Tourism not only creates jobs in the tertiary sector, it also
encourages growth in the primary and secondary sectors of industry. This is
known as the multiplier effect which in its simplest form is how many times
money spent by a tourist circulates through a country's economy.
Money spent in a hotel helps to create jobs directly in the
hotel, but it also creates jobs indirectly elsewhere in the economy. The hotel,
for example, has to buy food from local farmers, who may spend some of this
money on fertiliser or clothes. The demand for local products increases as
tourists often buy souvenirs, which increases secondary employment.
The multiplier effect continues until the money eventually
'leaks' from the economy through imports - the purchase of goods from other
A study of tourism 'leakage' in Thailand estimated that 70% of all money
spent by tourists ended up leaving Thailand (via foreign-owned tour operators,
airlines, hotels, imported drinks and food, etc.). Estimates for other Third
World countries range from 80% in the Caribbean to 40% in India.