This document discusses the economic impacts of tourism. It covers positive impacts like income, employment, and tax revenue generation. It also discusses negative impacts like cost inflation. The magnitude of economic impacts depends on factors like expenditure volume, development level, and how much spending recirculates locally. Tourism can benefit balances of payments. There are direct, indirect, and induced economic effects. Input-output analysis and tourism satellite accounts are used to measure these impacts. Employment impacts are also measured in various ways.

2. Tourism’s positive impacts in society and at the destination

3. Tourism’s negative impacts at the destination

4. The economic impact
of tourism

5. The economic impact
of tourism
The dimension of tourism worldwide
has an economical, social, cultural
and environmental influence on
tourism destinations (Mathieson and
Wall, 1982), and the influence can be
positive and/or negative
■ Income
generation
■ Employment
generation
■ Tax revenue
generation
■ Balance of payment effects
■ Economic disadvantages
■ Improvement of the
economic structure
of a region
■ Encouragement of
entrepreneurial
activity

6. Six major factors govern
the magnitude of the
economic impact:
■ The volume and intensity of
expenditure
■ The level of economic
development in the
destination
■ The size of the economic
base of the destination
■ The degree to which
tourist expenditures
recirculate within the
destination
■ The degree to which the destination
has adjusted to the seasonality of
tourist demand (Mathieson and
Wall, 1982).
■ The nature of the main facility and its
attrac-tiveness

7. Comparative advantages
of tourism
1. Natural resources, culture and cultural heritage
2. Human resources
3. Capital and infrastructure resources.
■ The types of suppliers and producers with which the industry’s demands are linked
■ The ability of local suppliers to meet these demands
■ The historical development of tourism in the destination area
■ The type of tourist development.

8. economic
Disadvantages
Cost inflation is a consequence of a number of factors:
■ Peak management
■ High taxes on some tourist
■ products and services.
Tourism and inflation
■ Seasonal demand
■ Inelastic supply
■ An insufficient market reaction (certain resorts or firms profit from an eco-
nomic rent)
■ Imported inflation due to international arrivals (impact of hard currencies and
increase of the money mass).

10. Balance of payments
and tourism

11. The real tourism
external account

12. The magic tourism
multiplier

13. There are 3
different effects
1. The direct effect of a change in final
demand refers to first-round effects
2. The indirect effect recognizes the need for an
industry – subject to a change in final demand
for its product – to make purchases from other
industries within an economy in order to
produce its output
3. The induced effect occurs as income levels rise throughout
the economy as a result of the initial change in final demand,
and a portion of the increased income is re-spent on final
goods produced within the local economy. This additional local
expenditure, arising from increased income, will generate
further reper-cussive effects. The addition to total output,
income, employment and govern-ment revenue caused by this
re-spending of local income is known as the induced effect.

14. Determining factors
1. The saving quota of the population of the destination
2. The import quota, or the share of tourism expenditure that is spent to imported products
3. The tax quota, or the share going to the public sector.
4. A fourth possible factor is the supply constraints in the economy

15. Types of
multipliers
1.Orthodox income multipliers
■type I – (direct+indirect income)/direct income
■type II – (direct+indirect+induced income)/direct income
2. Unorthodox income multipliers
■type I – (direct+indirect income)/change in final demand (additional expenditures)
■type II – (direct+indirect+induced income)/change in final demand (additional unit of spending).

16. Tourism Income
Multiplier

17. Input-output
analysis

19. The Tourism
Satellite Account
approach

20. measurement of
employment
generation
1. The supply approach
■tourism-related sectors
■minimum requirement method
2. The demand approach
■the national accounts method
■the tourism satellite account approach
■the Henderson–Cousins method
■the input–output approach
■the multiplier method.

21. The input–output
approach

22. The multiplier
method

23. Special
characteristics
of employment
1. Tourism is a growth sector
2. Tourism is a sector with a high degree of semi-
skilled and so-called unskilled workers
3. Tourism is also a sector with a high percentage of
part-time jobs
4. The high share of female workers
5. The sector also has many small firms and self-
employed
6. The seasonality of employment
7. Employment in tourism is growing

24. Cost–benefit analysis
Cost–benefit analysis takes these crowding-out
effects into account through the application of
the ‘with and without’ and not the ‘before and
after’ principle (Vanhove, 1976).
Crowding-out’ effects
Major events always involve ‘crowding-out’
effects, expenditure switching and retained
expenditure. Big events are very often confronted
with crowding-out effects, when traditional
visitors prefer not to visit the region where the
event takes place for reasons of over occupation,
higher prices, etc. (Scherly and Breiter, 2002)
The impact of
events