Tourism's Economic Impact

Tourism's Economic Impact14LEARNING OBJECTIVESKnow economic generators and impact of tourism.Perceive the economic importance of tourism in various regions of the world.Understand multipliers.Know about balance of payments.Comprehend elasticity and inelasticity.Know about tourism satellite accounts.THREE MAJOR GOALS OF TOURISMMaximize psychological experience for touristsMaximize profits for firms providing goods and services to touristsMaximize direct (primary) and indirect (secondary) impacts of tourist expenditures on a community or regionThese goals are often compatible but in certain situations can be incompatible.CONSTRAINTS FACED IN TOURISM GOAL ATTAINMENTDemandSupply of attractive resourcesTechnical and environmental constraintsTime constraintsIndivisibilitiesLegal constraintsSelf-imposed constraintsLack of knowledgeLimits on supportive resourcesECONOMIC MULTIPLIERSDirect EffectResult from visitors spending money in tourist enterprises and providing a living for the owners and managers and creating jobs for employeesIndirect EffectThe multiplier impact: visitor spending circulates and recirculatesEmployment MultiplierIncome MultiplierExample$1,000 of tourist expenditure and an MPC of 1/2Multiplier = = $2,000Multiplier = M = marginal (extra)P = propensity (inclination)C = consume (spending) MPC S = savings (money out of circulation) MPSA more simple formula is: Multiplier = 1/MPSINCOME MULTIPLIER FORMULATHE POWER OF TRAVEL