The Impact of War on Tourism: the Case of Croatia
Friday, April 30, 2004
Introduction
This paper examines the impact of war on tourism and its consequent effect on the economy of Croatia. Previous studies have examined the micro effects of war on demand for tourism in Croatia, but to date no study has examined the macro effect of war on GDP caused by the change in tourism. Our approach is to use ordinary least squares to model the Croatian economy during the war years 1991-1995 and the pre-and-post war years 1960-1990 and 1996-2002. We then use the results of the model to estimate the impact on GDP caused by the change in tourism.
The results show that after the initial decline in 1990, tourism began to increase even during the war years. Although this result was unanticipated, it is consistent with tourism patterns in Croatia and with findings of other studies showing that a decline in tourism tends to decay over a four or five-year period following a crisis. The model reveals that the decline in GDP attributable to tourism was approximately US$ 5 Billion.
The paper is divided into three sections. In the first section we discuss previous efforts to measure the effect on GDP resulting from a crisis. In the second section we discuss the importance of tourism to Croatia’s economy and the effect on tourism indicators and GDP caused by the war of 1991-1995. In the final section we discuss the model and its results.
Measuring war’s impact
Weaver (2000), using a model from Butler (1980), develops the theoretical concept of a war-distorted life cycle. War causes a deviation from the original path of tourism growth, so that there is a gap between the level tourism might have attained in the absence of war...