| Abstract: |
Tourism is one of the most visible and fastest growing facets of globalization
in developing countries. This paper combines a rich collection of Mexican
microdata with a quantitative spatial equilibrium model and a new empirical
strategy to learn about the long-run economic consequences of tourism. We
begin by estimating a number of reduced-form effects on local economic
outcomes in today's cross-section of Mexican municipalities. To base these
estimates on plausibly exogenous variation in long-term tourism exposure, we
exploit geological and oceanographic variation in beach quality along the
Mexican coastline to construct instrumental variables. To guide the estimation
of the aggregate implications of tourism, we then write down a spatial
equilibrium model of trade in goods and tourism services, and use the
reduced-form moments to inform its calibration for counterfactual analysis. We
find that tourism causes large and significant local economic gains relative
to less touristic regions, and that these gains are in part driven by
significant positive spillovers on manufacturing production. In the aggregate,
however, we find that these local spillovers are largely offset by reductions
in agglomeration economies among less touristic regions, so that the national
gains from tourism are mainly driven by a classical market integration effect. |