Stabilization Policies for the Tourist Sector

Over the past few decades, tourism has increasingly been included in economic policies at all levels. Not surprisingly, the tourism sector is highly satisfied with this development: the inclusion in economic policies can be taken as an indication of its acceptance as a respectable player — on equal terms with other types of business operations. However, despite the general acceptance and approval of the contribution of tourism to the economy and employment, policies seem to neglect certain characteristics of the tourist trade. This article examines a critical issue: the turbulence caused by exits and entries of firms. Data from the tourism sector in Denmark serve to illustrate the problems with considerable turbulence in the population of tourism enterprises. Instability can be regarded as a major challenge for policy makers. Within the policy tradition of interventionism, two main types of measures can be identified. One tries to boost the sector through intensified marketing, without any attempt to influence inter-firm competition, believing that more demand will enhance survival. The other attempts to affect competitiveness, investments and productivity more directly; the reasoning here is that the business environment has a decisive impact on the turbulence. This article offers a taxonomy of specific policy instruments according to the latter philosophy.