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Tourism and Economic Development: the Beach Disease?

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  • Mario Holzner

    (The Vienna Institute for International Economic Studies, wiiw)

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 cross-country 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.

Suggested Citation

  • Mario Holzner, 2010. "Tourism and Economic Development: the Beach Disease?," wiiw Working Papers 66, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:wpaper:66
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    More about this item

    Keywords

    tourism; Dutch Disease; economic development;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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