Tourism growth and regional resilience

João Romão, João Guerreiro and Paulo Rodrigues
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João Romão: CEFAGE – UAlg, University of Algarve, Portugal
João Guerreiro: CIEO, University of Algarve, Portu

Tourism Economics, 2016, vol. 22, issue 4, 699-714

Abstract: As a consequence of the international financial crisis in 2007, the region of Algarve, where tourism plays an important economic and social role, suffered a decrease in tourism demand, while unemployment increased sharply. Although tourism activities registered a quick recovery, unemployment levels continued to grow. This article examines the impacts of tourism activities on the sectorial structure of the regional economy, using a Bayesian vector autoregressive model. The results reveal that tourism growth did not automatically create the expected positive impacts on the economic performance of the other sectors, as was expressed by the objectives defined in the regional development strategies over the last two decades. The positive impacts of tourism were concentrated in the production of non-tradable goods and the construction sector, leading to a significant reduction of the weight of the tradable sector within the regional economy, similar to a process of deindustrialization described as the ‘Dutch disease’. The decline of construction activities after 2007 has led to a significant increase of regional unemployment, although tourism growth has returned to ‘pre-crisis’ levels, revealing the lack of regional resilience.

Keywords: Bayesian vector autoregressive model; employment; regional development; socioeconomic impacts; specialization (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:22:y:2016:i:4:p:699-714

DOI: 10.1177/1354816616654243

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