The effects of european economic integration on tourism: hallenges and opportunities for portuguese tourism development

The effects of European economic integration on

tourism: challenges and opportunities for Portuguese

tourism development

Carla Cardoso

Senior Researcher, Centre for Trends Study in Hospitality and Tourism (CETS-HT),

Fernando Pessoa University, Porto, Portugal

Luis Ferreira

Senior Researcher, Centre for Trends Study in Hospitality and Tourism (CETS-HT),

Fernando Pessoa University, Porto, Portugal

Introduction

Over the past few years we have witnessed the

continuing evolution of the European Union

(EU), which has been consolidating its

integration process with the reality of the

common market, the Amsterdam Treaty and

the recent adoption of economic and Monetary

Union. In reality, the EU is becoming the best

known and most successful example of

regional economic integration so far.

Meanwhile, as the EU consolidates its

economic integration process, the political

and institutional nature of the EU is

becoming more supranational, representing

several implications for national economies.

Portugal as a member of EU since 1986 has

been suffering significant alterations in

consequence of the new political, economic

and social perspectives within the European

integration process. Consequently, tourism,

due to its multidimensional characteristics,

has been influenced by the European

integration.

In this article, the review of regional

economic integration as a development

concept is followed by an analysis of the

repercussions of a regional agreement into

member countries. In the next part, the

evolution of European integration and the

impacts for tourism are shown. The

importance of the tourism sector based on

four selected economic indicators (balance of

payments, income, investments and

employment) is also described. The article

also identifies the Portuguese tourism sector

under the EU financial support over the past

few years. Some perspectives for tourism

growth are presented.

Economics of integration

Under the labels of ``regional economic

integration'', ``regionalism'' or simply

``economic integration'', there have been a

number of authors who have defined

economic integration to illustrate the

progressive removal of economic frontiers

between member states (Balassa, 1961;

Jovanovic, 1998; Molle, 1991; Piggott and

Cook, 1999; Pinder, 1983; Robson, 1989;

Swann, 1996; Tsoulaly, 1997; Wallace, 1990).

The pioneer definition of economic

integration, as a development concept, was

presented in Balassa's work at the beginning

of the 1960s. The author sets out the different

degrees of economic integration and his work

has inspired the majority of studies on this

subject. For Balassa (1961), economic

integration is a voluntary process of

increasing inter-dependence of economies

separated into areas or more expanded

regions, which manifests itself in different

ways, with the main being:

. Free Trade Areas (FTA), characterised by

the abolition of custom rights and

quantitative restrictions between the

participating countries, each country

maintaining its own tariff policy in

relation to third countries. FTA is often

restricted to industrial goods. The

European Free Trade Association (EFTA)

countries and North American Free Trade

Agreement (NAFTA) are two examples of

such an approach.

. Customs Union (CU), in addition to the

suppression of discrimination in relation

to merchandise movements inside the

Union it implies a Common External

Tariff (CET). The BENELUX countries are

in this particular sense a CU.

. Common Market (CM) is a more advanced

form of integration since the abolition of

restrictions does not limit itself to

commerce but also to the free circulation

of people, capital and services. South

Common Market (MERCOSUR) is in the

process of creating such an area.

. Economic and Monetary Union, which

involves, besides the common market, a

unification of the monetary, fiscal and

social policies with the establishment of a

The current issue and full text archive of this journal is available at

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[ 401 ]

International Journal of

Contemporary Hospitality

Management

12/7 [2000] 401±408

# MCB University Press

[ISSN 0959-6119]

Keywords

Economic integration, Europe,

Tourism, Portugal

Abstract

One of today's realities is that, as

a consequence of the

consolidation of the European

economic integration process, the

economies of the different

member countries of the European

Union are becoming more inter￾dependent and the physical,

technical and tax obstacles to

cross-border trade are being

diluted. At the same time,

European policies and regulations

have affected all areas of

economic activity. The tourism

sector is no exception due to the

economic, social and cultural

importance that this sector

assumes for countries like

Portugal. The overall purpose of

this article is to analyse the

implications of European

economic integration in the

tourism sector. In this context,

the article builds on earlier

research on European economic

integration and identifies its

effects in the tourism sector,

focusing on the following tourism

economic indicators: employment,

income, investments, and balance

of payments. The relationship

between European financial

support and the Portuguese

tourism sector will be analysed

with some related trends

identified.