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Tourism Economics

Tourism Leakages through Imports and Expatriate Welfare
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Abstract
Tourism is undoubtedly one of the largest and growing industries in Fiji. It creates employment, brings about economic growth and development and earns a significant amount of foreign dollar for the economy. However, a significant amount of the income earned is leaked out of the economy through imports and hiring of expatriates. The extent to which this leakage occurs is from Fiji’s economy is not known. As such, this research seeks to fill this vacuum and quantify the extent of leakage from the tourism industry.

Key words: Leakage, expatriates, imports
Introduction
Tourism is one of the significant industries in Fiji’s economy. It generates a substantial amount of foreign exchange inflows, creates employment, contributes towards government revenue and brings about a lot of economic growth and development. Like other Pacific Island Countries, Fiji’s tourism sector has comparative advantage enabling it to compete internationally.

However, despite the lucrative benefits from the tourism industry, full extent of the income generated can not be retained in the local economy. Fiji has an open economy. This means that it imports, exports and indulges in transactions internationally. As such, there are bound to be leakages from the economy. Leakage means income from tourism that leaves the destination country. The World Bank estimates that 55 per cent of international tourism income leaves the destination country via foreign-owned airlines, hotels and tour operators, or payments for imported food, drink and supplies.

The supply of tourism products requires three types of imports, final goods and services or directly consumable items such as foreign liquor, cigarettes, film rolls, intermediate inputs or raw materials such as flour, meat, fuel and capital goods and services such as machinery and equipment, busses and...