Tourism and trade in small island regions: The case of the canary islands

Abstract

The main objective of this paper is to study the relationship between international trade and tourism in small island regions (that is, territories that are dependent to a significant degree on the rest of the world). To that end, the authors explore the different forms this relationship can take and apply cointegration and the Granger causality test to the case of the Canary Islands. The results suggest a long-term bidirectional relationship between tourism and trade, while theshort-run link lies mainly in the trade generated by tourist arrivals.