Tourism Specialization and Economic Development: Evidence from the UNESCO World Heritage List (joint with Reda

Transcription

1 Tourism Specialization and Economic Development: Evidence from the UNESCO World Heritage List (joint with Reda Cherif and John Piotrowski) 13th Annual US/ICOMOS International Symposium, May 21, 2010 Washington DC, USA Rabah Arezki IMF Institute International Monetary Fund Stylized Facts Figure 1. Economic Growth and Tourism Specialization ) 5 GDP Growth (Average over Average Annual G Tourism receipt in % Exports ( Average over ) Source: World Bank (2008) 1

2 Motivation 1. Broad Question: Is tourism specialization a viable development strategy? 2. Narrowed to: What is the true magnitude of tourism specialization s impact on economic growth? 3. Conclusion: What are the implications of the answer to Question 2 on the answer to Question 1. Structure of the Talk Contribution Overview of the Literature Related to Tourism and Growth Validity of the UNESCO Instrument Estimation Strategy Results Robustness Conclusion 2

3 Contribution Contribution Estimation of a standard growth model augmented with tourism specialization. To address endogeneity, introduce a new instrument: each country s number of UNESCO World Heritage Sites. Results suggest there is a robust positive (causal) relationship between tourism receipts and growth. 3

4 Overview of the Literature Related to Tourism and Growth Channels Theory: Tourism and Dutch Disease: Chao and al. (2006) Service and Growth. Baumol (1967), Oulton (2001). Network effect in addition to enhanced security, stability, etc Empirics: Spillovers of FDI on Growth: Borenztein and al. (1998) Tourism and Growth using panel regressions. Sequeria and Nunes (2008). Issue: lack of valid instruments for tourism (e.g. lagged values) 4

5 Validity of the UNESCO Instrument UNESCO WHL: Selection Process UNESCO encourages the identification, protection, and preservation of cultural and natural heritage. Being a signatory of the World Heritage Convention is a prerequisite. As of 2006, 181 countries have signed. Countries nominate sites, and committee selects annually those to be added to the World Heritage List (WHL). 5

6 Unesco WHL and Tourism Testimony effect : a relationship between stocks. WHL rewards sites that are considered to be of outstanding value to humanity. Advertising effect : a relationship between flows. WHL has an accelerator effect on the flow of tourism over time. Instrument: Validity Does our UNESCO instrument based on the number of sites in a given country per capita satisfies the exclusion restriction? 1. Scope: Is there evident bias in the regional and historical distribution of World Heritage sites? 2. Political Clout: Does political clout, with potential economic consequences, influence the WHL inscription process? 3. Natural vs. Cultural: Do natural sites affect economic performance through channels other than tourism? 6

7 Scope: World-wide Scope: historical biais? Table 1. Regional and Historical Distribution of World Heritage Sites (2002) Region Cultural Natural 1/ Total Xth B.C.-XIVth A.D. XVth-XVIIth XVIIIth-XIXth XXth Africa (Early man, Islamic) (Zimbabwes) (Colonial) Asia (Buddhist, Hindu) (Ming, Mughal) (Qing) Middle East (Mesopotamia, Egypt, Islamic) (Ottoman) (North Africa) Europe (Greece, Rome, Middle Ages) 2/ (Renaissance) (Enlightenment, Industrial Rev.) Latin America (Aztec, Inca, Maya) (Spanish, Portuguese) (Independence) Total Source: UNESCO, / Includes "mixed" sites, i.e. those sites classified under both natural and cultural criteria. 2/ The Middle Ages account for 143 of the 219 European sites during this timeframe. 7

8 Political Clout: UNESCO Sites for UN General Assembly votes? Table 2. Correlation Between Total UNESCO World Heritage Sites and Average UN Voting Coincidence, Barro & Lee (2005) Kegley & Hoock (1991) Thacker (1999) Correlation coefficients for all countries (except G7) with: Canada France Germany Italy Japan UK USA G Correlation coefficients for non- OECD countries with: Canada France Germany Italy Japan UK USA G Cultural vs. Natural 1. Do Natural sites capture natural resource abundance? 2. Some natural sites are part of a recent trend of convervationism that increase the number of protected area (e.g. climate change, etc..) 3. Pbs: 1 and 2 could constitutes other channels than tourism through which natural sites can influence growth 8

