Country Risk Ratings of Small Island Tourism Economies

Over the last twenty years, there has been a growing fascination within public and academic circles about the livelihood of islands with small populations and territory which are present in each of the world’s great oceans. The Small Island Tourism Economies analysed in this paper vary profoundly in their size, land area, and location. Moreover, they have depended heavily on financial aid from their former colonists for infrastructure development, which has declined dramatically since the collapse of Communism. These economies also differ in their narrow natural resource bases on land and in water, in their prospects for self reliance in economic development, and their overwhelming reliance on tourism as a source of exports. These economies are developing countries which need a consistent inflow of foreign direct investment to maintain economic growth. Such sovereign island economies differ in the extent to which they are home to a multitude of ethnic diversity, political systems, historical experience, economic and environmental vulnerability, ecological fragility, the types of risks facing private investors, and in the extent to which they are perceived as, or perceive themselves to be, insular and peripheral. In spite of the vast diversity as well as similarities, researchers are fascinated by the world of small island economies, and are intrigued by their unique features which cannot be addressed through a generalised set of rules. This paper analyses the geographical, historical, economic, tourism-oriented and institutional characteristics, as well as vulnerability to changes in the international economic, financial and political climates, of twenty Small Island Tourism Economies. The snapshot images provide a comparative assessment of the international country risk ratings, and highlight the importance of economic, financial and political risk ratings as components of a composite risk rating for Small Island Tourism Economies.Small size, Tourism, Volatility, Vulnerability, Country risk ratings, Economic risk, Financial risk, Political risk, Composite risk

Managing Value-at-Risk in Daily Tourist Tax Revenue for the Maldives

International tourism is the principal economic activity for Small Island Tourism Economies (SITEs). There is a strongly predictable component of international tourism, specifically the government revenue received from taxes on international tourists, but it is difficult to predict the number of international tourist arrivals, which determines the magnitude of tax revenue receipts. A framework is presented for risk management of daily tourist tax revenues for the Maldives, which is a unique SITE because it relies almost entirely on tourism for its economic and social development. As international tourism receipts are significant financial assets to the economies of SITEs, the time-varying volatility of international tourist arrivals and their growth rate is analogous to the volatility (or dynamic risk) in financial returns. The volatility in the levels and growth rates of daily international tourist arrivals are investigated in the paper. This paper provides a template for the future analysis of earnings from international tourism, particularly tourism taxes for SITEs, discusses the direct and indirect monetary benefits from international tourism, highlights tourism taxes in the Maldives as a development financing phenomenon, and provides a framework for discussing the design and implementation of tourism taxes. Furthermore, it is demonstrated that the analysis developed in this paper can be used by the Maldivian Government in determining monetary and fiscal policy, by creditors to evaluate the risks associated with providing financial support to the Maldives, and by resort operators to decide whether to expand or contract their operations. Acknowledgements: The first author acknowledges the financial support of the Australian Research Council, the second author wishes to acknowledge a UWA Research Fellowship, and the third author is most grateful for the financial support of an International Postgraduate Research Scholarship and University Postgraduate Award at UWA. The authors wish to thank the Editor, two referees, Clive Granger, Matteo Manera and Juerg Weber for helpful comments and suggestions. An earlier version of this paper was presented at the Second International Conference on Tourism and Sustainable Development: Macro and Micro Economic Issues, Cagliari, Sardinia, Italy, September 2005.Small Island Tourism Economies (SITEs), international tourist arrivals, tourism tax, volatility, risk, Value-at-Risk (VaR), Sustainable Tourism@Risk (ST@R)

Managing Value-at-Risk in Daily Tourist Tax Revenues for the Maldives

International tourism is the principal economic activity for Small Island Tourism Economies (SITEs). There is a strongly predictable component of international tourism, specifically the government revenue received from taxes on international tourists, but it is difficult to predict the number of international tourist arrivals, which determines the magnitude of tax revenue receipts. A framework is presented for risk management of daily tourist tax revenues for the Maldives, which is a unique SITE because it relies almost entirely on tourism for its economic and social development. As international tourism receipts are significant financial assets to the economies of SITEs, the timevarying volatility of international tourist arrivals and their growth rate is analogous to the volatility (or dynamic risk) in financial returns. The volatility in the levels and growth rates of daily international tourist arrivals are investigated in the paper. This paper provides a template for the future analysis of earnings from international tourism, particularly tourism taxes for SITEs, discusses the direct and indirect monetary benefits from international tourism, highlights tourism taxes in the Maldives as a development financing phenomenon, and provides a framework for discussing the design and implementation of tourism taxes. Furthermore, it is demonstrated that the analysis developed in this paper can be used by the Maldivian Government in determining monetary and fiscal policy, by creditors to evaluate the risks associated with providing financial support to the Maldives, and by resort operators to decide whether to expand or contract their operations.Small Island Tourism Economies (SITEs), International tourist arrivals, Tourism tax, Volatility, Risk, Value-at-Risk (VaR), Sustainable Tourism@Risk (ST@R).

