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The scaling up of violent crime in Mexico is often characterized as detrimental to the Mexican tourism industry. However, no econometric study so far challenges this claim with data. This paper therefore empirically analyzes the impact of crime on the arrivals of tourists in Mexico for the period 1990 to 2010. Using a panel data set for the 31 Mexican federal states and Mexico City, I find a negative and significant effect of homicides on the number of tourists arriving. This finding is robust to alternative estimation techniques and samples. Furthermore, when disaggregating the tourist arrival data into local and international, I find that international tourists seem to be more intimidated from homicides than locals.

Does violent crime scare tourists away? Panel data evidence from 32 mexican states