9 Estimation Strategy Estimation Use instrumental variables technique to estimate standard growth models augmented with a proxy for tourism specialization (data from WDI). First stage: Tourism = UNESCO + Income + Education + Distance + Ɛ (as well as instrumentation for Institution and Trade openness) Second stage: Growth = Tourism + Income + Education + Distance + Ɛ (control for Persistence Guiso and al. (2008) and Tabellini and al. (2007)) Across all specifications, a remarkably robust Tourism coefficient and weak instrument tests. 9

10 First Stage (1) (2) (3) (4) (5) (6) Trade VARIABLES Tourism Tourism Tourism Tourism Trade Tourism Institution Tourism Institution Unesco *** *** *** *** *** *** [2.851] [6.751] [7.066] [6.863] [23.662] [7.066] [0.400] [7.464] [22.756] [0.443] Income * * ** 8.072** *** ** 0.554*** [0.551] [0.772] [0.605] [3.725] [0.620] [0.130] [0.988] [4.533] [0.132] Education [1.224] [1.383] [1.206] [3.803] [1.301] [0.157] [1.445] [3.725] [0.162] Distance *** *** [0.038] [0.039] [0.042] [0.248] [0.035] [0.008] [0.040] [0.262] [0.007] Kprice [2.376] [2.328] [8.539] [0.285] lnfrinstex_dk 1.421* *** *** [0.834] [5.786] [1.059] [7.126] [0.161] engfrac_dk * [3.842] [0.306] [4.175] [9.332] [0.336] Constant 8.162*** ** *** * 9.613* * [1.028] [5.053] [9.414] [6.304] [20.294] [5.206] [0.860] [10.729] [37.186] [1.606] F test P value Observations R-squared Second Stage (1) (2) (3) VARIABLES Growth Growth Growth (4) (5) (6) Growth Growth Growth Tourism 0.015*** 0.013** 0.017** [0.005] [0.006] [0.007] Income [0.069] [0.074] Education 0.158** 0.112* [0.066] [0.060] Distance 0.013*** 0.012*** [0.004] [0.004] Kprice ** [0.118] Trade Institution Constant [0.067] [0.433] [0.497] 0.012** 0.015*** [0.006] [0.006] ** * [0.069] [0.143] 0.163** 0.205*** [0.071] [0.075] 0.015*** [0.004] [0.008] [0.003] [0.203] [0.423] [0.609] 0.013* [0.008] ** [0.140] 0.214** [0.087] [0.008] [0.144] [0.003] 0.388** [0.186] 1.400* [0.754] Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (15% maximal IV size) Stock-Yogo weak ID test critical values (20% maximal IV size) Observations R-squared Robust standard errors in brackets Robustness 10

11 Robustness 1. Use various versions of the WHL. 2. Use exclusively the number of cultural sites, and subtract cultural sites by centuries of creation. 3. Check results with another instrument, km of coastline times distance to equator. (over-identification test) Robustness (cont.) 4. Use different definitions and data sources for the dependent variable. 5. Re-estimatation using first differences. ( advertising effect vs. testimony effect ) 6. Test whether outliers drive the results. 11

12 Using Various Century Cutoff Table 3. Robustness using Various WHL (1) (2) (3) VARIABLES growth growth growth Tourism 0.013** 0.013* 0.015** [0.006] [0.007] [0.006] Income [0.069] [0.070] [0.070] Education 0.158** 0.158** 0.156** [0.066] [0.067] [0.066] Distance 0.013*** 0.013*** 0.013*** [0.004] [0.004] [0.004] Constant [0.433] [0.435] [0.435] Cut-off year for instrument Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (15% maximal IV size) Observations R-squared Robust standard errors in brackets *** p<0.01, ** p<0.05, * p<0.1 Dropping Natural Sites Table 4. Robustness to Using Only Cultural Sites (1) (2) VARIABLES growth growth Tourism 0.013** 0.015*** [0.006] [0.005] Income [0.069] [0.070] Education 0.158** 0.156** [0.066] [0.067] Distance 0.013*** 0.013*** [0.004] [0.004] Constant [0.433] [0.437] Instrument coverage overall cultural only Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (15% maximal IV size) Observations R-squared Robust standard errors in brackets *** p<0.01, ** p<0.05, * p<0.1 12

