Measuring Economic Impacts of International Tourism Activities: A Global Inter-Country Input–Output Approach

Today, products produced in one country can easily be exported to other countries where they are consumed by households (residents and/or non-residents) or firms as intermediate inputs or investment. Growing fragmentation of production networks of national economic systems makes the measurement of non-residents’ impact difficult due to complexity of interconnectedness across industries and countries. In this contribution, we estimate domestic economic impacts and the number of jobs in each country generated by household final expenditures by non-residents that have not been directly measured in conventional statistics produced by national agencies. These estimations will be based on the information contained in OECD’s global Inter-Country Input–Output (ICIO) tables; the tables have been used to measure domestic and foreign value added generated by final commodity demand within a country for more than 63 economies and for a time series spanning from 1995 to 2011. In addition to the economic impact generated from the direct purchases by tourists, our model can also able to identify the indirect impact of those purchases on other industries (i.e. non-tourism). Our findings show that approximately 50% of the value added in a country were generated indirectly. Moreover, while domestic value added increased in absolute term in most of the targeted countries, foreign entities in products consumed by non-residents have also been increased. The findings will help us to increase our understanding of the total value added generated from non-residents’ expenditures as well as the total amount of jobs that are directly and indirectly associated with tourism activities. In order to have a better measure of the actual benefits of tourism, countries need to improve their non-residents’ expenditures statistics and to link it with other statistics (i.e. input–output tables) to have a robust and complete picture of tourism revenues and hence a better policy.