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The effect of infrastructure investment on tourism demand: a synthetic control approach for the case of Kuelap, Peru

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  • Erick Lahura

    (Economic Research Division, Central Reserve Bank of Peru (BCRP)
    Department of Economics, Pontifical Catholic University of Peru
    Universidad Científica del Sur)

  • Rosario Sabrera

    (Universidad Científica del Sur)

Abstract

In this paper we estimate the effect of infrastructure investment on tourism demand. For this purpose, we analyse the case of the Kuelap Archaeological Complex (Peru), which became more attractive and accessible following the construction of Peru’s first cable car system and the redevelopment of a nearby airport located in the city of Jaen. In order to estimate the effect of this infrastructure investment package on the number of visitors to Kuelap, we construct a synthetic control using characteristics from several archaeological sites in Peru similar to Kuelap. This synthetic control allows us to estimate the potential number of visits to Kuelap had the infrastructure investment package not been made. Thus, the causal effect is the difference between the actual visits to Kuelap and the ones to the synthetic control. The results show that the number of visits to Kuelap increased by approximately 100% in the wake of the infrastructure investment package.

Suggested Citation

  • Erick Lahura & Rosario Sabrera, 2023. "The effect of infrastructure investment on tourism demand: a synthetic control approach for the case of Kuelap, Peru," Empirical Economics, Springer, vol. 65(1), pages 443-478, July.
    • Handle: RePEc:spr:empeco:v:65:y:2023:i:1:d:10.1007_s00181-022-02334-1
    DOI: 10.1007/s00181-022-02334-1
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    More about this item

    Keywords

    Kuelap; Infrastructure investment; Tourism; Synthetic control;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • Z30 - Other Special Topics - - Tourism Economics - - - General

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