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This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations. JEL classification: F11; F43.

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Tourism has been regarded as a major source of economic growth and a good source of foreign exchange earnings. Tourism has also been considered as an activity that imposes costs on the host country. Such costs include increased pollution, congestion and despoliation of fragile environments and intra-generational inequity aggravation. One aspect that has been ignored is the general equilibrium effects of tourism on the other sectors in the economy. These effects can be quite substantial and should be taken into account when assessing the net benefits of a tourism boom on an economy. This paper presents a model which captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. We examine the effect of a tourist boom on structural adjustment, commodity and factor prices and more importantly resident welfare. An important result obtained is that the tourist boom may "immiserize" the residents. This occurs because of two effects. The first, a favourable effect due to an increase in the relative price of the non-traded good which is termed the secondary terms of trade effect. The second, a negative effect due to an efficiency loss that occurs in the presence of increasing returns to scale in manufacturing. If this second effect outweighs the first effect, resident immiserization occurs.

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The Simple Analytics of Optimal Growth with Illegal Migrants This paper analyses the impact of illegal migration on the optimal path of domestic (resident) consumption. The analysis draws two important conclusions. First, if illegal migrants and domestic labour are perfect substitutes, illegal migration necessarily lowers the long-run per capita consumption of domestic residents. Second, if illegal migrants and domestic labour are imperfect substitutes, the effect on the long-run per capita domestic consumption is ambiguous, however, in the Cobb-Douglas case, the result is clear cut and per capita domestic consumption rises as a result of illegal migration. Résumé : Une analyse simple de croissance optimale en présence d'immigration clandestine Dans cet article nous analysons les effets de l'immigration clandestine sur le sentier optimal de consommation nationale (des résidents). Nous obtenons deux conclusions importantes. D'abord, si les immigrants clandestins et le travail des nationaux sont des substituts parfaits, l'immigration illégale réduit dans le long terme la consommation par tête des nationaux. Ensuite, si les immigrants clandestins et le travail des nationaux sont des substituts imparfaits, l'effet sur la consommation par tête de long terme des nationaux est ambigu. Cependant, dans le cas d'une fonction de production de Cobb-Douglas, nous obtenons un résultat clair qui est que la consommation par tête augmente à la suite d'une entrée d'immigrants clandestins.

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