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Economic Policy, Tourism Trade and Productive Diversification


  • Iza Lejárraga
  • Peter Walkenhorst


Over the past two decades, tourism exports have been a major driver of economic growth in many emerging and developing countries. Yet, increased tourism revenues do not automatically translate into structural transformation and broad-based economic development. Drawing on cross-sectional data, this paper gauges the extent to which tourism has contributed to economic diversification in a large sample of developing countries. An econometric model is used to assess the relative importance of a country’s natural endowments, level of development, institutional maturity, business environment, and trade regulations in explaining cross-country differences in linkages between tourism and the general economy. The central findings contain encouraging lessons for developing countries: domains that are more amenable to policy interventions in the short term, such as the business environment or trade regulations, matter most in fostering productive linkages between tourism and the general economy. In contrast, fixed factors, such as land availability, or longer-terms goals, such as advances in the level of development, have less influence.

Suggested Citation

  • Iza Lejárraga & Peter Walkenhorst, 2013. "Economic Policy, Tourism Trade and Productive Diversification," Working Papers 2013-07, CEPII research center.
  • Handle: RePEc:cii:cepidt:2013-07

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    References listed on IDEAS

    1. Rinaldo Brau & Adriana Di Liberto & Francesco Pigliaru, 2011. "Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots?," The World Economy, Wiley Blackwell, vol. 34(3), pages 444-472, March.
    2. Adamos Adamou & Sofronis Clerides, 2010. "Prospects and Limits of Tourism-Led Growth: The International Evidence," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 2(3), pages 287-303, September.
    3. Glenn Jenkins & HEDI LAHOUEL, 1981. "Inflation And Taxation," Development Discussion Papers 1981-08, JDI Executive Programs.
    4. Brau, Rinaldo & Lanza, Alessandro & Pigliaru, Francesco, 2007. "How Fast are Small Tourism Countries Growing? Evidence from the Data for 1980–2003," MPRA Paper 82776, University Library of Munich, Germany.
    5. Richard Newfarmer & William Shaw & Peter Walkenhorst, 2009. "Breaking Into New Markets," World Bank Publications, The World Bank, number 2616.
    6. Chen, Lein Lein & Devereux, John, 1999. "Tourism and Welfare in Sub-Saharan Africa: A Theoretical Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 209-227, July.
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    Cited by:

    1. Reis, Jose Guilherme & Varela, Gonzalo, 2013. "Travel channel meets discovery channel or how tourism can encourage better export performance and diversification in Nepal," Policy Research Working Paper Series 6669, The World Bank.
    2. Reis, José Guilherme & Varela, Gonzalo, 2013. "Can Tourism Encourage Better Export Performance and Diversification in Nepal?," World Bank - Economic Premise, The World Bank, issue 127, pages 1-6, October.

    More about this item


    Tourism linkages; economic development; business enviroment;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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