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Tourism and Economic Development: the Beach Disease?

  • Mario Holzner

    ()

    (The Vienna Institute for International Economic Studies, wiiw)

This paper analyses empirically the danger of a Dutch Disease Effect in tourism-dependent countries in the long run. Data on 134 countries of the world over the period 1970-2007 is used. In a first step the long-run relationship between tourism and economic growth is analysed in a cross-country setting. The results are then checked in a panel data framework on GDP per capita levels that allows to control for reverse causality, non-linearity and interactive effects. It is found that there is no danger of a Beach Disease Effect. On the contrary, tourism-dependent countries do not face real exchange rate distortion and deindustrialization but higher than average economic growth rates. Investment in physical capital, such as transport infrastructure, is complementary to investment in tourism.

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File URL: http://www.wiiw.ac.at/tourism-and-economic-development-the-beach-disease--dlp-2173.pdf
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Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 66.

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Length: 31 pages including 9 Tables and 1 Figure
Date of creation: Jun 2010
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:66
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  1. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
  2. Juan Luis Eugenio-Martín & Noelia Martín Morales & Riccardo Scarpa, 2004. "Tourism and Economic Growth in Latin American Countries: A Panel Data Approach," Working Papers 2004.26, Fondazione Eni Enrico Mattei.
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