Tourism's Economic Impact - Tourism: Principles, Practices, Philosophies - page 315

TABLE 14.5 ''Leakage''

Savings

Leakage ¼

Imports

where

Savings ¼ not loaned to another spender

Imports ¼ spending on tourism needs in sources outside country (state)

1
MPS

Multiplier ¼

Suppose the MPSis 3 . Then

1
1

Multiplier ¼

3 ¼ 3

Here, also, more economic research is needed. Some studies have indicated that the multiplier
might be as high as 3.0 in some areas, but economic research in other localities indicates that it may be
more typically lower than this.

Economic Bene ts Widely Distributed

Using a conceptual approach, you should realize that tourism is characterized by the existence of a
large number of very small businesses that support and are ancillary to the industry. The receipts from
tourism quickly filter down to an extremely broad cross section of the population, so that the entire
community shares the economic bene ts. Table 14.6, based on a partially hypothetical example,
illustrates how quickly tourism receipts seep through the economy and the diversity of the businesses
that bene t from tourism. As the table indicates, the tourism dollar is shared by more than 70
distinguishable types of enterprises in just two rounds of spending.

Structural Changes

In countries that primarily rely on a single industry, such as agriculture, the introduction of tourism has
often led to a decrease in the agricultural base of the country. Agriculture is an extremely low-
productivity industry in the developing countries. The promise of much higher wages in the tourism
industry draws people away from farming. Agricultural output declines as a result, just when the
demand for food increases because of the in ux of tourists. The in ationary pressure on food prices is
further aggravated and can lead to considerable social upheaval. In the mid-1970s, some Caribbean
countries experienced a wave of protests and even direct attacks on tourists, as the resident
population expressed its dissatisfaction over rising prices.
Another major implication of the structural change is that instead of diversifying its economic base,
the country ' is tourism sector merely '' cannibalizes '' other major economic sectors. Diversity is the
foundation of economic stability. When one sector (or industry) experiences a slump, another sector
booms, thus reducing the probability of a severe depression and, indeed, reducing its impact if a