Economic impact of tourism in Cabo Verde: a CGE analysis

Tourism, a major economic activity in Cabo Verde, contributes largely to GDP and employment. The long-run economic impact of tourism in Cabo Verde is examined using a dynamic computable general equilibrium model and simulation analyses where the demand for tourism is increased by 10%, and the tax burden is reduced by half. Results show real GDP rising above its long-run growth path by 1.31 and 1.00 percentage points in 2030 and by 0.61 and 0.47 percentage points in 2050 in the demand and supply shocks, respectively. Despite considerable leakage, these shocks lead to improvement in the primary budget balance.