The macroeconomic consequences of quality improvement policies in advanced tourism-led economies

Federico Inchausti-Sintes

Current Issues in Tourism, 2020, vol. 23, issue 24, 3073-3092

Abstract: Traditional sun-and-beach destinations in advanced economies are facing increased competition from cheaper destinations in emerging countries. In contrast to other capital-intensive sectors, tourism, as a service-based activity, cannot make significant productivity gains to improve its competitiveness. Moreover, tourism-led economies have an underdeveloped industrial sector that limits opportunities for economic diversification. In this context, this paper presents a three-country dynamic CGE model to analyze the role of tourism quality improvements to achieve sustainable long-term economic growth in mature destinations in a context of international capital movements. According to the results, tourism-led economies may converge in real salaries with wealthier economies when focusing on high-end visitors. On the other hand, cheaper destinations achieve better returns from tourism activity in diversified economies.

Date: 2020
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DOI: 10.1080/13683500.2019.1679094

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