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High Skills, High Growth: Is Tourism An Exception?

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Executive Summary

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 contributes to growth and that the role of the tourism sector is significantly larger in countries with higher aggregate levels of human capital. The main results are robust to the inclusion of additional variables and the use of alternative estimators in the regression analysis.

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