Tourism and the economy: evidence from Brazil

ABSTRACT

We explore a discontinuity in the incentives created by the Brazilian Tourism Regionalization Program. We employ a research discontinuity design, focussing on municipalities in the transitions between two classes. We observe significant effects of the Program in tourist cities, including an increase in the value-added of services and per capita GDP. Additionally, we find that the value-added in industrial activities increases, implying a spillover effect from the improvement in local tourism conditions for other economic activities. Our article documents how tourism strategies can have a beneficial effect on a city's entire economic structure.

KEYWORDS:

• Tourism
• economy
• public policy
• RDD
• econometrics

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See Corrie et al. (2013), Dritsakis (2012), and Fayissa et al. (2011) for an interesting discussion on the importance of tourism on economic growth.

2 For a discussion of the beneficial effects of tourism on poverty and income, respectively, see He and Li (2021) and Kim et al. (2016).

3 See also Tang et al. (2017) who find support for the tourism-growth hypothesis for Malaysia, using Granger Causality. See also Akadiri et al. (2020), Eyuboglu and Eyuboglu (2020), Pérez-Rodríguez et al. (2021) and Falk et al. (2021).

4 The test helps to control small p-values that happen randomly, leading to the wrong rejection of H0.

5 The differences of the time fixed effect reduce to a constant term, which we omit from (2(2) $\mathrm{\Delta }{y}_i=\text{β}Trea{t}_i+\gamma Control{s}_i+{\eta }_i$(2) ).

6 See Fayissa et al. (2011), Ertugrul and Mangir (2015) and Bilen et al. (2017) for a discussion on the relationship between tourism and growth.

Additional information

Funding

This work was supported by CNPQ [308171/2019-5, 408546/2018-2, 425123/2018-9, 310541/2018-2].