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.