Does Sun-and-Sea All-Inclusive Tourism Contribute to Poverty Alleviation and/or Income Inequality Reduction? The Case of the Dominican Republic

Abstract

Tourism represents one of the most important industries in the world and one of the sectors of fastest growth. An understanding of the relation between tourism and poverty is key for poverty reduction in developing countries. The impact of tourism on the reduction of both poverty and inequality in income distribution is analyzed in this paper in the Dominican Republic (within the Caribbean Community of Small Island Developing States). The Ng and Perron test for analyzing time series stationarity and the AutoRegressive Distributed Lag bounds test were used to determine the existence of long-term relationships. The short-run dynamic models represented by the Error Correction Models were also estimated. The results showed that income from tourism has not alleviated poverty and has clearly failed to reduce inequality in the distribution of wealth. Finally, management implications are also provided for public and private bodies wishing to achieve sustainable tourism.