The economic impact of tourism in SIDS

• We model the economic impact of tourism for SIDS using three different methods.
• Tourism provides economic benefits for SIDS.
• Tourism output multipliers are high but income multipliers are relatively low.
• The transportation sector was a strategic sector with above average linkages.
• Specializing in tourism would provide some advantages to SIDS.

Small Island Developing States (SIDS) are faced with many challenges to economic development. Tourism is seen as a viable, and sometimes, only means of economic growth. This research compares the economic impact of tourism to seven SIDS. The research employs input output analysis, linkage analysis and a CGE model to assess the macroeconomic and sectoral impacts of increased tourism in these islands. The findings show that the transportation sector remains a key sector. The tourism income multipliers show that tourism generates a large amount of economic activity but the income that remains in the destinations is often very small. The results show that taking advantage of economies of scale maybe a way to maximize the benefits from tourism.