Abstract
While the Macao gambling industry has developed prosperously, its rapid development raises a problem of economic dependence on gambling that restricts economic diversification and causes a sustainable issue of non-gambling industries. In recent years, regulating and controlling the appropriate scale of the gambling industry have been regarded as a solution for sustainable economic development. Consequently, it is quite important to give a quantitative scale to the future development of the gambling industry. This study aims to estimate the appropriate scale of the gambling industry under the expectation of the optimal development of moderate economic diversification in Macao. This study employs the method of Measuring Economic Diversification in Hawaii in 2011 to evaluate the levels of diversification of Macao’s economy. A Data Envelopment Analysis (DEA) efficiency calculated by a bootstrapping model is applied to obtain the operational efficiency of Macao’s gambling industry. A transition probability matrix in three scenarios is predicted by expert interviews and industry interviews. The appropriate scale of Macao’s gambling industry until 2021 is forecasted by Markov chain. The predicted result shows that the growth rate of gambling will not exceed 3% in terms of achieving the goal of optimal developing moderate economic diversification in Macao.
Highlights
As a leading gambling destination, in 2017, Macao attracted more than 30 million tourists and created the highest gambling revenue (33 billion US dollars) in the world [1]
Scholars contend that a low level of diversification or concentrated economy can dramatically react to external influences, such as changes in demand for one product [4,5] and a diversified regional economy is less responsive to fluctuations to extra-regional economic growth [6]
To contribute to a solution for sustainable economic development in Macao, this study aims to determine the appropriate scale of the gambling industry for optimal development of moderate economic diversification in Macao
Summary
As a leading gambling destination, in 2017, Macao attracted more than 30 million tourists and created the highest gambling revenue (33 billion US dollars) in the world [1]. Since diversification can reduce a nation’s economic volatility and increase its real activity performance, so having a diverse economy has long been thought to play a key role in a sustainable economy [5]. Both the Macao government [7,8,9,10] and scholars [11,12,13,14] have recognized the importance of economic diversification, which is the source of long-term economic growth [5,15,16]. It is critical to establish moderate economic diversification in Macao
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