Tourism Development and Economic Diversification: A Small Island Challenge

Abstract

The tourism industry is the major source of income to the small islands of the Caribbean except for the two-island state of Trinidad and Tobago which is an oil and natural gas economy. The problem is that oil and gas production are in decline accompanied by rising production costs making the products uncompetitive. The country has adopted a diversification strategy which targets knowledge-intensive industries and tourism as a major service industry. Trinidad has an established business and conference tourism industry while Tobago is viewed as the traditional tourism island based on its natural assets of beaches, clear waters, marine reefs, and rain forests. The expressed objective is that Tobago will develop a sustainable tourism industry which will contribute significantly to the economic diversification thrust of the country. This paper presents original analyses of the economic performance of the tourism industry the results of which raise questions about the sustainability of the industry, particularly in Tobago. The overall conclusion is that serious rethinking and new planning approaches must be undertaken if the tourism industry in Tobago is to play an acceptable part in the economic development of the country.