International tourism and export instability

Abstract

Export diversification has been suggested as a strategy for decreasing the level of export earnings instability which is experienced by many developing countries. In recent years the international tourism sector has made an increasingly important contribution to the economies of many low income countries. This article examines whether diversification into the non‐traditional tourism sector has succeeded in decreasing the instability of export earnings. It was found that although tourism has the advantage of high growth rates and is a major source of foreign currency receipts, earnings from international tourism did not bring about a significant decrease in the instability of export earnings of most of the developing and industrialised countries considered. Furthermore, a net increase in the instability of earnings from tourism and merchandise exports occurred in a number of countries, and may be a particular problem in small, open developing economies.