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Tourist-income multipliers for Turkey
Tourist-incomemultipliers for Turkey JuanitaLiu,TurgutVar andAlp Timur Differential tourist-income multipliers were calculated for Turkey using conventional input-output methodology and standard linear equations. High values were obtained for the ratio multipliers demonstrating the importance of secondary effects to the Turkish economy. Results indicated that tourists who spent more on retail purchases and less on hotels and restaurants, had a greater propensity to generate more direct and induced income. Information on relative impacts and touristspending patterns could therefore be useful to the policy makers. Turkey; tourist Keywords: tourism-income multipliers
industry;
Juanita Liu is Assistant Professor and Turgut Var Distinguished Visiting Professor at the School of Travel Industry Management. University of Hawaii, 2404 Maile Wav. Honolulu, Hawaii 96822, USA: and Alp’Timur is at 9 Eyliil Universitesi, Izmir, Turkey. The authors would like to acknowledge the contributions of the United Nations TOKTEN, School of Travel Industry Management at the University of Hawaii, Simon Fraser University, and Associate Professor Meral Korzay of Bogazici University Faculty of Management, Turkey.
‘Brian H. Archer, ‘The anatomy of a multiplier’, Regional Studies, Vol 10, 1976, pp 71-77. ‘Brian H. Archer, The State ol the Art, Bangor Occasional Papers in Economics, No 17. University of Wales Press, Bangor, UK, 1977; Juanita C. Liu, Jojo Ouayson, and Turgut Var, ‘Tourism multipliers revisited’, Les Cahiers du Tourisme, SBrie C, No 70, Centre des Hautes Etudes TouristiUniversite de Droit, Aix-enques, Provence, France, July 1982. 3‘lssues in the News’, international Tourism Ouarferly, No 3. 1982. ‘National Report No. 68: Turkey’, International Tourism Ouarterly No 3, 1981.
280
The purpose of this study is to calculate differential tourist-income multipliers for Turkey. These multipliers provide the basis for determining the relative impacts of the various types of tourists by their differences in spending patterns and the income-generating propensities of the tourist-related businesses. Thus, it is possible to compare the relative contributions of various tourist groups to the generation of direct, indirect, induced, and total income. In Turkey the types of visitors of interest are foreign overnight visitors, Turkish tourists from abroad, domestic overnight visitors, foreign excursionists. and domestic excursionists. The method used to calculate sector multipliers is the conventional input-output approach with households endogenous. Data from a 63 X 63 industry matrix for Turkey were used. Tourist multipliers were then derived by applying a method to calculate regional tourism multipliers developed by Archer.’ This flexible model has the virtue of allowing various possibilities for disaggregation, and has been applied in previous case studies in the UK. Canada, and the Caribbean.’ Although tourist multipliers have usually been applied in a regional context, it is also appropriate to use them to examine policy applications at the national level.
The study area Despite the great potential for tourism development in Turkey, given its well known historical, cultural and physical attractions. there have been steady declines in tourist arrivals since the peak year of 1976. This trend was only reversed in 1981, when tourist arrivals rose 13% to 1.46 million. FR Germany has consistently headed the list of OECD countries in terms of number of visitors to Turkey, followed by the USA and France. Reasons for the failure of Turkey to capitalize on the boom in Mediterranean tourism during the 1970s are: political instability; the government’s virtual economic bankruptcy; restrictive investment policies; and an adverse media image of Turkey.3 The poor performance of Turkey’s tourist industry was also due to lack of attention from previous government administrations. Tourism was not regarded as a significant contributor to either employment or economic growth, hence taking a back seat to Turkey’s manufacturing and traditional agricultural industries; and was dependent on administrative decisions and financial allocations in other sectors.
0261~5177/84/040280-08$03.00
0
1984 Butterworth
8 Co (Publishers)
Ltd
Toourisr-income multipliers for Turkey
Government
support
However. the new administration has identified tourism as a top priority sector. and has implemented policies to encourage tourism developoment through the fourth development plan for tourism. The main policy of this plan is the shift from promotion of tourists to encouragement of foreign investments. Foreign investors are sought not only for importation of capital, technology and management. but also to introduce a system where they would be responsible for promoting and marketing their own projects. Generous incentives are offered to them including: 0
l 0
l
long-term subsidized interest rates on 60% of the total project cost; five-year exemption from construction and property taxes; provision of state land for tourism projects for 99 years at low rental; and state provision of basic infrastructure in tourism-development areas.’
The Turkish government is also taking measures to safeguard tour operators from losing money by passing a law to subsidize incoming charter flights with empty seats. The concern for the perennial balance of payments deficits and foreign exchange shortages that adversely affect industry relying on imported spare parts, contributed both to the new interest in tourism’s potential and to a growing concern for controlling the balance on the travel account. The IMF acted directly by contributing funds to boost tourism, and indirectly by insisting on devaluing the lira making Turkey highly competitive in comparison to other Mediterranean destinations. The government also imposed restrictions on overseas travel by Turkish citizens which resulted in higher domestic occupancy rates and an improved investment climate. These restrictions have since been relaxed. A significant feature of the fourth five-year plan for tourism is the new focus on concentrated development. While the failure of the first three plans can be primarily attributed to too little resources for development in infrastructure, and political instability exacerbated by declining tourist arrivals, other reasons given are spreading resources too thin, and by pushing too comprehensive an overseas promotion plan. For example, tourism has received no more than 0.5% of the government budget in the last 18 years, and less than 1% of all capital expenditure. The new tourism plan singles out four main areas for government funding - Antalya, Izmir, Ephesus and Istanbul. Other aims of the plan are to double tourist-bed capacity from 56 044 to 95 000 beds, and to improve manpower training. Regional
4’lssues in the News’, op tit, Ref 3.
