Economic Impacts
(Topic 6)
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Positive & Negative Impacts
Tourism has the potential to increase economic
benefits, which may include increase jobs opportunities and hours, wages, and
tax revenues for governments in many
nations, states and local communities and as a result tourism development has
intensified (Fleming & Toepper, 1990). However tourism can have both
positively and negatively affects on the economy. "The most direct
effects occur within the primary tourism sectors," (Stynes, 1997 pg.4)
however it is through the secondary tourism effects that the majority of the
sectors of the economy are affected (Stynes, 1997). As defined by Archer (1982, as cited in Hall, 2007)
primary tourism economic impacts are otherwise known as direct and secondary
economic impacts as indirect and induced. The nature of these economic impacts
can either be classified as positive or negative.
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Types of Impacts
Direct economic impacts are the immediate changes that occur within the economy as a result of tourist expenditure (Stynes, 1997). Positive direct economic impacts may typically consist of accommodation, transportation, attraction entry fees and other expenditures made by the tourist (Fleming & Toepper, 1990). However as expressed by Fleming and Toepper (1990) direct negative economic impacts are those expenses that come as a result of having tourists in the local area for example maintenance of tourist attractions and accommodation, promotional expenses and development of efficient transportation.
Indirect economic impacts are those resulting from expenditure by tourism related industries such as wages and purchase of goods and services from suppliers. (Fleming & Toepper, 1990). For example the whole supply chain within the linen industry, (sales, jobs, and income) may are affected due to the indirect effects associated at hotels within the tourism industry (Stynes, 1997). Induced economic impacts involve the expenditure or output of the employees and suppliers who are paid with the money spent by the tourist. Essentially these secondary impacts can be beneficial if the money spent by the tourism industries, employees or suppliers stays within the economy however purchases or imports outside the economic region has a negative impact known as leakage. |
Tourism Multipliers
Mathieson and Wall (1982, as cited in Vanhove, 2005) defines the tourist multiplier "as a number by which initial tourist expenditure must be multiplied in order to obtain the total cumulative income effect for a specific time period" (pg. 182). However as Vanhove (2005) explains there needs to be recognition between not just the primary establishments in which the tourist directly interacts and spending occurs, but with the secondary establishments in which the primary establishment interacts with. Therefore it is essential to determine the manner "in which expenditure on tourism filters through the economy and the way in which other sectors are affected as it does" (Pearce, 1989, p. 205 as cited in Hall, 2003).
A larger tourist multiplier is preferred as it represents a greater self-sufficiency by the economy in the provision of tourist facilities and services (Hall, 2007). Whereas a low tourist multiplier typically is an indication of a large amount of leakage, meaning expenditure by primary and secondary industries are occurring on goods and service that are provided or sourced outside the economic region. Output generally occurs in smaller countries whom "tend to have lower multipliers due to fewer sectoral linkages and higher import leakages (Archer, 1982, as cited in Khan, Chou, & Wong, 1990). |
In order to increase the tourism multiplier there needs to be an improvement of the value of primary output generated in addition to the initial expenditures (Fleming & Toepper, 1990). Possible ways to achieve this are by:
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Personal Application of Economic Impacts
Lyra lives in a small township at the base of a mountain which is home to one of the state's most well renown ski resorts. As a result of increased tourism to the area during the winter months the mountain's prospects of employment increases. Lyra works on the mountain during the snow season as a ski instructor and rental hire assistant. The spending of the tourists on hire equipment and lessons are a positive direct economic impact, however the advertising of the lessons and gear in addition to maintenance on the rental equipment is a negative direct economic impact. The money spent by the tourist was then used to pay the employees, suppliers of the rental equipment, electricity company and rental of the hire store, this can be identified as positive indirect economic impacts. Likewise the negative indirect economic impact is that many of Lyra's work mates dropped out of high school in order become ski and snowboard instructors as they preferred to be working in the tourism industry rather than completing their education. Lyra spends her weekly income on local produce and the service of a local builder whom is renovating her family home, in which is classified as a positive induced economic impact.
In addition Lyra noted positive economic impacts that affected her as a result of increased tourism was increase employment opportunities which allowed her to gain a greater income. On the down turn negative economic impacts that affected her was that the cost of living was higher due to an increase in the price of goods and services.
