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The share of tourism in the Croatian economy has been growing over the years whereby Croatia has one of the largest shares of tourism in Gross domestic product (GDP) in Europe. Therefore, tourism can be considered as one of the most important driver of the Croatian economy. The number of tourist arrivals affects many economic variables such as industry, retail trade, service activities, construction, employment, prices etc. In this paper, the focus will be on the impact of tourist arrivals on retail trade turnover in Croatia. By definition, retail trade is the sale of goods to final consumers for personal consumption or use in households and like tourism, retail trade is also very important component of Croatian GDP. For the purpose of the analysis, monthly data on the number of tourist arrivals and retail trade turnover (in real terms) are used. To determine the relationship between the variables the bounds testing (ARDL) approach for cointegration is applied. The results indicate the existence of stable cointegration relationship between the variables. In the long-run, an increase in tourist arrivals increases retail trade turnover in Croatia whereby in the short-run there is no impact. The error correction coefficient is highly statistically significant, has the correct sign and suggests slow speed of adjustment to the long-run equilibrium. |