Modelling International Tourism Demand and Uncertainty in Maldives and Seychelles: A Portfolio Approach

Maldives and Seychelles in the Indian Ocean are small island tourism economies (SITEs), both of which have relatively small populations, territorial sizes, land area and narrow productive bases. The two SITEs are surrounded by vast ocean and have an overwhelming reliance on international tourism for economic development. Variations in international tourist arrivals to these 2 SITEs have been affected by unanticipated oil shocks, natural disasters, crime and global terrorism, among others. An accurate assessment of the variations in international tourist arrivals, particularly the conditional volatility, is essential for policy and marketing purposes. The conditional mean and conditional variance of the weekly international tourist arrivals to Maldives and Seychelles from 1 January 1994 to 31 December 2003 for the 5 main tourist source countries are modelled. Multivariate models of uncertainty are estimated and tested. An assessment and interpretation of the estimates are made for policy makers and tour operators to reach optimal decisions on the basis of a portfolio approach to international tourism demand. The paper assesses 4 sets of country spillover effects between Maldives and Seychelles, namely: (i) the own country effects for Maldives and Seychelles; (ii) the country spillover effects from the remaining four countries within each of Maldives and Seychelles; (iii) the own country spillover effects between Maldives and Seychelles; and (iv) the cross-country spillover effects between Maldives and Seychelles. The empirical results for both Maldives and Seychelles are discussed in terms of each of these components.Small island tourism economies, Weekly international tourist arrivals, Uncertainty, Conditional volatility, Country spillover effects Acknowledgements: The first author wishes to acknowledge the financial support of the School of Accounting, Finance and Economics, Edith Cowan University. The second author is most grateful for the financial support of the Australian Research Council.

A social work study to measure the impact of socio-economical factors of tourism industry

Tourism plays an important role on development of economy especially in developing countries. The proposed study of this paper studies the impact of tourism on developing economic factors such as average income, real estate prices, etc. We have distributed 110 questionnaires among different people who are involved in various positions in the regions and analyzed the data. The survey is looking for the impact of tourism industry in terms of economical and social factors for one of the oldest villages in Iran named Maymand. The results indicate that there is a strong positive relationship, 0.873, between developing economy and tourism. In other word, developing tourism industry will help create more jobs, increase land prices, increase people's income and flourish environment. There is also a positive correlation, 0.854, between social development and tourism industry. This means we could expect a better health care system as well as medical treatment facilities, which helps prevent immigration to big cities

Toward a long-term strategy of economic development of Croatia: Where to begin, what to do and how to do it?

This paper attempts to elaborate the main principles of an economic development strategy suitable for Croatia over the next 10–15 years. Based on brief analyses of advances made in development theory and policy and experiences of the emerging market economies in Asia, Latin America, and Central Europe, the paper identifies critical factors necessary for launching an accelerated process of economic development. These factors are: leadership commitment to economic development; the level and quality of social and human capital; application of modern (especially information) technology; stable and consistent macroeconomic policies; and efficient market-based institutions. The paper then analyses Croatia’s strengths and weaknesses in terms of these factors in comparison with a select group of economies: Slovenia, Hungary, the Czech Republic, Portugal, Ireland, Chile, Uruguay, Hong Kong and Singapore. In addition, the paper analyses implications of “new economy” developments in the United States and other advanced industrial countries for a small open economy like Croatia. Against this background, the paper proposes seven basic principles for elaborating a long-term strategy of Croatia’s economic development: (i) Setting a clear development goal—the paper proposes a doubling of real per capita GDP to US$10,000 in the next 10–15 years, which would require an average annual growth rate of about 5½%, and that this growth rate is achievable; (ii) Ensuring transparency and equal access to development opportunities, as opposed to following specific industrial policy; (iii) Adjusting to globalisation of economic activity and absorbing “new economy” developments; (iv) Implementing fundamental reform of labour markets, with a view to reducing the high non-wage labour costs through pension and health care reforms; (v) Actively promoting financial market development by accelerating corporate and bank restructuring, and legal and judicial system reforms; (vi) Deciding on the economic role of the state in such areas as education, legal and judicial systems, market regulation, infrastructure, and science and technology; and (vii) Maintaining stable and consistent macroeconomic policies to facilitate structural reforms. The paper briefly discusses the main benefits and costs of a possible “euroisation” of Croatia’s economy, and arrangements for a possible transition from the current monetary and exchange rate regime, characterised by a high degree of factor and commodity price indexation to the Deutsche mark, toward a more flexible interim regime that would facilitate the eventual adoption of the euro and be consistent with the overall development strategy outlined

