DAUGAVPILS UNIVERSITY DEPARTMENT OF ECONOMICS Mg. oec. NAILA MUSAYEVA Doctoral Thesis DEVELOPMENT OF REGIONAL TOURISM IN AZERBAIJAN Submitted for the Doctor Degree of Economics Subfield – Regional Economics The scientific supervisor: Dr.sc.ing., professor Irēna Silineviča: ______________ Research author: ____________ Daugavpils 2016 1 TABLE OF CONTENTS TABLE OF FIGURES AND TABLES 3 APROBATION 5 ANNOTATION 5 ANOTĀCIJA 8 АННОТАЦИЯ 9 INTRODUCTION 10 1.THEORETICALLY-METHODOLOGICAL ASPECTS OF REGIONAL TOURISM ANALYSIS 15 The concept of a tourist region and regional tourism 15 Factors affecting the regional tourism development 17 Research methods for regional tourism 29 Statistical accounting in tourism 32 The national system of tourism statistics in Azerbaijan 36 2.RESEARCH COMPETITIVENESS IN AREAS OF TOURISM, BASED ON TRAVEL AND TOURISM COMPETITIVENESS INDEX 40 Competitiveness Index in Travel and Tourism Field 40 Isolation and analysis of clusters in area of TTIC components 43 Analysis of tourism competitiveness based on M. Porter factors 81 Analysis of the tourism potential of Azerbaijan on the basis of Porter factors 85 3.EFFECTIVE USE OF TOURIST POTENTIAL IN REGIONAL ECONOMY 91 3.1.Indicators of economic efficiency of tourism 91 The impact of tourism on the country’s payment balance 95 3.4.Tourism's contribution to employment 98 3.5. The impact of tourism on employment in Azerbaijan 99 3.6.Tourist multiplier 100 3.7.The indirect impact of tourism on the economy of Azerbaijan due to the multiplier effect104 3.8.The effectiveness of the use of tourism potential in Azerbaijan 106 4. ANALYSIS OF REGIONAL TOURISM IN AZERBAIJAN IN THE LOCAL CONTEXT 108 4.1.SWOT analysis of tourism in Azerbaijan 108 4.2.Features of the development of tourism in the regions of Azerbaijan 111 4.3.Application of the hierarchy analysis process to evaluate the economic competitiveness of the tourist regions in Azerbaijan 119 4.4. Assessment of the prospects of the development of alternative forms of tourism in the regions of Azerbaijan 122 CONCLUSION 124 PROBLEMS AND PROPOSALS FOR THEIR SOLUTION 126 BIBLIOGRAPHY 127 2 TABLE OF FIGURES AND TABLES Figure 2.1. TTCI structure 2015 .................................................................................................... 42 Figure 2.2. Average values of standardized factors of competitiveness in the T & T clusters .... 45 Figure 2.3. Distribution of countries according to T & T clusters ................................................ 45 Figure 2.4. Average values of tourism competitiveness components in T & T clusters ............... 46 Figure 2.5. The average values of the competitiveness sub-indices of tourism industry in T & T clusters ........................................................................................................................ 47 Figure 2.6. Average values of standardized «Business environment» component indicators in T & T clusters................................................................................................................. 48 Figure 2.7. Average values of standardized component indicators «Safety and security» in T & T clusters ..................................................................................................................... 52 Figure 2.8. Average values of standardized «Health and hygiene» component indicators in T & T clusters ..................................................................................................................... 53 Figure 2.9. Average values of standardized indicators component «Human resources and labour market» in T & T clusters ........................................................................................... 54 Figure 2.10. Average values of standardized «ICT readiness» component indicators in T & T clusters ........................................................................................................................ 56 Figure 2.11. Average values of standardized «Prioritization of Travel & Tourism» component indicators in T & T clusters ........................................................................................ 58 Figure 2.12. Expenditures for tourism services in Azerbaijan (thsd. manat) ................................ 59 Figure 2.13. Average values of standardized «International Openness» component indicators in T & T clusters ............................................................................................................. 60 Figure 2.14. Average values of standardized «Price competitiveness» component indicators in T & T clusters ............................................................................................................. 62 Figure 2.15. Average values of standardized «Environmental sustainability» component indicators in T & T clusters ........................................................................................ 64 Figure 2.16. Average values of standardized «Air transport infrastructure» component indicators in T & T clusters ........................................................................................ 68 Figure 2.17. Average values of standardized indicators «Ground and port infrastructure» component in T & T clusters ...................................................................................... 69 Figure 2.18. Average values of standardized «Tourist service infrastructure» component indicators in T & T clusters ........................................................................................ 72 Figure 2.19. Average values of standardized «Natural resources» component indicators in T & T clusters ..................................................................................................................... 74 Figure 2.20. Average values of standardized component indicators «Cultural resources and business travel» in T & T clusters .............................................................................. 76 Figure 2.21. Classification tree in the space components of competitiveness in tourism ............. 79 Figure 2.22. Average Porter factors in clusters identified in plane of competitive factors ........... 82 Figure 2.23. Relationship of Porter factors .................................................................................. 83 Figure 2.24. Porter competitiveness diamonds in the clusters identified in the plane of tourism competitiveness factors ............................................................................................... 84 Figure 2.25. Average values of standardized indicators of factor conditions for production of tourist services in Azerbaijan...................................................................................... 85 Figure 2.26. Average values of standardized indicators for conditions of tourist service demand in Azerbaijan ............................................................................................................... 86 Figure 2.27. Average values of standardized performance indicators supporting industries of tourism services in Azerbaijan.................................................................................... 87 Figure 2.28. Average values of standardized indicators of strategies of tourist companies in Azerbaijan ................................................................................................................... 88 Figure 3.1. Tourism's contribution to GDP, in competitiveness clusters ...................................... 95 3 Figure 4.1. Distribution of tourist flow by region ....................................................................... 116 Figure 4.2. The distribution of direct and total income from tourism activities in regions of Azerbaijan ................................................................................................................. 116 Figure 4.3. The distribution of the regions of Azerbaijan according to elements of tourist infrastructure and tourist flows ................................................................................. 117 Figure 4.4. The evaluation results of experts for Tourism Competitiveness sub-indices (criteria of the first level)........................................................................................................ 120 Figure 4.5. The expert evaluation results on the competitiveness of the tourism components (second-level criteria, taking into account the weight coefficients of the first level criteria) ...................................................................................................................... 121 Figure 4.6. The results of expert evaluation for the competitive advantages of economic regions in Azerbaijan on estimated parameters of tourism competitiveness ............ 121 Table 1.1. Management structure of state tourism industry .......................................................... 28 Table 1.2. Methods of assessing the integrated assessment of tourist resources in region ........... 30 Table 1.3. Types of polygons for Tourism Competitiveness ........................................................ 30 Table 2.1. Dynamics of Azerbaijan's competitiveness ranking in the field of tourism ................. 43 Table 2.2. Components and their factor loadings in the framework of two-factor structure of the index of competitiveness in travel and tourism .......................................................... 44 Table 2.3. Standardized coefficients of the linear regression equation, which establishes the connection between the components of the index TTCI and competitiveness