Measuring the size of tourism and its impact in an economy

Abstract

Based on the definition of tourism given by the World Tourism Organization, the definition of industry and the concept of productive activities in the System of National Accounts, we show in this paper that tourism has a demand side and a supply side, and that the latter is defined by the former. Also, the supply side of tourism involves many industries in the economy and cannot be defined as a single industry. Therefore, we argue that aggregate measures of tourism should be built from the demand side. We also argue that the measure of the size of tourism and the measure of the contribution of tourism to GDP should be separated. While initial tourism demand is the best measure of the size of tourism, tourism driven GDP is the best measure of the contribution of tourism. The paper presents a method for deriving the two measures. The size measure is free of double counting and comparable to GDP, while the contribution measure provides a conceptually correct and statistically consistent basis for analyzing the supply side of tourism.