Infrastructure investments and rural development: The case of Norwegian National Tourist Routes

Abstract

This thesis studies the impact of tourism based infrastructure investments on rural development in Norway by looking at the ongoing case of investment into the Norwegian National Tourist Routes. Using a generalized difference-in-differences estimation we look at the impact of opening attractions in different municipalities across Norway on this set of outcome variables: Population growth, unemployment, traffic accidents and housing prices. The results from the difference-in-differences estimates indicate no significant effect of opening attractions, but the estimates of what we call top attractions show that the number of traffic accidents increase by 20 to 22 per 1000 inhabitants. While not all of the models used show significant results for the other variables, top attractions seem to have a positive effect on population growth and housing prices in some of the models. With a limited number of our results yielding significant findings, we cannot conclude that the investment into tourism based infrastructure and tourist routes have had a noticeable short-run impact on local development at least when looking at all attractions, while for top attractions there seems to be an increase in number of traffic accidents. That being said, the analysis has been done while the project is still ongoing and has only been able to look at the contemporaneous and short-run effects. Therefore, investment into tourism based infrastructure and tourist routes might still have a significant impact on local development in the long-run.