TOURISM
MANAGEMENT
distribution
The regional distribution of tourist arrivals and accommodation certainly supports the core-area approach. Air travel accounts for 31% of all arrivals and of these visitors 85% land in Istanbul. Thirty per cent arrive by sea and the two main ports of entry are Istanbul (43%) and the port of Ephesus (44%). Hotels are concentrated in the Marmara region including Istanbul (36%), Aegean region (24%) and Mediterranean area (22%). The rest are scattered throughout the country. The main area of development at present is in the Mediterranean region around
December
1984
281
Touri.~r-income mrclriplirrs for Turkqv
Antalya where planned projects will more than triple 1977 bed capacity.’ Hence, despite the many problems encountered by developing tourism in Turkey, it appears that one can look forward to an optimistic future in an industry that represents about 12% of export earnings. 10% of balance of payments and 0.5% of GNP.
The multiplier
“National Ref 3.
Report No 68: Turkey’,
op cit.
method
The multiplier measures the impact of exogenous spending in the economy by adding up all the successive rounds of respending (see Figure 1). Direct effects account for income generated as tourists make purchases from the tourist-related businesses, while indirect effects occur as these businesses make local purchases from all other enterprises in the region. The additonal earnings give rise to induced effects of increased household income and spending. The impact of tourist spending measured at these three stages can be used to determine either ratio or normal multipliers. Ratio multipliers provide a useful picture of the degree of interdependence in the economy and the relative importance of the secondary (indirect and induced) effects, while normal multipliers indicate the amount of income that is generated per dollar of tourist expenditure. Two types of ratio multipliers are caclulated in this study. The Type I
L; Tourist
Tourist
businesses
t
I
1
dollar
I
t
I
I
I
1 All businesses c
,
Figure 1. Flow of the tourist dollar in economy.
the local
Source: Juanita Liu and Turgut Var. ‘The economic impact of tourism in metropolitan Victoria, B.C.‘, Journal of Travel Research, Vol 22, No 2, 1983.
282
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Tour&income
multipliers for Ttirkey
multiplier is the ratio of the direct and indirect income to the direct income, while the Type II multiplier is the ratio of the direct and secondary income to the direct income.6
Input-output
model
A sixty-three-sector model was used as the basis for calculation of the sector multipliers.’ Conventional input-output methodology was employed using the standard system of linear equations of the form: x=y+Ax
111
where x is the vector of income generation coefficients for each industry; y is the vector of direct value-added coefficients; and A is the inter-industry-transactions-coefficients matrix. According to the technique, the matrix is inverted twice with households both endogenous and exogenous in order to calculate indirect and induced effects.” Hence, the standard Leontief solution can be used: x-+Ax=y
PI
(I - A)x = y
[31
x = (I - A)-’ where
y
I is the identity
Tourist-multiplier
[41 matrix.
model
The sector multipliers obtained by the input-output incorporated into the method developed by Archer’ multipliers. The equation is:
i,
i,
Qj Kji Vi
I
model were then to calculate tourist
1
where
6Juanita C. Liu, The Economic impact of Tourism on an Island Economy: i Case Studv of Victoria. B.C.. Unoublished Dissertation, Department oi Geography, Simon Fraser University, Burnaby, SC, Canada, 1980. ‘T.C. Devlet Pldnlama Teskilbti, 1973 Endustrilerasi. lslemler Tablosu. Republic of Turkey Input-Output Table 7973, Ankara, 1974. ‘Harry W. Richardson, Input-Output and Regional Economics. John Wiley and Sons, New York, 1972. ‘Archer, op tit, Fief 1.
TOURISM
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j is each category of tourist; i is each type of business; Q, is the proportion of total tourist expenditure spent by the jth type of tourist; Kji is the proportion spent by the jch type of tourist in each ith type of business; Vi is the direct and indirect income generated per US dollar of revenue by the ith type of business which received tourist expenditures; C is the propensity to consume; X, is the proportion of total consumer spending by the residents of the tourist region in the ith type of business; and Z, is the proportion of consumer spending by residents in the ith type of business within the region.
1984
283
Tourisl-incomr
nnclripiitw
for
Turkq
Table 1. Sector multipliers for Turkey.
