The contribution of tourism to Growth: lessons from the Azores and Madeira

Abstract

The Azores and Madeira are two regions of Portugal, both considered as ultra-peripheral regions of the European Union. The islands were granted a considerable level of autonomy in 1976 and have, since, devised their own development policies. In the last twenty years, tourism has played a completely different role in these islands. In both cases, development strategies were, to a great extent, based on activities that were traditionally strong in the islands and exhibited good competitive conditions. The Azores opted for the development of activities in agriculture, while Madeira opted for a strategy of tourism development.The purpose of the current paper is to establish a comparison of the economic growth that occurred in each of these regions and to try to explore the correlations that might be made between the results obtained and the strategic options made. The comparison is based on the statistics that characterize the main economic sectors in each region, namely in what regards contributions to employment, GDP and exports. The results of a simple
econometric model of GDP and employment impacts are also presented.