Promoting tourism as U.S. foreign aid: building on the promise of the Caribbean basin initiative

Abstract

Many economists are questioning the role of foreign aid as a development tool. The Caribbean region has received significant amounts of foreign aid but with mixed results. The region confronts daunting development issues, such as declining productivity and employment against the backdrop of a challenging international environment with a high risk of natural disasters. The study argues that tourism is a stable source of growth for the region and has great potential as a mechanism for distributing foreign aid in a market driven approach that may avoid several of the shortcomings of traditional foreign aid. The Caribbean Basin Initiative includes fiscal incentives for U.S. citizens to travel to certain Caribbean countries for the purpose of strengthening their economies and should serve as a model for further study and innovation. This study assesses whether tourism can serve as an approach to delivering U.S. aid to the Caribbean.