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Economic Impacts of Inbound Tourism under Different Assumptions Regarding the Macroeconomy

Citation

Dwyer, L and Forsyth, P and Madden, JR and Spurr, R, Economic Impacts of Inbound Tourism under Different Assumptions Regarding the Macroeconomy, Current Issues in Tourism, 3, (4) pp. 325-363. ISSN 1368-3500 (2000) [Refereed Article]

DOI: doi:10.1080/13683500008667877

Abstract

On what is taken to be the 'Standard View', increased tourism expenditure from inbound markets has direct, indirect and induced effects on a host destination, leading to increased production, income and employment. Strong links between tourism and other sectors of business reduce import leakages from tourism expenditure thereby enhancing the multiplier effects of the injected expenditure on domestic output, value added and employment. The usual technique for analysing these effects is input-output analysis. This paper argues that economy-wide effects must be taken into account in determining the impacts of increased tourism expenditure on a destination, and that the 'Standard View' is superficial and very often misleading. An expanding tourism industry tends to 'crowd out' other sectors of economic activity, reducing the demand for traditional exports and import competing industries. The extent of these 'crowding out' effects depends, in turn, on the workings of labour markets, changes in prices and the real exchange rate, and the macroeconomic policy context. It is argued that these mechanisms can only properly be taken into account using Computable General Equilibrium (CGE) models rather than input-output modelling. The paper then looks at applications of CGE modelling to tourism growth in both nations and regions, classifying the various studies according to assumptions made about labour markets and government policies. The discussion has relevance for estimating the economic contribution of tourism in all destinations. The paper concludes with some observations regarding the use of CGE modelling in tourism contexts internationally and issues for further research.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied Economics
Research Field:Tourism Economics
Objective Division:Commercial Services and Tourism
Objective Group:Tourism
Objective Field:Economic Issues in Tourism
Author:Madden, JR (Dr John Madden)
ID Code:21063
Year Published:2000
Deposited By:Centre for Regional Economic Analysis
Deposited On:2000-08-01
Last Modified:2011-09-30
Downloads:0

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