The Impact of Tourism Services Diversification on Regional Economic Growth: Evidence From Bukhara Region Districts

This study investigates the impact of tourism services diversification on regional economic growth using panel data from eleven districts of Bukhara region, Uzbekistan, over the period 2015-2024. As one of the principal tourism destinations in Central Asia with rich historical and cultural heritage, Bukhara region provides an ideal laboratory for examining how the structural composition and diversification of tourism-related services affect local economic outcomes. Using a comprehensive econometric framework combining spatial econometric analysis (Spatial Lag Model), regression with fixed and random effects estimation, Location Quotient analysis of regional specialization, and the Herfindahl-Hirschman Index for diversification, we investigate the relationships between tourism service portfolio composition and economic indicators at the district level, namely gross regional product, employment and per capita income. The empirical results show that tourism services diversification (the inverse HHI), has a positive and significant effect on regional economic growth over the period 1991- 2005: a one-unit increase in diversification is associated with growth rates about 2.34 percentage points higher. Location Quotient analysis indicates that the urban district of Bukhara has some strong specialization advantages concerning accommodation and cultural services, while peripheral districts have some comparative advantages in production (handicraft) and agritourism. The significant positive spatial spillovers found in the spatial econometric estimation, with a spatial lag coefficient of 0.312, indicate that regional economic growth in adjacent districts plays a role in the local economic performance related to growth. Hausman specification test preferred fixed effects vs. random effects, indicating it is necessary to control for within and between district unobserved heterogeneity. Analysis of shift-share decomposition shows that competitive effects were stronger in districts with more diversified tourism portfolios, indicating that diversification contributes to resilience and growth potential. These findings provide empirical support for regional development policies promoting tourism services diversification as a strategy for sustainable economic growth in heritage tourism destinations.