Tourism
CHAPTER 3
THEORETICAL FRAMEWORK
The theoretical framework of the thesis is multidisciplinary in approach. First, tourism impacts and tourism in the Gross Domestic Product are pooled into the framework to better understand the impact of tourism in the whole economy. Finally, general equilibrium theories and the theoretical structure of an applied CGE model are briefly discussed to better understand the framework under which the tourism sub-sector interacts with the other sectors, sub-sectors and industries in the economy.
Tourism Impacts[1]
The impacts of tourism expenditure are generally considered under three headings. These are direct effects, indirect effects, and induced effects. Figure 1 summarizes these.
[pic]
Source: Ennew, 2003.
Figure 1. The effects of tourism expenditure
Direct Effects
The direct effects of tourism arise from expenditures by tourists, which immediately generate income for businesses and households, employment and revenue from taxation. If we consider Figure 1, then initial tourism expenditure has a direct effect in the form of income to businesses for goods and services bought by tourists, wages to households in connection with tourism related employment and income to the government through tourism related taxation and fees. When tourists spend their income on imported goods (often food and drink but possibly also furnishings in hotels, salaries for overseas workers, etc), that expenditure is lost to the system (leakages via imports). Governments, households and most notably business, must then make purchases in order to provide tourism related goods and services. This is most apparent in the case of businesses that must purchase a range of different inputs to create the goods and services purchased by tourists. The initial tourism expenditure or visitor consumption can be classified into two sub-categories (i.e., visitor actual final consumption and tourism business
THEORETICAL FRAMEWORK
The theoretical framework of the thesis is multidisciplinary in approach. First, tourism impacts and tourism in the Gross Domestic Product are pooled into the framework to better understand the impact of tourism in the whole economy. Finally, general equilibrium theories and the theoretical structure of an applied CGE model are briefly discussed to better understand the framework under which the tourism sub-sector interacts with the other sectors, sub-sectors and industries in the economy.
Tourism Impacts[1]
The impacts of tourism expenditure are generally considered under three headings. These are direct effects, indirect effects, and induced effects. Figure 1 summarizes these.
[pic]
Source: Ennew, 2003.
Figure 1. The effects of tourism expenditure
Direct Effects
The direct effects of tourism arise from expenditures by tourists, which immediately generate income for businesses and households, employment and revenue from taxation. If we consider Figure 1, then initial tourism expenditure has a direct effect in the form of income to businesses for goods and services bought by tourists, wages to households in connection with tourism related employment and income to the government through tourism related taxation and fees. When tourists spend their income on imported goods (often food and drink but possibly also furnishings in hotels, salaries for overseas workers, etc), that expenditure is lost to the system (leakages via imports). Governments, households and most notably business, must then make purchases in order to provide tourism related goods and services. This is most apparent in the case of businesses that must purchase a range of different inputs to create the goods and services purchased by tourists. The initial tourism expenditure or visitor consumption can be classified into two sub-categories (i.e., visitor actual final consumption and tourism business