Critical assessment of economic impact analyses at selected national festivals

Thesis (PhD (Tourism Management))--North-West University, Potchefstroom Campus, 2012Festivals have become a global phenomenon and now serve as a platform to promote the leisure and tourism industry within a nation. These events have an undisputed economic effect – not only on the hosting community – but also on the global community. Despite the encouraging community support and the socio-economic impact and spin-offs that are generated by means of such events, the financing of art festivals remains an intricate issue. The fact remains that not all festivals are financially self-sustainable and so require extensive sponsorship in order to ensure the continuation of the event. Limited government funding available due to budget constraints curbs the financial support forthcoming from municipalities and so forces event organisers to seek alternative funding to ensure the survival and feasibility of events. This responsibility places an additional burden on event organisers and so necessitates the use of assessment tools in order to convince private and public institutions or individuals to invest in such events through sponsorships. During an extensive literature study, it became apparent that the need exists to re-assess fully the economic impact analysis of events. The literature revealed that varying models are used to conduct economic impact analyses. In order to establish a concise framework within which to conduct an economic assessment, it was decided to select only the most-used models – Computable General Equilibrium (CGE), Input-Output (I-O) and Social Accounting Matrix (SAM). The dilemma facing tourism economists is to determine which economic assessment approach is most effective as every methodology has its own advantages and disadvantages. In addition, the type and size of an event also plays a fundamental role when selecting an appropriate measuring tool. This research was further motivated because of the existing gap that exists in the South African context for no study has yet been conducted where the various models that assess economic impact have been applied to the collated data of the same event. This study thus aims to provide an overview and a comparison of competing and supplementing methodologies for modelling the regional economic dynamics and the impacts of events. It further investigates the manner in which regional CGE, I-O and SAM based (multiplier) models operate towards capturing the region-specific, inter-regional and multi-regional production, consumption and factor market patterns as result of expenditures incurred during events. An analysis of the virtues and the limitations of these economic assessment methodologies suggests that it may be the considerations such as the data collection/compilation, expected output, research objectives and costs involved that ultimately determine the choice of a specific modelling framework. While addressing the problem stated above, this study produced the following three articles that are now embodied in the work: * Article 1 - “Critical assessment of economic impact analyses of the ABSA Klein Karoo National Arts Festival”, and * Article 2 - “Critical assessment of economic impact analyses of the Aardklop National Arts Festival”. Article 2 investigated and compared the economic assessment results when applying specific constructed models, being the Social Accounting Matrix (SAM) and Computable General Equilibrium (CGE) for the appropriate provinces, to the available data obtained from previous surveys conducted at the 2010 ABSA Klein Karoo National Arts Festival and from the Aardklop National Arts Festival. The two articles indicated that when different models of assessment are applied to the same data set of an event, the economic impact results might differ significantly. This may serve as a warning to economic assessors, academics and researchers that economic impact results can be misleading and therefore the application thereof should be handled with the utmost care in order to avoid misinterpretations and misconceptions. * Article 3, “Assessing the economic impact of the Aardklop National Arts Festival: a feast of models to opt for – or not?” In this article, data from a visitor and business survey conducted at the 2010 Aardklop National Arts Festival was used in the analyses made by applying SAM, CGE and I-O regional models constructed for South Africa’s Northwest Province. Results from these analyses were then compared in order to give researchers and practitioners a better insight and clarity regarding which approach works best for the economic assessment of an arts festival. This article highlighted the fact that the measured economic impact results differ when various models that are applied to the same event. It also became evident that the most conservative economic impact was measured by an I-O model, followed with a higher SAM measurement, while CGE revealed the highest economic assessment. The most significant contribution of this study is embedded in the fact that within the South African context – and even globally – it is the first study of its kind that aimed to determine the economic impact by means of applying more than one assessment model to the data set of a single event. Further, this study provides guidelines for event organisers, academics and economic advisors to follow in conjunction with the existing body of knowledge and practical implementation structures when assessing the economic impact of events.Doctora