The role of public investment in tourism value creation: Evidence from ERDF-funded interventions in European regions

Tourism represents a significant source of economic activity in many European regions, yet its role as a channel for public investment–driven value creation remains insufficiently explored within Cohesion Policy evaluations. This study examines the effects of ERDF-funded public investment on tourism development in 194 NUTS2 regions between 2014 and 2019. Using a dynamic panel data approach (System GMM and Fixed Effects), it analyses the impact of the four ERDF thematic objectives, Smarter, Greener, Connected, and Social Europe in the tourism-related gross value added. The results indicate that total ERDF investment does not generate immediate increases in tourism value added, but exerts a positive effect in the short term, supporting the presence of a time-to-build mechanism. Connectivity-related investments emerge as the most effective driver of tourism value creation, especially in transition and intermediate regions. By contrast, Smarter investments show no aggregate impact and generate negative short-term effects in rural and emerging areas, reflecting absorption and implementation constraints. Coastal, urban, and highly competitive (leader) regions display limited responsiveness to ERDF interventions, suggesting the dominance of private market dynamics and potential saturation effects. These findings reveal strong territorial heterogeneity in the capacity of public investment to generate tourism-related economic value, underscoring the need for place-based Cohesion Policy strategies.