Effects of Trade Reform on Health and Tourism Sectors of the Reforming Country

Abstract

Health trade and related tourism have become prevalent in recent times, particularly in countries where quality medical services are provided at a relatively low cost. Therefore, using a competitive general equilibrium trade model, this article theoretically attempts to find possible complementarity between the health sector and the tourism sector in a small open developing economy. While exploring the results, this article also finds the effect of trade reform on factor prices, per unit factor requirement and output of different sectors of the economy. Capital owners are seen to lose with trade reform, while labours and doctors gain. Eventually, both health and tourism sectors are found to be complementary in nature. However, expansion of these sectors is conditional on factor intensity assumption. Following this, we briefly touch upon the possible effects of deglobalisation in such an economy. We find that capitalists gain, whereas both doctors and labours suffer loss. Complementarity between health and tourism sectors persists, and the size of different sectors is again found to depend on factor intensity.