OVERALL CONTRIBUTION OF THE FOREIGN TOURIST DEMAND ON CROATIAN ECONOMY

Purpose - The purpose of the paper is to estimate of overall impact of foreign tourist demand on the Croatian output, gross value added and employment. Methodology - The direct, indirect and induced effects of the consumption of foreign tourists to the overall Croatian economy are based on input-output model. Open input-output model was used to calculate the direct and indirect effects of the expenditures of foreign tourists, while the closed input-output model was used to analyze induced effects. Findings - Expenditures of the foreign tourists in the recession period 2009-2014 significantly reduced the overall negative impact of recession. Decrease in gross value added and employment without increased competitiveness of Croatian tourism would be more significant and the level of Croatian real GDP would be even lower than recorded. Besides hotel and restaurant sector, indirect and induced impact of foreign tourist demand is significant for food production, personal services and trade. Originality of the research - The originality and the contribution of the paper is methodological development of model which measure relation of tourist demand and overall macroeconomic performance of an economy. The empirical contribution is calculation of direct, indirect and induced effects of foreign tourists expenditures based on the updated input-output coefficients. The results could be of interest for academic and general public because they provide overall assessment of contribution of tourism industry in Croatia based on the sound methodological framework.