INTERNATIONAL JOURNAL OF SOCIAL SCIENCES 15 th November Vol.46. No TIJOSS & ARF. All rights reserved

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1 ISLAND ECONOMIES AND SUSTAINABLE TOURISM: THE CONTRIBUTIONS OF A SMALL ISLAND TOWARD THE REGIONAL ECONOMY IN TAIWAN 1 Chih-Liang Chao, 2 Wei-Lin Chen 1 Associate Professor, Department of Environmental and Cultural Resources, College of Hsinchu Education, National Tsing-Hua University, Taiwan 2 Assistant Professor (part-time), Department of Tourism, Providence University, Taiwan 1 clchao11@gmail.com; 2 g @gmail.com ABSTRACT Xiao-liu-qiu Island is famous for its coral formations, abundant natural tourism resources, and easy-going culture in Taiwan. These attributes have attracted great numbers of tourists year after year. The aim of this study was to estimate the contribution attributable to tourism spending in Xiao-liu-qiu Island s economy to its administrative region. In doing so, the use of a regional input-output model that can create multiplier estimates is required to examine the economic impact of tourism. In addition to employing secondary data, an interview questionnaire was also utilized. The results of the survey pointed out that tourists spent most of their money on accommodation, food & beverage and transportation in Xiao-liu-qiu Island. Almost 300,000 tourists visiting Xiao-liu-qiu Island spent US$ 29,399, in 2012, and created a further US$ 113,184, in the economic value. Furthermore, the economic effects for all sectors were also estimated. According to our results, policy suggestions and further research recommendations are given. KEYWORDS: Input-Output Analysis, Offshore Island Development, Multiplier Effects, Regional Level, Tourist Spending Corresponding author. 1

2 INTRODUCTION Tourism development is considered as one of the most important strategies of economic growth for many offshore islands in the world; for example, Okinawa, Japan, Hawaii, the United States, and Bali, Indonesia. Taiwan is an island country surrounded by 14 offshore islands. The economies of most Taiwanese offshore islands have in previous times depended on the fishing industry and local military expenditures. However, because of the diminishing fishing resources and troop withdrawals, industrial transformation is necessary for these islands. As such, tourism development has been a top priority strategy for improving local economics over the past decade. Xiao-liu-qiu Island is one such island, and is located in the South of Taiwan (see Figure1). It is the sole coral island of the 14 islands of Taiwan and has a total territorial area of km 2. The shortest distance between Taiwan and Xiao-liu-qiu Island is 14 km and which can be reached only by boat. Xiao-liu-qiu Island is categorized into the administrative region of Ping-tung County, and was previously considered one of Taiwan s underdeveloped townships as there was no infrastructure, electricity or clean water until the 1980s. Deep sea fisheries has traditionally been the main industry in this Island over the past few decades, and supported 70% of the residents livelihoods. Because the island's geological landscape is peculiar, there are odd coral rocks eroded by the sea alongside the coast, cliffs in the south and small rare sandy beaches on the western coast. Several scenic spots on the island combined into a scenic area. In 2000, Xiao-liu-qiu National Scenic Area was incorporated into the Dapeng Bay National Scenic Area Administration. The Pingtung County Government (the local authority of Dapeng Bay National Scenic Area) started to strengthen the local infrastructure and promote their fishing and tourism industries through a series of events such as the Bluefin Tuna Cultural Festival. Subsequently, local residents began offering tourism services and focusing on tourism development. Because of its unique coral geology, abundant marine species, easy-going people, village culture, and beautiful natural scenery, the island has become a popular attraction in recent years. 2 The size of the tourism industry in Xiao-liu-qiu Island has already surpassed the fishing industry to become its people s main source of income (Chen, 2012). The numbers of tourists visiting Xiao-liu-qiu Island is growing rapidly (see Figure 2). Since 2004, more than 100,000 tourists have visited Xiao-liu-qiu Island each year, except in In 2009, the numbers of tourists reached almost 200,000, and increased by almost 50% in Consequently, the demands and supplies related to tourism have expanded hugely in recent years. According to the offshore islands Development Act, which is legislated by the Executive Yuan (2013), tourism is the main strategy to speed up the development of offshore islands. However, very few studies have been undertaken in relation to the importance of offshore island tourism in Taiwan, including Xiao-liu-qiu Island, particularly when considering economic issues quantitatively. Tourism economic impacts are important factors in marketing and management decisions, and local governments and communities need to understand the relative importance of tourism to their region, including tourism s contribution to economic activity in the area (Stynes, 1997). Therefore, the main purpose of this study was to estimate the contribution attributable to tourism spending in Xiao-liu-qiu Island s to economy of Ping-tong country. In doing so, the use of a regional input-output model that can create multiplier estimates is required to examine the economic impact of tourism; in which, sales (transaction) multiplier was also estimated in this study.

