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Does the Investment Climate Determine the Transformation of Tourism Growth into Economic Development?

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  • Pablo Juan Cárdenas-García
  • Juan Ignacio Pulido-Fernández

Abstract

Currently, there are opposing views concerning the capacity of economic growth resulting from the expansion of tourism activity to influence an increase in the level of a country's economic development. In recent years a school of thought has been consolidating that there is no automatic relationship between the two, but that certain circumstances must occur in the structural foundations of a country for such a link to be made. The investment climate plays a decisive role in the economic development of a society. The aim of this paper is to identify, through a country-level empirical analysis, which specific factors related to the investment climate promote or hinder the transformation of tourism growth into an improvement of the living conditions of the population. The end result is that, in those countries with lower levels of development, the lack of an appropriate investment climate complicates this relationship (unlike in developed countries). Thus, continuing to invest in tourism in these countries without first solving the issues affecting the investment climate will lead to a failure of such investment.

Suggested Citation

  • Pablo Juan Cárdenas-García & Juan Ignacio Pulido-Fernández, 2014. "Does the Investment Climate Determine the Transformation of Tourism Growth into Economic Development?," Tourism Economics, , vol. 20(4), pages 669-694, August.
    • Handle: RePEc:sae:toueco:v:20:y:2014:i:4:p:669-694
    DOI: 10.5367/te.2013.0302
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    References listed on IDEAS

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    3. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1.
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