Are there any post-tourism-based economies?

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Plenty of countries depend greatly on tourism, with some experiencing rapid growth as a result (e.g. Maldives, Iceland, St Lucia). Some are are trying to diversify their economies further, such as the UAE, which has positioned itself as a regional business hub. My question is: are there any countries that progressed from developing to developed through tourism, that have also been able to pivot towards a more diversified, developed economy?

In: Economics

There are so few “Developed” countries on the list that its pretty hard to find an example.

I’d say the closest thing you will find could be Estonia.

“Estonia?!” You say?

Yes. Estonia.

Estonia was actually a pretty popular tourist destination during its time as a member of the USSR. As a result, there was a tourism industry designed to serve people in the country’s capital city.

“But Vladimir, there must have been other USSR travel destinations!”

You are correct!

But what sets Estonia apart from the rest of the USSR is that it had one key source of foreign tourism: Finland.

Finns have been taking ferries to Estonia for decades and spending their sweet, sweet foreign money in Estonia which was a massive priority for USSR officials which further drove the economy in Estonia from the USSR’s need to foster more foreign interest as well as from Finns themselves visiting to take advantage of their buying power.

Finns, unlike other western citizens, had a bit more freedom when in Tallin, which helped develop a sort of black-market tourism industry on top of the official state-run hotels and restaurants.

When the USSR collapsed, Estonia was situated fairly well to thrive under the free-market economic changes. Tourism only increased from Finland (and Sweden) as word got around that the buying power has gotten even better with no more USSR controlled exchange rates/ now you were free to visit anywhere you wanted without checking in with the police.

Fast forward to today. Finns still like to go to Estonia for some cheaper shopping, but on the whole, Estonia is considered a developed country with a stable diversified economy. It has a very small population so it is by no means an economic powerhouse, but their economy was much stronger than many other post-soviet states and thus they were more quickly able to embrace the free market and they’ve successfully diversified their economy.

The reason I’m sticking with Estonia as the only real example is that there are small island countries or tax havens that do extremely well both for tourism and for their financial services, but those financial services are less of a natural path to ‘developed’ and more of a short-cut to get foreign business without really trying.

I also cut out countries which derived their economic status from their colonial past. A lot of new-world countries that are on the ‘more developed’ end of the spectrum didn’t necessarily get their development from tourism. Tourism certainly exists, but that doesn’t change the fact that there are also massive mining operations or cattle exports.

Jersey was historically a tourism based economy, within easy distance of the UK. However, cheaper air travel and package holidays killed the industry, and we diversified into a financial centre and are now a tax haven due to significantly lower tax than the UK (maximum 20%)