Tourism, migration and economic growth

MARA ROJAS

Congreso; International Conference on Tourism Development and Management (ICDM 2009); 2009

The World Tourism Organization (2003) has proposed tourism as one of the major export sectors and an important source of foreign exchange earnings of developing economies. Several empirical studies have corroborated the importance of the tourism on the economic growth in those economies. However, looking results for medium-income level countries, the relationship between tourism development and economic growth seems to be ambiguous. This work postulates the existence of structural characteristics in the tourism sector in these countries which could reduce the effect of an increase in tourism services on the economic growth. Because of labor in this sector has been considered as low quality and not regular one, it will be necessary to take into account the crucial significance of employment. Considering migrations and human capital formation, it will be try to tackle the problem in a theoretical form. Following Haque and Kim (1995) and Cipriano (2005), this paper develops a two-sector model with endogenous growth in a context of overlapping generations, dual labour market and open economy. The lower productivity sector will throw labor out towards the tourism sector, so migrations will depend on the wage differential expected. The latter sector could hire new employment under two different conditions: as unskilled labour or as skilled labour. The results would suggest that, in a context with migration and without human capital accumulation, the final equilibrium could be worse than the initial one. As soon as migrants invest in human capital, the tourism sector will increase his productivity, the gap between two sectors will be reduced and economy will grow.