The economic impact of the tourism sector on the overall Italian economy: An Input-Output Approach

Defining the tourism sector poses a considerable challenge, owing to the diversified nature of its economic activities, which encompass services, industries, and agriculture. The extent of tourism's influence varies substantially across these sectors, making it arduous to gauge its contribution to the gross domestic product (GDP). To surmount this challenge, the satellite accounting method (TSA) is typically used to establish the spread of tourism across different economic activities and subsequently determine its contribution to final production. A range of approaches, including impact models, cost-benefit models, social accounting matrices (SAMs), and computable general equilibrium (CGE), have been utilized to evaluate the economic ramifications of tourism (see Frechtling, 2009; Madsen and Zhang, 2010; Rossouw and Saayman, 2011; and Dwyer et al., 2007). However, since 2010, TSAs have become, the standard tool to measure the direct economic contributions of tourism (Cañada, 2013; Dwyer et al., op.cit.). Within the framework of satellite accounting (TSA), the expenditure approach is typically adopted, although it should not be regarded as the exclusive method. Given that tourism expenditure is the key metric used to determine tourism's contribution to the gross domestic product (GDP) in the satellite accounts, it is essential to ascertain which aggregate is considered within the Italian satellite accounting framework. Other countries' approaches to this matter generally rely on industry data (Structural Business Statistics), input- output tables in the System of National Accounts (SNA), and/or visitor surveys (Pham and Dwyer, 2013). The TSA has the advantage to identify industry outputs that are consumed or purchased for tourism as well as their contribution to key macroeconomic indicators such as GDP, national income, and employment (Frechtling, 2010; Jones et al., 2009). The relationship between tourism and other economic sectors remains incompletely understood since tourism is not identified as a separate industry in a country's input-output tables. Several studies have investigated the dominant economic activity aggregated in "homogeneous production branches or activity branches," without explicitly distinguishing tourism activity from non-tourism activity, such as in the case of the restaurant industry. The present study seeks to address this issue by considering the tourism industry as it is defined in the Tourism Satellite Accounts and incorporating this classification into the Input-Output (I-O) framework. To achieve this objective, the economic activities pertaining to the tourism industry, as delineated within the framework of satellite accounting, were consolidated within the Input-Output (I-O) tables under the designation of the "tourism sector." In this process, the original economic activities were appropriately weighted by employing the tourism coefficients derived from satellite accounting. Concurrently, the economic activities within the tourism industry that were not directly associated with tourism were encompassed within the non-tourism sector. The latest Input-Output scheme published by ISTAT for the year 2019 was used for this purpose. To estimate the overall impact of tourism on employment, income, and production by calculating multipliers, it was necessary to first compute technical coefficients for the tourism sector. Subsequently, the study presents forward and backward linkage coefficients to illustrate how variations in the tourism sectors would influence the value-added , production, employment, and income of the entire national economy. This could prove valuable for economic policy planning, particularly for policymakers who seek to measure the impact of the tourism industry on other sectors. However, given that the contribution of the tourism industry to GDP is determined using the expenditure approach, the paper begins by focusing on a preliminary analysis of discrepancies in data pertaining to tourism spending. This constitutes a key aspect in understanding the quality of the tourism coefficient used to derive the tourism sector in the I-O scheme, and subsequently, the impact of the tourism industry as an industry was calculated by aggregating the activity branches.