Tourism focus boosts transition economies in the short-term

December 10, 2020

Tourists wander a market square in Krakow, Poland. (Jacek Dylag, Unsplash)

Tourism specialization can lead to economic gains and improved human development for transition countries, although the effects might only be temporary, researchers found.

The research, led by University of Central Florida professor Robertico Croes and published in Tourism Management, focused on Poland as a case study, examining the country from the fall of the Berlin Wall to nearly the present day. Tourism, at first, generated economic growth for the country, but the effect diffused over time as Poland’s tourism product failed to remain competitive and Polish workers’ productivity fell.

The long-term relationship between tourism specialization and economic growth, the researchers wrote, “suggests that the economy may be struggling to match the right person with the right job and is still in the process of catching up with tourism development."

Poland was used as a focal point because it was among the first countries to transition to a market economy after the fall of the Berlin Wall and first to complete its transition.

“Poland right now is about one generation, 25 years” since beginning the transition away from a centrally planned economy, Croes said in an interview. “So it was a good moment to look back at what happened.”

Between 1995 and 2018, international tourism spending in Poland increased 4.2% but international arrivals remained flat. Over the same time period, the country experienced 3-4% economic growth and 5-6% unemployment.

Human development — which includes income, health, education and other factors — was indirectly, negatively impacted by tourism specialization, but the increase in economic growth helped to reverse the human development trend, at least in terms of income.

“You cannot build a hospital on your own,” Croes said. “So tourism provides you with a job, provides you with income in your household, but there needs to be an organizational infrastructure to take care of other dimensions of human development, like education and health.”

The government plays an important role in the intensity and speed of tourism specialization’s impact on residents’ lives, he added.

“It is a mediating factor that can either pull you up or pull you down,” Croes said.

In the case of Poland, the researchers suggest the government has two options to extend the impact of tourism specialization on the country: It can put strong emphasis on tourism development in order to better compete with other destinations and increase international tourism to the country; or it can find a balance between using of tourism as a channel for private incomes and using it as a trigger for public provisioning for social services, especially health and education. 

Within the next two years, Croes and his fellow researchers intend to conduct a panel analysis of other transition economies in Eastern Europe, such as Hungary, Bulgaria and Romania, to examine if the effects in Poland were consistent across countries in similar situations.

“Context is very, very important here,” Croes said. “So we do not see any reason why it would not apply to other transition economies. But the mediating factor here is the context of that particular transition economy.”

Research for the paper began several years ago when Croes met Monika Bąk, dean of economics at the University of Gdansk in Poland, at a conference and they began discussing opportunities for international collaboration. Croes had previously studied the impact of tourism on developing countries and islands, and the two agreed to test tourism specialization hypotheses on transition economies.

The most important part of the research to understand, Croes said, was the context and interpretation of the data.

“Using the procedures in order to make sure that it’s rigorous, that wasn’t really an issue,” Croes said, because he had used similar procedures in other cases. “It was more the interpretation of what we found to make sense in that particular context. And also whether we can explain it theoretically, which is very, very important."

Prior to joining the University of Central Florida in the early 2000s, Croes managed tourism in Aruba. When he was offered a faculty position by the university, Croes realized he was one of only a few economists with a background in both economics and tourism.

“Usually, economists do not look at tourism in a serious way,” he said. “So that is how it started.”

The study “Tourism specialization, economic growth, human development and transition economies: The case of Poland,” published in the February 2021 edition of  Tourism Management, was authored by Robertico Croes, University of Central Florida; Jorge Ridderstaat, UCF; Monika Bąk, University of Gdansk; and Piotr Zientara, University of Gdansk.

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