CTO BUSINESS MEETINGS AND STATE OF THE INDUSTRY CONFERENCE M.BLOKLAND OCTOBER 2013

Content The case for developing the TSA

The TSA Relevancy

Measuring the full impact

The status of TSA compilation in the Caribbean region

The case for developing a TSA Tourism, has become a significant economic activity

and is considered critical to economic development in the Caribbean Region

According to Caribbean Tourism Organization (CTO) data, about 25 million people visited the Caribbean in 2012, and spent about USD 27.5 billion.

In 2013 the CTO expects a growth in the number of visitors to the Caribbean from four to five percent.

According to UNWTO data tourism is the world's number one export earner

The case for developing a TSA The impact of tourism on the country’s economy has

relied heavily, on the use of tourism statistics such as visitor arrivals, visitor expenditure estimates and balance of payment data

Other statistics available have focused on the characteristics of visitors, the conditions in which they travelled and stayed, the purpose of visit etc.

The case for developing a TSA Need of an overview of the entire economic role that

tourism is playing and can play directly, indirectly, or through induced effects, in the economy in terms of generation of value added, employment, personal income, and government income.

Need for government, businesses and the society as a whole to have sufficient information for effective evidence based and informed decisions and efficient business operations

Why a satellite? Economic activities are conventionally classified according

to the goods and services they produce e.g. transport and communication, agriculture, public administration etc.

Tourism however focusses on measuring the visitors’ demand for goods and services produced by different industries/establishment

Tourism impact measurement and analysis requires a different approach but following the same general accounting principles of the System of National Accounts (SNA) which is consistent with other macro frameworks

Solution: use of satellite accounts that are annexed to the core macro-economic framework the SNA

The SNA The SNA provides the concepts, the definitions, the

classifications, accounting rules for the estimation of production, consumption, capital formation, income, stocks and flows of financial and nonfinancial wealth and other related economic variables.

Main macro-economic aggregates such as GDP, GNI, GDP per capita

The UNSNA provides a tool for analysing the demand and supply of goods and services within the economy through supply and use tables (SUT).

TSA development Close collaboration of international organisations UNWTO Other UN organisations such as UNECLAC and UNSD Other international organisations such as Eurostat, the

Organisation for Economic Cooperation and Development (OECD), the International Monetary Fund worked closely together

Development of a comprehensive tool to track measure and present the impact of tourism in the economy and which is internationally comparable and imbedded wihin the central macro framework

The tourism satellite account (TSA)

TSA methodology Methodology: International, TSA Recommended

Methodological Framework 2008 (TSA RMF2008), Recommendations for Tourism Statistics 2008 (RTS2008)

The TSA relevancy Relevancy: measuring the direct contribution of

tourism

The importance of tourism is measured in terms of tourist expenditures, Gross Domestic Product and employment

Macro-economic aggregates that describe the size and the direct economic contribution of tourism, indicated by the tourism direct gross value added (TDGVA) and tourism direct gross domestic product (TDGDP)

The TSA Relevancy Gross value added of the tourism industries: the total gross

value added of all establishments that belong to the tourism characteristic industries

e.g. accommodation services, food and beverage services, transport services, travel agencies, recreation culture and sporting activities etc.

Tourism direct gross value added is the total of that part of gross value added of the tourism industries and other industries that directly provide goods and services to visitors

Tourism direct gross domestic product is tourism direct gross value added plus taxes less subsidies on internal tourism consumption.

