Evaluating Tourism's Economic Effects: Comparison of Different Approaches

There are several models available to evaluate the economic impact of tourism. All are different from each other in terms of nature, structure, result driven, demand of the data and complexity. Most of the time it is not sure that model is appropriate for the situation where is it been applied. Numerous practices including ‘Multiplier Analysis’ and ‘Input–Output Analysis’ are still frequently used for estimation of economic impacts of tourism in change of traveller's expenditure. All the existing techniques have serious limitations, and therefore, alternative techniques have been proposed to address the existing problems. Amongst these models are ‘Computable General Equilibrium (CGE) model’ and ‘Money Generation Model (MGM)’ that are comprehensively used in Australia, the United Kingdom, the United States and Canada to estimate economic impacts of changes and policies, across many sectors. Within the tourism industry, CGE technique has not been used broadly, resulting in poor estimation of economic impacts of tourism. Considering it, this paper will support the arguments of CGE and MGM modelling as the favoured practises in analysing the economic impacts of tourism and will discuss its prospective for the future research in this area.