The international tourism sector has grown rapidly in Turkey since the 1980s and Turkey ranks among
the top ten countries in terms of tourist arrivals and receipts. Previous studies on international tourism in
Turkey are partial equilibrium studies which emphasized the importance of the sector for foreign
exchange earnings, employment creation, and economic growth. The social accounting matrix (SAM)
modeling approach is superior to partial equilibrium analysis as it takes into account intersectoral
linkages. This paper analyzes the contribution of international tourism to the Turkish economy using two
SAMs for 1996 and 2002, respectively. Two analyses are conducted using the SAM impact model: (i)
sectoral comparison of GDP elasticities, and (ii) SAM impact analysis of international tourism on output,
value-added, and employment. The results show that the GDP elasticity of international tourism is
relatively low and the impact of foreign tourist expenditures on domestic production, value-added (GDP),
and employment in Turkey are modest. The results imply the possibility of leakage of foreign tourist
expenditures out of the economy.
International tourism has developed rapidly on the global scale
since the late 1970s. According to the United Nations World
Tourism Organization (UNWTO), total international tourist arrivals
increased from 25 million in 1950 to 277 million in 1980, 439
million in 1990, 684 million in 2000, and 922 million in 2008
(UNWTO, 2009). Total tourism revenues worldwide increased to
944 billion US dollars in 2008. International tourism has also
developed remarkably in Turkey since the 1980s and the country
ranks among the top ten countries both in terms of tourist arrivals
and tourism receipts.
Rapid development of international tourism has attracted the
interest of scholars since the early 1980s, and a number of studies
have tried to quantify the impact of tourism on the economy for
various countries. The techniques used in these studies range from
univariate and multivariate econometric techniques to inpute
output (IeO) models and its spin-offs, social accounting matrix
(SAM) and applied computable general equilibrium (CGE) models.
Econometric studies are partial equilibrium studies and have little
to say about intersectoral connections in an economy. On the other
hand, IeO, SAM, and CGE models have advantages over econometric
analysis as they take into account intersectoral inpute
output relations and final demand (i.e. consumption, investment,
exports, and imports) simultaneously (Archer, 1996; Briassoulis,
1991; Fletcher, 1989; Hara, 2008). The use of SAM modeling for
tourism analysis became possible only after the introduction of
tourism satellite accounts in the national accounting systems and
IeO tables. Previously, tourism services were not regarded as
a production activity in national IeO tables as they were included in
various services (e.g. hotels, restaurants, transportation, and
recreation). Using tourism sector surveys, tourism demand was
incorporated into national accounts in the form of tourism satellite
accounts (UNWTO, 2008).
Turkey is among the top ten countries on the international
tourism market. A broad quantitative analysis of the economic
impact of international tourism is necessary for such an important
country and the current paper is the first attempt to fill this gap by
using the SAM modeling technique. There are only a few quantitative
studies examining the contribution of international tourism
on the Turkish economy and they employ time series econometric
techniques such as vector autoregressive model, vector error
correction, and Granger causality. Among these, Gunduz and
Hatemi-J (2005), Bahar (2006), Kaplan and Celik (2008), and
Zortuk (2009) found that tourism had a positive impact on GDP
growth whereas Katircioglu (2009) rejected the tourism-led growth hypothesis. In addition, Onder and Durgun (2008) found
a positive impact of tourism on employment. These studies praise
tourism as an earner of foreign exchange, contributor to employment
creation, and facilitator of economic growth. However, they
ignore intersectoral interactions despite backward linkages of the
tourism sector found by inputeoutput studies for various countries.
This paper builds on previous SAM studies (Defourney &
Thorbecke, 1984; Oosterhaven & Fan, 2006) that examine the
impact of tourism on the economy and aims to answer the
following three research questions by using the SAM impact model:
(i) to what extent did international tourism contribute to GDP in
Turkey?; (ii) to what extent did international tourism contribute to
employment growth in Turkey?; (iii) through what sort of intersectoral
relations did international tourism contribute to employment
and GDP? To this end, two SAMs are built for 1996 and 2002
through very careful treatment of the data obtained from inpute
output tables, tourism statistics, and related other data. Due to lack
of data on transport and trade margins in the previous
inputeoutput tables, SAMs could be constructed only for 1996 and
2002.1 The results obtained for these two years are compared to
investigate if there were significant changes over time.
Macroeconomic consequences of changes in tourism demand
may be significant for policymakers in a developing country like
Turkey due to growth and development objectives of tourism
policies. Successful tourism strategies are deemed as those that
create jobs and lead to higher economic growth.
