Measuring Financial Leakage and Linkage of Tourism in Egyptian Economy using TSA approach

Abstract

This paper explores both financial leakage and economic linkage of tourism in Egypt. These two cases become challenge for developing countries and small islands countries which depend on tourism for enhancing economic performance. World Tourism Organization developed TSA system to measure the importance of tourism. It is an accurate tool for estimating the importance of tourism on the economy; however, TSA output does not represent a real indicator of tourism importance on national economy. For example, tourism revenues are not an accurate indicator of economic impacts of tourism, because a proportion of it may leave the host community for various reasons and this refers to leakage.On contrast, developed countries, which have diversification in its economy and variety of economic sectors and activities, it found that large proportion of tourism revenues are absorbed in the local community. This absorb is due to forward and backward linkage of tourism with other domestic activities and sectors.A lot of studies tried to measure leakage and linkage but it seems to be difficult. This paper uses TSA system as a method to measure both financial leakage and economic linkage of tourism in Egypt. The final result indicates that leakage is low and is about 16.4% for some activities and tourism has good backward linkage with other sectors especially agriculture. Also, a lot of limitations belonging to this method were mentioned as the external, invisible and pre-visit leakage cannot be measured from the TSA outputs and there is also a lack of data from TSA.KeywordsFinancial Leakage, Linkage, TSA system, Tourism Sector, Egyptian Economy