Application of Income Multiplier in Tourism

Income multiplier is the most commonly used method to analyze the multiplier effect of tourism. There are two ways to calculate the income multiplier: one is called the orthodox income multiplier, which refers to the ratio of the total income (the sum of direct, indirect and induced income) induced by tourism expenses to the direct income; The other is called unorthodox income multiplier, which refers to the ratio of the total income generated by tourism expenses to the initial tourism expenses. Table 3- 18 lists the orthodox income multiplier and unorthodox income multiplier created by tourism expenditure in Gewanlide area. Relatively speaking, orthodox income multipliers are widely used. Unless otherwise specified, the income multiplier in this paper refers to the orthodox tourism income multiplier.

Generally speaking, the orthodox income multiplier of tourism is greater than 1. However, for a specific tourist city, the result is not necessarily so. This is because the higher the import tendency of goods and services in a tourist city, the higher the leakage rate of total tourism revenue, the smaller the multiplier, and even a high degree of input dependence, so the income multiplier may be less than 1. Among many calculation methods of tourism income multiplier, special model is the most helpful to our understanding. The special model for calculating the tourist income multiplier comes from the classical multiplier 1/( 1-r), and its basic form is:

Where m is the income multiplier of tourism, a represents the proportion of tourism expenditure left in the destination city after the first round of leakage (direct investment in tourism), b represents the proportion of destination city residents' income to buy goods and services, and c represents the proportion of destination city residents' consumption to local consumption.

Obviously, if the value of A is small, and the values of B and C are not large, the value of income multiplier M may be less than 1. Moreover, the research results of various countries in the world show (as shown in the following table) that the multiplier of tourism income in economically developed areas is much larger than that in economically underdeveloped areas; The multiplier of tourism income in underdeveloped areas with large population and large economic scale is also greater than that in underdeveloped areas with small population and small economic scale; Due to the small economic scale and high dependence on the import of goods and services, the multiplier of tourism income in island countries is very small, although the gross national product and employment generated by tourism account for a considerable proportion in the national economy. Personal income multiplier of destination country or region Personal income multiplier of destination country or region Turkey 1.96 Northern Ireland 1. 10 Cayman Islands 0.65 UK 1.73 Bermuda 1.09 Iceland 0.64 love. Erlan 1.72 China, Hongkong 1.02 British Virgin Islands 0.58 Egypt 1.23 Mauritius 0.96 Solomon 0.52 Jamaica 1.23 Antigua 0.88 Palau * * * Republic of China 0.50 Dominica 1.20 Bahamas 0.79.