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Less Developed Countries, Tourism Investments and Local Economic Development


  • R. Andergassen
  • G. Candela


The present paper analyzes the forward linkages of a multinational’s investment in a resort which kicks off tourism activity in a LDC. We show that, under quite natural assumptions, overnight stays are increasing in the number of tourism related, differentiated goods and services supplied in equilibrium. These goods and services, if supplied by the local community, represent forward linkages of FDI in tourism. We investigate the multinational’s incentives to promote, reduce or eliminate these forward linkages and the effectiveness of some policy instruments available to a local government to leverage on the presence of FDI and to stimulate domestic entrepreneurship.

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  • R. Andergassen & G. Candela, 2009. "Less Developed Countries, Tourism Investments and Local Economic Development," Working Papers 676, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:676

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    References listed on IDEAS

    1. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    2. Rodriguez-Clare, Andres, 1996. "Multinationals, Linkages, and Economic Development," American Economic Review, American Economic Association, vol. 86(4), pages 852-873, September.
    3. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
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    Cited by:

    1. Ahmad Jafari Samimi & Somaye Sadeghi & Soraya Sadeghi, 2013. "The Relationship between Foreign Direct Investment and Tourism Development: Evidence from Developing Countries," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(2), pages 59-68, July.
    2. repec:eee:touman:v:37:y:2013:i:c:p:86-98 is not listed on IDEAS
    3. repec:eur:ejesjr:85 is not listed on IDEAS
    4. Xinhua Gu & Pui Sun Tam & Chun Kwok Lei & Xiao Chang, 2016. "The Economics of Taxation in Casino Tourism with Cross-border Market Power," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 113-125, February.
    5. Rakela Thano, 2013. "Touristic Investments In Saranda Region," Romanian Economic Business Review, Romanian-American University, vol. 8(2), pages 117-130, June.
    6. Rakela Thano, 2013. "Touristic Investments in Saranda Region," Journal of Knowledge Management, Economics and Information Technology,, vol. 3(2), pages 1-9, April.
    7. Daniel Bulin, 2014. "Tourism Industry Worldwide – Testing Some Correlations Between Essential Indicators," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(2), pages 56-65, November.

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