Evaluating the Impact of Crime on Tourism in Barbados : A Transfer Function Approach

The impact of crime on tourism to Barbados was examined using a transfer function approach. Results indicate that an increase in the overall crime rate has a negative and significant impact on arrivals to the island. However, the fall-off is delayed, starting six months after a one-unit increase in the crime rate. The impulse response function shows that a one-percent shock to crime reduces arrivals to Barbados, but takes about 20 months for arrivals to return to normalcy. Impacts for the murder, assault with intent to rob, rape and residential burglary rates were also investigated. Qualitatively, the results resemble those for the overall crime rate; however, the magnitudes of the impacts are greater. Given the country's dependence on tourism, it is advised that at the first sign of heightened criminal activity, policymakers should act to minimise losses