industrial sector
Normal
Ratio
Transactions
Drect
IndIrect
Induced
Total
Type’
Type I/
1 2 3 4 5 6 7 8 9 10
0.7162 0 6357 0.5401 0.7561 0.5446 0.2187 0.2775 0.4111 0.3401 0.5990
0 1806 0.3063 0.1904 0.1043 0.2002 0.0214 0.1976 0.1850 0.2158 0.1988
1.3403 1.4078 1.0917 1.2858 11131 0.3588 0.7100 0.8908 0.8308 1.1923
2.2371 2.3498 1.8222 2.1462 1 8579 0 5989 1.1850 1 4868 1.3868 1.9902
1.2522 14819 1.3526 1.1379 1.3676 1.0978 1.7120 1.4501 1.6347 1.3319
3.1235 3.6965 3.3740 2.8384 3.4115 2.7384 4.2705 3.6171 4.0775 3 3224
1.3332 1 5062 1 3772 1.3222 1.4823 1.0481 1 4504 1.4489 1.5034 1.4822
Manufacturing meat 8 meat products vegetable & fruit processing vegetable and other 011s flour products sugar production other food products alcoholic beverages non-alcoholic beverages tobacco and cigarettes ginntng textiles clothing/ready-made confectionary leather 8 fur industry shoe industry wood & cork products wooden furniture paper 8 paper products printing chemical fertilizers pharmaceuticals other chemicals petroleum refining other petroleum & coal products rubber Industry plastics industry glass industry cement industry other iron & steel industry (primary) other metals (primary) metal products industry non-electrical machinery, incl. repair farm machinery electrical machinery sea vessels rallroad rolling stock auto industry other vehicles other manufacturing electricity gas 8 water
11 12 13 14 15 16 17 10 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
0.0603 0.1926 0.1589 0.1051 0.0933 0.1487 0.3747 0.2224 0.3499 0.1080 0.2055 0 3693 0.2558 0.5582 0.2892 0.2297 0.1694 0.4221 0.2418 0.2929 0.1216 0.1423 0.2000 0.3013 0.1780 0.3103 0.2137 0.3720 0.2178 0.0722 0.2640 0.1396 0.1317 0.2127 0.3126 0.2885 0.2428 0.2154 0.1466 0.5212 0.6201
0.8638 0.6254 0.6781 0.7629 0.5317 0.6664 0.2377 0.4386 0.3294 0.7804 0.4404 0.4253 0.5771 0.3107 0.5043 0.5368 0.3584 0.3103 0.1225 0.3451 0.1539 0.1071 0.3588 0.3506 0.3441 0.2383 0.3881 0.2953 0.3015 0.2808 0.3090 0.0911 0.2824 0.1855 0.1406 0.3115 0.2608 0.0622 0.2858 0.2004 0.2321
1.3811 1.2225 1.2508 1.2971 0.9339 1.2181 0.9153 0.9879 1.0151 1.3275 0.9653 1.1876 1.2447 1.2985 1.1858 1.1455 0.7868 1.0945 0.5443 0.9535 0.4117 0.3727 0.8351 0.9742 0.7802 0.8198 0.8994 0.9973 0.7761 0.5276 0.8562 0.3447 0.6188 0.5951 0.6772 0.8967 0.7527 0.4148 0.6462 1.0783 1.2736
2 3052 2.0405 2.0878 2.1651 1.5589 2.0332 1.5277 1 6489 1.6944 2.2159 1.6112 1.9822 2.0776 2.1674 1 9793 1.9120 13166 1.8269 0.9086 1.5915 0.6872 0 6221 1.3939 1.6261 1.3022 1.3683 1.5012 1 6647 1.2954 0.8806 1.4291 0.5754 1.0329 0.9933 1.1304 1.4967 1.2563 0.6923 1.0787 1.7999 2.1258
15 3144 4.2469 5.2680 8.2569 6.7012 5.4812 1.6344 2.9723 1.9415 8.2279 3.1432 2.1516 3.2558 1.5566 2.7434 3.3369 3.1163 1.7353 1.5066 2.1781 2.2657 1.7521 2.7941 2.1636 2.9332 1.7680 2.8162 1.7939 2.3840 4.8863 2.1704 1.6528 3.1449 1.8718 1.4498 2.0795 2.0741 1.2887 2.9493 1.3845 1.3742
38.2008 10.5937 13.1406 20.5964 16.7156 13 6724 4 0768 7.4142 4.8430 20.5239 7.8404 5.3670 8.1214 3 8828 6.8433 8.3236 7.7734 4 3285 3.7582 5 4331 5.6516 4.3705 6.9697 5.3969 7.3166 4.4101 7.0248 4.4747 5.9466 12.1884 5.4139 4.1228 7.8448 4.6692 3.6165 5.1871 5.1736 3.2146 7.3568 3.4636 3.4279
2.3833 2.0754 2.5885 2.1744 1.9076 2.3373 1.4977 2.1287 15419 2.1859 2.0499 2.1002 2.2144 1.7598 2.0411 2.3708 1.8675 1.7845 1.3188 1.8385 1.4329 1.4134 2.1064 1.8712 2.0322 1.6385 1.9503 1.6626 1.9056 1.9232 1.9798 1.3001 1.9840 1.6431 1.4009 2.0614 1.7463 1.1935 1.8021 1.5308 1.4630
Services construction (bullding) other construction wholesale & retail hotels and restaurants rail transportation other land transportation sea transportation air transportation communications banking, insurance, cooperatives personal & professional services home ownership
52 53 54 55 56 57 58 59 60 61 62 63
0.3887 0.6645 0.8076 0.3835 0.4792 0.5543 0.5525 0.2240 0.6417 0.5830 0.7243 0.5771
0.3718 0.1894 0.0807 0.3910 0.3598 0.1608 0.1963 0.1615 0.1000 0.0800 0.1273 0.0666
1.1364 1.2761 1.3275 1.1574 1.2538 1.0686 1.1190 0.5761 1.1084 0.9909 1.2727 0.9620
1.8968 2.1300 2.2159 1.9319 2.0928 1.7837 1.8678 0.9617 1.8501 1.6539 2.1243 1.6058
1.9565 1.2850 1.0999 2.0193 1.7508 1.2901 1.3554 1.7210 1.1558 1.1372 1.1758 1.1154
4.8803 3.2053 2.7437 5.0371 4.3671 3.2182 3.3809 4.2928 2.8830 2.8367 2.9329 2.7823
2.0509 1.5302 1.1585 1.9256 1.9966 1so93 1.5831 1.6431 1.2567 1.1492 1.2727 1.1258
Pnmary agnculture animal husbandry forestry fishing coal mining 011& natural gas Iron ore mining metallic minerals. excl. iron non-metallic minerals quarrymg
284
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Tourisr-income
mulripliers for Turkey
Analysis and results Sector multipliers Some expected relationships amon g the multipliers were found (see Table 1). Relatively higher direct, but lower indirect, multipliers were obtained for the service and primary sectors, indicating the high wage-intensiveness and low propensity to make indirect purchases. of these industries. Conversely, the manufacturing industries generally had low direct, but high indirect and Type I multipliers, reflecting the magnitude of purchase from other industries and the capital-intensive nature of manufacturing activity. In some cases, the ratio multipliers were extremely high. For example, the meat and meat-products industries had the highest indirect coefficient of 0.86. but an extremely low direct coefficient of 0.06. This resulted in a Type I multiplier of 15.3. The importance of induced effects can be seen in the high Type II multipliers found in the study. The high values of the ratio multipliers, in general, indicate the high degree of self-sufficiency of the Turkish economy due to the fact that Turkey imports very little. Finally, the transactions multipliers. which measure the amount of sales generated in the economy, are consistent with the range found in other studies.
