Resource title

Fear of Croatian Disease. Is there a danger of a Dutch Disease Effect with respect to a boom in the tourism sector in Croatia in the long run - 'The Croatian Disease'?

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Resource description

The aim of this research is to analyze empirically the danger of a Dutch Disease Effect with respect to a boom in the tourism sector in Croatia in the long run. Due to the brief time series of data available for Croatia, we employ for our econometric work data on more than 100 countries of the world over the period 1970-2000. In a first step the general, long-run relationship between tourism, growth, the real exchange rate, taxation and the manufacturing sector is looked at in a cross country setting. A panel data framework gives the possibility to counter check the acquired results. This second approach also allows to control for reverse causality, nonlinearity and interactive effects, applying a more complex methodology. It is found that, at least in the long run, there is no danger of a Dutch Disease Effect with respect to a boom in the tourism sector - and thus, no fear of a 'Croatian Disease'! Countries with higher income from tourism tend not only to have higher economic growth rates but also higher levels of investment and secondary school enrolment. Countries dependent on tourism prove to be rather outward oriented, having low levels of real exchange rate distortion and its variability. Finally, tourism does not seem to lead to a contraction of the manufacturing sector. (author's abstract)

Resource author

Mario Holzner

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Resource language

en

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application/pdf

Resource resource URL

http://epub.wu.ac.at/1925/1/document.pdf

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