Does a country need good institutions to use tourism as an economic development activator? From a sample of non-organisation for economic co-operation and development countries, this article aims to assess the feasibility of tourism-led growth in different institutional settings. The results not only suggest that a tourism shock is good for gross domestic product growth but that inclusive institutions enhance the ability of a country to convert tourism into growth. It also emphasises that beyond tourism that remains a major transmission channel for growth, inclusive countries largely benefit from growth in their neighbouring countries. They are more able to import economic growth from abroad.
This paper sheds the light on an underemphasized centripetal force in a Venables framework: in such kind of models, the fall in transport costs (in core-periphery equilibrium) increases the complexity of production processes, through an increase in the number of varieties of intermediate goods. We argue that this increasing complexity strengthens the need, for downstream firms, to be close to their suppliers. If the coordination costs that arise from this complexity effect are strong enough, the redispersion of industrial activities in the last stage of the integration process does not take place.JEL classification: F12, F15, R12, O18
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.