Assimilation of tourism satellite accounts and applied general equilibrium models to inform tourism policy analysis

Abstract

Historically, tourism policy analysis in South Africa has posed challenges to accurate measurement. The primary reason for this is that tourism is not designated as an 'industry' in standard economic accounts. This paper therefore demonstrates the relevance and need for applied general equilibrium (AGE) models to be completed and extended through an integration with tourism satellite accounts (TSAs) as a tool for policy makers (especially tourism policy makers) in South Africa. The paper sets out the reasons behind the need for economic models for policy analysis and other purposes, and gives an overview of old and new approaches to tourism policy modelling. The relevance of integrated models to, specifically, tourism policy analysis both internationally and in the South African context is discussed, followed by an illustrative empirical simulation of an exogenous inbound tourism expansion of 10%, against the background of the relationship between tourism and economic development. Furthermore, the indirect effects of an input-output model are also presented for comparison. The results confirm that the integrated approach is a more accurate tool for policy analysis.