Tourist-income multipliers Each US dollar spent by the various tourists visiting Turkey results in about US$2 of income to residents. Only negligible differences to total multipliers were found for the various tourists (See Table 2). However, certain patterns emerge when one examines a breakdown of the total figures. For instance, Turkish tourists from abroad, and excursionists have higher direct and induced multipliers, compared to the foreign and domestic overnight tourists. These differences can be explained by the variations in spending patterns which demonstrated that the Turkish tourists from abroad and excursionists spend more on retail goods (with higher corresponding multipliers) and less on hotels and restaurants (with lower corresponding multipliers). On the other hand, ratio multipliers were relatively higher for the foreign and domestic overnight tourists than those for the other tourists, reflecting opposite spending patterns. It is important to note that these results show that the value obtained via the normal versus the ratio techniques are not necessarily similar. In factcontrary patterns have been demonstrated. Comparison of the two different calculations of the income multiplier leads to the conclusion that normal multipliers are a better measure of Table 2. Tourist-income
multipliers for Turkey.
Normal
Type of visitor
All visitors Foreign overnight visitors Turkish tourists from abroad (overnight) Domestic overnight visitors Foreign excursionists Domestic excursionists
TOURISM
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1984
Ratio
I
Transactions
Direct
lndirecl
induced
Total
Type
0.4826 0.4625
0.3115 0.3270
1.1868 1.1799
1.9809 1.9695
1.5243 1.7070
3.8022 4.2581
1.7347 1.7721
0.5320 0.4889 0.6258 0.5941
0.2820 0.3026 0.1853 0.2211
1.2164 1.1829 1.2121 1.2183
2.0304 1.9744 2.0231 2.0335
1.5302 1.6189 1.2961 1.3722
3.8169 4.0383 3.2330 3.4228
1.6508 1.7188 1.4551 1.5215
Type I/
285
Tourist-income
multipliers
for
Turkey
overall benefit, since they provide a direct account of income generated per tourist dollar spent, while the conventional approach of using ratio multipliers gives only the extent of secondary income generated relative to the direct income received. Spending
pntterns
In addition, those visitors with the highest income-multiplier values are not necessarily those who contribute the most to the economy in terms of generating overall economic activity or total income. For example, foreign tourists have the lowest direct, induced. and total multipliers, indicating high leakage elements in their spending and suggesting a demand for imported items. On the other hand, foreign tourists have the highest transactions multiplier and also contribute two-thirds of total income to the Turkish economy. The overnight tourists. in general, have the highest transactions multipliers, indicating that they require more goods and services per tourist dollar spent and hence generate more economic activity than do the excursionists (see Table 3). Although typically excluded from tourism studies. the relative contributions of domestic tourists and excursionists cannot be ignored. This study shows that domestic tourists and excursionists contribute 17% of total income to the Turkish economy. Although the numbers of excusionists are always greater than their actual economic impact, the results show that they nevertheless contribute about 5% of total income. The final category of Turkish tourists from abroad is meaningful for Turkey because of the large numbers of overseas Lvorkers. They contribute about 13% of total income to the Turkish economy.
Conclusions Despite the data limitations, it is felt that some positive benefit can be gained from this study. First of all, as can be expected, higher total multiplier values were obtained for Turkey than those calculated in previous regional studies. The normal tourism-income multiplier of two reflects the low import content for the nation as a whole. The importance of secondary effects can be seen in high ratio multipliers. However, closer examination of the disaggregated multipliers show that those tourists with high direct and induced effects also had correspondingly low indirect effects and ratio coefficients. These differences reflect variations in spending patterns which indicate that the tourists that spend more on retail purchases and less on hotels and restaurants, have a greater propensity to generate direct and induced income, than those who do otherwise.
Table 3. Relative contributions
Type of visitor
Note: %omputed from Table 11.4.2 and Table 11.4.3. Tourism Policy and International Tourism in OECD Member Countries, OECD. Paris, 1981,
286
Foreign overnight visitors Turkish tourists from abroad (overnight) Domestic overnight visitors Foreign excursionists Domestic excursionists All visitors US$
of various tourists, 1981.
Percenr 66.6 13.2 15.7 2.8 1.7 469.9 million
Direct contribution (S x 107
Indirect contribution (S x 106)
Induced contribution (S x 10’)
Total (9 x 10’)
144.8
102.4
369.3
616.5
33.1 36.0 6.1 4.8 226.8
17.5 22.3 2.4 1.8 146.4
75.7 87.2 15.8 9.7 557.7
126.3 145.5 26.3 16.3 930.9
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Tortrisr-incomr
mdripliers
On the other hand. those tourists with the highest multipliers necessarily those that contribute the most to the economy both of stimulating economic activity. and generating income. words, those tourists who spend the most do not necessarily greatest impact on the economy in terms of the propensity to income to residents.
for Turkey
are not in terms In other have the generate
Policy implications These results suggest that policy goals should include information on relative impacts. as well as on the usual total or average spending of tourists. Although this study has focused on income effects. employment effects are also important. Further, because multipliers provide only a partial picture, demand patterns and supply constraints must also be incorporated into policy formulation. Finally, the importance of regional studies needs to be stressed. This study has presented highly aggregated estimates at the national level. It is possible that drastically different results may emerge from more detailed regional studies. Given the mandate for more concentrated tourism development in a few core areas by the Turkish government’s most recent five-year plan for tourism, it is imperative that close attention be given to determining the economic impacts of tourism at the regional level.
