Estimating the economic impact of tourism: A comparative analysis of Albania, Croatia, the Former Yugoslav Republic of Macedonia and Greece

This study assessed the economic impact of tourism on investment, government and imports expenditures in Albania, Croatia, the Former Yugoslav Republic (FYR) of Macedonia, and Greece. The objectives of this study were to develop a model to determine the impacts generated from an incremental change in tourist expenditures in the economy of Albania, Croatia, FYR of Macedonia, and Greece; to estimate the multipliers of the tourism expenditures on investment, government and imports expenditures in Albania, Croatia, FYR of Macedonia, and Greece and to investigate the differences and similarities of the economic impact of tourism between Albania, Croatia, FYR of Macedonia, and Greece. According to the results, tourism impact on investment, government and import expenditures was not significant for FYR of Macedonia. Tourism impact on investment was significant in Albania, Croatia and Greece, due to the increasing number of tourism arrivals and tourism expenditures in these countries during the period of time pertaining to this study, 1991-2004. Tourism impact on government expenditures was significant for Croatia and Greece in response to the rapid growth of tourism demand. In Albania, tourism impact on government expenditures was less significant, due to financing of mega infrastructure projects through foreign direct investments. Tourism impact on imports was significant for Albania, Croatia and Greece. In Albania and Croatia no import substitution industries have been developed. In Greece such an industry for food and beverages has been developed, but there is still reliance on imported goods and services such as machinery and fuels. When a country is deciding to embark on tourism development as a development option, or to expand tourism industry, it must be decided that long term benefits outweigh the estimated costs. An important consideration was the financing of the required investment projects in tourism infrastructure. If foreign direct investment can be found to finance some of these projects, most of the costs involved can be reduced for the government. In addition, the government can focus its efforts in promoting domestic industry in order to develop import substitution industries to reduce the offset costs from the imported goods and services