Is Tourism Specialization Sustainable for a Small Island Economy? A Cyclical Perspective

Abstract

While tourism is becoming one of the most important sectors of the world economy, the number of small islands trying to develop a competitive tourism sector is increasing (Logossah, 2004; Shareef, 2003). Observers have to recognize that an important part of these Small Island Tourism Economies (SITE) is successful. Lanza and Pigliaru (2000) showed that seven out of the fifteen fastest growing countries between 1985 and 1995 were tourism countries3 and that most of them were SITE as St Kitts and Nevis, Antigua and Barbuda or Cyprus. Marques (2003) showed for example a strong correlation between the level of GDP and tourism receipts for the region of the Caribbean. SITE are said to have some kind of absolute advantage in the production of tourist goods because of their natural endowments, and it implies that tourism is often seen by policy makers as the easiest way out to the “small island problem” (Crusol et al. 1989). Nonetheless tourism must not be thought of as a panacea, as a study realized by the World Bank and the Commonwealth secretariat pointed out in 2000. In fact, even though tourism provides welfare gains (Copeland, 1991, Nowak, Sahli, 1999, Sinclair 1998) and constitutes a good engine of growth (Hazari and Sgro, 1995, Lanza et al. 2003), it may also generate static and dynamic perverse effects. Recent literature has widely explored negative economic consequences of tourism