Dutch Disease in Tourism Economies. Evidence from Spain

Considerable attention has been given in economic literature to Dutch disease, with symptoms of the disease being extensively described in many different contexts. Nevertheless, none of the studies has focused on the tourist industry as a source of increased wealth through the exploitation of natural resources, such as beaches, natural areas and wild fauna, typical of mass models of tourism development. By examining two different Spanish regions, this paper provides evidence that the Balearics and the Canary Islands, whose economies are heavily oriented toward tourism, both show signs of Dutch disease and that, as a result, their economic growth might be compromised in coming years.