The French government spends only 85 million Euros directly on tourism each year. However, this small investment yields enormous returns: 1) It generates 95 billion Euros in tourist expenditures, a return of over 1,000 times the initial investment. 2) It supports 1.8 million jobs in the tourism industry at a cost of just 47 Euros per job. 3) Tourism accounts for 6.3% of France's GDP but the government spends just 0.0003% of its budget on tourism. The document argues that tourism provides far greater returns than other industries and merits more political and financial support from the French government.

1. Task 3: Tourism Macroeconomics and the French State
The answer………………………(In 07 fig terms)
The French State spent just 85m Euros….directly on Tourism
Surprised????
Let’s consider the implications of this figure:-
1. 85m Euros ‘buys’ 95,000,000,000 Euros of tourist expenditure….
1x government Euro returns 1117 Euros of expenditure. That represents a 1117x
direct and immediate return on investment. Often, by virtue of the multiplier
effect of direct + indirect + induced expenditure, this 95,000,000,000 can easily
DOUBLE... producing a return of nearer 2000x!!
2. 85m Euros ‘buys’ and ‘keeps’ 1,800,000 jobs in the French Tourism
Industry…… 47 Euros per job, per year. If those jobs were not there, 47 Euros
would keep someone Unemployed for just ONE SINGLE DAY in terms of state
unemployment benefit! Again the multiplier applies to jobs – people employed in
Tourism have an income, which they spend on goods this creating and sustaining
jobs in other sectors and so on. Tourism employment multipliers can be in the
region of 1.5x , suggesting the real employment figure sustained by tourism
expenditure is perhaps as high as 2,500,000. If the SMIC is 12000€ per annum
and creating and keeping a Tourism job costs only 37€ to 47€................ then (on
this somewhat crude measure admittedly) it is 250x cheaper to invest in/ protect
long term/permanent jobs in Tourism than it is to keep a person UN-
employed for a single year!
3. 85m Euros represents 0.0003% of government expenditure, yet it produces
6.3% GDP (PBI). Ie the proportion Tourism contributes to GDP is 21000x
greater than the proportion of total government expenditure it represents.
4. 85m Euros represents just 1.1 Euros per each and every international visitor
to France. Of course, not all of that budget is spent on attracting international
visitors, and a lot of this money is inevitably wasted on trying to attract visitors
who choose NOT to come to France ...... so this statistic is clearly saying that the
state spends less than ONE € per international visitor attracted.... when such
visitors tend to spend between 400€ and 500€ per head in the country! Another
measure with a 500x rate of return to the country.
5. What about the direct and indirect taxation return to the State itself..... the
2,500,000 directly and indirectly employed do not need state unemployment
benefits and they do pay tax? What of the companies and enterprises that pay tax
on their profits? ... And the VAT/TVA payable to the state on the things Tourists
purchase from travel tickets to souveniers and food & drink? I don’t know of a
formal statistic that breaks this down to this level, but if one assumed the
2,500,000 people employed directly and indirectly in Tourism paid just 1000€
tax each, that alone would represent 2,500,000,000€ i.e. a 30x return on the
85,000,000€ outlay. (And that is without VAT/TVA and corporation tax!!)
Looking at the above measures, crude as they are, they range from a 30x return to
a 21000x return in one year for the French state whereas the best we can get at

2. the bank is 3-5% (ie just 1/20th of 1x... we would double our investment only in 20
yrs!).
There are other strong arguments in favour of Tourism too: such as the extent to
which it directly supports:
• The countryside: where it is difficult to attract other forms of jobs / industry
and where agriculture is becoming increasingly capital rather than labour
intensive, Tourism can be a prime or vital supplementary/second income for
small businesses (Chambres d’Hôtes, for example) which can maintain the
fabric of local communities.
• Agriculture / Viticulture: the sheer volume of domestic and international
tourists in France enable particularly smaller producers to find a local and
regional market that will pay reasonable prices for their produce (as opposed
to having to sell in bulk at lower prices to larger retailers). This is again good
for the local economy. The tourist buyer is there anyway, so this is good in
sustainability terms if he buys and takes with him rather than necessitating an
additional delivery to his home.
• Heritage, the Arts and Culture: many of our important events, festivals and
historical monuments are significant Tourist attractions in themselves and the
Tourist income saves the state from having to subsidise them to a much more
significant degree. Often high-price Tourism entry fees enable local people to
pay less or even to be able to enjoy facilities and events which would
otherwise not take place at all.
So.... if you were the Tourism industry (as you soon will be) facing such
competition in a declining European portion of the global market share, what would
you be thinking about these figures and these positive returns to Tourism?
• Are these ‘good’ figures?
• Can other industries measure up to Tourism on these terms?
• Is there a case for investing more political and financial capital in Tourism?
If you are a little surprised that with these figures there is not more aggressive support
for this gigantic and effective industry coming from the government.... what might
this be do you think........................................................?
Might it have something to do with:
• Candyfloss image
• Lack of image
• Lack of unionisation and concentration
• Lack of coordination
• Lack of voice / power
• Government tendency to support ailing industries rather than the growth ones
• Political priorities being elsewhere
• Complacency with No1 status possibly
• Destinations sell themselves – what need of state intervention
What do YOU think should be done, knowing what you know now?