The Role of the Government in Promoting Tourism Investment in Selected Mediterranean Countries - Implications for the Republic of Croatia

Due to the combined impact of the financial crisis of 2008, and some still unresolved structural problems in its economy, in the forthcoming period Croatia should expect a significant decline in the overall investment demand (public and private). The expected drop in the overall investment activity will also have significant negative implications on tourism, the leading export sector of Croatia. In order to maintain a modest level of investment in Croatian hotel/tourism sector under these extremely difficult conditions, Croatia should urgently establish an internationally transparent and long-term sustainable incentive system to encourage both, domestic and foreign investors to invest in the country’s tourism sector related development projects. In this regard, and using the case study approach, the purpose of this article is to draw one’s attention to best practice methods and policy instruments in three moderately developed countries of the Mediterranean which have, so far, been successful in attracting major tourism sector investors (Malta, Turkey and Egypt). Contrary to the situation in highly industrialized Mediterranean countries, members of EU, the findings suggest that the active role of the government is of utmost importance in attracting and controlling investment demand in the tourism sector in moderately developed Mediterranean economies, despite the fact that the approaches vary somewhat between the three analyzed countries.