The economic impact of inbound tourism in Kenya: A CGE analysis

In both developing and developed countries tourism is often regarded as an economic activity of
immense significance creating thousands of jobs. However, calculations dealing with the economic
nature of tourism are often derived from input-output models, which largely overstate its effects on employment by assuming linear responses and highly elastic supplies of goods, services and labor.
The purpose of this study is to develop and apply a computable general equilibrium approach to
estimate the effects of growth in tourism spending on the Kenyan economy as a whole and on
particular sectors within it. The results indicate that the economic benefits from tourism expansion in Kenya are small. The paper concludes with a discussion of the policy implications and research
limitations.