TABLE OF CONTENTS Mathieson and Wall (1982) define the tourist multiplier 'as a number by which initial tourist expenditure must be multiplied in order to obtain the total cumulative income effect for a specific time period'. This is a dangerous definition, as it is presented as a black box process and there is a variation in multiplier values; the income multiplier is one of them. A more precise description can be found in Fletcher and Archer (1992). It is based upon the recognition that the various sectors that make up the economy are interdependent. In addition to purchasing primary inputs such as labour, imports, etc., each sector will purchase intermediate goods produced by other establishments within the local economy. Therefore, any autonomous change in the level of final demand (domestic expenditures, inbound tourism or investments) will not only affect the industry that produces that final good, but also that industry's suppliers and suppliers' suppliers, etc.
Owing to this sector interdependence, any change in final demand will bring about a change in the economy's level of output, income employment and government revenue. The term 'multiplier' refers to the ratio of the change in one of the above variables to the change in final demand that brought it about. We can illustrate the mechanism with the following scheme (see Figure 7.1).
Taking the expenditure in a hotel as a starting point, to...
