The sources of comparative advantage in tourism
Stellenbosch Working Paper Series No. WP01/2010Publication date: 2010
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
[protected email address] (Department of Economics, University of Stellenbosch)
Tourism flows are usually explained through demand-side factors such as income growth in developed economies and changes in the preferences of visitors. While these models are adequate for short-term forecasts, little theoretical justification is provided to explain why certain countries perform better than others. This paper identifies which countries have a comparative advantage in the export of travel services (tourism). Consequently, the paper seeks to identify the sources of this comparative advantage. We include the standard explanatory variables (factors of production, including natural environment) for Ricardian comparative advantage, plus measures of infrastructure, health, safety and security, tourism prioritization, and various dummy variables. We also develop and test new variables, including a neighbourhood variable, which measures the benefits obtained from regional tourism clusters. Our results have important policy implications; it is clear that the natural environment has a large positive and significant impact on a country’s revealed comparative advantage, as do transport endowments (a measure of relative accessibility) and the neighbourhood variable. These findings correspond to the predictions of the neoclassical trade theories (namely Heckscher-Ohlin) and to some extent the new trade theories (Krugman).
JEL Classification:F11
Keywords:tourism, comparative advantage, trade in services
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Monday 13 October 202512:10-13:10
Prof Euan Phimister: Stellenbosch Business School
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Topic: "Allocative Efficiency, Labour Shares, and Corporate Lobbying in European Manufacturing"
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26 Sep 2025 Free Weekly Review | Number 37 | 26 SeptemberThis report covers the key domestic and international data releases over the past week. The more comprehensive BER Weekly Review (Enhanced Version) includes a detailed discussion on the main economic events and developments over the past week, a summary of upcoming data (the week ahead) and the BER’s forecast for key economic indicators....
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