RECOMENDACIONES

Using the Chenery-Watanabe and Rasmussen-Hirschman linkage methods, the findings revealed that the average backward and forward linkages for tourism increased between 2003 and 2008. This shows an increasing degree of sector interdependence together with high economic growth and more diverse economy during the study periods. Tourism generated 24 cents more secondary (indirect and induced) impacts, domestically, in 2008 through inter- industry linkages than in 2003 from a dollar’s expenditure by a visitor. This indicates that the

180

tourism sector interaction with other economic sectors increased significantly. Tourism was among the top three sectors classified as strong backward-oriented sectors together with transport and communication, and electricity and water supply for both years. Backward- oriented sectors support employment and output in the sector’s value chain (Beynon et al., 2009). The tourism sector’s higher backward linkage value is associated with the high employment and larger output indicating that the sector purchases higher amount of inputs from the economy than other sectors.

The high linkage effects of the tourism sector offer greater potential to stimulate the economic activity and therefore have a greater effect on the country’s economic growth. This implies that tourism, as a purchaser of inputs, increased more than the average of all economic sectors in the economy for both years. The economic sectors that exhibit higher backward linkages are the sectors that are more connected with the industrial sectors (Azad, 1999). In terms of the forward linkages, the tourism sector ranked fifth out of the 14 economic sectors for both years. The average level of the forward linkage index indicates that the sector has medium capacity to sell its products to other sectors and the sector inputs are mainly used for personal consumption and providing final goods to the economy. Tourism is one of the four sectors that had a high backward linkage value for both years in the economy.

The industry sector does not have particularly strong linkages with the rest of the economy except the food and beverages manufacturing sector, over the study period, although the sector continues to rely on imported inputs. Furthermore, the industry sector is underdeveloped and largely dominated by the mining and quarrying sector. The agriculture sector produces traditional products with low levels of value added from subsistence farming in the country. Mining and quarrying (industry) together with the forestry and logging (agriculture) sector do not possess great inter-industry linkages although both sectors produce the highest level of outputs and are self sufficient in the economy. This is because the majority of their products were exported to other countries. The construction and banking and finance sectors grew fast but relied significantly on imported goods and foreign employees, so registered lower inter-industry linkages in the economy. Thus tourism together with the wholesale and retail trade, and electricity and water supply are the most improved sectors between 2003 and 2008 in terms of exhibiting high inter-industry linkages.

The results show the tourism sector ranked third in 2008 based on the total linkages. Total linkages provide an alternative basis for comparison; the sectors which have the greatest values are considered key sectors of the economy (Sonis et al., 1995). High total linkage

181

coefficients are concentrated mainly in tourism, the wholesale and retail trade, agriculture and livestock and transport and communication sectors in 2008. This implies that these sectors have been dominant in the country’s economy during the study period. Tourism falls into the group of ‘strong backward linkage’ sectors in the economy. The more inter-industry linkage exists between tourism and the general economy, the more innovative the tourism cluster will be (Lejarraja & Walkenhorst, 2007). The economic sectors with relatively high linkages offer greater potential to stimulate the economic activity of the other sectors and therefore have a greater effect on the country’s economic growth (Jones, 1976).

In terms of weighted linkages, the tourism sector ranked eighth in 2003 and improved to sixth in 2008 among the 14 economic sectors. Similarly, the tourism sector ranked seventh in 2003 and moved up to sixth based on pure linkages value in 2008. The increasing trends of both weighted and pure linkages values show that the tourism sector had a greater reliance on intermediate inputs in 2008 than in 2003. The findings of the pure and weighted linkages were similar and revealed that the sector was considered an average performing sector which exhibited medium capacity to increase the inputs from the rest of the economic sectors.

In terms of the I-O MPM findings, tourism was the third most important sector based on the hierarchy of the backward linkages for both years in the economy. The results revealed that the transport and communication and electricity and water supply sectors together with tourism, achieved higher positions in the hierarchies of backward linkages than the average hierarchies of all economic sectors. The I-O MPM findings showed that tourism together with transport and communication and electricity and water supply sectors were considered key sectors. For example, based on the I-O MPM approach, the service sector has two key sectors in 2003 and three sectors in 2008 out of the five key sectors identified in the economy.

The findings indicate that the tourism sector was less self sufficient in 2008 than in 2003 due to the increased imports of tourism in the latter year. The lower SSR values of the tourism sector in both years revealed that the sector significantly depended on imports of goods and services. Therefore the tourism sector is viewed as an import-based industry and there were significant income leakages through the economy. Overall, the average value of the SSR of the service sectors was significantly lower than the industry and agriculture sectors in the country. The agriculture sector is considered self sufficient but the industrial and service sectors are less self sufficient to satisfy the domestic demand. Comparing the SSR value of this study with Secretario et al.’s (2009) study in Cambodia, Vietnam and Thailand, the Lao PDR economy is less self sufficient to meet the domestic demand than those countries.

182

One of the common findings of the inter-industry linkage analysis methods used in this study was tourism exhibited strong backward linkages in both years. Based on the MRI approach, the tourism sector ranked third in 2003 and fourth in 2008 in the key sector analysis of the economy. The tourism sector achieved higher scores in both average and total values by the MRI approach in 2008. The common key sectors for both years were tourism, food and beverages manufacturing, wholesale and retail trade and agriculture and livestock. These sectors demonstrated greater values of backward and forward linkages than other economic sectors and possess greater influence through both purchases and sales in the economy.

The findings disclose that the tourism sector has an important role, not only as a foreign exchange earner but also generating its own output as well as the output of the inter-linked economic sectors. The significant backward linkage of the tourism sector showed its influence was widely distributed in the economy. The construction, public administration, personal, social and community services and real estate and business services exhibited weak linkages. These sectors’ final demand increments will have significantly lower impacts on the sectors that supply inputs in the production of these sectors’ output and characterized by high imports of goods and services and a high level of foreign ownership in the country.

One of the main reasons why the tourism sector exhibited higher multiplier effects than other economic sectors was that the tourism linkages were more spread out over the economy. The respective rankings of the backward and forward linkages of the economic sectors varied with different methods used in our study. This may create inconsistencies from the policy perspective, particularly where a sector is a key sector in one inter-industry linkage approach and not in another. The MRI approach provided consistent results and further insights into the different types of multiplier, linkage and key sector analyses.

7.1.3 Research Objective Three: tourism stakeholders’ perceptions, and