Tourism, trade and domestic welfare

Tourism has been regarded as a major source of economic growth and a source of foreign exchange. It has also been viewed 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 other sectors in the economy. This paper presents a model that captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. An important result obtained is that the tourist boom may 'immiserize' the residents.