Tourism and Economic Diversification in Resource-Dependent Economies: The Case of Libya

الملخص

Libya’s economy has long been dominated by oil, making it highly vulnerable to price shocks and the “resource curse.” This study examines whether tourism can serve as a viable pathway for diversification and growth in a fragile, resource-rich state. Libya has untapped tourism assets Mediterranean beaches, desert landscapes, and ancient heritage yet receipts have remained minimal (around US$170 million in 2010). We draw on the tourism-led growth literature and analyses of Dutch Disease to frame tourism as an export sector that could generate jobs, foreign exchange, and regional development. Using World Bank (WDI) and governance data alongside WTTC and UNWTO reports, we compare Libya (1995-2024) with Egypt, Morocco, and Tunisia. Fixed-effects panel regressions show that a 1% increase in tourist arrivals raises tourism revenue by roughly 0.7-0.8%, underscoring tourism’s direct impact (consistent with Balaguer & Cantavella- Jordá, 2002). However, political stability is also a key determinant. Our findings imply that, with peace and policy reforms, tourism could correct some Dutch Disease effects and contribute meaningfully to Libya’s GDP and exports. The paper offers updated evidence on Libya’s tourism sector, situates it within resource-diversification theory, and proposes policy measures for sustainable growth.