The Tourist Trap: A Comparative Study of the Institutional Resource Curse in Swedish Municipalities

The detrimental effects of windfall revenue on a polity’s institutions are well chronicled in the literature of the resource curse. Natural resources, especially oil, have received the main share of attention in this line of research, leaving other potential “curses” relatively underexplored. This paper offers one such addendum to the resource curse theory: Tourism. Although unlikely to wield as detrimental effects as oil or other easily extracted primary commodities, it argues that reliance on revenue from the tourism industry involves many of the same underlying processes – especially when the economy is otherwise advanced. OLS-, IV-, and TSCS-analyses on Sweden’s 290 municipalities offer robust evidence that municipalities with a heavy reliance on revenues from the tourism sector have lower quality institutions. In turn, this relationship is found to be mediated through a number of the transmission channels suggested by the extant resource curse literature: lower bureaucratic quality, weaker accountability, and higher inequality, and partly through distorted relationships between political and business spheres. These findings call for further study into what constitutes a “curse,” and the contingent contexts wherein specific industries may turn into such.