Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 93

savings or spending on imports, regardless of whether this occurs because of
tourist demand for imported goods or stronger import demand due to the
demonstration effect. Moreover, money can also flow out of a regional or
local economy owing to national taxation whilst the repatriated profits of
foreign owners of tourism enterprises also represent a capital outflow.
Expatriate workers can have the same effect if the 'imported' staff remit a
portion of their income to the place of their domicile. In this case, induced
effects will be reduced.
On the one hand, tourism development decision-makers may tend to
prefer those multipliers that reveal the highest economic impacts in order to
justify tourism development which requires a high level of investment. On
the other hand, tourism economists warn against the uncritical use of mul-
tipliers for policy formulation as some multipliers have limited policy rele-
vance. For example, transaction or output multipliers show bigger values yet
suffer from double counting as the increased output from one industry is an
input into another. Furthermore, multipliers take induced effects for granted
even though the increase in production can only happen if there are unused
resources in the economy and if a suitable resource (re)allocation is possible.
Where there is no excess capacity or there are resource rigidities the increased
demand will trigger inflationary tendencies (Dwyer et al. , 2010).
More recently, tourism researchers and policymakers have begun to use
computable general equilibrium (CGE) models that use actual economic
data and estimate how the economy might react to changes in tourism.
These models are more realistic as they take account of the links between
tourism and other industries, recognise resource constraints as well as inter-
sectoral price and cost effects of tourism spending, and offer a more realistic
assessment of the economic impacts of changes in tourism expenditure
(Dwyer et al. , 2010). Nevertheless, experience with this model is quite lim-
ited and, thus, its weaknesses have not been fully considered. Moreover, in
comparison to the enthusiasm that many tourism researchers and policy-
makers have shown towards the 'old' tourism multipliers, the new impact
models might encounter some resistance as they are complex and difficult
to apply, they require significant amounts of data and, compared to the 'old'
methods, they compute even lower values for tourism effects as a result of
tourism expenditures.
Overall, however, economic impacts assume more or less importance
depending upon the tourism context. For less developed countries, for exam-
ple, tourism is generally favoured for its potential as a generator of foreign
currency, whereas, within Europe and in the light of European Union (EU)
policy, it is tourism's role as a source of employment that has been growing
in importance, together with its contribution to regional development. In the
last decade, tourism has often been seen as a vehicle for sustainable develop-
ment and a possible agent of more green economies. Importantly, the last
two decades have also been dominated by the debate on the environmental