TOURISM
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287
industry;
Juanita Liu is Assistant Professor and Turgut Var Distinguished Visiting Professor at the School of Travel Industry Management. University of Hawaii, 2404 Maile Wav. Honolulu, Hawaii 96822, USA: and Alp’Timur is at 9 Eyliil Universitesi, Izmir, Turkey. The authors would like to acknowledge the contributions of the United Nations TOKTEN, School of Travel Industry Management at the University of Hawaii, Simon Fraser University, and Associate Professor Meral Korzay of Bogazici University Faculty of Management, Turkey.
‘Brian H. Archer, ‘The anatomy of a multiplier’, Regional Studies, Vol 10, 1976, pp 71-77. ‘Brian H. Archer, The State ol the Art, Bangor Occasional Papers in Economics, No 17. University of Wales Press, Bangor, UK, 1977; Juanita C. Liu, Jojo Ouayson, and Turgut Var, ‘Tourism multipliers revisited’, Les Cahiers du Tourisme, SBrie C, No 70, Centre des Hautes Etudes TouristiUniversite de Droit, Aix-enques, Provence, France, July 1982. 3‘lssues in the News’, international Tourism Ouarferly, No 3. 1982. ‘National Report No. 68: Turkey’, International Tourism Ouarterly No 3, 1981.
280
The purpose of this study is to calculate differential tourist-income multipliers for Turkey. These multipliers provide the basis for determining the relative impacts of the various types of tourists by their differences in spending patterns and the income-generating propensities of the tourist-related businesses. Thus, it is possible to compare the relative contributions of various tourist groups to the generation of direct, indirect, induced, and total income. In Turkey the types of visitors of interest are foreign overnight visitors, Turkish tourists from abroad, domestic overnight visitors, foreign excursionists. and domestic excursionists. The method used to calculate sector multipliers is the conventional input-output approach with households endogenous. Data from a 63 X 63 industry matrix for Turkey were used. Tourist multipliers were then derived by applying a method to calculate regional tourism multipliers developed by Archer.’ This flexible model has the virtue of allowing various possibilities for disaggregation, and has been applied in previous case studies in the UK. Canada, and the Caribbean.’ Although tourist multipliers have usually been applied in a regional context, it is also appropriate to use them to examine policy applications at the national level.
The study area Despite the great potential for tourism development in Turkey, given its well known historical, cultural and physical attractions. there have been steady declines in tourist arrivals since the peak year of 1976. This trend was only reversed in 1981, when tourist arrivals rose 13% to 1.46 million. FR Germany has consistently headed the list of OECD countries in terms of number of visitors to Turkey, followed by the USA and France. Reasons for the failure of Turkey to capitalize on the boom in Mediterranean tourism during the 1970s are: political instability; the government’s virtual economic bankruptcy; restrictive investment policies; and an adverse media image of Turkey.3 The poor performance of Turkey’s tourist industry was also due to lack of attention from previous government administrations. Tourism was not regarded as a significant contributor to either employment or economic growth, hence taking a back seat to Turkey’s manufacturing and traditional agricultural industries; and was dependent on administrative decisions and financial allocations in other sectors.
0261~5177/84/040280-08$03.00
0
1984 Butterworth
8 Co (Publishers)
Ltd
Toourisr-income multipliers for Turkey
Government
support
However. the new administration has identified tourism as a top priority sector. and has implemented policies to encourage tourism developoment through the fourth development plan for tourism. The main policy of this plan is the shift from promotion of tourists to encouragement of foreign investments. Foreign investors are sought not only for importation of capital, technology and management. but also to introduce a system where they would be responsible for promoting and marketing their own projects. Generous incentives are offered to them including: 0
l 0
l
long-term subsidized interest rates on 60% of the total project cost; five-year exemption from construction and property taxes; provision of state land for tourism projects for 99 years at low rental; and state provision of basic infrastructure in tourism-development areas.’
The Turkish government is also taking measures to safeguard tour operators from losing money by passing a law to subsidize incoming charter flights with empty seats. The concern for the perennial balance of payments deficits and foreign exchange shortages that adversely affect industry relying on imported spare parts, contributed both to the new interest in tourism’s potential and to a growing concern for controlling the balance on the travel account. The IMF acted directly by contributing funds to boost tourism, and indirectly by insisting on devaluing the lira making Turkey highly competitive in comparison to other Mediterranean destinations. The government also imposed restrictions on overseas travel by Turkish citizens which resulted in higher domestic occupancy rates and an improved investment climate. These restrictions have since been relaxed. A significant feature of the fourth five-year plan for tourism is the new focus on concentrated development. While the failure of the first three plans can be primarily attributed to too little resources for development in infrastructure, and political instability exacerbated by declining tourist arrivals, other reasons given are spreading resources too thin, and by pushing too comprehensive an overseas promotion plan. For example, tourism has received no more than 0.5% of the government budget in the last 18 years, and less than 1% of all capital expenditure. The new tourism plan singles out four main areas for government funding - Antalya, Izmir, Ephesus and Istanbul. Other aims of the plan are to double tourist-bed capacity from 56 044 to 95 000 beds, and to improve manpower training. Regional
4’lssues in the News’, op tit, Ref 3.
