Tourism and Economic Growth: The Case of Mauritius

Abstract

Tourism is now believed to provide an impetus to the economic progress of developing nations and its importance is gaining widespread recognition. In fact, the relationship between exports and growth is the subject of ongoing debate, but the nature of exports has received little attention. Despite the continuous efforts of developing countries to increase their exports, this strategy often adds little foreign exchange to their balance of payments. For many reasons, the non-traditional exports of developing countries have too often failed to prove effective in economic development and so tourism is increasingly seen as something of a saviour. This paper focuses on the success story of a small island economy, Mauritius. Once regarded as an extreme case of a mono-crop economy, relying very predominantly on the export of sugar, Mauritius is now a reputed exporter of non-traditional goods (textiles) and services (tourism). Using cointegration and causality tests, the author's results lend support to the contention that tourism has promoted growth, and further evidence suggests that tourism has a significant positive impact on Mauritian economic development.