Elisabeth Valle

A General Equilibrium Assessment of the Impact of a Fall in Tourism Under Alternative Closure Rules: the Case of the Balearic Islands

A look at the 1997 input-output table shows the Balearic Islands as a service-oriented economy, highly specialized in the production of services for tourists. The main goal of this article is to evaluate with alternative multisectoral models the impact on the Balearic Islands economy of a 10 percent permanent fall in tourism demand. First, we estimate the impact of the reduction in nonresident consumption using a rather standard input-output model. Then, we estimate its effects using an extended general linear model implemented with a social accounting matrix elaborated by the authors. Finally, we use an applied (computable) general equilibrium model using alternative closure rules to those encountered in other regional studies.

An assessment of the impact of tourism in the Balearic Islands.

According to the official Institute of Tourist Studies, the Balearic Islands, a Spanish region with just over one million inhabitants, received 9.6 million international arrivals in 2005 out of 55.8 million for the entire country. Although a rather impressive figure, it is 8.2% below the 10.5 million recorded in 1999, which might partially explain why the Balearic Islands has recorded the worst growth performance of all 17 autonomous Spanish regions since 2000. A look at the 1997 regional input–output table confirms the Balearic Islands as a service-oriented economy highly specialized in the production of services for tourists. The main purpose of this paper is to provide the first assessment of the impact of tourism in the Balearic Islands using input–output techniques and several alternative assumptions on endogeneity of final demand components. The paper also estimates, under the same assumptions, the effects on the economy of a 10% fall in tourist flows. Finally, the results are compared with those obtained with a social accounting matrix model.

The potential effects of a change in the distribution of tourism expenditure on employment

Many mature tourist destinations are considering replacing low category hotel beds with high category beds. This study estimates the potential effects that these proposals will have on employment, assuming that labour is homogeneous. The methodology used is based on the input–output model and the social accounting matrix, which allow direct, indirect and induced effects to be taken into account. In addition to conventional employment and output multipliers, the paper presents projections for different bed replacement scenarios and analyses the replacement ratios which would allow aggregate gross value added or employment to remain constant. Finally, the analysis extends to include the change of tourist expenditure distribution on complementary tourism facilities.

Trade Effects of Specialization in Tourism: An Inter-Regional Input—Output Model of the Balearic Islands

The authors construct an inter-regional input–output model that combines both national and regional data to isolate the effects of changes in demand by their regional nature using an additive decomposition. The model is used to quantify the backward linkages of the top industries in the Balearic Islands (a European region heavily specializing in tourism) with other industries, both within the region and in the rest of Spain. The results confirm the importance of local industries in terms of backward linkage effects, but also reveal that only 55% of these effects stay in the region, while the rest leak out to the rest of the country due to the extraordinary dependency on supplies created by this specialization.

The economic dimension of climate change impacts on tourism The case of Portugal

Climate variables such as temperature and precipitation play a crucial role on tourism flows worldwide. This places tourism at the forefront of the economic sectors to be affected by climate change. In this article, we address the impacts of climate change on the arrivals of inbound tourists to Portugal, a south European country where tourism is a core economic sector. The economic dimension of the impacts, in terms of gross domestic product (GDP) and employment, is then assessed. This is achieved by combining a world gravity model of tourism flows with an input–output model. The results show that under standard climate change scenarios from the Intergovernmental Panel on Climate Change, Portugal will experience a significant increase in temperature leading to a decrease of inbound tourism arrivals between 2.5% and 5.2%. This decrease in tourist arrivals is expected to reduce Portuguese GDP between 0.19% and 0.40%.

Innovation, hotel occupancy, and regional growth

In this article we contribute to the analysis of innovation in the tourism industry and more specifically to understanding the role of innovation on the hotel occupancy. Furthermore, we discuss how the growth in hotel occupancy due to innovation increases, directly and indirectly, production, added value and employment in other sectors of the economy. In this way, we calculated the total impact on the Balearic economy of an innovation process in the Balearic hotel industry as well as the specific effects on different economic sectors. Positive and significant impact on potential growth was found with added value of between 1.6% and 2.2%. The micro–macro model presented in this work justifies implementing policies promoting innovation in the hotel industry.