Tourism’s Forward and Backward Linkages

Abstract

This article proposes linkage analysis as a complement to the traditional tourism-impact analysis to examine tourism’s economic imprints on a destination’s economy. The starting point of tourism-impact analysis is final demand; impact analysis measures the direct and indirect impacts of tourist spending on the local economy. The starting point of linkage analysis is the tourism sector; the analysis examines the strengths of the inter-sectoral forward (FL) and backward (BL) relationships between the tourism sector and the nontourism industries. The FL measures the relative importance of the tourism sector as supplier to nontourism industries in the economy, whereas the BL measures its relative importance as demander. Directly applying conventional linkage analysis to tourism is not straightforward because tourism is not a defined industry. Thus, we develop a methodology to calculate tourism’s forward and backward linkages using national, regional, or local input-output tables and demonstrate its utility by applying it to Hawaii.