Does Tourism Contribute Significantly to the Malaysian Economy? Multiplier Analysis Using I-O Technique

Mohammad Nurul Huda Mazumder, Elsadig Musa Ahmed, Abul Quasem Al-Amin


The objective of this paper is to examine the contribution made by tourism sector through deriving multipliers in terms of output, income, employment, value added, and import for the Malaysian economy using input-output techniques. Normal and ratio multipliers were measured to demonstrate the contribution made by tourism industry and its linkages with the other sectors of the economy. International tourist expenditure makes highest contribution in generating output since output multiplier is seven times higher than import multiplier. The lower value of import multiplier represents that the amount of leakage that occurs as a result of tourist expenditure is not significant. It is also evident from the results that secondary effect of tourist expenditure is found to be higher in generating output and value added. The lower value of secondary effect on income and employment suggests that tourism industry is relatively labour-intensive in nature. The multiplier analysis is found to be effective in appropriate policy making for the tourism industry. However, multiplier analysis of tourism industry of Malaysia possesses that this industry is contributing significantly to the economy and proves as a potential sector to enhance economic growth towards a developed nation by 2020.

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