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New Insights into ECCU's Tourism Sector Competitiveness

Author

Listed:
  • Mr. Manuk Ghazanchyan
  • Li Zhao
  • Steve Brito
  • Vivian Parlak

Abstract

Tourism has become the main driver of economic growth and employment and the most important source of income in the ECCU. Preserving and, possibly, enhancing the competitiveness of the tourism product is key for these countries. Unfortunately, the evidence shows that tourism arrivals to the ECCU have been declining slightly while global demand for tourism is on the rise. The objective of this paper is to study the structural determinants of competitiveness for the ECCU, defined as the relative cost advantage over other touristic regions (Di Bella, Lewis, and Martin 2007). Using a gravity model, we show that proximity to North American and European markets is indeed an important competitive advantage for the ECCU. However, despite this advantage, and, in some cases, specialization in high-end tourism, regression analysis shows that arrivals to the ECCU are sensitive to relative prices. Our simulations show that mitigating supply-side constraints would improve the ECCU’s competitiveness and allow the region to regain global market shares.

Suggested Citation

  • Mr. Manuk Ghazanchyan & Li Zhao & Steve Brito & Vivian Parlak, 2019. "New Insights into ECCU's Tourism Sector Competitiveness," IMF Working Papers 2019/154, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2019/154
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    References listed on IDEAS

    as
    1. Rafael Romeu, 2014. "The Vacation Is Over: Implications for the Caribbean of Opening U.S.-Cuba Tourism," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-27, January.
    2. Mr. Sebastian Acevedo Mejia & Lu Han & Miss Marie S Kim & Ms. Nicole Laframboise, 2016. "Flying to Paradise: The Role of Airlift in the Caribbean Tourism Industry," IMF Working Papers 2016/033, International Monetary Fund.
    3. Ms. Nicole Laframboise & Miss Nkunde Mwase & Mr. Joonkyu Park & Yingke Zhou, 2014. "Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?," IMF Working Papers 2014/229, International Monetary Fund.
    4. Mr. Mark W Lewis & Ms. Aurelie Martin & Gabriel Di Bella, 2007. "Assessing Competitiveness and Real Exchange Rate Misalignment in Low-Income Countries," IMF Working Papers 2007/201, International Monetary Fund.
    5. Mr. Sebastian Acevedo Mejia & Mr. Trevor Serge Coleridge Alleyne & Rafael Romeu, 2017. "Revisiting the Potential Impact to the Rest of the Caribbean from Opening US-Cuba Tourism," IMF Working Papers 2017/100, International Monetary Fund.
    6. Mr. Sebastian Acevedo Mejia, 2014. "Debt, Growth and Natural Disasters A Caribbean Trilogy," IMF Working Papers 2014/125, International Monetary Fund.
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    Cited by:

    1. Mr. Julian T Chow, 2019. "Tourism In Belize: Ensuring Sustained Growth," IMF Working Papers 2019/267, International Monetary Fund.
    2. Cevik Serhan & Ghazanchyan Manuk, 2021. "Perfect Storm: Climate Change and Tourism," Journal of Globalization and Development, De Gruyter, vol. 12(1), pages 47-61, June.

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