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An economic analysis of the Lao PDR tourism industry: A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy in Economics at Lincoln University

Khanal, Bhoj R.
Date
2011
Type
Thesis
Fields of Research
Abstract
Since 2001, Lao PDR tourism sector ranked second in terms of foreign exchange earnings after the mining and quarrying sector. Over two million international tourists visited the country in 2010, generating US$313million tourism receipts (LNTA, 2010). The tourism sector is regarded as one of the fastest growing sector economies in the country. Despite its importance, there has been no in-depth analysis of tourism’s contribution to the economy. This study investigates the economic impacts of tourism on the Lao PDR economy. Using a visitors’ expenditure survey and input-output models, the tourism sector was disaggregated from rest of the economy. The economic multipliers and inter-industry linkages of the 14 economic sectors for 2003 and 2008 were analyzed using SimSIP SAM Software. Tourism stakeholders’ perceptions of the country’s tourism were also analyzed. The results revealed that tourism is the leading sector in the country impacting positively on the economy during 2003-2008. Tourism contributed 7.5 percent to the national GDP and one in every seven people depended on tourism related businesses as their major employment in 2008. The multiplier results showed tourism contributes significantly to the economy in terms of generating output, value added and employment. However, the income multiplier was insignificant indicating high imports and relatively low income from tourism. The results further indicated that the indirect and induced impacts grew faster than the direct impacts of the tourism sector indicating tourism’s secondary impacts are potentially important to the economy. The tourism normal and ratio multipliers are among the top three economic sectors demonstrating tourism substantial contribution on the economy. The higher average backward and forward linkages of the tourism sector compared with other economic sectors during 2003-2008 imply the sector’s greater dependency on the domestic economy. Inter-industry linkages analysis showed tourism is a key sector in creating demand and stimulating production within the sector as well as other sectors of the economy. Tourism stakeholders also perceived that tourism was a catalyst in expanding businesses and generated positive impacts such as increased income, output and employment at local and national levels. The stakeholders also underlined some negative impacts such as cultural change, unsafe migration, human trafficking and the degradation of natural and heritage sites in the country.
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