Responses to the COVID-19 pandemic: exploring leakage and opportunities along the Maldives' tourism value chain

The Maldives is a tropical paradise, renowned for its natural beauty, marine attractions, and proximity to India and Sri Lanka. Travel and tourism are this archipelagic state’s largest industries, accounting for close to 30% of its gross domestic product (GDP) and contributing foreign exchange revenue earnings of almost 57% of GDP in 2019. The COVID-19 pandemic has significantly affected human life and hampered global economic activity. Unprecedented global movement restrictions to curb the spread of the coronavirus have caused economic devastation driven by a fall in tourism demand worldwide. The post-pandemic recovery of the Maldives’ tourism industry will depend on both increased tourist arrivals and on increased contributions of tourists to the economy.

This chapter provides an analysis of the Maldives’ tourism industry, with theoretical references to the value chain and endogenous growth models. It aims to shed light on economic leakage and opportunities along the tourism value chain that encompass the construction, agriculture, and handicraft industries and suggest ways to increase local participation within the industries and the retention of tourist dollars spent within the country. Reducing economic leakage and exploiting opportunities that favor the Maldivian people will improve the Maldives’ tourism industry and tourism value chain in the medium and long term, and contribute towards the Maldivian government’s commitment to achieving several of the United Nations’ Sustainable Development Goals (SDGs), including gender equality, environmental sustainability, and partnerships. This analysis of the Maldives’ tourism industry can be extended to other, similar small island nations that rely predominantly on their tourism industry to drive their economy.