More Than a Trip: The Contribution of Tourism to Regional Poverty Reduction

Abstract

Tourism has become a vital socioeconomic activity in Colombia, and provincial tourist destinations and events have contributed to the reduction of poverty levels since the implementation of the Millennium Development Goals. We assess the dynamic linkages between Colombia’s tourism and various economic sectors for poverty reduction at the provincial level using a novel binary probit model. A longitudinal dataset is employed by utilizing generalized estimation equations for 24 provinces over the period 2002 to 2016. Tourism’s effects on poverty and extreme poverty are modeled with several contributing factors, including the level of provincial development along with several economic sectors and tourism’s value-added impacts. Findings show that increases in the value added of tourism lead to significant reductions in both poverty and extreme poverty at the provincial level. Also, growth in the value added of the tourism sector leads to reductions in poverty and extreme poverty gaps between economically lagging and leading provinces. Results for other sectors emphasize the importance of manufacturing and other services sectors for poverty reduction. These results provide important policy implications for stimulating tourism’s value added to reduce the monetary poverty gap between lagging and leading provinces.