DEMAND OF REGIONAL TOURISTS VISITING LAO PEOPLE'S DEMOCRATIC REPUBLIC: A DYNAMIC PANEL DATA APPROACH

Over 85% of international tourists visit to Lao PDR are regional tourists from Thailand, Vietnam and China. This study investigates the dynamic panel demand of regional tourists' fromThailand, Vietnam and China visiting Lao PDR. Tourism price, income, substitute tourism price and SARs are the factors that are included in the model. The panel dataset from the period 2000-2011 is estimated by the system Generalized Method of Moment (system GMM) estimation. The result shows that the substitute tourism price and SARs have significant negative effects on regional tourists visiting Lao PDR. Countries such as China and Thailand are complementary destinations of regional tourists visiting Lao PDR. We suggest that Lao PDR should co-operate with China and Thailand for maintaining the number of regional tourists. Moreover, Lao PDR should recognize that planning is necessary for managing the risks of unexpected natural shocks in the future.