Tourism and Economic Development: Evidence from Mexico's Coastline

Cecile Gaubert
Additional contact information
Cecile Gaubert: UC Berkeley

No 298, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: Tourism is one of the most visible and fastest growing facets of globalization in developing countries. Despite widespread policy interest, however, we currently have limited empirical evidence on the economic consequences of this channel of market integration. This paper combines a rich collection of Mexican microdata with a quantitative spatial equilibrium model of trade in goods and tourism services and a new empirical strategy to estimate the long-run economic consequences of tourism. We estimate a number of reduced form effects of tourism on local economic outcomes in today's cross-section of Mexican municipalities. We develop an instrumental variable strategy that exploits geological and oceanographic variation in beach quality along the Mexican coastline. To assess tourism's welfare implications, we use a spatial equilibrium model, and use the reduced form moments to inform its calibration for counterfactual analysis. We find that tourism causes large and significant increases in long run local economic activity. These effects are driven by sizable positive spillovers on traded goods production. In the aggregate, however, we find that these spillovers are largely offset by reductions in agglomeration economies among non-touristic regions, so that the national gains from tourism are mainly driven by a classical market integration effect.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (14)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:298

Access Statistics for this paper

More papers in 2016 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().