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Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots?

29 Pages Posted: 21 Mar 2011  

Rinaldo Brau

Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Adriana Di Liberto

Università di Cagliari and Crenos; IZA Institute of Labor Economics

Francesco Pigliaru

University of Cagliari and CRENoS

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Abstract

Is tourism an opportunity for lagging countries in the elusive quest for growth (Easterly, 2002)? Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialisation is likely to be associated with higher per capita GDP growth rates than those observed in industrialised countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth (Acemoglu etal., 2001) and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth-enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth.

Suggested Citation

Brau, Rinaldo and Di Liberto, Adriana and Pigliaru, Francesco, Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots?. The World Economy, Vol. 34, No. 3, pp. 444-472, 2011. Available at SSRN: https://ssrn.com/abstract=1790171 or http://dx.doi.org/10.1111/j.1467-9701.2010.01320.x

Rinaldo Brau (Contact Author)

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
ITALY

Adriana Di Liberto

Università di Cagliari and Crenos ( email )

via S. Ignazio 78
Cagliari, 09123
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Francesco Pigliaru

University of Cagliari and CRENoS ( email )

Viale S. Ignazio, 78
Cagliari I-09123
Italy
070-6753818 (Phone)
070-6753760 (Fax)

HOME PAGE: http://francescopigliaru@blogspot.com

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