Tourism and regional development: a spatial econometric model for Portugal at municipal level

This study examines the importance of tourism as a factor for regional economic development in Mainland Portugal, emphasizing the inter-regional spatial spillover effects. A spatial analysis of the main variables of the tourism sector revealed strong evidence of positive spatial autocorrelation across the municipalities of Portugal. A significant spatial clustering of these activities on coastal locations was identified, leading to the formation of hot spots in coastal regions and cold spots in inland regions. Furthermore, this work specifies spatial econometric models aiming to estimate the relevance of the tourism sector in regional economic development, on a municipal level. The econometric model, which highlights the role performed by interregional spatial spillovers, regresses the regional gross value added against a group of variables, which reflect the contribution of the tourism sector and, furthermore, control variables for the classic determinants of income, for the 278 municipalities of Portugal. The results show that tourism is a significant driver of regional economic development. Moreover, they revealed the presence of positive and significant inter-regional spillover effects, which strongly enhance tourism’s economic impact.