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Economic growth and market segment choice in tourism-based economies

  • Sauveur GiannoniEmail author
  • Juan M. HernándezEmail author
  • Jorge V. Pérez-Rodríguez
Article
  • 54 Downloads

Abstract

Many regions and countries seek to develop their tourism industry as a strategy for economic growth. A growing body of research supports the hypothesis of tourism-led growth. This paper contributes to the existing literature in two ways. First, it proposes a new mechanism for sustained tourism-led growth, emphasising the crucial importance of the market segment in which a tourist destination wishes to operate. Second, it shows how a destination that is experiencing stagnation can temporarily boost its performance and improve its long-term welfare by reorienting the supply from a highly price-sensitive mass tourism product towards a more selective one of the luxury tourism. This change in focus is discussed in the light of the experience of two Spanish archipelagos. The empirical results obtained highlight the evident success of the reorientation strategy in one of these cases. The model provides theoretical support for the implementation of tourist product restructuring policies in economies that are reliant on tourism.

Keywords

Economic growth Tourism-based economies Market segment switching strategy Romer model Sustained growth 

JEL Classification

C52 C61 O41 Q26 Z32 

Notes

Funding

Funding was provided by the Ministry of Economy and Competitiveness of the Government of Spain (Grant No. ECO2014-59067-P). University of Las Palmas de Gran Canaria (Grant CEI2018-08).

Supplementary material

181_2019_1668_MOESM1_ESM.pdf (408 kb)
Supplementary material 1 (pdf 408 KB)

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.UMR CNRS 6240 LISAUniversità di Corsica Pasquale PaoliCorteFrance
  2. 2.Department of Quantitative Methods in Economics, Instituto Universitario de Turismo y Desarrollo Económico Sostenible (TIDES)Universidad de Las Palmas de Gran CanariaLas PalmasSpain
  3. 3.Department of Quantitative Methods in EconomicsUniversidad de Las Palmas de Gran CanariaLas PalmasSpain

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