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Economic growth and market segment choice in tourism-based economies

Author

Listed:
  • Sauveur Giannoni

    (Università di Corsica Pasquale Paoli)

  • Juan M. Hernández

    (Universidad de Las Palmas de Gran Canaria)

  • Jorge V. Pérez-Rodríguez

    (Universidad de Las Palmas de Gran Canaria)

Abstract

Many regions and countries seek to develop their tourism industry as a strategy for economic growth. A growing body of research supports the hypothesis of tourism-led growth. This paper contributes to the existing literature in two ways. First, it proposes a new mechanism for sustained tourism-led growth, emphasising the crucial importance of the market segment in which a tourist destination wishes to operate. Second, it shows how a destination that is experiencing stagnation can temporarily boost its performance and improve its long-term welfare by reorienting the supply from a highly price-sensitive mass tourism product towards a more selective one of the luxury tourism. This change in focus is discussed in the light of the experience of two Spanish archipelagos. The empirical results obtained highlight the evident success of the reorientation strategy in one of these cases. The model provides theoretical support for the implementation of tourist product restructuring policies in economies that are reliant on tourism.

Suggested Citation

  • Sauveur Giannoni & Juan M. Hernández & Jorge V. Pérez-Rodríguez, 2020. "Economic growth and market segment choice in tourism-based economies," Empirical Economics, Springer, vol. 59(3), pages 1435-1452, September.
    • Handle: RePEc:spr:empeco:v:59:y:2020:i:3:d:10.1007_s00181-019-01668-7
    DOI: 10.1007/s00181-019-01668-7
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    More about this item

    Keywords

    Economic growth; Tourism-based economies; Market segment switching strategy; Romer model; Sustained growth;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development

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