Regional economic impacts of tourism: the case of Denmark

The Danish interregional general equilibrium model LINE is presented together with its tourism submodel. The model is used to analyse the importance of tourism in regional economies and to decompose regional tourism multipliers. The difference between direct and derived effects is examined; and by using the model, the factors that determine the size of the direct effects and derived effects are identified. The analysis is applied to Danish regions which are divided into urban and rural regions. In general, the results show that tourism multipliers are larger in urban than in rural areas. Factors such as interregional trade, commuting and shopping leakage have to be taken into consideration when evaluating the derived effects. When the leakage is large, the tourism multiplier tends to be small. The paper also draws attention to the difference between absolute and relative impacts of tourism on the regional economy.