Less Developed Countries, Tourism Investments and Local Economic Development
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.
|Date of creation:||Sep 2009|
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The Warwick Economics Research Paper Series (TWERPS)
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CEPR Discussion Papers
1365, C.E.P.R. Discussion Papers.
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- Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
- Rodriguez-Clare, Andres, 1996. "Multinationals, Linkages, and Economic Development," American Economic Review, American Economic Association, vol. 86(4), pages 852-873, September.
- 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.
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