NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Tourism and Economic Development: Evidence from Mexico's Coastline

Benjamin Faber, Cecile Gaubert

NBER Working Paper No. 22300
Issued in June 2016, Revised in January 2018
NBER Program(s):Development Economics, International Trade and Investment

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.

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Document Object Identifier (DOI): 10.3386/w22300

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