The Impact of Inbound Tourism Development on the Production and Employment of Economic Sectors: A Structural Path Analysis Approach

Tourism development can bring about economic growth and job creation at destinations. Tourist arrival at a destination increases the final demand for product, therefore tourism and non-tourism economic sectors increase their production in order to meet the final and intermediate demands, respectively. Thus economic growth is brought about and demand for labor increases. Using the social accounting matrix of 2011, this paper studied the impact of inbound tourism development on the output of economic sectors and its job creation potential. The social accounting matrix is modified so as to incorporate tourism as a single comprehensive sector. Moreover, using structural path analysis approach, the paths through which tourism development affects the output level of other sectors are identified. Findings indicate that compared to other sectors, inbound tourism has the greatest effect on the production level. The results show the manufacturing, transportation and services sectors have the most output increase as a result of inbound tourism development. The highest direct impact is experienced in the transportation sector, while the highest indirect impact is imposed via intermediate demand of transportation from manufacturing sector. The highest induced effect is witnessed when the labor income of the middle-income urban households which is earned from tourism transportation is spent on services. Finally, job creation potential of inbound tourism is revealed to be at the fourth place, after agriculture, construction and transportation sectors, respectively. Therefore, developing inbound tourism can enhance production and employment.