Prosper. An evaluation of tourism's contribution to regional economies

Prosper has delivered a three part model for assessing and enhancing the value of tourism in regional areas. The first part of the model uses simple indicators to provide an assessment of the economic, social, and environmental value attached to tourism. An indicators approach was adopted following extensive review of the application of more complex approaches to regional economic analysis. The review found that complex approaches are unlikely to produce results of sufficient validity and applicability to warrant their high resource costs (time, money, and skills). Complex models are also more difficult to maintain. The economic value is represented through quantitative indicators relating to employment and the number of businesses in tourism related sectors. These are all relative indicators (for example, proportion of all businesses which are businesses in the tourism sector or proportion of change in employment that can be attributed to change in tourism related employment). These indicators are drawn from national data sets which provide information for statistical local areas and/or postcode areas. This offers the opportunity to develop and deliver consistent national profiles through a vehicle such as Decipher. National standard data sets are supplemented in the model by more qualitative assessments of tourism’s contribution to the local economy made by business operators through interviews or surveys. Again, tracking the change in these assessments over time is the key to the model. Social and environmental values are substantially more difficult to assess. The Prosper case studies have included qualitative assessments derived from business and community meetings, local government and other administrative documents, media and a simplified network analysis identifying the extent to which community based organisations interact with the delivery of tourism services. Data sets have been identified which would allow a quantitative analysis of the extent to which tourism activity (visitor movements, business activity, business construction) encroaches on environmentally sensitive areas or is responsible for redevelopment or preservation of built environments. The case studies have not been able to implement this quantitative analysis. The second part of the model conducts a ‘diagnostic’ assessment of the capacity in the region to harness the value of tourism through innovation. Innovation is seen as a very important mechanism for both identifying regional issues and developing responses to those issues. Innovation is widely accepted in the literature as a driver of economic growth, and concepts such as ‘systems of innovation’ and ‘regional systems of innovation’ have become common in understanding how that innovation can be encouraged and placed within technical or geographical contexts. The diagnostic element of the Prosper model uses a series of techniques (including historical document analysis, interviews, and network analysis) to investigate the characteristics of region’s human tourism resources in relation to their ‘innovation potential’. Innovation potential is influenced by: • Economic competence – the extent to which those resources include capacity to manage projects and implement new ideas; • Clustering of resources – the spatial relationships between tourism attractions and amenities and nontourism amenities and resources which may be critical in the delivery of tourism product; • Networks – the social and professional relationships between tourism attractions and amenities and nontourism amenities and resources which may be critical in the delivery of tourism product; • Development blocks – the existence of sufficient new resources or new ways of looking at existing resources to provide opportunities for innovation. Development blocks need also to be a source of tension or disequilibrium so that their use is contested and therefore options more likely to be scrutinized as to their viability; • Entrepreneurship – the capacity for human resources to engage in new tasks and drive activity; • Critical mass – the relationship between the capacity to supply tourism product, and the capacity to access sufficient and appropriate markets (including resident markets) to support ongoing supply; • Local government – the extent to which local government considers tourism an important issue and is willing to engage in the innovation process • Production and distribution of knowledge – the extent to which the history and current status of tourism is understood and communicated, and the degree to which stakeholders can access and apply new information for identifying the potential or need for change, assessing the viability of projects, and evaluating activities; • Social, political and cultural capital – the strength of the social, political and cultural environments, and the degree to which those environments can be effectively harnessed to support tourism innovation. The third part of the model uses ‘visioning’ techniques (drawing in part on experiences from Sustainable Tourism CRC projects on ‘Gold Coast Visioning’ led by Professor Bill Faulkner at Griffith University, and research by Walker, Lee, Goddard, Kelly & Pedersen, 2005) to engage stakeholders in developing strategies for identifying tourism value issues (based on the community awareness of the value of tourism, aspirations for enhancing value, and strategies for addressing deficiencies in innovation potential). A number of processes are available for applying visioning techniques. Our case studies typically involved community leaders accepting ownership of the results of the application of the first components of the model and, in a facilitated or nonfacilitated way, delivering these results broadly through the community. In some cases, strategies emerged entirely from within the region, while in others, the research team was further engaged to collate strategy suggestions and summarise the arguments attached to these suggestions. In most cases, the final case study write-up included reference to suggestions which appeared likely to be carried forward. The Prosper model was tested in thirteen case studies, not simply to establish whether the relationships hypothesized between innovation potential and harnessing the value of tourism could be observed, but also to establish to extent to which participating regions viewed the application of the model as important and worthwhile in their attempts to move forward. The case studies were a mix of five new studies conducted using the Prosper model in a direct way and meta-analysis of eight previous case studies. The short time frame for the research (2 and ½ years) and the relatively long term nature of change made it impossible to design the research to evaluate the success of the strategies developed or any specific innovations in new case studies, so the metaanalysis studies were significant in this respect. The case studies strongly supported the second part of the model in particular, and the research served as an influential tool for many of the case study communities who were able to implement programs of value monitoring (through quantitative or qualitative means), identify ways in which their systems of innovation could be strengthened, and develop context specific mechanisms for identifying and assessing the feasibility of tourism development proposals. The research has delivered a number of outputs which may be used in dissemination and commercialisation of the intellectual property. A stand-alone publication reviewing the applicability of various economic value assessment techniques to regional tourism has been produced. A quick guide to the Prosper model and assessing whether application of the model would assist a particular region has been drafted, and is slated for development in collaboration with Sustainable Tourism CRC. A detailed methodology specification has been prepared, and may be used as the basis of consulting services or the conduct of further case studies. The quantitative data sets (Census, Sensis, TTF employment analysis, labour force statistics etc.) may be made available through Decipher and included in a structured Decipher product which facilitates analysis and interpretation. A book containing research results of the thirteen case studies and an overview of the relationship between those case studies and the Prosper model has been edited by Dean Carson and Dr Jim Macbeth and has been submitted to the Sustainable Tourism CRC editorial team led by Professor Chris Cooper at the University of Queensland