TOURISM
MANAGEMENT
distribution
The regional distribution of tourist arrivals and accommodation certainly supports the core-area approach. Air travel accounts for 31% of all arrivals and of these visitors 85% land in Istanbul. Thirty per cent arrive by sea and the two main ports of entry are Istanbul (43%) and the port of Ephesus (44%). Hotels are concentrated in the Marmara region including Istanbul (36%), Aegean region (24%) and Mediterranean area (22%). The rest are scattered throughout the country. The main area of development at present is in the Mediterranean region around
December
1984
281
Touri.~r-income mrclriplirrs for Turkqv
Antalya where planned projects will more than triple 1977 bed capacity.’ Hence, despite the many problems encountered by developing tourism in Turkey, it appears that one can look forward to an optimistic future in an industry that represents about 12% of export earnings. 10% of balance of payments and 0.5% of GNP.
The multiplier
“National Ref 3.
Report No 68: Turkey’,
op cit.
method
The multiplier measures the impact of exogenous spending in the economy by adding up all the successive rounds of respending (see Figure 1). Direct effects account for income generated as tourists make purchases from the tourist-related businesses, while indirect effects occur as these businesses make local purchases from all other enterprises in the region. The additonal earnings give rise to induced effects of increased household income and spending. The impact of tourist spending measured at these three stages can be used to determine either ratio or normal multipliers. Ratio multipliers provide a useful picture of the degree of interdependence in the economy and the relative importance of the secondary (indirect and induced) effects, while normal multipliers indicate the amount of income that is generated per dollar of tourist expenditure. Two types of ratio multipliers are caclulated in this study. The Type I
L; Tourist
Tourist
businesses
t
I
1
dollar
I
t
I
I
I
1 All businesses c
,
Figure 1. Flow of the tourist dollar in economy.
the local
Source: Juanita Liu and Turgut Var. ‘The economic impact of tourism in metropolitan Victoria, B.C.‘, Journal of Travel Research, Vol 22, No 2, 1983.
282
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Tour&income
multipliers for Ttirkey
multiplier is the ratio of the direct and indirect income to the direct income, while the Type II multiplier is the ratio of the direct and secondary income to the direct income.6
Input-output
model
A sixty-three-sector model was used as the basis for calculation of the sector multipliers.’ Conventional input-output methodology was employed using the standard system of linear equations of the form: x=y+Ax
111
where x is the vector of income generation coefficients for each industry; y is the vector of direct value-added coefficients; and A is the inter-industry-transactions-coefficients matrix. According to the technique, the matrix is inverted twice with households both endogenous and exogenous in order to calculate indirect and induced effects.” Hence, the standard Leontief solution can be used: x-+Ax=y
PI
(I - A)x = y
[31
x = (I - A)-’ where
y
I is the identity
Tourist-multiplier
[41 matrix.
model
The sector multipliers obtained by the input-output incorporated into the method developed by Archer’ multipliers. The equation is:
i,
i,
Qj Kji Vi
I
model were then to calculate tourist
1
where
6Juanita C. Liu, The Economic impact of Tourism on an Island Economy: i Case Studv of Victoria. B.C.. Unoublished Dissertation, Department oi Geography, Simon Fraser University, Burnaby, SC, Canada, 1980. ‘T.C. Devlet Pldnlama Teskilbti, 1973 Endustrilerasi. lslemler Tablosu. Republic of Turkey Input-Output Table 7973, Ankara, 1974. ‘Harry W. Richardson, Input-Output and Regional Economics. John Wiley and Sons, New York, 1972. ‘Archer, op tit, Fief 1.
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j is each category of tourist; i is each type of business; Q, is the proportion of total tourist expenditure spent by the jth type of tourist; Kji is the proportion spent by the jch type of tourist in each ith type of business; Vi is the direct and indirect income generated per US dollar of revenue by the ith type of business which received tourist expenditures; C is the propensity to consume; X, is the proportion of total consumer spending by the residents of the tourist region in the ith type of business; and Z, is the proportion of consumer spending by residents in the ith type of business within the region.
1984
283
Tourisl-incomr
nnclripiitw
for
Turkq
Table 1. Sector multipliers for Turkey.
industrial sector
Normal
Ratio
Transactions
Drect
IndIrect
Induced
Total
Type’
Type I/
1 2 3 4 5 6 7 8 9 10
0.7162 0 6357 0.5401 0.7561 0.5446 0.2187 0.2775 0.4111 0.3401 0.5990
0 1806 0.3063 0.1904 0.1043 0.2002 0.0214 0.1976 0.1850 0.2158 0.1988
1.3403 1.4078 1.0917 1.2858 11131 0.3588 0.7100 0.8908 0.8308 1.1923
2.2371 2.3498 1.8222 2.1462 1 8579 0 5989 1.1850 1 4868 1.3868 1.9902
1.2522 14819 1.3526 1.1379 1.3676 1.0978 1.7120 1.4501 1.6347 1.3319
3.1235 3.6965 3.3740 2.8384 3.4115 2.7384 4.2705 3.6171 4.0775 3 3224
1.3332 1 5062 1 3772 1.3222 1.4823 1.0481 1 4504 1.4489 1.5034 1.4822
