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Tourism and Economic Development: A Survey


  • M. Thea Sinclair


Faced with the problems of declining terms of trade for agricultural products and high levels of protection against manufacturs, many developing countries have turned to tourism as a possible alternative source of growth. This paper provides a comprehensive survey of the literature on tourism and economic development, identifying both the contribution that tourism can make to development and the costs that it entails. Single equation and system of equations models which have been used to estimate tourism demand are provided and evaluated. The estimated elasticity values indicate developing countries' potential to benefit from increasing expenditure on tourism but their susceptibility to deterioration in price competitiveness. The economic features of the main sectors of tourism supply - transportation, tour operators, travel agents and accommodation - are examined and the role of cross-country integration between firms, operating in imperfectly competitive contexts, is highlighted. Tourism's considerable contributions to foreign currency, income and employment generation are examined. The paper argues that many of the problems associated with the use of developing countries' environmental resources for tourism stem from market failure. Methods which can be used to value such resources are provided and implications for using the market mechanism to increase returns from tourism are suggested.

Suggested Citation

  • M. Thea Sinclair, 1997. "Tourism and Economic Development: A Survey," Studies in Economics 9703, School of Economics, University of Kent.
  • Handle: RePEc:ukc:ukcedp:9703

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    References listed on IDEAS

    1. Carlos A. Végh Gramont, 1991. "Stopping High Inflation; An Analytical Overview," IMF Working Papers 91/107, International Monetary Fund.
    2. Sachs, Jeffrey D, 1996. "Economic Transition and the Exchange-Rate Regime," American Economic Review, American Economic Association, vol. 86(2), pages 147-152, May.
    3. S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    4. Rudiger Dornbusch & Stanley Fischer, 1986. "Stopping hyperinflations past and present," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 122(1), pages 1-47, March.
    5. Aslund Anders, 1994. "Lessons of the First Four Years of Systemic Change in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 19(1), pages 22-38, August.
    6. Richard Layard & Ansgar Richter, 1994. "Who Gains and Who Loses from Russian Credit Expansion," CEP Discussion Papers dp0200, Centre for Economic Performance, LSE.
    7. R. B. Johnston & Piroska M Nagy & Roy Pepper & Mauro Mecagni & Ratna Sahay & Mario I. Bléjer & Richard J Hides, 1992. "Albania; From Isolation Toward Reform," IMF Occasional Papers 98, International Monetary Fund.
    8. Ratna Sahay & Carlos A. Vegh, 1996. "Inflation and stabilization in transition economies: An analytical interpretation of the evidence," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(1), pages 75-108.
    9. Carlos A. Végh, 1992. "Stopping High Inflation: An Analytical Overview," IMF Staff Papers, Palgrave Macmillan, vol. 39(3), pages 626-695, September.
    10. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    11. Calvo, Guillermo A & Vegh, Carlos A, 1995. "Fighting Inflation with High Interest Rates: The Small Open Economy Case under Flexible Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 49-66, February.
    12. Peter J. Montiel, 1989. "Empirical Analysis of High-Inflation Episodes in Argentina, Brazil, and Israel," IMF Staff Papers, Palgrave Macmillan, vol. 36(3), pages 527-549, September.
    13. Ahmet Mancellari & Harry Papapanagos & Peter Sanfey, 1996. "Job creation and temporary emigration: the Albanian experience," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 471-490, October.
    14. Thomas D. Willett & Fahim Al-Marhubi, 1994. "Currency Policies for Inflation Control in the Formerly Centrally Planned Economies," The World Economy, Wiley Blackwell, vol. 17(6), pages 795-815, November.
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    More about this item


    Tourism; Development; Demand; Supply; Balance of Payments; Income; Employment; Instability; Environment;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries


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