Importing to Feed International Tourists: Growth Implications for Islands across the Globe

Employing bootstrapped fixed and random effects estimation techniques on five-year-non-overlapping-averaged data, covering 1980 through 2019, this study, firstly, investigates, empirically, the potential bi-causal relationship between international tourist arrivals and the importation of consumables/merchandises, in the case of 45 sovereign islands. The growth implication of a concurrent pursuit of tourism expansion and merchandise importations is also examined. The study further investigates how over-reliance on imported merchandise to feed international tourists, and over-specialisation in the tourism sector, affect the tourism-led-growth hypothesis in case of these islands. Results from the study postulate that an increase in arrivals of international tourists significantly leads to an increase in the importation of consumable merchandises, and vice versa. Moreover, a moderate importation of merchandises to sustain tourist arrivals is significantly observed not to be detrimental to the growth of islands across the globe. However, the results further reveal that over-reliance on imported merchandises for the sake of international tourists, as well as over-specialisation in tourism with the help of imported merchandises, both exert significant detrimental net effects on the economic growth of islands across the globe. The findings hold policy guidelines for the pursuit of tourism-led and merchandise-import-led growth strategies among global islands.