Understanding the economic contribution of tourism in Malta : a literature review

Abstract

The paper presents a critical assessment of the key studies which present empirical estimates for the contribution of the tourism sector to the Maltese economy. The observed discrepancies in the estimates derived from these studies has in part led to a situation in which there is an effective widespread divergence relating to the specific economic contribution of tourism in Malta. The paper evaluates the estimates derived by these key studies in the context of both the strengths and weaknesses of their respective modelling frameworks, which range from the construction of tourism satellite accounts, to input-output models and computable general equilibrium modelling, as well as an evaluation of the overall quality of the data utilized. The paper therefore attempts to identify and clarify the main causes behind the observed variations in the resulting estimates and through a systematic comparative assessment also aid in the providing a further understanding of the potential economic contribution of tourism to the Maltese economy. On the basis of this assessment it is suggested that the contribution of tourism to the Maltese economy should account for approximately 5.7% of total gross value added when taking account solely direct effects, 12% once indirect effects are included and roughly 17% accounting also for the induced effects. Furthermore, on the basis of this assessment the paper highlights the need for further research in this area given the significance of the tourism sector to the small island economy of Malta.