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Does proximity to conflict affect tourism: Evidence from NATO bombing

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  • Marina Tkalec
  • Ivan Žilić

Abstract

Although conflict, war, violence, and terrorism affect tourism, research that identifies possible channels of these effects is scarce. We explore if the adverse effects are channelled through proximity to conflict areas. We use the conflict in Kosovo in 1999 and the country Croatia as a quasi-natural experiment and take advantage of the specific north-west to south-east orientation of Croatian Adriatic counties to identify the effect of NATO bombing in Kosovo on tourism outcomes as well as the potential proximity channel. Using data on the population of Croatian firms and the difference-in-differences identification strategy we find that tourism companies’ revenues decreased significantly due to NATO bombing, especially in accommodation services and in companies with 50 or more employees. However, using a synthetic control approach we find that the adverse effect is only transitory. Analysing heterogeneous effects with respect to the distance of the firm from Kosovo—using a linear and a more flexible model—we find compelling evidence that within-country proximity to conflict is not a significant channel through which the negative effect propagates.

Suggested Citation

  • Marina Tkalec & Ivan Žilić, 2021. "Does proximity to conflict affect tourism: Evidence from NATO bombing," PLOS ONE, Public Library of Science, vol. 16(10), pages 1-21, October.
    • Handle: RePEc:plo:pone00:0258195
    DOI: 10.1371/journal.pone.0258195
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    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z3 - Other Special Topics - - Tourism Economics

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