3 Taiwan Figure 1 Location of Xiao-liu-qiu Island in Taiwan Figure2 Trend of tourist numbers to the Xiao-liu-qiu National Scenic Area Source: Authors drew based on data of Tourism Bureau (2012, 2006, 2011, 2010, 2009, 2008, 2007, 2005) with domestic coefficients. A location coefficient is also employed to adjust the coefficients. Finally, a discussion of the main findings and a conclusion are offered in the section five. The rest of this paper is divided into five sections. In the next section, the concept of the economic impact of tourism and the I-O model of tourism are presented. Section three moves on to describe the methodology used, in which the direct economic effects are calculated by tourist spending. Furthermore, the ratio of manpower between regional and national levels (Pingtung County/ nation) is assessed using the Location Quotation method. In section four, the impact of tourism in the Xiao-liu-qiu Island economy is presented using a standard I-O model specified 3 The objectives of this paper are as follows: 1. To determine the spending pattern of a typical tourist visiting Xiao-liu-qiu Island. 2. To construct a regional input-output model and to calculate its multiplier effects. 3. To determine the contribution of tourists

4 visiting the island to the economy of Pingtung County. THEORETICAL FRAMEWORK The economic impact of tourism Tourism is the combination of several industries; hence, its estimation of economic impact is complex (Fletcher, 1989). Nevertheless, the economic analysis of tourism can provide meaningful estimates of these economic interdependencies and a better understanding of the role and importance of tourism in a region s economy. Generally speaking, the economic impact of tourism includes the sum of direct, indirect and induced incomes (Stynes, 1997). Direct income for an area is defined as the total amount of tourist expenditure. As internal businesses buy and sell to each other in response to the direct income, indirect income is generated. And, when a tourist industry employee and their household spend their income, induced income is created. These secondary effects, namely the indirect and induced effects, are calculated by multiplying the direct effects by multipliers of the region because of inter-industry dependencies. In which, the multiplier is often used to measure secondary effects of tourism expenditure and show the wide range of sectors in a community that may benefit from tourism (Stynes, 1997). Several methods have been applied to estimate the economic impact of tourism, including I-O Analysis. Stynes and Propst (1996) stated that it is an inexpensive and accessible economic impact estimation system, tailored to recreation and tourism applications. I-O Analysis is considered an important tool to estimate the economic effect of tourism in a regional economy, and can reveal the interrelations of the tourism industries with other industries in the economy(surugiu, 2009), as well as provide a statistically consistent and systematic approach to understand the economic impact of tourism on the whole economy. Generally, I-O studies aim to measure the impacts on the producing industries located in a particular area that are caused by new final demands for products made in the area (Miller and Blair, 2011). An I-O analysis is a mathematical model that 4 describes the flows of money between sectors within a region s economy (Stynes, 1997). This system has been adopted to evaluate the economic impact of tourism for over three decades (Sun, 2007), and can provide estimate models for a local region, a country or a group of countries (Stynes, 1999). According to Briassoulis (1991), the advantages of I-O analysis include: (1) its flexibility to evaluate economic impact from the general equilibrium perspective based on different temporal and spatial scales; (2) its ability to monitor the economic impact of individual groups who have distinct spending patterns; and, (3) the ease of interpretation and convenience of data availability. According to Sun (2007), the method assumes that the economic ratios and regional multipliers are stable over the evaluation period and the coefficients examined in the I-O model generally illustrate the average performance of business throughout a year. Some researches using I-O model to analyze the economic effect of tourism. Baaijens et al., (1998) attempt to demonstrate that meta-analysis could be regarded as a method for comparative and explorative research in the tourism field. They focus on regional tourist multipliers to measure the tourist spending effect on the regional economy. The results show that the average tourist income multiplier has a positive relationship to population size, the number of visits in a year, the ratio of the tourist numbers to the population size, and the share of the most important country of origin in the total number of tourists. They also transfer the comparative analysis result to the Greek island of Lesvos and estimate the average tourist income multiplier comes out at 0.55 and 0.67 respectively. Kweka et al. (2001) used input-output analysis to estimate the economic impact of tourism and assessed whether it is a key sector for the Tanzanian economy. The findings proved that tourism has a significant impact on output because of strong inter-sector and linkage effects. But the impact on tourism income was insignificant. However, tourism was identified as a key sector to enhance economic growth. Fan and Oosterhaven (2005) conducted an input-output table, a social accounting matrix, and tourist expenditure data to estimate the international tourism impact on the Chinese

