Economic Potentials of Tourism for Jordan: Input-Output Analysis

Abstract

In seeking solutions to the challenges facing the Jordanian economy, most importantly the scarcity of economic resources, decision-makers consider tourism a strategic option that can contribute to economic growth, export diversification, and job creation. This study aims to assess the potential contributions of tourism to the Jordanian economy through its effects on other sectors. Based on the recent 2016 input-output table, several indicators have been deduced: backward and forward linkages, multipliers for output, value-added, taxes, import, and employment. Results of the study show that JD 1 increase in final demand by tourists causes an increase in output by JD 1.55, value-added by JD 0.74, employment by 0.069 jobs, and imports by JD 0.22. Comparing these results with other countries (Turkey, Tanzania, Ireland, Jamaica, and Romania) reveals a weak expected influence of tourism in Jordan. This outcome is enhanced because most of the impact of multipliers occurs within an individual sector, while the effects that spread to other sectors are limited. To strengthen tourism’s role, the study recommends developing tourism-related service infrastructure such as transportation, reducing tax burdens on the restaurant and hotel sector, and encouraging local workers to work in tourism.