UNDERSTANDING THE ECONOMIC IMPACT OF TOURISM

The combined effects of major expenditures on investments in infrastructure and the associated influx of visitors mean that tourism can have significant impacts, both positive and negative, on an economy, on its culture, and on the environment. In practice, the dominant motive for the development of tourism is economic (improvements in employment, incomes and exports), but the very process of developing tourism will impose costs elsewhere. While recognizing the variety of different impacts that tourism may have, this discussion will focus particular attention on the economic impact of tourism. Economic benefits are probably the main reason why so many countries are interested in the development of tourism and the contribution of tourism to the world economy is considerable. The purpose of this paper is to examine the main economic costs and benefits associated with tourism and to highlight the difficulties associated with their measurement. Having highlighted the potential economic contribution of tourism, we will then examine the role played by tourism satellite accounts in providing a consistent and reliable source of information on the economic dimensions of tourism. Finally, the use of economic impact modelling techniques will be introduced to present an integrated framework for the evaluation of the economic impact of tourism.