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Tourism's Forward and Backward Linkages

Junning Cai (), PingSun Leung and James Mak ()
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PingSun Leung: Department of Economics, University of Hawaii at Manoa
James Mak: Department of Economics, University of Hawaii at Manoa

No 200516, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper proposes “linkage analysis” as a complement to the traditional “tourism impact analysis” to examine tourism’s economic imprints on a destination’s economy. Although related, the two methods are not the same. The starting point of tourism “impact analysis” is “final demand”; impact analysis measures the direct and indirect impacts of tourist spending on the local economy. By contrast, the starting point of “linkage analysis” is the tourism sector; the analysis examines the strengths of the inter-sectoral forward (FL) and backward (BL) relationships between the tourism sector and the non-tourism industries in the rest of the economy. The FL measures the relative importance of the tourism sector as supplier to the other (non-tourism) industries in the economy whereas the BL measures its relative importance as demander. Directly applying conventional linkage analysis to tourism is not straightforward because tourism is not a defined industry. Thus we develop a methodology to calculate tourism’s forward and backward linkages using information from national, regional, or local input-output tables and demonstrate its utility by applying it to Hawaii.

Pages: 31 pages
Date: 2005
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