Modeling Economic Growth with Tourism for Small Open Economies

18 Pages Posted: 31 Oct 2017

See all articles by Peter Josef Stauvermann

Peter Josef Stauvermann

Changwon National University

Ronald R. Kumar

University of the South Pacific

Date Written: November 2017

Abstract

The purpose of the paper is to develop an economic growth model and analyze the impact of changes in tourists’ income on the growth of tourism dependent small open economies. We use a general theoretical construct to answer the question of how the price elasticity of tourism demand, income elasticity of tourism demand, and the concentration in the service sector influence the economic development of small economies. One of the main results is that the policy planners in small open economies may consider specific policies to influence the strength of market competition. An ensuing effect of such policies is that the labor incomes will increase. The approach provides a microeconomic foundation for macroeconomic modeling which can be used for applied research, and the model can be easily extended to examine other dimensions of economic development.

Suggested Citation

Stauvermann, Peter Josef and Kumar, Ronald Ravinesh, Modeling Economic Growth with Tourism for Small Open Economies (November 2017). Metroeconomica, Vol. 68, Issue 4, pp. 1001-1018, 2017, Available at SSRN: https://ssrn.com/abstract=3062299 or http://dx.doi.org/10.1111/meca.12161

Peter Josef Stauvermann (Contact Author)

Changwon National University

Changwon
Korea, Republic of (South Korea)

Ronald Ravinesh Kumar

University of the South Pacific ( email )

Laucala Campus
Suva
Fiji

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