5 economy. They found that only 1.64% of GDP, 1.40% of household income and 1.01 % of total Chinese employment rely on international tourist expenditures. Comparing to other industries, the tertiary industries have relatively low output multipliers, but have a higher contribution to GDP effect (55%) from international tourism. Although the size of agricultural sector in China is large, its share of tourism impacts is quite small, and it needs 48% of total employment, in order to satisfy international demand in China. The international tourism in China mainly stimulates high value added in service industries. Polo and Valle (2008) employed standard input-output technique to provide the first assessment of the impact of tourism on the Balearic economy and to estimate the effects of a 10% decrease in tourism flows. The results show that tourism has become the leading sector of the Balearic economy, and the economic performance of the island is tightly linked to tourism flows. Haddad et al. (2012) explored the inter-island input-output system for the Azores, including the economy of the nine islands, considering twenty-five different economic activities. The results show that the economic structure of those islands is quite different. Besides, the specific economic bases of those islands are also distinct and the biggest island not only captures an important part of the impact of external pushes completed on smaller islands, but they also constitute significant drivers of smaller islands. In summary, the I-O model is a useful tool to estimate the economic tourism impact of island development over three decades before. In the abovementioned studies, the economic impacts on employment, incomes, transactions, and output of a single island or a series of islands have been investigated. Some have further focused on the tourism contribution with other industries. According to the results of those studies, all support the fact that tourism development is useful to improve the economics of a small island; however, the impact distributions of the tourism effects are uneven. METHOD Data collection and integration procedure An on-site questionnaire and secondary data were adopted to calculate the economic impact of tourism on Xiao-liu-qiu Island and answer the three research questions. The questionnaire was designed in two sections. Section A collects tourists expenditures on accommodation, transportation (ship and motorcycle rental), food and beverage (breakfast, lunch, dinner and snacks), recreational activities (admission tickets of scenic areas, water sports, etc.), and shopping (souvenirs and other local products), while section B gathers personal profile and travel preference information. Data were collected on-site on the 31 st of August and the 1-2 nd and 7-10 th of September, 2012, thereby encompassing 4 weekdays and 3 weekend days in total. Visitors touring the area at the time of the survey were considered the target population. Non-probability sampling was applied as tourists waited for boarding at both government-owned and private harbors after their trip ended. However, package tourists were excluded from this study because they were not aware of the internal distributions of their expenditure in each category. National Domestic Transactions Table in 2006 was the basis for estimating economic impact of tourism of Xiao-liu-qiu Island. Because of its low agricultural and industrial production and accessible transport, most of resources (e.g. Food, mineral, electricity, gasoline, water) are conveyed from mainland of Taiwan in order to supply residents and tourists demands. Therefore, Yearbook of Manpower Survey Statistics in 2011 was employed to estimate location quotients, which was used to regionalize input coefficient matrix. The purpose and types of secondary data in this study were showed as Table 1. Table 1 Data base Secondary data Source (year) Sectors Purpose Annual Statistical Report on Tourism in 2011 Tourism Bureau (2012) -- To obtain the numbers of tourists visiting Xiao-liu-qiu in

