The Economics of Tourism and Sustainable Development
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The Economics of Tourism and Sustainable Development

  • The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Alessandro Lanza, Anil Markandya and Francesco Pigliaru

Although economics has increasingly become a technical subject, this accessible book aims to present important economics results and relate them explicitly to the policy debate. Using a coherent analytical framework, this unique approach offers prescriptions for moving tourism, and economic development more generally, closer to a sustainable ideal. The authors begin by studying the macroeconomic effect of tourism in terms of growth performance and sources of growth. They also examine how the tourism–growth link is affected by the role of imports in the economy, and how tourism impacts upon land use. Further chapters investigate the important issue of forecasting visitor numbers and explore the need for a comprehensive accounting framework to take account of ecologically sustainable tourism. The authors also examine the microeconomic aspects of sustainable tourism and analyse the increasing popularity of environmentally friendly holidays.
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Chapter 1: An investigation on the growth performance of small tourism countries

Rinaldo Brau, Alessandro Lanza and Francesco Pigliaru

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1. An investigation on the growth performance of small tourism countries1 Rinaldo Brau, Alessandro Lanza and Francesco Pigliaru 1. INTRODUCTION In a recent paper, Easterly and Kraay (2000) investigate whether or not being small represents an economic disadvantage for a country. Their finding is that smaller countries are not poorer than average, nor that they grow more slowly. Similar results are also provided by Armstrong and Read (1995) and Armstrong et al. (1998). Yet reasons for being pessimistic are not difficult to find, especially in literature on endogenous growth, where scale effects often play a role in the determination of an economy’s growth rate (Grossman and Helpman, 1991; Aghion and Howitt, 1998). Likewise, countries which rely strongly on international tourism are suspected of being locked into a slow growth path. Again, endogenous growth theories tend to emphasize the virtues of high-tech sectors, whose potential for high long-run growth is regarded as more promising than that of non-high-tech service sectors such as tourism.2 In addition, countries in which tourism is the prominent sector are often very small. So expectations about their economic performance are not high, to say the least. Nevertheless, this pessimistic perspective is challenged by a growing stream of literature on small and island countries’ economic performance, where tourism is generally associated to higher than average income levels (e.g. Read, 2004 for a recent survey). In this chapter we assess the reliability of these different views about the likely role of tourism as a growth engine...

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