Even though Kerala lagged behind in industrialization, it has made rapid strides in creating value out of the available tourism infrastructures. The international tourist on a maiden visit to the state is enticed to splurge on the antiques and other tangible goods. Thus this circulation of money has resulted in mushrooming of businesses in and around the tourist resorts.
As stated earlier, the money received from the tourist passes on from one transaction to another, thus expanding like ‘ripples’ in a lake. It continues to work and change hands and eventually vanishes. A statistical model of the turnover of expenditure would demonstrate that the characteristics of onward movement, diversification into newer areas and penetration of the tourist money into vast fields of Kerala economy. Let us assume that a tourist pays 1000 dollars to a hotel and we envisage it as realistically as possible. The onward movement of this money through various expenditures, transactions and turnovers would take place faster. The Kerala travel and tourism sector has benefited much as a result of this inflow of foreign money.
In the subsequent stages of the onward movement of the tourist money through the economy, it would continue to be converted into income for other sectors which, when spent in its turn, would give rise to fresh income and so on until it becomes difficult to be identified. In certain countries it has been found that about 15 transactions may occur before its identity disappears finally.
The velocity of circulation is measured by what is called the ‘multiplier effect’ and it is the number of times the money changes hands, before it apparently moves out of the economy. The greater the number of turnovers, through which the tourist’s money passes, the greater is its spread and deeper is its impact on the local economy. This unbroken series or conversion of the payments made by the tourist into real incomes has resulted in the ‘multiplier effect of tourism’ in Kerala. The ‘multiplier effect’ in Kerala tourism is one reason for the confidence shown by the prominent investors to invest in the state.
As stated earlier, the money received from the tourist passes on from one transaction to another, thus expanding like ‘ripples’ in a lake. It continues to work and change hands and eventually vanishes. A statistical model of the turnover of expenditure would demonstrate that the characteristics of onward movement, diversification into newer areas and penetration of the tourist money into vast fields of Kerala economy. Let us assume that a tourist pays 1000 dollars to a hotel and we envisage it as realistically as possible. The onward movement of this money through various expenditures, transactions and turnovers would take place faster. The Kerala travel and tourism sector has benefited much as a result of this inflow of foreign money.
In the subsequent stages of the onward movement of the tourist money through the economy, it would continue to be converted into income for other sectors which, when spent in its turn, would give rise to fresh income and so on until it becomes difficult to be identified. In certain countries it has been found that about 15 transactions may occur before its identity disappears finally.
The velocity of circulation is measured by what is called the ‘multiplier effect’ and it is the number of times the money changes hands, before it apparently moves out of the economy. The greater the number of turnovers, through which the tourist’s money passes, the greater is its spread and deeper is its impact on the local economy. This unbroken series or conversion of the payments made by the tourist into real incomes has resulted in the ‘multiplier effect of tourism’ in Kerala. The ‘multiplier effect’ in Kerala tourism is one reason for the confidence shown by the prominent investors to invest in the state.
