The Contribution of Tourism on Economic Growth in Central America and in the Caribbean

The main objective of this paper is to analyze the contribution of tourism to economic growth in Central American and selected Caribbean countries (The Bahamas, Dominica, Dominican Republic and Saint Lucia). Following recent methodology presented by Ivanov and Webster (2007), this paper will utilize the rate of growth of real Gross Domestic Product (GDP) per capita as a measure of economic growth. This will then be disaggregated into a growth component attributable to tourism and a second growth component generated by the other industries of the economy. This methodology, which has the characteristic of generating a performance measure of tourism’s past contribution to economic growth, will be applied to the period 1990-2007. We compare the results with a group of developed destinations including Spain, France, Italy, UK and USA. The comparison between the two groups shows that the tourism contribution to GDP is higher in general for the developed group but it is not associated necessarily with a greater contribution to the economy’s growth