Economic leakage in tourism sector

Abstract: Many countries have chosen tourism as a tool for economic development. Economic leakage is a phenomenon that always occurs in the tourism industry of every country. Although this issue has been mentioned for over a half century, it seems that only few researchers have done a thorough analysis about this subject. Despite this fact, it by no means implies that economic leakage should be underestimated because if a high level of leakage prevails in a region, it could decelerate a region moving towards economic sustainability. The story of economic leakage is presented by starting from concepts of sustainability, tourism and economic development followed by the literature review of economic leakage. The tourism value chain is used to help examine leakage prone points in the tourism sector. Åre and Idre are chosen as cases to apply the value chain to. Finally, some recommendations of mitigating economic leakage and the lessons learned will be elaborated.