13 Various Century Cut-off Table 5. Robustness to Removing Various Centuries from the WHL (1) (2) (3) (4) (5) (6) (7) (8) VARIABLES growth growth growth growth growth growth growth growth Tourism 0.015*** 0.015*** 0.016*** 0.017*** 0.017*** 0.018*** 0.019*** 0.022*** [0.005] [0.005] [0.005] [0.005] [0.005] [0.005] [0.005] [0.006] Income [0.070] [0.070] [0.070] [0.070] [0.070] [0.071] [0.071] [0.071] Education 0.156** 0.156** 0.154** 0.152** 0.151** 0.150** 0.148** 0.145** [0.067] [0.067] [0.066] [0.066] [0.066] [0.067] [0.067] [0.067] Distance 0.013*** 0.013*** 0.013*** 0.013*** 0.013*** 0.013*** 0.013*** 0.013*** [0.004] [0.004] [0.004] [0.004] [0.004] [0.004] [0.004] [0.004] Constant [0.437] [0.437] [0.438] [0.439] [0.439] [0.442] [0.442] [0.445] Century Cut-off Point for Cultural l Sites: All XX XVIII XV XIII X V VBC B.C. Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (15% maximal IV size) Stock-Yogo weak ID test critical values (20% maximal IV size) Observations R-squared Robust standard errors in brackets *** p<0.01, ** p<0.05, * p<0.1 Using Coastline time Distance Table 6. Robustness to Using Additional Instruments for Tourism (1) (2) (3) (4) VARIABLES growth growth growth growth Tourism 0.013** 0.015** 0.016** 0.015** [0.006] [0.006] [0.006] [0.006] Income [0.069] [0.070] [0.069] [0.069] Education 0.158** 0.155** 0.154** 0.155** [0.066] [0.066] [0.066] [0.066] Distance 0.013*** 0.013*** 0.013*** 0.013*** [0.004] [0.004] [0.004] [0.004] Constant [0.433] [0.434] [0.432] [0.429] Instrument coverage unesco unesco, coastline unesco, coastline, coastline interacted with distance unesco, coastline, coastline interacted with distance, and coastline squared Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (5% maximal IV size) Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (20% maximal IV size) Hansen J test (p value) Observations R-squared Robust standard errors in brackets *** p<0.01, ** p<0.05, * p<0.1 13

14 Using PPP GDP from PWT Table 7. Robustness to using Different Measures of GDP (1) (2) (3) (4) (5) GDP, PPP (constant t 2005 Real GDP Chain per worker unit: I$ Real GDP per capita (Constant t Prices: Real GDP per capita (Constant Prices: Chain series) unit: I$ in 2000 Real GDP Chain per equivalent adult unit: I$ international $) per worker in 2000 Constant Prices, Laspeyres) unit: I$ in 2000 Constant Prices, PWT per eq. adult in 2000 Describtion World Bank PWT 6.2 Constant Prices, PWT Constant Prices VARIABLES growth growth_rgdpwok_pwt growth_rgdpl_pwt growth_rgdpch_pwt growth_rgdpeqa_pwt Tourism 0.013** 0.024*** 0.021*** 0.021*** 0.022*** [0.006] [0.007] [0.007] [0.007] [0.007] Income [0.069] Income_rgdpwok_pwt ** [0.070] Income_rgdpl_pwt [0.081] Income_rgdpch_pwt [0.081] Income_rgdpeqa_pwt [0.082] Education 0.158** * 0.149* 0.139* [0.066] [0.071] [0.079] [0.079] [0.079] Distance 0.013*** 0.015*** 0.012*** 0.012*** 0.012*** [0.004] [0.004] [0.004] [0.004] [0.004] Constant [0.433] [0.511] [0.562] [0.561] [0.586] Kleibergen-Paap rk Wald F statistic Stock-Yogo weak ID test critical values (10% maximal IV size) Stock-Yogo weak ID test critical values (15% maximal IV size) Stock-Yogo weak ID test critical values (20% maximal IV size) Observations R-squared Robust standard errors in brackets *** p<0.01, ** p<0.05, * p<0.1 Conclusion and Directions for Further Research 14

15 Conclusion Ceteris paribus, an increase of one standard deviation in tourism activity leads to annualized additional growth of 0.5 percentage points. That is significant over the long term. BUT can Tourism Make a Miracle? How does tourism specialization compared to export led strategy of Asian Tigers (technological adoption, labor reallocation, learning by doing, ) Further Research Determinants of potential for tourism How does tourism specialized countries weather the crisis? Tourism and its social return: Isn t it too narrow to focus on the relationship between tourism and growth? Tourism as an absorber of excess low skilled labor? Sophistication and tourism specialization? 15

16 Thank you 16