A comparison of the moderating effect of tourism reliance on the economic development for islands and other countries

• There is a significant negative impact on economic development for countries that rely heavily on tourism.
• Islands (primarily SIDS) rely more on tourism than non-island countries.
• SIDS that rely more heavily on tourism have a significant negative impact of at lower levels of economic development.

Tourism is usually one of the top industries in most countries, especially islands. However, there is some question as to whether there is a negative potential impact if a country relies too much on tourism as a means of economic development to the detriment of other industries such as manufacturing and agriculture. The purpose of this paper is to examine the moderating effect of tourism reliance on the relationship between tourism development and economic development for regular countries and island economies, including “small island developing states” (SIDS). This study uses quantile regression on panel data from the WDI database from 1995 through 2014 for all of the countries that report tourism and economic data. The findings demonstrate that tourism reliance does have a moderating effect on the relationship between tourism development and economic development for all countries, but mainly at higher levels of economic development.