Did tourism dependence exacerbate economic contractions over and above COVID? Preliminary evidence and clues for identifying optimal tourism levels

Abstract

ABSTRACT The COVID pandemic brought an unwelcome but rare natural quasi-experimental condition to empirically observe the effect of varying levels of tourism dependence on the intensity of economic contraction, vulnerability, and exposure to risks faced by countries when extreme circumstances and global shock events such as COVID cause travel and tourism activity to contract to zero or near-zero levels. Previous studies examining how to optimize tourism specialization, activity, or carrying capacity have thus far ignored scenarios in which global and local travel could be severely curtailed in such short, unexpected, manner and on a massive scale involving nearly all countries. This study aims to fill this knowledge void. Findings suggest that while almost all economies faced extraordinary contraction in 2020 due to the COVID pandemic, countries more heavily reliant on tourism for economic growth fared more poorly. Analysis also suggests that tourism dependence likely inflicted greater impact on economic contraction than the pandemic itself. Implications for long-term sustainable tourism levels incorporating worst case scenarios and based on the rare circumstance ushered by the pandemic are discussed.