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Less Developed Countries, Tourism Investments and Local Economic Development

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  • R. Andergassen
  • G. Candela

Abstract

The present paper analyzes the forward linkages of a multinational s investment in a resort which kicks off tourism activity in a LDC. We show that, under quite natural assumptions, overnight stays are increasing in the number of tourism related, differentiated goods and services supplied in equilibrium. These goods and services, if supplied by the local community, represent forward linkages of FDI in tourism. We investigate the multinational s incentives to promote, reduce or eliminate these forward linkages and the effectiveness of some policy instruments available to a local government to leverage on the presence of FDI and to stimulate domestic entrepreneurship.

Suggested Citation

  • R. Andergassen & G. Candela, 2009. "Less Developed Countries, Tourism Investments and Local Economic Development," Working Papers 676, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:676
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    References listed on IDEAS

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    1. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Multinational Corporations and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 8, pages 101-133, Palgrave Macmillan.
    2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    3. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    4. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    5. Rodriguez-Clare, Andres, 1996. "Multinationals, Linkages, and Economic Development," American Economic Review, American Economic Association, vol. 86(4), pages 852-873, September.
    6. Blomstrom, Magnus & Kokko, Ari, 1998. "Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
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    Cited by:

    1. Ahmad Jafari Samimi & Somaye Sadeghi & Soraya Sadeghi, 2013. "The Relationship between Foreign Direct Investment and Tourism Development: Evidence from Developing Countries," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(2), pages 59-68, July.
    2. Rainer Andergassen & Guido Candela & Paolo Figini, 2017. "The management of tourism destinations," Tourism Economics, , vol. 23(1), pages 49-65, February.
    3. Andergassen, Rainer & Candela, Guido & Figini, Paolo, 2013. "An economic model for tourism destinations: Product sophistication and price coordination," Tourism Management, Elsevier, vol. 37(C), pages 86-98.
    4. Rakela Thano, 2013. "Touristic Investments in Saranda Region," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(2), pages 1-9, April.
    5. Sung Yu-Chi & Hung-Pin Lin, 2018. "Causality Relationship between Tourism, Foreign Direct Investment and Economic Growth in Taiwan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(3), pages 287-293, September.
    6. Llesh Lleshaj & Arben Malaj, 2016. "The Impact of Foreign Direct Investments (FDIs) on Economic Growth: The Solow Model in the Case of Albania," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 2, January -.
    7. Xinhua Gu & Pui Sun Tam & Chun Kwok Lei & Xiao Chang, 2016. "The Economics of Taxation in Casino Tourism with Cross-border Market Power," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 113-125, February.
    8. Rakela Thano, 2013. "Touristic Investments In Saranda Region," Romanian Economic Business Review, Romanian-American University, vol. 8(2), pages 117-130, June.
    9. Daniel Bulin, 2014. "Tourism Industry Worldwide – Testing Some Correlations Between Essential Indicators," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(2), pages 56-65, November.

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