Exports are generally assumed to promote long-term growth through two main channels. The first, known as the export-led growth (ELG) hypothesis, is by enhancing economy-wide efficiency. This mechanism has recently been applied to tourism services exports (the tourism-led growth, TLG, hypothesis). The second channel is the financing of imports of foreign capital goods, thus raising the level of capital formation. Although this channel turns out to be empirically important, no theoretical rigorous foundation has yet been provided. Moreover, it has never been investigated for tourism exports. This paper fills two gaps. On the theoretical side, it provides a clear justification of the role of capital good imports in the link between exports and overall economic growth. A model has been built to examine this so-called EKIG hypothesis (exports → capital good imports → growth) in which sustained economic growth is achieved by imports of foreign capital entirely financed through inbound tourism. This model highlights a mechanism of international transmission of economic growth from the tourist-generating country (the tourism services importer) to the tourist-receiving economy (the tourism services exporter) through trade and terms-of-trade movement without any technological progress, research and development (R&D) activity or accumulation of human capital in the host economy. On the empirical side, this study constitutes the first attempt to examine the role of tourism exports on economic growth through capital good imports. The authors use Johansen's cointegration approach and the multivariate Granger causality test to analyse the TKIG (tourism → capital good imports → growth) hypothesis in the Spanish economy.

Using the embryonic 'Dutch disease' literature on tourism, this paper examines the economy-wide effects of an inbound tourism boom on a small open island economy. It illustrates a range of new findings not present in traditional tourism economics literature. This paper also addresses the complexities that surround the economic evaluation of the net effect of tourism growth on the host community. An important result obtained here is that increased inbound tourism may lead to net welfare losses when tourism products are intensive users of coastal land. Thus, this paper provides a warning to researchers and practitioners of the need to evaluate both the tourism sector's overall impacts on the host economy and its net effect on the community when considering its expansion.

Tourism has been regarded as a major source of economic growth and a good source of foreign exchange earnings. Tourism has also been considered as an activity that imposes costs on the host country. Such costs include increased pollution, congestion and despoliation of fragile environments and intra-generational inequity aggravation. One aspect that has been ignored is the general equilibrium effects of tourism on the other sectors in the economy. These effects can be quite substantial and should be taken into account when assessing the net benefits of a tourism boom on an economy. This paper presents a model which captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. We examine the effect of a tourist boom on structural adjustment, commodity and factor prices and more importantly resident welfare. An important result obtained is that the tourist boom may "immiserize" the residents. This occurs because of two effects. The first, a favourable effect due to an increase in the relative price of the non-traded good which is termed the secondary terms of trade effect. The second, a negative effect due to an efficiency loss that occurs in the presence of increasing returns to scale in manufacturing. If this second effect outweighs the first effect, resident immiserization occurs.

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This paper examines the relationship between tourism exports, imports of capital goods and economic growth, with special reference to Tunisia over the period 1975–2007. The dynamic interaction between these variables is examined within a vector error correction model using the Johansen technique of cointegration with structural changes and the multivariate Granger causality test. The authors consider that tourism may affect economic growth through two different channels, the TLG and TKIG mechanisms. Their findings reveal a complex picture of the relationship between these variables. There seems to be no TLG mechanism in Tunisia, while the TKIG mechanism appears as a short-run phenomenon only. In total, tourism exports have contributed significantly towards financing the country's imports of capital goods, but they have not been the principal engine of long-term growth. On the contrary, the results support the hypothesis of a growth-led tourism in this country. They also provide evidence of a strong unidirectional causality from economic growth to imports of capital goods.