Tourism and the Economy of Tanzania: A CGE Analysis, Paper presemted at the

Although much literature exists to demonstrate the importance of tourism as a foreign exchange earner, little is known about how tourism expansion affects the economy of a developing country (LDC). This paper employs a CGE analysis to demonstrate the potential contribution of tourism for economic growth in Tanzania using a SAM for 1992. The efficacy of tourism taxation and infrastructure development as important ways to amplify the beneficial impact of tourism is demonstrated. The findings indicate that tourism expansion has substantial impact on the economy as shown by increases in real GDP, total welfare and exports. Improvement of infrastructure appreciably amplifies the effects of tourism expansion and tourism taxation has an unambiguously favourable impact on tax revenue and welfare. As LDCs lack sufficient resources to enhance growth, tourism may provide as a source of tax revenue to finance infrastructure projects that will benefit the economy as whole, as well as tourists