Chapter 14 - Tourism's economic impact. After completing this unit, you should be able to: Know 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. | Tourism's Economic Impact 14 LEARNING OBJECTIVES Know 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 TOURISM Maximize psychological experience for tourists Maximize profits for firms providing goods and services to tourists Maximize direct (primary) and indirect (secondary) impacts of tourist expenditures on a community or region These goals are often compatible but in certain situations can be incompatible. CONSTRAINTS FACED IN TOURISM GOAL ATTAINMENT Demand Supply of attractive resources Technical and environmental constraints Time constraints Indivisibilities Legal constraints Self-imposed constraints Lack of knowledge Limits on supportive resources ECONOMIC MULTIPLIERS Direct Effect Result from visitors spending money in tourist enterprises and providing a living for the owners and managers and creating jobs for employees Indirect Effect The multiplier impact: visitor spending circulates and recirculates Employment Multiplier Income Multiplier Example $1,000 of tourist expenditure and an MPC of 1/2 Multiplier = = $2,000 Multiplier = M = marginal (extra) P = propensity (inclination) C = consume (spending) MPC S = savings (money out of circulation) MPS A more simple formula is: Multiplier = 1/MPS INCOME MULTIPLIER FORMULA THE POWER OF TRAVEL | Tourism's Economic Impact 14 LEARNING OBJECTIVES Know 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 TOURISM Maximize psychological experience for tourists Maximize profits for firms providing goods and services to tourists Maximize direct (primary) and indirect (secondary) impacts of tourist expenditures on a community or region These goals are often compatible but in certain situations can be incompatible. CONSTRAINTS FACED IN TOURISM GOAL ATTAINMENT Demand Supply of attractive resources Technical and environmental constraints Time constraints Indivisibilities Legal constraints Self-imposed constraints Lack of knowledge Limits on supportive resources ECONOMIC MULTIPLIERS Direct Effect Result from visitors spending money in tourist enterprises and providing a living for the owners and managers and creating jobs for employees Indirect Effect The multiplier impact: visitor spending circulates and recirculates Employment Multiplier Income Multiplier Example $1,000 of tourist expenditure and an MPC of 1/2 Multiplier = = $2,000 Multiplier = M = marginal (extra) P = propensity (inclination) C = consume (spending) MPC S = savings (money out of circulation) MPS A more simple formula is: Multiplier = 1/MPS INCOME MULTIPLIER FORMULA THE POWER OF TRAVEL
