Economic growth and market segment choice in tourism-based economies

Sauveur Giannoni (), Juan Hernández and Jorge Pérez-Rodríguez
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Sauveur Giannoni: Università di Corsica Pasquale Paoli [Université de Corse Pascal Paoli], LISA - Laboratoire « Lieux, Identités, eSpaces, Activités » (UMR CNRS 6240 LISA) - CNRS - Centre National de la Recherche Scientifique - Università di Corsica Pasquale Paoli [Université de Corse Pascal Paoli]
Juan Hernández: ULPGC - Universidad de las Palmas de Gran Canaria
Jorge Pérez-Rodríguez: ULPGC - Universidad de las Palmas de Gran Canaria

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Abstract: Many regions and countries seek to develop their tourism industry as a strategy for economic growth. A growing body of research supports the hypothesis of tourism-led growth. This paper contributes to the existing literature in two ways. First, it proposes a new mechanism for sustained tourism-led growth, emphasising the crucial importance of the market segment in which a tourist destination wishes to operate. Second, it shows how a destination that is experiencing stagnation can temporarily boost its performance and improve its long-term welfare by reorienting the supply from a highly price-sensitive mass tourism product towards a more selective one of the luxury tourism. This change in focus is discussed in the light of the experience of two Spanish archipelagos. The empirical results obtained highlight the evident success of the reorientation strategy in one of these cases. The model provides theoretical support for the implementation of tourist product restructuring policies in economies that are reliant on tourism.

Keywords: economic growth; tourism-based economies; marketsegment switching strategy; Romer model; sustained growth (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://hal.science/hal-04653583v1
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Published in Empirical Economics, 2019, 59 (3), pp.1435-1452. ⟨10.1007/s00181-019-01668-7⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04653583

DOI: 10.1007/s00181-019-01668-7

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