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Is Tourism-Based Development Good for the Poor? A General Equilibrium Analysis for Thailand

Author

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  • Wattanakuljarus, Anan

    (U of Wisconsin)

  • Coxhead, Ian

Abstract

The popularity of tourism as a component of development strategy in low-income countries is founded in part upon the belief that expansion of this industry will improve income distribution by greatly expanding demand for relatively low-skilled labor. We examine this belief for the case of Thailand, a highly tourismintensive economy, using a new and specifically-designed applied general equilibrium model. A boom in inbound tourism demand generates foreign exchange and raises household incomes across the board, but worsens their distribution. Tourism sectors are not especially labor-intensive, and the expansion of foreign tourism demand brings about a real appreciation that undermines profitability and reduces employment in tradable sectors, notably agriculture, from which the poor derive a substantial fraction of their income. We examine the robustness of these results with respect to alternative factor market assumptions relevant to the Thai economy.

Suggested Citation

  • Wattanakuljarus, Anan & Coxhead, Ian, 2006. "Is Tourism-Based Development Good for the Poor? A General Equilibrium Analysis for Thailand," Staff Paper Series 502, University of Wisconsin, Agricultural and Applied Economics.
    • Handle: RePEc:ecl:wisagr:502
    as

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    References listed on IDEAS

    as
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    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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