From aid to attraction: The effects of official development assistance and economic diplomacy on tourism flows to Turkey

Abstract

This study examines whether official development assistance (ODA) functions as a channel of economic diplomacy by shaping tourism demand from recipient countries to Turkey. Using a panel dataset of 69 countries that received Turkish ODA between 2006 and 2020, inbound tourist arrivals to Turkey are employed as a proxy for tourism demand originating from aid-recipient economies. An augmented gravity model is applied to estimate the relationship, controlling for income levels, population size, exchange rates, geographical distance, trade agreements, and diplomatic representation. The results show a positive and statistically significant relationship between ODA and subsequent tourism demand. Specifically, an increase of US$1,000 in ODA to a recipient country is associated with approximately 87 additional tourist arrivals in Turkey the following year, ceteris paribus. This result is robust across alternative model specifications. The findings suggest that ODA may generate positive spillovers for Turkey beyond its developmental objectives. In particular, ODA appears to enhance destination awareness, strengthen bilateral relations, and improve perceptions of Turkey in recipient countries. These channels reduce informational and perceptual barriers and encourage cross-border mobility. In this context, ODA may complement trade diplomacy by fostering linkages in the services sector, particularly tourism.