Econometric model of Services Sector Development and Impact of Tourism in Latin American Countries

Over recent decades some Latin American countries have experienced an important development due to the positive effect of tourism on the services sector. Our model relates tourism with the increase of Value-Added in services, taking into account other important variables which influence the evolution of this sector and explain the important differences among developed and less developed countries. Besides tourism, the industrial evolution is also very important to improve the development of services through some inter-sector relations. The model suggests that some stagnation of services development in many countries is due largely to a lack of industrial investment, specially in countries with a low level of tourism. Our main conclusions are that both factors, industry and tourism, need to be increased generally to contribute to development of employment and production of the services sector. .