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Multiplier effect and leakage in tourism

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weihao wu

on 19 August 2013

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Transcript of Multiplier effect and leakage in tourism

Multiplier effect and leakage in tourism
Group Members:
Wu Weihao(12653863)
Sun Mingye(12737316)
Liu Tongxin(12657433)
Leakages in tourism
The term leakage is used to refer to the amount spent on importing goods and services to meet the needs of tourists.
Leakage occur when the local economy is unable to provide reliable, continuous, competitively prices supply of the required product or service and of a consistent quality to meet the market demand.
How the leakage happens
Of each US$ 100 spent on a vocation tour by a tourism from a developed country, only around US$ 5 actually stays in a developing-country destination’s economy.

Two main ways that leakage occurs
Import leakage
This commonly occurs when tourists demand stands of equipment, food, and other products that the host country cannot supply
Export leakage
Multinational corporations and large foreign business have a substantial share in the import leakage

Example of leakage in tourism
Thousands of tourists go to beach resort in place like Jamaica every year, but those resorts are owned by non-Jamaican an companies. So, the money that tourists spend while in Jamaica goes back to the US or Europe where the resort owners live.

Overview of presentation
What is tourism
Benefits of tourism
The multiplier effect
Leakages in tourism
Conclusion
References
Introduction
World's largest industry, it is labour-intensive.
Tourism is travel for recreational, leisure, or business purposes.
It is an important source of interregional and international cash flows.
Benefits of tourism
Job creation as tourists ask for high quality services.
Takings of foreign currency.
Has helped to save cultural traditions like cooking, dances, clothing, crafts.
Multiplier effect.

Multiplier effect in tourism
Tourism can lead to a multiplier effect. What is meant by the term multiplier effect?
The term multiplier effect refers to the resulting effect of a service or amenity creating further wealth or positive effects in an area.
For example, tourism in an area will create jobs in an area, therefore the employees of the tourism industry will have some extra money to spend on other services, and therefore improving these other services in that area, allowing further employment in the area.
Multiplier effect in tourism
The example of multiplier effect in tourism is:
Monetary policy
Public finances
Revenue
Examples of Multiplier effect
Josiah Miller. (2013). The impact of Leakages and Linkages on Tourism-led Local Economic Development. Retrieved from: http://tourismplanningprofessionals.com/?p=262
Canadian Bacon. (2009). What are examples of leakage in tourism. Retrieved from: http://ca.answers.yahoo.com/question/index?qid=20090617094727AAKJEzf
United Nations Environment Programme. (2012). Negative Economic Impacts of Tourism. Retrieved from:
http://www.unep.org/resourceefficiency/Business/SectoralActivities/Tourism/FactsandFiguresaboutTourism/ImpactsofTourism/EconomicImpactsofTourism/NegativeEconomicImpactsofTourism/tabid/78784/Default.aspx
Mathieson A & Wall G; Tourism: economic, physical and social impacts, Longman, Harlow, UK, 1982.
Cooper C, Fletcher J, Gilbert D, & Wanhill S; Tourism: principles & practice, Longman, Harlow, UK, 1993.
Inskeep E; Tourism planning: an integrated and sustainable development approach, Van Nostrand Reinhold, New York, 1991.
Gee CY, Makens JC, & Choy DJL; The travel industry, Van Nostrand Reinhold, New York, 1989.
Fletcher J; The economic impact of international tourism on the national economy of Jamaica, unpublished report to the government of Jamaica, USAID/UNDP/WTO, 1985.
Harcombe DPT; The marketing of legends, with particular reference to the King Arthur legend, unpublished MSc thesis, Bournemouth University, UK, 1997.
Diamond J; Tourism and developmental policy: a quantitive appraisal, Bulletin of Tourism Research vol 28 no 1 pp 36 � 50, 1976.

Mill RC & Morrison AM; The tourism system: an introductory text, Prentice Hall International, Englewood Cliffs, New Jersey, USA, 1992.

Conclusion:
Tourism is growth industry
Improve people life
Provide opportunities of work
Promote economy growth
Multiplier effect
Leakage and pollution
Thanks For Your Attention
References:
Multiplier effect
An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

eg. if a corporation builds a factory. Indirectly, the new factory will stimulate employment in laundries, restaurants, and service industries in the factory's vicinity.
1. Monetary policy
2. Investment
3. Public finances
4. Revenue
Full transcript