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The indirect impact of tourism: an economic analysis
Mon 23 Apr 2012
by Professor François Vellas Toulouse University – TED AFL
Third Meeting of T20 Tourism Ministers Paris, France, 25 October 2011
The main purpose of this report is to show the importance and the role of the indirect economic effects of tourism on growth and GDP, employment and foreign trade.
Tourism's role in the economy is often perceived as being limited to the hospitality industry (cafes, hotels and restaurants) and outbound and inbound travel agencies and carriers, which form the leading service sector in many countries. However, the economic impact of tourism is much greater, since many inputs are needed in order to produce tourism and leisure services, spanning the whole range of farm, agrifood and industrial production, including the production of capital goods as well as construction and public works.
Highlighting these indirect impacts of tourism is regarded as a priority by the T20 countries and the World Tourism Organization (UNWTO), which has produced methodological tools such as Tourism Satellite Accounts (TSAs). Assessing the economic impacts of tourism helps to inform the conduct of stimulus policies in response to international economic and financial crises. It shows that tourism can become a driver of recovery, fostering stable and sustainable economic growth, provided that sectoral support policies are implemented taking the central role of tourism into account.
The first part looks at currently available methodological resources for measuring the indirect impacts of tourism on the economy. It highlights the central role of calculations based on Tourism Satellite Accounts and shows how multiplier-based analysis can give an overall evaluation of the economic impact of tourism, distinguishing between direct, indirect and induced effects.
The second part considers how the indirect economic impacts of tourism affect output (GDP), employment and certain sectors. It shows that tourism is an essential contributor to GDP and job creation in all the T20 countries. In particular, it illustrates the sectoral impact of tourism on the supply of goods and services, on investments and public spending.
The third part looks at the impact of tourism on the restoration of economic growth and the reduction of global macroeconomic imbalances. It shows that the impacts of tourism have a specific role in correcting balance of payments imbalances. In particular, exports of tourism services help to bring trade deficits or surpluses back into balance. Following the economic crisis, countries which experienced significant recovery in 2010 took advantage of surging tourism demand, both domestic and international, to buttress the growth of all their economies. In most slower-growing countries, the recovery of international tourism probably took longer to establish itself (it could be seen in early 2011) and to contribute to global growth.
In conclusion, the report puts forward options for improving the tools for measuring the indirect impacts of tourism and proposes the introduction of international comparisons in all the T20 countries.