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Tourism, Trade and Domestic Welfare

Author

Listed:
  • Pasquale M. Sgro

    (Deakin University)

  • Jean-Jacques Nowak

    (Université Lille)

  • Mondher Sahli

    (Victoria University of Wellington)

Abstract
Tourism has been regarded as a major source of economic growth and a good source of foreign exchange earnings. Tourism has also been considered as an activity that imposes costs on the host country. Such costs include increased pollution, congestion and despoliation of fragile environments and intra-generational inequity aggravation. One aspect that has been ignored is the general equilibrium effects of tourism on the other sectors in the economy. These effects can be quite substantial and should be taken into account when assessing the net benefits of a tourism boom on an economy. This paper presents a model which captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. We examine the effect of a tourist boom on structural adjustment, commodity and factor prices and more importantly resident welfare. An important result obtained is that the tourist boom may “immiserize” the residents. This occurs because of two effects. The first, a favourable effect due to an increase in the relative price of the non-traded good which is termed the secondary terms of trade effect. The second, a negative effect due to an efficiency loss that occurs in the presence of increasing returns to scale in manufacturing. If this second effect outweighs the first effect, resident immiserization occurs.

Suggested Citation

  • Pasquale M. Sgro & Jean-Jacques Nowak & Mondher Sahli, 2004. "Tourism, Trade and Domestic Welfare," Working Papers 2004.24, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2004.24
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Beladi, Hamid & Chao, Chi-Chur & Hazari, Bharat R. & Laffargue, Jean-Pierre, 2009. "Tourism and the environment," Resource and Energy Economics, Elsevier, vol. 31(1), pages 39-49, January.
    2. Gasparino, Ugo & Bellini, Elena & del Corpo, Barbara & Malizia, William, 2008. "Measuring the Impact of Tourism Upon Urban Economies: A Review of Literature," Knowledge, Technology, Human Capital Working Papers 37846, Fondazione Eni Enrico Mattei (FEEM).
    3. Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Pasquale M. Sgro & Eden S. H. Yu, 2005. "Tourism, jobs, capital accumulation and the economy: A dynamic analysis," Working Papers halshs-00590811, HAL.
    4. Malgorzata Ogonowska & Dominique Torre, 2014. "Towards a Sustainable Tourism," GREDEG Working Papers 2014-45, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    5. Brishti Guha, 2006. "Green revolutions and miracle economies: Agricultural innovations, trade and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(2), pages 209-230.
    6. Nizar, Muhammad Afdi, 2013. "Pengaruh Pariwisata Terhadap Perdagangan Internasional Di Indonesia [effect of tourism on international trade in Indonesia]," MPRA Paper 65631, University Library of Munich, Germany.
    7. Stefan F. Schubert & Juan Gabriel Brida, 2008. "Dynamic Effects of Subsidizing the Tourism Sector," Tourism Economics, , vol. 14(1), pages 57-80, March.
    8. Kazuhiro Testu, 2006. "Tourism Promotion and Regional Development in Low-income Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(3), pages 417-424.
    9. Wattanakuljarus, Anan & Coxhead, Ian, 2008. "Is tourism-based development good for the poor?: A general equilibrium analysis for Thailand," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 929-955.
    10. Mustafa Terzioglu & Ummuhan Gokovali, 2016. "Economic linkages and leakages in the hotel industry," Tourism Economics, , vol. 22(4), pages 715-728, August.
    11. Zhang, Wei-Bin, 2015. "Tourism, Trade, Externalities, And Public Goods In A Three-Sector Growth Model," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 6(1), pages 1-19.
    12. Claudio Calero & Lindsay W Turner, 2020. "Regional economic development and tourism: A literature review to highlight future directions for regional tourism research," Tourism Economics, , vol. 26(1), pages 3-26, February.
    13. Chi-Chur Chao & Pasquale M. Sgro, 2008. "Environmental Control, Wage Inequality and National Welfare for a Tourism Economy," Working Papers 78, Sapienza University of Rome, CIDEI.
    14. Marie-Eve Yergeau & Dorothée Boccanfuso & Jonathan Goyette, 2014. "Conservation and welfare: Toward a reconciliation of theory and facts," EcoMod2014 6716, EcoMod.
    15. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(609), W), pages 103-126, Winter.
    16. Wei-Bin ZHANG, 2015. "Tourism, Trade And Wealth Accumulation With Endogenous Income And Wealth Distribution Among Countries," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(1), pages 1-1, January.
    17. Prof. Wei-Bin Zhang, 2015. "Economic Oscillations in a Multi-Country Growth Model with Free Trade and Tourism," Eurasian Business & Economics Journal, Eurasian Academy Of Sciences, vol. 2(2), pages 1-19, July.
    18. Juan Gabriel Brida & Stefan Franz Schubert, 2008. "The Economic Effects Of Advertising On Tourism Demand," Economics Bulletin, AccessEcon, vol. 6(45), pages 1-16.

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    More about this item

    Keywords

    Tourism; Trade welfare;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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