Specialization versus diversity: The role of city size in tourist cities

Abstract

The paper examines the impact of specialization and diversity on economic growth of tourist cities. Industrial diversity is decomposed into two parts, related and unrelated diversity (UV). The paper constructs a panel threshold model with city size as the threshold variable, and empirically tests the nonlinear effects of specialization and diversity on economic growth of tourist cities from the perspective of city size. The results show that: First, tourism specialization has a positive impact on economic growth of tourist cities, and there is a double threshold effect based on city size. When the city size exceeds two thresholds, tourism specialization plays a significant role in promoting economic growth of tourist cities. Second, related diversity (RV) has a positive impact on economic growth of tourist cities, and there is no threshold effect based on city size. Third, the impact of unrelated diversity on economic growth of tourist cities has a single threshold effect based on city size. Specifically, when the city size is lower than the threshold value, unrelated diversity inhibits economic growth of tourist cities. Otherwise, unrelated diversity will promote economic growth of tourist cities. The conclusions are still valid after a series of robustness tests. The paper highlights that local governments of tourist cities should not pursue absolute tourism specialization or industrial diversity, but should design and adjust industrial structure reasonably according to the city size.