However a large majority of the employees at the ski resort contributed of internationals as Lyra (2013) stated "many locals prefer to have a full time job all year round." This however meant that tourist expenditure contributing towards the employees wage was left the economic region when the international employees returned home at the end of the snow season. Lyra also noted that many of the goods sourced and equipment used on the resort were imported, tourists were likely to purchase items in the towns below surrounding the mountain, and stay at the accommodation provide on or around the mountain in which are both negative and positive impacts contributing towards the tourism multiplier within the economic region.
Example was constructed based upon information extracted from an interview with Lyra, however name has been changed for confidential reasons. Example was also supported by articles written by Fleming & Toepper (1990) and Stynes (1997).
In addition Lyra noted positive economic impacts that affected her as a result of increased tourism was increase employment opportunities which allowed her to gain a greater income. On the down turn negative economic impacts that affected her was that the cost of living was higher due to an increase in the price of goods and services.
However a large majority of the employees at the ski resort contributed of internationals as Lyra (2013) stated "many locals prefer to have a full time job all year round." This however meant that tourist expenditure contributing towards the employees wage was left the economic region when the international employees returned home at the end of the snow season. Lyra also noted that many of the goods sourced and equipment used on the resort were imported, tourists were likely to purchase items in the towns below surrounding the mountain, and stay at the accommodation provide on or around the mountain in which are both negative and positive impacts contributing towards the tourism multiplier within the economic region.
Example was constructed based upon information extracted from an interview with Lyra, however name has been changed for confidential reasons. Example was also supported by articles written by Fleming & Toepper (1990) and Stynes (1997).
References
Croy, G. (Lecturer). (2013) MGP2501 Tourism Economic
Impacts Additional. [VIDEO] Australia: Monash University
Donehue, L. (personal communication, September, 2013)
Fleming. W. R., and Toepper, L. (1990) Economic impact studies: relating the positive and negative impacts to tourism development. Journal of Travel Research. 29(1): 35-42. DOI: 10.1177/004728759002900108
Gaur, S. (2011) Types of Tourism & Impacts of Tourism. Tourism. Retrieved September 9, 2013 from http://www.slideshare.net/shwetag77/tourism-7227230
Hall, C.M. (2003). Introduction to tourism: dimensions and issues (4th ed). Frenchs forest, Australia. Pearson education Australian
Hall, C.M. (2007). Introduction to tourism in Australia: development, issues and changes (5th ed). Frenchs forest, Australia. Pearson education Australian
Khan, H., Chou, F. S., & Wong, K. C. (1990). Tourism multiplier effects on Singapore. Annals of Tourism Research. 17(3): 408-418
Stynes, D. J. (1997). Economic impacts of Tourism: A handbook for tourism professionals. Retrieved from: https://www.msu.edu/course/prr/840/econimpact/pdf/ecimpvol1.pdf
Vanhove, N. (2005) The economics of tourism destinations. Burlington, MA. Elsevier Butterworth-Heinemann
Donehue, L. (personal communication, September, 2013)
Fleming. W. R., and Toepper, L. (1990) Economic impact studies: relating the positive and negative impacts to tourism development. Journal of Travel Research. 29(1): 35-42. DOI: 10.1177/004728759002900108
Gaur, S. (2011) Types of Tourism & Impacts of Tourism. Tourism. Retrieved September 9, 2013 from http://www.slideshare.net/shwetag77/tourism-7227230
Hall, C.M. (2003). Introduction to tourism: dimensions and issues (4th ed). Frenchs forest, Australia. Pearson education Australian
Hall, C.M. (2007). Introduction to tourism in Australia: development, issues and changes (5th ed). Frenchs forest, Australia. Pearson education Australian
Khan, H., Chou, F. S., & Wong, K. C. (1990). Tourism multiplier effects on Singapore. Annals of Tourism Research. 17(3): 408-418
Stynes, D. J. (1997). Economic impacts of Tourism: A handbook for tourism professionals. Retrieved from: https://www.msu.edu/course/prr/840/econimpact/pdf/ecimpvol1.pdf
Vanhove, N. (2005) The economics of tourism destinations. Burlington, MA. Elsevier Butterworth-Heinemann
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