Tourism and Economic Development: Evidence from Mexico’s Coastline

Tourism is a fast-growing services sector in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long-term economic consequences of tourism both locally and in the aggregate. We find...

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Bibliographic Details
Published in:The American economic review 2019-06, Vol.109 (6), p.2245-2293
Main Authors: Faber, Benjamin, Gaubert, Cecile
Format: Article
Language:English
Subjects:
Developing countries
Economic development
Economic integration
Economic models
Equilibrium
LDCs
Spillover effect
Tourism
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Summary:Tourism is a fast-growing services sector in developing countries. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model and a new empirical strategy to study the long-term economic consequences of tourism both locally and in the aggregate. We find that tourism causes large and significant local economic gains relative to less touristic regions that are in part driven by significant positive spillovers on manufacturing. In the aggregate, however, these local spillovers are largely offset by reductions in agglomeration economies among less touristic regions, so that the national gains from trade in tourism are mainly driven by a classical market integration effect.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20161434