Economic Impacts of Inbound Tourism under Different Assumptions Regarding the Macroeconomy

By L. Dwyer, Peter A. Forsyth, John R Madden, Ray Spurr. 2000

201 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Sociology and Political Science, Transportation

View Paper: https://www.semanticscholar.org/paper/f478f70bd4ab6e66efd6f8ebf1678f119e8e7659

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Citations in the corpus

Estimating the Impacts of Special Events on an Economy (2005, methodology): “In real-life economies, when more resources are required in one area of the economy, they are drawn away, at least in part, from productive activities elsewhere in the economy (Dwyer and Forsyth 1993, 1998; Dwyer et al. 2000; Dwyer, Forsyth, and Spurr 2004).”
Evaluating tourism's economic effects: new and old approaches (2004, methodology): “Once this issue is recognised it is in principle straightforward to adjust outputs of a CGE model to take them into account (Dwyer et al., 2003b). Some CGE models are explicitly designed to measure changes in welfare—see Dixon, Picton and Rimmer (2002). The result will be a measure of the net benefi”
Quantifying the Impact of Foot and Mouth Disease on Tourism and the UK Economy (2003, background): “The general absence of tourism research involving CGE models is surprising, although considerable research has been undertaken on the Australian economy (for example, Adams and Parmenter, 1995; Dwyer et al, 2000, 2001).”
Economic Impact of Tourism on Fiji's Economy: Empirical Evidence from the Computable General Equilibrium Model (2004, methodology): “Part of the material in this paper is from the author’s PhD thesis. for a lack of robustness and the reliability of results obtained with this technique has therefore been questioned (see Dwyer et al, 2000 for more details).”
Tourism and poverty relief (2008, methodology): “This has led some researchers to use Computable General Equilibrium (CGE) models that take such effects into account (Adams and Parmenter 1995; Zhou et al. 1997; Blake 2000; Dwyer et al., 2000, 2003a; Sugiyarto et al. 2003).”
Assessing the Economic Impacts of Events: A Computable General Equilibrium Approach (2006, background): “Actual economies comprise a complex pattern of feedback effects and resource constraints; these are not captured by I-O analysis (Dwyer et al. 2000; Dwyer, Forsyth, and Spurr 2004).”
Does tourism development promote economic growth in transition countries? A panel data analysis (2013, background): “, 2006) and production capacity constraints (Dwyer et al., 2000), the tourism–economy relationship can also differ from one country to another.”
Tourism and its economic impact: A literature review using bibliometric tools (2018, background): “Dwyer et al. (2000) looked at the applications of CGE modelling to tourism growth in both nations and regions, praising the capacity of this new methodology to take into account also economy-wide effects, such as the reduction of the demand for traditional exports and import industries due to the…”
Tourism as an Economic Growth Factor: A Case Study for Southern European Countries (2008, background): “…over recent years, there have been some applications of computable general equilibrium (CGE) models to the tourism field in various countries, such as Australia (Adams and Parmenter, 1995; Dwyer et al, 2000), Hawaii (Zhou et al, 1997), Spain (Blake, 2000) and the USA (Blake and Sinclair, 2002).”
Tourism and Development in Developing Economies: A Policy Implication Perspective (2020, background): “The trends suggest three types of the economic impact of tourism development: direct, indirect, and induced [19].”