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Croatia's Tourism Industry – Part 2: Curse or Blessing?

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  • Kristian Orsini
  • Mario Pletikosa

Abstract

Despite a generally benevolent view on the positive economic impact of tourism, some economists have long argued that a bloated tourism sector may crowd out other industries. The phenomenon is reminiscent of the Dutch Disease and is therefore sometimes dubbed the Beach Disease. The debate around it has often neglected the fact that while the impact of tourism on other tradable sectors may well be negative, its overall economic impact tends to be more ambiguous. In this paper, we distinctly analyse the two dimensions. Our results indicate that tourism development in Croatia is not likely to crowd out other tradable sectors. However, tourism is also unlikely to be as important for long-run growth as trade openness. These findings can be ascribed to the peculiarities of the Croatian tourism sector and already discussed in a previous Economic Brief on tourism in Croatia*, including a high leakage rate via imports and a limited impact on employment, which insulate tourism from the rest of the economy and limits potential positive (or negative) spillovers.

Suggested Citation

  • Kristian Orsini & Mario Pletikosa, 2019. "Croatia's Tourism Industry – Part 2: Curse or Blessing?," European Economy - Economic Briefs 047, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecobri:047
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    References listed on IDEAS

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    Cited by:

    1. Kristian Orsini & Arian Perić, 2021. "Understanding the Croatian Export Boom," European Economy - Economic Briefs 065, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Marija Beg & Martina Basarac Serti?, 0000. "The Signs Of Dutch Disease In Croatia," Proceedings of Economics and Finance Conferences 11413238, International Institute of Social and Economic Sciences.

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    More about this item

    Keywords

    Croatia; tourism; crowing-out; Beach Disease; growth; exports; Cobb-Douglas; augmented; export-led growth; tourism-led growth; Orsini; Pletikosa.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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