Tourism multiplier effect

Factors affecting the multiplier effect of tourism and ways to improve it

For tourist destinations, the tourism income brought by tourists' local consumption will lead to the increase of social and economic benefits through the chain reaction of tourism economy operation and social and economic activities. However, the surplus of tourism consumption in the economic system and the number of cycles of local re-consumption will affect the size of tourism multiplier effect. Specifically, there are several key factors:

(a) Marginal propensity to consume and marginal propensity to save

When the proportion of each additional unit of tourism income used for consumption is greater, it means that the marginal propensity to consume is greater, so that the higher the amount of consumption in the economic system, the greater the multiplier effect; On the other hand, when the proportion of each additional unit's tourism income is used for saving, it means that the marginal propensity to save is greater, which makes this part of the funds break away from the circulation process of the local economic system, thus the multiplier effect on local economic development is smaller. It can be seen that the magnitude of tourism multiplier effect is directly proportional to marginal propensity to consume and inversely proportional to marginal propensity to save.

(b) Marginal tendency of imported materials and loss of tourism revenue

Even if the marginal propensity to consume is large enough, if the purchasing object of consumption activities is not the products or services of enterprises in the destination country or region, but the products or services of other countries or regions, the leakage of tourism income will be formed, and this part of the leaked income will be separated from the operation process of the economic system of the country or region, thus reducing the turnover and circulation times of income in the country or region and greatly reducing the tourism multiplier effect. It can be seen that the greater the tendency of marginal input materials or the more tourism leakage, the lower the tourism multiplier effect, and the two are inversely proportional.

The development of inbound tourism can not only create a lot of foreign exchange, but also consume a lot of foreign exchange, especially in developing countries. Therefore, in order to improve the multiplier effect of tourism, we must pay more attention to the problem of foreign exchange loss. Although there is no problem of foreign exchange loss between different regions of a country, we should also pay attention to the problem of income loss for the destination region.

Mcgarsey, an expert on tourism research in South and Foreign Countries, believes that there are many reasons for leakage, some of which can be avoided through proper planning and management, while others cannot be overcome due to the local economic environment. He summarized the reasons for the leakage of 12, and some domestic scholars further classified these reasons into the following categories:

(1) direct leakage. It mainly includes foreign exchange expenditures for purchasing various imported materials needed for tourism development, construction and operation; Interest on foreign loans and profit outflow of foreign investors in joint venture tourism enterprises; Wages and labor costs of employing foreign employees; Various expenses incurred in tourism promotion and sales abroad.

(2) Indirect leakage. It mainly includes the foreign exchange losses caused by the import of goods and services from abroad by relevant enterprises and institutions that provide various materials and services for the tourism industry, and the increased expenses in this regard with the development of the tourism industry.

(3) Invisible leakage. Due to the increased wear and tear of various public facilities, foreign exchange losses caused by the need to import materials and manpower in the process of maintenance, compensation and demolition.

(4) black market leakage. That is, the foreign exchange income lost outside the destination official through the black market trading of foreign exchange.

(5) Subsequent leakage. Also known as induced leakage, it refers to the foreign exchange outflow involved in the personal consumption of tourism professionals.

(6) Early leakage. Refers to the part of the total income obtained by overseas tourism operators from selling tourism products of a certain country to tourists who have not entered the destination country. The reasons for this part of the leak include travel booking method, travel distance, which country and means of transportation are used, and the route for tourists to enter the destination country.

To improve the multiplier effect of tourism, it is necessary not only to improve the market economic system, innovate tourism products and improve the quantity and quality of tourism supply, but also to make more efforts from the coordination and integrity of industrial structure. Because the multiplier effect of tourism economy comes from the relationship between tourism industry and related industries, the closer the relationship, the greater the multiplier effect of tourism economy. Only when there is a coordinated relationship between industries in the national economy can we better promote the development of related industries; The completeness of industrial structure largely determines the degree of leakage in the operation of tourism economy. The more complete the industrial structure, the more likely it is that the income brought by tourists' tourism consumption will remain in the destination economic system, thus reducing the purchase of imported goods and services. The higher the degree of self-sufficiency, the greater the tourism multiplier effect.