BRIDGETOWN, Bar­ba­dos–A study ex­am­in­ing what is dri­ving the tourism flows in the Caribbean has found that the re­gion's share of the glob­al tourism mar­ket is de­clin­ing.

The In­ter­na­tion­al Mon­e­tary Fund (IMF) Work­ing Pa­per ti­tled "Re­vis­it­ing Tourism Flows to the Caribbean: What is Dri­ving Ar­rivals," finds that tourism ar­rivals and ex­pen­di­ture are sen­si­tive to both price and in­come fac­tors in source mar­kets; price and in­come elas­tic­i­ties of tourism have de­clined since 2008 and that price elas­tic­i­ty is sta­tis­ti­cal­ly in­signif­i­cant for "high-end" des­ti­na­tions.

In ad­di­tion, the study pre­pared by Nicole Lafram­boise, Nkunde Mwase, Joonkyu Park, and Yingke Zhou, al­so found that the nom­i­nal cost of an av­er­age one week beach hol­i­day in the Caribbean is high­er than in oth­er beach des­ti­na­tions around the world.

"These re­sults point to the need for struc­tur­al re­forms to raise prod­uct qual­i­ty, cost re­duc­tion or con­tain­ment in "low-end" des­ti­na­tions, in­clud­ing pos­si­bly via ex­change rates, and an ad­just­ment in ag­gre­gate con­sump­tion to adapt to the im­pli­ca­tions of a low­er con­tri­bu­tion to GDP (gross do­mes­tic prod­uct) from tourism," the study in­di­cat­ed.

The study found that the Caribbean is high­ly de­pen­dent on tourism. In many coun­tries, the im­por­tance of tourism in­creased steadi­ly as the sys­tem of agri­cul­tur­al trade pref­er­ences was dis­man­tled. Tourism grad­u­al­ly be­came the dom­i­nant sec­tor, and now ac­counts for a large share of GDP, rang­ing from eight to 40 per cent of GDP for most of the 16 coun­tries stud­ied in this pa­per.

It found that tourism is of course the main dri­ver of eco­nom­ic growth and em­ploy­ment, and is a key source of gov­ern­ment rev­enues."In re­cent years, how­ev­er, the rate of growth in tourist ar­rivals has stalled, and the re­gion's share of the glob­al mar­ket has been shrink­ing. More­over, many Caribbean coun­tries are fac­ing sig­nif­i­cant macro­eco­nom­ic im­bal­ances as growth has slowed and pub­lic fi­nances have de­te­ri­o­rat­ed. Thus there is strong in­ter­est in un­der­stand­ing what dri­ves tourism flows."

The study re­vis­its the de­ter­mi­nants of tourism and ex­plores new fac­tors like the im­pact of com­peti­tors from pe­riph­ery Eu­rope; it in­ves­ti­gates the ex­tent to which the glob­al fi­nan­cial cri­sis and re­ces­sion may have al­tered tourism de­mand; and it in­tro­duces the con­cept of a "week at the beach" in­dex to com­pare the nom­i­nal cost of sim­i­lar tourism prod­ucts across dif­fer­ent beach des­ti­na­tions around the world.

Us­ing da­ta cov­er­ing the pe­ri­od 2000�2013 for 16 Caribbean coun­tries, the pa­per finds that both price and in­come fac­tors are found to have a sig­nif­i­cant im­pact on tourism ar­rivals and ex­pen­di­ture, al­though price elas­tic­i­ty is found to be sta­tis­ti­cal­ly in­signif­i­cant for high-end des­ti­na­tions. The num­ber of air­lines al­so has a sta­tis­ti­cal­ly pos­i­tive im­pact on ar­rivals and ex­pen­di­ture.

The 16 coun­tries used in the study are An­guil­la, An­tigua & Bar­bu­da, The Ba­hamas, Bar­ba­dos, Be­lize, Do­mini­ca, Do­mini­can Re­pub­lic, Grena­da, Ja­maica, St Kitts & Nevis, St Lu­cia and St Vin­cent & the Grenadines.

�2 The au­thors of the study said they ex­clud­ed Guyana, Haiti, Suri­name and T&T–non tourism-based economies–in some of the em­pir­i­cal work.