Tourism, Trade and Domestic Welfare
AbstractTourism 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.24.
Date of creation: Feb 2004
Date of revision:
Tourism; Trade welfare;
Other versions of this item:
- F10 - International Economics - - Trade - - - General
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-48, December.
- Horst Herberg & Murray C. Kemp, 1969. "Some Implications of Variable Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 403-415, August.
- Hazari, Bharat R. & A-Ng, 1993. "An analysis of tourists' consumption of non-traded goods and services on the welfare of the domestic consumers," International Review of Economics & Finance, Elsevier, vol. 2(1), pages 43-58.
- Bird, Richard M., 1992. "Taxing tourism in developing countries," World Development, Elsevier, vol. 20(8), pages 1145-1158, August.
- Panagariya, Arvind, 1980. "Variable returns to scale in general equilibrium theory once again," Journal of International Economics, Elsevier, vol. 10(4), pages 499-526, November.
- Martin, John P. & Neary, J. Peter, 1980. "Variable labour supply and the pure theory of international trade : An empirical note," Journal of International Economics, Elsevier, vol. 10(4), pages 549-559, November.
- Copeland, Brian R, 1991. "Tourism, Welfare and De-industrialization in a Small Open Economy," Economica, London School of Economics and Political Science, vol. 58(232), pages 515-29, November.
- Schubert, Stefan Franz, 2009. "Coping with Externalities in Tourism - A Dynamic Optimal Taxation Approach," MPRA Paper 16736, University Library of Munich, Germany.
- Brishti Guha, 2005.
"Green Revolutions and Miracle Economies : Agricultural Innovation, Trade and Growth,"
20-2005, Singapore Management University, School of Economics.
- Brishti Guha, 2006. "Green revolutions and miracle economies: Agricultural innovations, trade and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(2), pages 209-230.
- Brishti Guha, 2005. "Green Revolutions and Miracle Economies : Agricultural Innovation, Trade and Growth," Development Economics Working Papers 22424, East Asian Bureau of Economic Research.
- Kazuhiro Testu, 2006. "Tourism Promotion and Regional Development in Low-income Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(3), pages 417-424.
- Cheng, Ka Ming & Kim, Hyeongwoo & Thompson, Henry, 2009. "The Exchange Rate and US Tourism Balance of Trade," MPRA Paper 18318, University Library of Munich, Germany.
- Juan Gabriel Brida & Stefan Franz Schubert, 2008. "The Economic Effects Of Advertising On Tourism Demand," Economics Bulletin, AccessEcon, vol. 6(45), pages 1-16.
- Stefania Lionetti & Juan Gabriel Brida & Wiston Adrián Risso, 2009. "Long run economic growth and tourism: inferring from Uruguay," Quaderni della facoltÃ di Scienze economiche dell'UniversitÃ di Lugano 0901, USI Università della Svizzera italiana.
- Schubert, Stefan Franz & Brida, Juan Gabriel, 2008. "The Dynamic Effects of Subsidizing the Tourism Sector," MPRA Paper 16755, University Library of Munich, Germany.
- Dr. Riadh Ben Jelili , Dr. Adel Abdel-Azim Ebrahim, . "Tourism in Arab South Mediterranean Countries: The Competitiveness Challenge," API-Working Paper Series 1006, Arab Planning Institute - Kuwait, Information Center.
- repec:hal:wpaper:halshs-00590811 is not listed on IDEAS
- Shi, Hui, 2012. "The efficiency of government promotion of inbound tourism: The case of Australia," Economic Modelling, Elsevier, vol. 29(6), pages 2711-2718.
- Schubert, Stefan Franz & Brida, Juan Gabriel, 2009. "A Dynamic Model of Economic Growth in a Small Tourism Driven Economy," MPRA Paper 16737, University Library of Munich, Germany.
- Biswas, Anindya & Mandal, Biswajit & Saha, Nitesh, 2013. "Foreign capital and exchange rate movement in developing economies: a theoretical note," MPRA Paper 52468, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (barbara racah).
If references are entirely missing, you can add them using this form.