The Dutch Disease effects on tourism – The case of Australia

Industries in an economy are inter-dependent on each other. However, the relationship among them is not always positive. The recent mining boom in Australia has adversely affected many other non-mining related industries, including tourism, through the effects of resource constraints and a strong appreciation of the exchange rate. This paper examines in detail the mining boom effects on tourism in specific markets such as those for inter-state, intra-state and inbound tourism through the movement of price indexes of each market across states and territories in Australia. Furthermore, while negative impacts on tourism are consistent with the traditional Dutch Disease theory, this paper also highlights an important point to policy makers that strategic planning for investment in accommodation and aviation can have positive impacts on tourism during and after the boom has passed.