Adriana Di Liberto

Tourism and development: a recent phenomenon built on old (institutional) roots?

Is tourism an opportunity for lagging countries in the elusive quest for growth (Easterly, 2002)? Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialization is likely to be associated with higher per capita GDP growth rates than those observed in industrialized countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth (Acemoglu et al., 2001) and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth. (This abstract was borrowed from another version of this item.)

Convergence and Divergence in Neoclassical Growth Models with Human Capital

Among the determinants of the growth and convergence processes identified by the theoretical literature, human capital is certainly one of the most important. This paper offers a selective survey of the more recent contributions of the theory of human capital and growth. In particular, our aim is to provide the necessary link between the theory on growth, convergence and human capital and the empirics of convergence. Summarising with a play on words, we might conclude that during the last fifteen years there has been a convergence of ideas between endogenous and exogenous models with respect to the convergence hypothesis where human capital plays an important role. Despite the still theoretically important difference between models that assume exogenous versus models that assume endogenous long-run growth rates, both theories predict that a mechanism of convergence is possible, but it will only be so among similar economies. In particular, most theoretical literature assumes that similar levels of human capital are fundamental for catch up to take place. Therefore, both theories are currently able to explain a stylised fact of the empirical literature on growth, namely the observed convergence among groups of homogeneous countries and the absence of convergence when large and heterogeneous data sets are introduced. This observation explains why, with current econometric techniques, it is not possible to discriminate endogenous versus exogenous models by simply using a convergence regression.

High Skills, High Growth: Is Tourism an Exception?

Despite the emphasis placed by growth models on technological progress, recent empirical evidence shows that tourism, a low-skill/low-tech sector and one of the fastest growing industries in the world, may offer a beneficial specialization strategy for growth. This paper focuses on a balanced panel of 72 countries (1980-2005) and confirms that the tourism sector indicator is always positive and significant in growth regressions. Moreover, results also imply that increased education contribute to growth and that the role of the tourism sector is significantly larger in countries with higher aggregate levels of human capital. Our main results are robust to the inclusion of additional variables and the use of alternative estimators in the regression analysis. Overall, this study confirms that the expansion of a low-tech sector such as tourism may be a valuable strategy for development. But it also suggests that an increase in human capital endowments is always beneficial, even when the development strategy focuses on the expansion of a (successful) low-tech sector.

TFP convergence across European regions: a comparative spatial dynamics analysis

This paper proposes a fixed-effect panel methodology to estimate Total Factor Productivity and investigate the spatial dimension of regional EU TFP from both a static and a dynamic perspective. The sample includes 199 regions in EU15 (plus Norway and Switzerland) between 1985 and 2006. First of all, we find the absence of an overall process of convergence, since TFP dispersion is virtually constant along time. Furthermore, exploratory spatial data techniques show that there are interesting interregional dynamic patterns. We find that polarization patterns in Europe have significantly changed along time. Overall, results suggest that only few TFP leaders are emerging and they are distancing themselves from the rest, while the cluster of low TFP regions is widening.

Past Dominations, Current Institutions and the Italian Regional Economic Performance

We study the connection between economic performance and the quality of government institutions for the sample of 103 Italian NUTS3 regions, including new measures of institutional quality calculated using data on the provision of four areas of public service: health, educational infrastructures, environment and energy. In order to address likely endogeneity problems, we use the histories of the different foreign dominations that ruled Italian regions between the 16th and 17th century and over seven hundred years before the creation of the unified Italian State. Our results suggest a significant role of past historical institutions on the current public administration efficiency and show that the latter makes a difference to the economic performance of regions. Overall, our analysis confirms that informal institutions matter for development, and that history can be used to find suitable instruments.

Tourism and Development: A Recent Phenomenon Built on Old (Institutional) Roots?

Is tourism an opportunity for lagging countries in the elusive quest for growth (Easterly, 2002)‘ Recent empirical evidence suggests that the answer is a cautious yes. Aggregate cross-country data show that tourism specialization is likely to be associated with higher per capita GDP growth rates than those observed in industrialized countries. However, this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems. In this paper we frame our starting question within the general debate about the importance of good/bad institutions as fundamental determinants of economic growth (Acemoglu et al., 2001) and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth enhancing institutions. Our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables. By means of descriptive statistics and some simple cross-country regressions we confirm that the quality of institutions is important for growth. Yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher-than-average growth.