Coastal Tourism and ‘Dutch Disease’ in a Small Island Economy

Abstract

Using the embryonic ‘Dutch disease’ literature on tourism, this paper examines the economy-wide effects of an inbound tourism boom on a small open island economy. It illustrates a range of new findings not present in traditional tourism economics literature. This paper also addresses the complexities that surround the economic evaluation of the net effect of tourism growth on the host community. An important result obtained here is that increased inbound tourism may lead to net welfare losses when tourism products are intensive users of coastal land. Thus, this paper provides a warning to researchers and practitioners of the need to evaluate both the tourism sector's overall impacts on the host economy and its net effect on the community when considering its expansion.