Risk Management of Daily Tourist Tax Revenues for the Maldives

International tourism is the principal economic activity for Small Island Tourism Economies (SITEs). There is a strongly predictable component of international tourism, specifically the government revenue received from taxes on international tourists, but it is difficult to predict the number of international tourist arrivals which, in turn, determines the magnitude of tax revenue receipts. A framework is presented for risk management of daily tourist tax revenues for the Maldives, which is a unique SITE because it relies entirely on tourism for its economic and social development. As these receipts from international tourism are significant financial assets to the economies of SITEs, the time-varying volatility of international tourist arrivals and their growth rate is analogous to the volatility (or dynamic risk) in financial returns. In this paper, the volatility in the levels and growth rates of daily international tourist arrivals is investigated.Small Island Tourism Economies (SITEs), International tourist arrivals, Tourism tax, Volatility, Risk, Value-at-Risk (VaR), Sustainable Tourism-@-Risk (ST@R)

Globalization of Production and the Competitiveness of Small and Medium-sized Enterprises in Asia and the Pacific: Trends and Prospects

This final section reviews the requirements for increasing the competitiveness prospects of Asia-Pacific SMEs within the context of the challenges of the globalization of production, and seeks to provide some specific recommendations on how SME development in the region could be taken in new and potentially fruitful directions. These recommendations seek to address the core question running through this research paper, namely: what can usefully be done to increase the competitive performance of Asia-Pacific SMEs?SMEs, competitiveness, Asia, Pacific, policy, recommendations

Modelling International Tourism Demand and Volatility in Small Island Tourism Economies

Small Island Tourism Economies (SITEs) vary in their size, land area, location, narrow resource bases, economic development, an overwhelming reliance on tourism, and a consistent inflow of foreign direct investment for economic growth. SITEs differ in their ethnic diversity, political systems, economic and environmental vulnerability, ecological fragility, and the risks facing investors. Owing to natural disasters, ethnic conflicts, crime, and the threat of global terrorism, there have been dramatic changes in the arrivals of international tourists to SITEs. These variations in international tourism demand to SITEs, particularly the conditional variance (or volatility) in international tourist arrivals, have not previously been analysed in the tourism research literature. An examination of the conditional volatility of international tourist arrivals is essential for policy analysis and marketing purposes. This paper models the conditional mean and conditional variance of the logarithm of monthly international tourist arrivals and the growth rate (or log-difference) in the monthly international tourist arrivals for six SITEs, namely Barbados, Cyprus, Dominica, Fiji, Maldives, and Seychelles. Diagnostic checks of the regularity conditions of the logarithm of monthly international tourist arrivals and their growth rates suggest that the estimated univariate models of trends and volatility are statistically adequate. Therefore, the estimated models are appropriate for purposes of public and private sector management of tourism. Acknowledgements: The authors wish to thank Felix Chan, Suhejla Hoti, Christine Lim and two anonymous referees for helpful comments and suggestions. The first author is most grateful for a UWA Research Grant, and the second author wishes to acknowledge financial support of Australian Research Council.Island economies, small size, vulnerability, international tourism demand, arrival rate, trends, volatility, time-varying conditional variance, GARCH, GJR, asymmetry, shocks, regularity conditions