Croatia's Tourism Industry – Part 2: Curse or Blessing?

Kristian Orsini and Mario Pletikosa

No 47, European Economy - Economic Briefs from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Despite a generally benevolent view on the positive economic impact of tourism, some economists have long argued that a bloated tourism sector may crowd out other industries. The phenomenon is reminiscent of the Dutch Disease and is therefore sometimes dubbed the Beach Disease. The debate around it has often neglected the fact that while the impact of tourism on other tradable sectors may well be negative, its overall economic impact tends to be more ambiguous. In this paper, we distinctly analyse the two dimensions. Our results indicate that tourism development in Croatia is not likely to crowd out other tradable sectors. However, tourism is also unlikely to be as important for long-run growth as trade openness. These findings can be ascribed to the peculiarities of the Croatian tourism sector and already discussed in a previous Economic Brief on tourism in Croatia*, including a high leakage rate via imports and a limited impact on employment, which insulate tourism from the rest of the economy and limits potential positive (or negative) spillovers.

Keywords: Croatia; tourism; crowing-out; "Beach Disease"; growth; exports; "Cobb-Douglas"; augmented; "export-led growth"; "tourism-led growth"; Orsini; Pletikosa. (search for similar items in EconPapers)
JEL-codes: C32 C51 E13 F43 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2019-07
New Economics Papers: this item is included in nep-int and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:ecobri:047

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