Tourist municipalities and local political corruption

Abstract

Are tourist municipalities a breeding ground for corruption? Before the 2008 economic crisis, Spain experienced an economic boom, together with a surge in political corruption at the local level. In a tourism-oriented economy - tourism represents above 11% of country GDP - where most of the tourism activity is focused on certain municipalities, understanding the link between tourism and corruption at the local level is crucial. Whether those municipalities present differences from non-tourist local governments when it comes to corruption represents the main research question of the present paper. Also, this paper analyzes whether voting behavior in these municipalities hides some particularities related to corrupt activities. This paper gathers information on municipalities' public accounts and fiscal revenues generated by businesses in the local area, together with the results of four local recent elections. Estimations show how tourism contributes to the existence of local political corruption. Interestingly, local governments in tourist municipalities are also proven to be more stable than those in non-tourist municipalities.