Determinants of Tourism Balance in Egypt (1977‒2022)

International tourism is not only limited to inbound tourism, but it also includes outbound tourism. Therefore, it has become necessary to know the extent of the impact of inbound and outbound tourism on the balance of payments, which is known as tourism balance. The purpose of this study is to determine the most important determinants of tourism balance in Egypt during 1977‒2022. To achieve this purpose, the study employed a nonlinear autoregressive distributed lag (NARDL) co-integration methodology. The results showed that the Egyptian tourism balance is positively affected in the long-run by the real effective exchange rate and the per capita income in European countries by one lag period. However, it is negatively affected by the per capita income in Egypt by one lag period as well. It is also positively affected in the short-run by per capita income in European countries. However, it was negatively affected by the decline in per capita income in Egypt, and by the resolution to devalue the Egyptian pound in 2016. It also concluded that the “J-curve” hypothesis applies to the Egyptian tourism balance. Finally, it found that in the short-run, the Egyptian tourism balance is affected “asymmetrically" by negative and positive changes in per capita income in Egypt. The main contribution of the current study to the decision maker is to focus on studying the impact of both inbound and outbound tourism on the balance of payments. The study concluded with a set of recommendations, among which is adopting a policy of devaluing the Egyptian pound to address the problem of the decline in the growth rate of the surplus in the tourism balance, taking into account its inflation implications; and addressing the short-run negative impacts on the tourism companies as a result of the Egyptian pound devaluation policy; and limiting outbound tourism (tourism by Egyptians abroad).