Manufacturing meat 8 meat products vegetable & fruit processing vegetable and other 011s flour products sugar production other food products alcoholic beverages non-alcoholic beverages tobacco and cigarettes ginntng textiles clothing/ready-made confectionary leather 8 fur industry shoe industry wood & cork products wooden furniture paper 8 paper products printing chemical fertilizers pharmaceuticals other chemicals petroleum refining other petroleum & coal products rubber Industry plastics industry glass industry cement industry other iron & steel industry (primary) other metals (primary) metal products industry non-electrical machinery, incl. repair farm machinery electrical machinery sea vessels rallroad rolling stock auto industry other vehicles other manufacturing electricity gas 8 water
11 12 13 14 15 16 17 10 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
0.0603 0.1926 0.1589 0.1051 0.0933 0.1487 0.3747 0.2224 0.3499 0.1080 0.2055 0 3693 0.2558 0.5582 0.2892 0.2297 0.1694 0.4221 0.2418 0.2929 0.1216 0.1423 0.2000 0.3013 0.1780 0.3103 0.2137 0.3720 0.2178 0.0722 0.2640 0.1396 0.1317 0.2127 0.3126 0.2885 0.2428 0.2154 0.1466 0.5212 0.6201
0.8638 0.6254 0.6781 0.7629 0.5317 0.6664 0.2377 0.4386 0.3294 0.7804 0.4404 0.4253 0.5771 0.3107 0.5043 0.5368 0.3584 0.3103 0.1225 0.3451 0.1539 0.1071 0.3588 0.3506 0.3441 0.2383 0.3881 0.2953 0.3015 0.2808 0.3090 0.0911 0.2824 0.1855 0.1406 0.3115 0.2608 0.0622 0.2858 0.2004 0.2321
1.3811 1.2225 1.2508 1.2971 0.9339 1.2181 0.9153 0.9879 1.0151 1.3275 0.9653 1.1876 1.2447 1.2985 1.1858 1.1455 0.7868 1.0945 0.5443 0.9535 0.4117 0.3727 0.8351 0.9742 0.7802 0.8198 0.8994 0.9973 0.7761 0.5276 0.8562 0.3447 0.6188 0.5951 0.6772 0.8967 0.7527 0.4148 0.6462 1.0783 1.2736
2 3052 2.0405 2.0878 2.1651 1.5589 2.0332 1.5277 1 6489 1.6944 2.2159 1.6112 1.9822 2.0776 2.1674 1 9793 1.9120 13166 1.8269 0.9086 1.5915 0.6872 0 6221 1.3939 1.6261 1.3022 1.3683 1.5012 1 6647 1.2954 0.8806 1.4291 0.5754 1.0329 0.9933 1.1304 1.4967 1.2563 0.6923 1.0787 1.7999 2.1258
15 3144 4.2469 5.2680 8.2569 6.7012 5.4812 1.6344 2.9723 1.9415 8.2279 3.1432 2.1516 3.2558 1.5566 2.7434 3.3369 3.1163 1.7353 1.5066 2.1781 2.2657 1.7521 2.7941 2.1636 2.9332 1.7680 2.8162 1.7939 2.3840 4.8863 2.1704 1.6528 3.1449 1.8718 1.4498 2.0795 2.0741 1.2887 2.9493 1.3845 1.3742
38.2008 10.5937 13.1406 20.5964 16.7156 13 6724 4 0768 7.4142 4.8430 20.5239 7.8404 5.3670 8.1214 3 8828 6.8433 8.3236 7.7734 4 3285 3.7582 5 4331 5.6516 4.3705 6.9697 5.3969 7.3166 4.4101 7.0248 4.4747 5.9466 12.1884 5.4139 4.1228 7.8448 4.6692 3.6165 5.1871 5.1736 3.2146 7.3568 3.4636 3.4279
2.3833 2.0754 2.5885 2.1744 1.9076 2.3373 1.4977 2.1287 15419 2.1859 2.0499 2.1002 2.2144 1.7598 2.0411 2.3708 1.8675 1.7845 1.3188 1.8385 1.4329 1.4134 2.1064 1.8712 2.0322 1.6385 1.9503 1.6626 1.9056 1.9232 1.9798 1.3001 1.9840 1.6431 1.4009 2.0614 1.7463 1.1935 1.8021 1.5308 1.4630
Services construction (bullding) other construction wholesale & retail hotels and restaurants rail transportation other land transportation sea transportation air transportation communications banking, insurance, cooperatives personal & professional services home ownership
52 53 54 55 56 57 58 59 60 61 62 63
0.3887 0.6645 0.8076 0.3835 0.4792 0.5543 0.5525 0.2240 0.6417 0.5830 0.7243 0.5771
0.3718 0.1894 0.0807 0.3910 0.3598 0.1608 0.1963 0.1615 0.1000 0.0800 0.1273 0.0666
1.1364 1.2761 1.3275 1.1574 1.2538 1.0686 1.1190 0.5761 1.1084 0.9909 1.2727 0.9620
1.8968 2.1300 2.2159 1.9319 2.0928 1.7837 1.8678 0.9617 1.8501 1.6539 2.1243 1.6058
1.9565 1.2850 1.0999 2.0193 1.7508 1.2901 1.3554 1.7210 1.1558 1.1372 1.1758 1.1154
4.8803 3.2053 2.7437 5.0371 4.3671 3.2182 3.3809 4.2928 2.8830 2.8367 2.9329 2.7823
2.0509 1.5302 1.1585 1.9256 1.9966 1so93 1.5831 1.6431 1.2567 1.1492 1.2727 1.1258
Pnmary agnculture animal husbandry forestry fishing coal mining 011& natural gas Iron ore mining metallic minerals. excl. iron non-metallic minerals quarrymg
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Tourisr-income
mulripliers for Turkey
Analysis and results Sector multipliers Some expected relationships amon g the multipliers were found (see Table 1). Relatively higher direct, but lower indirect, multipliers were obtained for the service and primary sectors, indicating the high wage-intensiveness and low propensity to make indirect purchases. of these industries. Conversely, the manufacturing industries generally had low direct, but high indirect and Type I multipliers, reflecting the magnitude of purchase from other industries and the capital-intensive nature of manufacturing activity. In some cases, the ratio multipliers were extremely high. For example, the meat and meat-products industries had the highest indirect coefficient of 0.86. but an extremely low direct coefficient of 0.06. This resulted in a Type I multiplier of 15.3. The importance of induced effects can be seen in the high Type II multipliers found in the study. The high values of the ratio multipliers, in general, indicate the high degree of self-sufficiency of the Turkish economy due to the fact that Turkey imports very little. Finally, the transactions multipliers. which measure the amount of sales generated in the economy, are consistent with the range found in other studies.