The remainder of the paper is organized as follows. In the next
section, development of the international tourism sector and
tourism policies in Turkey is briefly explained. Section 3 reviews the
literature on the economic impacts of tourism. Section 4 sets out
the methodology of the social accounting matrix analysis. The
results of the analysis are presented and interpreted with a policy
discussion in Section 5. Finally, Section 6 wraps up and concludes.
In this paper, the importance of international tourism for the
Turkish economy is investigated from two perspectives: (i) sectoral
comparisons of GDP elasticities, and (ii) calculation of the impact of
the international tourism sector on output, value-added (GDP), and
employment. These analyses were conducted using the SAMs for
1996 and 2002.
The findings draw a somewhat negative picture for the contribution
of international tourismto the economy, but the results of the
analyses have important policy implications. Although international
tourism was generally deemed as an important sector in previous
studies, the impact of foreign tourist expenditures on domestic
production, value-added (GDP), and employment in Turkey can be
best described as modest. In addition, compared to international
tourism, domestic tourism activities are found to be more important
in terms of GDP elasticity, which indicates the need to diversify
tourism activities. Tosun et al. (2003, pp. 154e155) argued that
domestic tourism can be used as a cushion to overcome a possible
crisis due to unexpected negative demand shocks. In addition,
Seckelmann (2002) argued that the development of domestic
tourism may help improve inter-regional inequalities. More attention
should be paid by the government to domestic tourism.
Domestic tourism can be seen as a substitute for international
tourism on the condition that domestic tourists have a smaller
propensity to spend on imported goods and services than foreign
tourists. Another important policy recommendation is to put in place
effective long-term strategies to promote domestic resource use in
order to reap the benefits of foreign tourist expenditures.
The reason for a weak contribution of international tourism to
the economic growth can also be sought in structural problems
related to the role played by tour operators and the problems
related to the way of doing business. Foreign tour operators in
Europe control the demand side of the international tourism
business by promoting the western and eastern coasts, which are
endowed with rich natural resources for the sun-sea-sand tourism
(Tosun et al., 2003, pp. 134e135). Turkey’s comparative advantage
in international tourism sector is the low costs of providing various
services which helps attract more tourists from Europe through
package tours offered by foreign tour operators. As a result, the
government favors coastal regions in allocating incentives and
funds devoted to the development of tourism to the detriment of
the other segments of international tourism, such as culture
tourism in which Turkey is also well-endowed.
Empirical studies tend to emphasize the positive contribution of
foreign tourist expenditures on the economy through backward
linkages which increase domestic production and demand for
domestic inputs. The results of this paper imply that this mechanism
largely fails to work in Turkey. This brings about the possibility
of the leakage of foreign tourist expenditures out of the
economy albeit only partially. In this regard, it is important to
examine the relation between goods and services imports and
foreign tourist expenditures. If part of foreign tourist expenditures,
such as accommodation, restaurants, daily necessities, and transportation,
are directed to imported goods and services, then part of
the revenues from international tourism leak out and fail to have
a favorable impact on domestic production and employment. Due
to lack of data on the expenditures of foreign tourists on imported
goods, at this stage, it is not possible to quantify the extent of the
leakage of tourist expenditures.
This paper examines the importance of tourism demand for the
Turkish economy by using SAM impact analysis. Applied general
equilibrium assessment of the government’s international tourism
policies such as those reported in the strategy paper of the Turkish
Ministry of Culture and Tourism titled Tourism Strategy of Turkey e
2023 (MCT, 2007) remains a future research topic. Furthermore,
regional impacts of foreign tourist expenditures can be investigated
using the currently unavailable regional SAMs. Empirical analysis of
poverty and income distribution across different types of households
is beyond the scope of this paper, but they remain as
important future research areas.
The empirical results of this paper should be interpreted with
caution due to several limitations regarding the assumptions of the
SAM model data availability. The SAMmodel is an extended version
of the linear IeO model where changes stimulated by exogenous
shocks are average rather than marginal changes. In addition, lack
of longitudinal tourism data, especially tourism satellite accounts,
poses an important limitation to tourism studies in Turkey.
Tourism satellite accounts are available only for 1996e1998 and
2001e2003, and IeO tables are available for 1996 and 2002.
Economic conditions have changed since 2002 and it is necessary to
analyze more recent developments in international tourism activities.
For this purpose, there is a need for a more recent IeO table
which has a higher level of sectoral disaggregation, especially
regarding tourism and tourism-related sectors. In particular, it is
important to note that construction of the missing international
tourism data was possible only by making several assumptions
such as the tourism ratio. With the availability of more recent data,
the analysis can be extended beyond 2002.
