Although Maldives is a small country, it presents an interesting case to anyone interested in those factors associated with tourism flow because it has one of the most well-developed tourism industry among island economies. However, the questions arise as to how Maldives has transformed from a sleepy seaside hamlet in the 1970s to an icon of luxury tourism in the 1990s.
It is true that the underlying characteristics that give Maldives a comparative advantage in tourism are and were the sun, blue ocean, and white sand today and four decades ago. Without the entrepreneurship of the pioneering entrepreneurs, however, tourism would not get started in the country in the 1970s. Without considerable technology transfers, human resource development, and physical investment, the significant transformation of the tourism in terms of quality and quantities that the country has gone through would not take place. In this sense, I agree completely with Crouch and Ritchie (1999), who argue in the context of tourism that factor endowments can be both naturally occurring as well as intentionally accumulated or transformed over time. More specifically, Maldives have specialized in a niche called luxury tourism. According to Rodrik (2003), filling a particular niche cannot be attributed only to natural endowments. What have led Maldives to its specialization to the niche?
Although some authors have discussed the contribution of early entrepreneurs to the development of the Maldives tourism industry as well as private sector in general (Niyaz, 2002; Scheyvens, 2011; Shakeela, Ruhanen, & Breakey, 2011; Shareef, Hoti, & McAleer, 2008), there is limited knowledge about dynamic changes to the industry. Using tourist area life cycle (TALC) model developed by Butler (1980), this article examines the evolution of tourism industry in the Maldives.
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