Investment in infrastructure and effects of tourism boom

Akihiko Yanase

    Research output: Contribution to journalArticlepeer-review

    1 Citation (Scopus)

    Abstract

    This paper develops a dynamic trade model of a small open economy with productivity effects of public infrastructure and inbound tourism (i.e. foreign visitors' consumption of nontradable goods produced in the home country). It is shown that the economy either specializes in the production of the nontradable good or diversifies production. In the case of specialization, a tourism boom, i.e. an increase in the foreign tourists' demand for the nontradable good, makes the economy better off. In the case of diversified production, by contrast, a tourism boom induces a deterioration in the terms of trade and the economy may be worse off.

    Original languageEnglish
    Pages (from-to)425-443
    Number of pages19
    JournalReview of International Economics
    Volume23
    Issue number2
    DOIs
    Publication statusPublished - 2015 May 1

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Development

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