2878 *** −0.6483 *** −0.8821 *** −0.4528 *** 0.2184
∆LnTC(−2) −0.4132 *** −0.4869 *** −1.4587 *** −0.6643 *** 0.6033 **
∆LnHR 0.0986 *** −0.1741 *** −1.4111 *** −0.3999 *** −0.0915
∆LnHR(−1) 0.1510 *** −0.5506 *** −1.3510 *** −0.5582 *** −0.4007 ***
∆LnHR(−2) −0.2002 *** −0.5204 *** −0.9590 *** −0.5994 *** 0.1700 **
∆LnRF −0.3545 *** 0.0890 *** 0.0308 −0.0893 ** 0.1158 **
∆LnRF(−1) 0.2466 *** 0.4231 *** 0.6569 *** 0.3287 *** 0.6064 ***
∆LnRF(−2) 0.1928 *** 0.2773 *** 0.0310 * 0.4173 *** 0.3353 ***
∆ Dum −0.1033 *** 0.0528 *** 0.1058 *** 0.1854 *** 0.0245
∆ Dum(−1) −0.1194 *** 0.0688 *** 0.0447 *** 0.0486 ** −0.2367 ***
∆ Dum(−2) 0.0840 *** 0.0368 *** 0.2676 *** 0.0108 ** −0.0831 ***
C −0.9987 −2.6653 ** −6.2748 −4.8529 −2.3403
@Trend −0.0173 *** −0.0143 *** −0.0169 *** −0.0753 *** −0.0023 ***
Note: LnVA is dependent variable; *, ** and *** for statistical significance at 0.10, 0.05 and 0.01 levels, respectively.
Source: Author’s calculation using Eviews.

Appendix A.2. Estimated Coefficients

Table A2. Estimated coefficients by FMOLS and OLS.

FMOLS Pooled OLS FEM REM

LnTC Coefficient 0.7066 0.7439 0.7392 0.7393
t-Statistic 3.067 *** 1.77 * 4.78 *** 4.78 ***
LnHR Coefficient 0.5691 0.5778 0.5440 0.5442
t-Statistic 5.10 *** 2.88 ** 7.38 *** 7.39 ***
LnRF Coefficient 0.0981 0.0519 0.0692 0.0691
t-Statistic 0.44 0.13 0.47 0.4708
Dum Coefficient −0.2122 −0.0780 −0.2247 −0.2237
t-Statistic −2.06 ** −0.42 −3.29 *** −3.28 ***
R-squared 0.9273 0.3874 0.9204 0.8243
Adj R-squared 0.9233 0.3783 0.9161 0.8216
F-statistic 42.69 *** 214.75 *** 316.57 ***
Effects Tests 174.10 ***
Hausman test 0.00
Note: *, ** and *** for statistically significant at the 0.10, 0.05 and 0.01 levels, respectively. Source: FMOLS and
OLS estimation results for data panel in Eview.

Table A2 above shows that adjusted R squared for all estimators is quite high, except
Pooled OLS. Significance in F-statistics of Pooled OLS, FEM and FEM are all at 0.01 level.
The Redundant Fixed Effects test in the FEM estimate gives significance in the Cross-section
F statistic at the 0.01 level, so it allows a strong rejection the null hypothesis that the effects
are redundant and shows that the cross-section fixed effects are statistically significant. This
means that FEM is more reliable than Pooled OLS estimation. The Chi-square statistical
significance of Cross-section random in Hausman Test does not reach 0.05 level, and the
Null hypothesis cannot be rejected, so the REM model is selected. These results show that
both the FMOLS and REM estimators are reliable.

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