Rural Development and Rural Tourism: The Impact of Infrastructure Investments

Rural and peripheral development is still a matter of concern in several western countries. Depopulation, low density of business activities, younger people emigration and better-qualified individuals feeling that such regions have been abandoned by the government, and incapable of moving on, are among the key indicators to "understand" rural and peripheral areas. Rural tourism has long been understood as an effective catalyst of change in depressed and deprived (of entrepreneurial capacity) areas and to explore a unique set of amenities. Because of funds directed to help private investment projects in rural tourism facilities, most peripheral areas are now relatively well endowed with key infrastructures. Nevertheless, the tourism lead approach produced mixed results due to low levels of demand in some areas and lack of a cooperative behavior among providers to maximize the opportunities offered by the wide range of attractions. In this paper, we investigate to what extent investments in infrastructure helped the rural tourism sector to attract more visitors in Madeira. Based on the panel-data approach, this paper provides insights to analyze the development path of rural tourism in Madeira and to explores how local policy makers may be the "missing link" needed to improve the sector prospects based on tangible and intangible amenities.