Impact analysis of demand-driven shocks in Turkey's tourism sector within the framework of social accounting matrix

For the last three decades, there have been important developments in Turkish tourism sector with the effects of liberalization and export-oriented economy policies. The major development in tourism sector came with the Tourism Incentive Law. Investments have increased with increasing incentives in tourism sector. As a result of these investments, both tourist arrivals and tourism incomes have increased for years. In this study, the evolution of Turkish tourism sector has been analysed since 1980. First of all, the statistical data of tourism sector was presented in terms of tourist arrivals, tourism income, the contribution of tourism to Turkish economy as the rate of GDP, employment and value added. Secondly, by using Tourism Satellite Account (TSA) tables, tourism sector is aggregated into one sector, and it was placed in Input-Output and Social Accounting Matrices (SAM) tables. Estimation of prices with using a SAM is necessary to assess the effects of changes in demand for sectoral output. This study estimates the SAM based income and price multipliers for Turkey using data from the 2002 SAM under the tourism related scenarios and captures the interdependence among activities, households and factors as a result of exogenous income and price shocks. In all scenario analyses, we calculate the transfer, open-loop and closed loop effects to describe the changes in the economy. The first scenario aims to estimate a 10 % increase in tourism incomes. In this respect, investigating how this scenario affects other sectors? goods and services demands and the incomes of production factors of these sectors. Results indicated that all sectoral demands and productions in other sectors are increased. Also, these increases stimulate the growth of economy. Under the SAM based price multiplier analysis, two scenarios are used to evaluate the price effects. First one is an examination of the effects of a 1 % decrease in energy prices mainly on tourism sector and other sectors. Then we investigate how simulation affects sectoral factor prices, household income and production activities. Results of first price simulation indicate that the decrease in energy prices reduces sectoral prices and production costs of activities. Second price simulation is about tourism taxation. Analyzing the effects of a 1 % decrease in tax rate on tourism aggregate sales price, we search for the similar impacts as in the first scenario. The results of the second simulation show that a decrease in tax rate on tourism sector reduces the price of tourism goods and services and then increases the demand in the tourism sector. Tourism is connected to other sectors; hence an increase in demand in tourism causes increases in other sectors? demand and prices. When compared to first price scenario, the second?s prices slightly increases.