Tourism and economic development: The beach disease?

Abstract

This paper analyses empirically the danger of a Dutch Disease Effect in tourism-dependent countries in the long run. Data on 134 countries of the world over the period 1970-2007 is used. In a first step the long-run relationship between tourism and economic growth is analysed in a crosscountry setting. The results are then checked in a panel data framework on GDP per capita levels that allows to control for reverse causality, non-linearity and interactive effects. It is found that there is no danger of a Beach Disease Effect. On the contrary, tourism-dependent countries do not face real exchange rate distortion and deindustrialization but higher than average economic growth rates. Investment in physical capital, such as transport infrastructure, is complementary to investment in tourism.

Gaming Tourism Boom, Foreign Currency Inflows, andDutch Disease Effects: an Empirical Model for Macau

“…Conversely, [20] provided an empirical analysis to assess the long-run danger of a DD effect in tourism-dependent countries named "Beach Disease Effect" in [20]. This analysis concluded that there was no reason to fear a "Beach Disease Effect", at least in the long-run, and that most of the indirect effects of tourism should operate through physical and human capital channels.…”

How much money grows on trees: case of Asian Region

“…When more people visit the country attracted by the greenery and natural beauty there, it will result in revenue generation and hence can contribute to the economic growth of the country, e.g. Mehmood et al, (2014), Marrocu &Paci (2011), andHolzner, (2011). The increased GDP, in turn, can provide more opportunities for the enhancement of tourism by providing the financial assistance and proper management.…”

Does Tourism Sustain Economic Growth? Wavelet-Based Evidence From the United States

“…Studies also show that tourism has significant positive effects on economic growth in EU countries (Holzner, 2011;Albalate & Bel 2010) suggesting that tourism enhances economic growth in the long run. Mihalic (2002) argues numerous benefit of tourism as a growing tactic via export of goods and services.…”