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The effect of Dutch disease in the tourism sector: the case of Mediterranean countries

Author

Listed:
  • Nesrin Tuncay

    (Necmettin Erbakan University Faculty of Tourism, Department of Tourism Management, Meram / Konya, Turkey)

  • Ceyhun Can Özcan

    (Necmettin Erbakan University Faculty of Tourism, Department of Tourism Management, Meram / Konya, Turkey)

Abstract

Purpose – A flourishing tourism sector can produce the same increase in income as that from natural resource exports. Unlike the oil, gas, and mineral extraction industries, which cause depletion of natural resources, the tourism industry has the potential to become a renewable industry, if well managed. In this context, the aim of this study is to investigate the existence of the Dutch disease effect in Mediterranean countries with high tourism dependence. Design – The data set used in this study was from 1996-2015, and it was obtained from the 2017 World Development Indicator [WDI] database. The logarithms of all variables were added to the model. In the study, 17 selected Mediterranean countries (Albania, Algeria, Bosnia and Herzegovina, Cyprus, Croatia, Egypt, France, Greece, Italy, Israel, Lebanon, Malta, Morocco, Slovenia, Spain, Tunisia, and Turkey) were used. Methodology – In the study, the methods used by Figini and Vici (2009), Holzner (2011), Ghalia and Fidrmuc (2015) are followed. In addition, Panel AMG, CCE co-integration estimators were used. Findings –The panel data analysis results for the country group imply that the Dutch disease does not exist overall but, on the other hand, the country based results reveal existence of the Dutch disease in some of the Mediterranean countries (Albania, Bosnia and Herzegovina, Croatia, Egypt, Greece, Italy, Morocco, and Turkey). Originality of the Research – The originality of this study is twofold. First of all, to our knowledge, this is the first study investigating the Dutch disease in the Mediterranean countries. Moreover, the study employs recently developed panel data econometric methods and allows us to get results for each economy separately, unlike conventional panel data analysis methods. Therefore, we predict that this study will make an important contribution to the literature.

Suggested Citation

  • Nesrin Tuncay & Ceyhun Can Özcan, 2020. "The effect of Dutch disease in the tourism sector: the case of Mediterranean countries," Tourism and Hospitality Management, University of Rijeka, Faculty of Tourism and Hospitality Management, vol. 26(1), pages 97-114, June.
    • Handle: RePEc:tho:journl:v:26:y:2020:n:1:p:97-114
    DOI: https://doi.org/10.20867/thm.26.1.6
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    References listed on IDEAS

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    1. 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, December.
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    3. Javier Capó Parrilla & Antoni Riera Font & Jaume Rosselló Nadal, 2005. "Dutch Disease in Tourism Economies. Evidence from Spain," CRE Working Papers (Documents de treball del CRE) 2005/01, Centre de Recerca Econòmica (UIB ·"Sa Nostra"), revised Jan 2005.
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    6. E. Çaglayan & N. Sak & K. Karymshakov, 2012. "Relationship between Tourism and Economic Growth: A Panel Granger Causality Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(5), pages 591-602, September.
    7. M. Hashem Pesaran, 2006. "Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure," Econometrica, Econometric Society, vol. 74(4), pages 967-1012, July.
    8. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, February.
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    Cited by:

    1. 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.
    2. Uzma Khan, 2020. "Does Tourism Boost Economic Growth: Evidence from Italy," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 214-222.

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    More about this item

    Keywords

    Tourism Sector; Dutch Disease; Mediterranean Countries;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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