International tourism specialisation of small countries

International tourism has expanded enormously over recent decades, fuelled by changing consumer tastes, advances in transport and new holiday destinations. The present study aims at analysing the linkages between economic growth and tourism-based economies. An econometric model for a selected number of small countries has been implemented to investigate the nature, magnitude and overall significance of the demand for tourism. Countries were selected to capture regional diversity, differences in market orientation and a range of experiences, from emerging to long-standing industries. The results show that tourism can be a significant engine of economic growth, when the elasticity of substitution between manufacturing goods and tourism services is < 1. Finally two stylised facts emerged, namely: (i) countries specialised in tourism register good economic performances; (ii) these same countries have small dimensions as defined by international trade theory.