The key objective of this study is to determine and analyze the impacts of inbound tourism on the Malaysian economy using an input-output analysis. With the view of accomplishing the key objective, this study also explores the economic potential of inbound markets for the Malaysian tourism industry. As central to any economic impact analysis, tourism multipliers are estimated from the inverse of Leontief’s input-output matrix. The empirical results reveal two interesting observations concerning inbound tourism impacts on Malaysian economy. These are, firstly, tourism sectors that produce larger multipliers do not generate larger total economic impact, and secondly, inbound markets with highest per capita do not yield highest economic impact. Therefore, this study concludes that an economic sector with lower multipliers should not be neglected and that the contribution of inbound tourism market generating lower per capita expenditure should not be ignored when preparing appropriate tourism marketing and public policies for developing economies.
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