Tourism and EU Accession in Malta and Cyprus

This source preferred by Adam Blake

Authors: Blake, A., Sinclair, M.T. and Sugiyarto, G.

http://www.nottingham.ac.uk/ttri/pdf/2003_7.pdf

Publisher: Tourism and Travel Research Institute

Computable General Equilibrium (CGE) models of the Maltese and Cypriot economies are developed and used to quantify and compare the impact of EU accession and changes in tourism on each of the Mediterranean islands. Tourism is particularly important relative to other economic activities in these island nations, so that changes in tourism demand are likely to have considerable effects at both the macroeconomic and inter-sectoral levels. The models quantify the effects of EU accession, in total and under nine headings, each of which corresponds to a particular effect of accession.

Results show that EU accession is beneficial to both countries, although as a percentage of GDP Malta benefits considerably more than Cyprus – in part because EU funding is more substantial in Malta when compared with GDP, but also because Malta trades a larger share of its GDP with the EU than Cyprus does. The effects of accession on tourism are negative in Malta and positive in Cyprus, because the greater effects from trade and funding allocations lead to a greater demand for factors of production in Malta that increase wage rates and take factors of production away from tourism. In Cyprus, effects that benefit tourism outweigh such general equilibrium trade-off effects.

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