Tourism Multiplier Effect

Handout 5 MIDTERM

Multiplier Effect

The Multiplier Effect is a concept in economics introduced by British economist John Maynard Keynes 1930's. The concept applies to changes in demand for any industry’s output, thus not solely related to tourism activity.

Tourism Multiplier Effect

How many times money spent by a tourist circulates through a country's economy.

Direct

Effects of this revenue are experienced by the providers of tourist goods and services.

Indirect

Effects are derived from the intermediate consumption by suppliers of tourism goods and services.

Induced

Income of workers and business owners provided by tourism revenue is spent acquiring different goods and services.

Economic Leakage

Act of money leaving the host country and ending up elsewhere.

Taxes

The resources collected by the government through direct (paid by individuals) and indirect leaves circulation.

Saving

Part of the income of workers and business workers is saved and is not used to consume goods and services.

Imports

A portion of companies' and individuals' expenditures is allocated for purchasing imported goods and services.