The TSA Relevancy Tourism employment

Tourism gross fixed capital formation

Linkages with non-monetary information on tourism, such as number of trips (or visits), duration of stay, purpose of trip, modes of transport, etc., which is required to specify the characteristics of the economic variables

The TSA Relevancy Analysis of :

demand for goods and services associated with tourism within an economy,

the supply of goods and services within the same economy

The TSA enables policymakers to benchmark tourism with other industries based on comparable concepts like employment, contribution to GDP and wages

Measuring the full impact The TSA does not measure the indirect and induced effect

of tourism but it can form the basis for other macro-economic tools such as the input-output table, the social accounting matrix and the Computable General Equilibrium Model”

Policy makers can use these tools to measure the full impact of tourism and simulate the results of new policies

UNWTO publication: Exploring the full impact of Tourism for policymaking: Enabling the use of Tourism Satellite Accounts through macro-economic tools: Mr. Douglas C. Frechtling

Measuring the full impact The full impact also takes into account some of the less

positive impacts such as the leakages through imports, creation of low paid seasonal employment and huge demands on water resources and the environment in terms of waste

CTO and the United Nations' Caribbean Environment Program promotion of more sustainable tourism

TSA STATUS in the Caribbean region

TSA Status in the Caribbean

Efforts have been made through CARICOM, OECS, and the Caribbean Tourism Organization (CTO) to provide the countries with guidance for development

TSA development limited The Caribbean Tourism Organization (CTO)/ IADB Regional Tourism

Satellite Account Implementation Initiative (RTSAII) Overall purpose : strengthen the countries capabilities to assess the

impact of tourism and thus improve policy preparation, formulation and implementation for sustainable economic growth

Components : (i) diagnosis and preparation of recommendations; (ii) the introduction of a common methodology and institutional framework for compiling TSAs; and (iii) capacity building towards standardized and harmonized statistics for the TSA.

TSA status The RTSAII pilot countries: Bahamas, Barbados, Jamaica

and Trinidad & Tobago

The initiative carried out in these four countries will serve as a pilot project

A harmonized approach to capitalize on collaborations, particularly for data collection efforts and documentation and facilitate training and capacity building

Standardization in technical and institutional processes

Mechanism for interaction among countries and resulting in the sharing of best practices, knowledge and pooled resources

TSA Status The first component of the RTSAII has now been

completed

The overall assessment has shown that the four pilot countries are in different stages of TSA compilation.

Jamaica and the Bahamas have already met the minimum requirements for compiling TSA and would like to move to measuring the full impact

Trinidad & Tobago and Barbados have limited compilations and are at the beginning stage of compiling the TSA.

TSA Status All pilot countries need to improve the methodology

currently used, some more than others. The macro frameworks should be updated to reflect the most recent versions and the coverage of the TSA tables needs to be improved

TSA Status The TSA compilation is very resource intensive.

The adoption of the TSA in the Caribbean Region has been limited due in part to the fact that countries lack adequate human and financial resources to undertake the implementation of the TSA

In terms of data sources countries are required to several surveys which can be very costly e.g. regular visitor expenditure surveys, household expenditure surveys, national account surveys, labour force surveys to name a few

In addition extensive use of administrative data is required e.g. government budget data from the Ministry of Finance, data from the Port Authorities, Immigration and Ministry of Tourism to name a few

Example: data requirements SUT Output by industry and product

Intermediate consumption by industry and product

Import and export of goods and services by product

Household final consumption expenditure by product

Government final consumption expenditure by product

Gross fixed capital formation by product

Changes in inventories by product

Taxes less subsidies on products

Compensation of employees and taxes less subsidies on production

TSA Status In terms of human resources, the pilot countries have

indicated that they would prefer to have a separate unit within the national accounts department consisting of at least three persons and additional staff to conduct the related surveys

Training of staff

In all the pilot countries the TSA compilation is integrated within the National Accounts Department

In terms of financial resources, countries have insufficient budgetary possibilities for data collection, processing and dissemination and staff recruitment

Conclusion Collaboration with the different stakeholders is critical

e.g. Central Statistical Office, the Ministry of Tourism, the Tourism Authority (board), Central Bank, and Immigration Department

Given the resource requirements and the importance of the TSA for policy it is of utmost importance to have

any support political and/or otherwise to secure the necessary resources for the TSA compilation in the Caribbean Region

Improved TSA awareness for policy

Thank for your attention!!