Economy-wide Impact of Tourism in Malaysia: An Input–output Analysis

Abstract

Because previous empirical research offers inconclusive evidence of the induced impact of tourism expenditure in Malaysia, this study utilizes a closed input–output model to analyze the total economy-wide impact of international tourist expenditure in Malaysia. The results reveal that international tourist expenditure has both a direct primary impact on tourism-related sectors and a significant secondary impact on other sectors of the economy. The findings of this study suggest that minimizing multiplier variation by adding value to tourism products and curbing import dependency increases the significance of the multipliers and impacts that are generated by international tourist expenditure. The results of this study also indicate that both the primary and secondary economy-wide impacts of tourism should be considered on the basis of many multipliers across various sectors, which is largely absent in the extant literature on the Malaysian tourism industry.