A paradigm shift to a new strategy for small island economies: Embracing demand side economics for value enhancement and long term economic stability

The article answers three interrelated questions pertaining to small island economies and tourism development under the condition of globalization: (1) why is tourism relevant for small island economies; (2) why is a supply perspective inappropriate for these economies; and (3) why is a demand perspective more appropriate for small island economies in the era of globalization? Empirical realities indicate that small islands have performed well in specializing as tourist destinations, despite their size constraints and resulting disadvantage in economic terms. The Caribbean region is an appropriate proxy for small island economies. However, globalization may be taking its toll on sectoral specialization in the Caribbean as a development strategy. The supply side strategy seems to have lost its effectiveness. To reverse this trend, the study proposes the implementation of new tourism strategies based on a demand focused approach to sustain value enhancement. These strategies have important managerial and policy implications.