Tourist-income multipliers Each US dollar spent by the various tourists visiting Turkey results in about US$2 of income to residents. Only negligible differences to total multipliers were found for the various tourists (See Table 2). However, certain patterns emerge when one examines a breakdown of the total figures. For instance, Turkish tourists from abroad, and excursionists have higher direct and induced multipliers, compared to the foreign and domestic overnight tourists. These differences can be explained by the variations in spending patterns which demonstrated that the Turkish tourists from abroad and excursionists spend more on retail goods (with higher corresponding multipliers) and less on hotels and restaurants (with lower corresponding multipliers). On the other hand, ratio multipliers were relatively higher for the foreign and domestic overnight tourists than those for the other tourists, reflecting opposite spending patterns. It is important to note that these results show that the value obtained via the normal versus the ratio techniques are not necessarily similar. In factcontrary patterns have been demonstrated. Comparison of the two different calculations of the income multiplier leads to the conclusion that normal multipliers are a better measure of Table 2. Tourist-income
multipliers for Turkey.
Normal
Type of visitor
All visitors Foreign overnight visitors Turkish tourists from abroad (overnight) Domestic overnight visitors Foreign excursionists Domestic excursionists
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Ratio
I
Transactions
Direct
lndirecl
induced
Total
Type
0.4826 0.4625
0.3115 0.3270
1.1868 1.1799
1.9809 1.9695
1.5243 1.7070
3.8022 4.2581
1.7347 1.7721
0.5320 0.4889 0.6258 0.5941
0.2820 0.3026 0.1853 0.2211
1.2164 1.1829 1.2121 1.2183
2.0304 1.9744 2.0231 2.0335
1.5302 1.6189 1.2961 1.3722
3.8169 4.0383 3.2330 3.4228
1.6508 1.7188 1.4551 1.5215
Type I/
285
Tourist-income
multipliers
for
Turkey
overall benefit, since they provide a direct account of income generated per tourist dollar spent, while the conventional approach of using ratio multipliers gives only the extent of secondary income generated relative to the direct income received. Spending
pntterns
In addition, those visitors with the highest income-multiplier values are not necessarily those who contribute the most to the economy in terms of generating overall economic activity or total income. For example, foreign tourists have the lowest direct, induced. and total multipliers, indicating high leakage elements in their spending and suggesting a demand for imported items. On the other hand, foreign tourists have the highest transactions multiplier and also contribute two-thirds of total income to the Turkish economy. The overnight tourists. in general, have the highest transactions multipliers, indicating that they require more goods and services per tourist dollar spent and hence generate more economic activity than do the excursionists (see Table 3). Although typically excluded from tourism studies. the relative contributions of domestic tourists and excursionists cannot be ignored. This study shows that domestic tourists and excursionists contribute 17% of total income to the Turkish economy. Although the numbers of excusionists are always greater than their actual economic impact, the results show that they nevertheless contribute about 5% of total income. The final category of Turkish tourists from abroad is meaningful for Turkey because of the large numbers of overseas Lvorkers. They contribute about 13% of total income to the Turkish economy.
Conclusions Despite the data limitations, it is felt that some positive benefit can be gained from this study. First of all, as can be expected, higher total multiplier values were obtained for Turkey than those calculated in previous regional studies. The normal tourism-income multiplier of two reflects the low import content for the nation as a whole. The importance of secondary effects can be seen in high ratio multipliers. However, closer examination of the disaggregated multipliers show that those tourists with high direct and induced effects also had correspondingly low indirect effects and ratio coefficients. These differences reflect variations in spending patterns which indicate that the tourists that spend more on retail purchases and less on hotels and restaurants, have a greater propensity to generate direct and induced income, than those who do otherwise.
Table 3. Relative contributions
Type of visitor
Note: %omputed from Table 11.4.2 and Table 11.4.3. Tourism Policy and International Tourism in OECD Member Countries, OECD. Paris, 1981,
286
Foreign overnight visitors Turkish tourists from abroad (overnight) Domestic overnight visitors Foreign excursionists Domestic excursionists All visitors US$
of various tourists, 1981.
Percenr 66.6 13.2 15.7 2.8 1.7 469.9 million
Direct contribution (S x 107
Indirect contribution (S x 106)
Induced contribution (S x 10’)
Total (9 x 10’)
144.8
102.4
369.3
616.5
33.1 36.0 6.1 4.8 226.8
17.5 22.3 2.4 1.8 146.4
75.7 87.2 15.8 9.7 557.7
126.3 145.5 26.3 16.3 930.9
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Tortrisr-incomr
mdripliers
On the other hand. those tourists with the highest multipliers necessarily those that contribute the most to the economy both of stimulating economic activity. and generating income. words, those tourists who spend the most do not necessarily greatest impact on the economy in terms of the propensity to income to residents.
for Turkey
are not in terms In other have the generate
Policy implications These results suggest that policy goals should include information on relative impacts. as well as on the usual total or average spending of tourists. Although this study has focused on income effects. employment effects are also important. Further, because multipliers provide only a partial picture, demand patterns and supply constraints must also be incorporated into policy formulation. Finally, the importance of regional studies needs to be stressed. This study has presented highly aggregated estimates at the national level. It is possible that drastically different results may emerge from more detailed regional studies. Given the mandate for more concentrated tourism development in a few core areas by the Turkish government’s most recent five-year plan for tourism, it is imperative that close attention be given to determining the economic impacts of tourism at the regional level.
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287