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Growth, Conventional Production and Tourism Specialisation: Technological Catching-up Versus Terms-of-Trade Effects

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  • Valente, Simone

Abstract

This paper extends the 'expanding-varieties' growth model in a two-countries-two-goods setup, and describes the dynamics of growth rates and terms of trade when the industry-based economy is the innovation leader, while the tourism-based economy is the follower (i.e. increases the number of intermediate inputs by readapting innovations developed abroad). Two types of transitional dynamics may exist: technological catching-up and technological falling-behind. Contrary to the standard result, technological catching-up by the follower is associated with lower growth rates with respect to the leader, whereas terms-of-trade effects guarantee positive growth differentials for the tourism-based economy when the technological gap with the leader increases over time. The underlying principle of 'increased relative demand' might explain the good economic performance observed in tourism-dependent economies.

Suggested Citation

  • Valente, Simone, 2005. "Growth, Conventional Production and Tourism Specialisation: Technological Catching-up Versus Terms-of-Trade Effects," Natural Resources Management Working Papers 12139, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemnr:12139
    DOI: 10.22004/ag.econ.12139
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    Cited by:

    1. Andreas Freytag & Christoph Vietze, 2013. "Can nature promote development? The role of sustainable tourism for economic growth," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 2(1), pages 16-44, March.
    2. Rinaldo Brau & A. Lanza & F. Pigliaru, 2006. "How fast are small tourist countries growing? The 1980-2003 evidence," Working Paper CRENoS 200614, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    3. Christoph Vietze, 2011. "What's Pushing International Tourism Expenditures?," Tourism Economics, , vol. 17(2), pages 237-260, April.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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