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Tourism, Dutch Disease And Welfare In An Open Dynamic Economy

Author

Listed:
  • CHI-CHUR CHAO
  • BHARAT R. HAZARI
  • JEAN-PIERRE LAFFARGUE
  • PASQUALE M. SGRO
  • EDEN S. H. YU

Abstract

This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations.
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Suggested Citation

  • Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2006. "Tourism, Dutch Disease And Welfare In An Open Dynamic Economy," The Japanese Economic Review, Japanese Economic Association, vol. 57(4), pages 501-515.
  • Handle: RePEc:bla:jecrev:v:57:y:2006:i:4:p:501-515
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-5876.2006.00400.x
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    Cited by:

    1. John M. Piotrowski & Rabah Arezki & Reda Cherif, 2009. "Tourism Specialization and Economic Development; Evidence from the UNESCO World Heritage List," IMF Working Papers 09/176, International Monetary Fund.
    2. 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.
    3. Inchausti-Sintes, Federico, 2015. "Tourism: Economic growth, employment and Dutch Disease," Annals of Tourism Research, Elsevier, vol. 54(C), pages 172-189.
    4. repec:eee:touman:v:55:y:2016:i:c:p:272-275 is not listed on IDEAS
    5. Shi, Hui, 2012. "The efficiency of government promotion of inbound tourism: The case of Australia," Economic Modelling, Elsevier, vol. 29(6), pages 2711-2718.
    6. Maruska Vizek & Marina Tkalec, 2014. "The Price Tag Of Tourism: Do Small Open Economies Dependent On Tourism Revenues Experience Higher Prices Of Goods And Services?," Proceedings of International Academic Conferences 0301622, International Institute of Social and Economic Sciences.
    7. Shahzad, Syed Jawad Hussain & Shahbaz, Muhammad & Ferrer, Román & Kumar, Ronald Ravinesh, 2017. "Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach," Tourism Management, Elsevier, vol. 60(C), pages 223-232.
    8. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 103-126, Winter.
    9. Akihiko Yanase, 2015. "Investment in Infrastructure and Effects of Tourism Boom," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 425-443, May.
    10. Holzner, Mario, 2011. "Tourism and economic development: The beach disease?," Tourism Management, Elsevier, vol. 32(4), pages 922-933.
    11. Chou, Ming Che, 2013. "Does tourism development promote economic growth in transition countries? A panel data analysis," Economic Modelling, Elsevier, vol. 33(C), pages 226-232.
    12. repec:hur:ijarbs:v:7:y:2017:i:11:p:643-666 is not listed on IDEAS
    13. repec:bla:metroe:v:68:y:2017:i:4:p:1001-1018 is not listed on IDEAS
    14. repec:eee:touman:v:40:y:2014:i:c:p:273-281 is not listed on IDEAS
    15. Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Eden S. H. Yu, 2009. "A Dynamic Model Of Tourism, Employment And Welfare: The Case Of Hong Kong," Pacific Economic Review, Wiley Blackwell, vol. 14(2), pages 232-245, May.
    16. Chen, Ping-ho & Lai, Ching-chong & Chu, Hsun, 2016. "Welfare effects of tourism-driven Dutch disease: The roles of international borrowings and factor intensity," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 381-394.
    17. Ratbek Dzhumashev & Jaai Parasnis, 2011. "Taxation and Migration: Policies to Manage a Resource Boom," Monash Economics Working Papers 33-11, Monash University, Department of Economics.
    18. João Sousa Andrade & António Portugal Duarte, 2013. "The Dutch Disease in the Portuguese Economy," GEMF Working Papers 2013-05, GEMF, Faculty of Economics, University of Coimbra.
    19. Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2005. "Tourism, jobs, capital accumulation and the economy: A dynamic analysis," Working Papers halshs-00590811, HAL.
    20. Zhang, Wei-Bin, 2015. "Tourism, Trade, Externalities, And Public Goods In A Three-Sector Growth Model," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 6(1), pages 1-19.
    21. Wei-Bin ZHANG, 2015. "Tourism, Trade And Wealth Accumulation With Endogenous Income And Wealth Distribution Among Countries," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(1), pages 1-1, January.
    22. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 103-126, Winter.
    23. repec:bla:reviec:v:25:y:2017:i:3:p:607-625 is not listed on IDEAS
    24. Juin‐Jen Chang & Lee‐Jung Lu & Shih‐Wen Hu, 2011. "Congestion Externalities of Tourism, Dutch Disease and Optimal Taxation: Macroeconomic Implications," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 90-108, March.
    25. repec:beo:journl:v:62:y:2017:i:213:p:93-128 is not listed on IDEAS

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