6 National Domestic Transactions Table in 2006 Yearbook of Manpower Survey Statistics in 2011 Executive Yuan (2010) 52 To gain the annual price value of input and output on transaction by industry (52 sectors) Executive Yuan (2012) 19 To find out the industry employed person at the regional/ national level, and further calculate the location quotients. In this study, fifty-two industries of National Domestic Transactions Table in 2006 and nineteen industries of Yearbook of Manpower Survey Statistics in 2011 were adopted. For consistency purpose, industries classification was reorganized based on industry characteristics and research purpose. Sixteen industries were categorized and named as Figure4. Constructing regional input-output table The input coefficients table is built from the transaction table, which is a fifty-two sector matrix from the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. (Taiwan). Next, the combined transaction table is calculated into a technical coefficient matrix (also named input coefficient table), in which the technical coefficient (a ij ) indicates the proportion of inputs (Z ij ) that must be purchased by each sector to produce one unit of output (X j ). Then, the location quotients method is adopted to adjust the technical coefficient matrix as a local technical coefficient matrix. a ij = Z ij X j 1. Location Quotients estimation Location quotients is a method used to determine industry concentration on specific region, it is the ratio of employment share at regional and national level (ACILTasman, 2009). The numbers of industry of employed persons at national and regional (Pingtung County) level are reported from the Yearbook of Manpower Survey Statistics of The report is used to measure the location quotient in order to understand the concentration of each regional industry. If LQ i R > 1, it indicates that industry i has more concentrated development in region R than in the nation as a whole, and that it can satisfy the demands of other regions. In other words, the regional economy has a comparative advantage in those industries. By 6 contrast, when LQ i R < 1, it means that industry i is not more focused in region R than in the nation, it is not sufficient to drive the economy. These LQ coefficients are calculated to adjust input-output table from national level to region level. LQ i R = The ratio of local employment (industry i) The ratio of national emplyment (industry i) If industry i has more concentrated development in region R than in the nation (LQ R i > 1), it is assumed that the national input coefficient (a N ij ) is used as the regional input coefficient (a RR ij ) ; otherwise, its regional direct input coefficients RR ) are estimated from the national coefficient (a ij (a ij N ) and multiplied by LQ i R. If LQ R i > 1, a RR N ij = a ij If LQ R i < 1, a RR N R ij = a ij LQ i The Inter-industry interdependence coefficient matrix (also named Leontief Inverse Matrix or Direct plus Indirect Requirements Matrix, (I A) 1 ) is calculated from the Leontief A matrix. This matrix demonstrates that output rises in each industry sector due to the unit increase in final demand. 2. Multiplier In order to determine the total impact of tourist spending, multiplier analysis has been applied to make the linkages between tourism and the rest of

7 economy through the trading relationships established between various sectors; a high multiplier indicates a greater ability by the country or region to meet the demands tourists from within its own production capabilities (Saayman and Saayman, 2006). As Horwath (1981) mentioned, the multiplier is calculated to measure the impact of extra expenditure introduced into the economy (p.3). As Miller and Blair (2011) explained, the multipliers that incorporate direct and indirect effects are known as simple multipliers, which is closed with respected to households (p. 244). It measure the effects, both direct and indirect, on the output from all industries due to an initial one dollar change in a given industry (p.15) (ACILTasman, 2009). Simple multipliers were computed in this study. The procedure of model construction and analysis is drawn as Figure 3. Location quotients Tourist expenditure Adjustme National Domestic Transactions Table National input coefficie nt table Regional input coefficie nt table Regional industry linkages Tourism economic impact Figure 3 Analysis procedure RESULTS Sample description A total of 347 tourists were surveyed in Xiao-liu-qiu Island. The average expenditure per tourist was calculated according to the on-site questionnaire. As shown in Table 2, there were 191 female respondents (55.8%) and 151 (44.2%) male. Most respondents were young, with 55.3% of respondents between the ages of % of respondents were highly educated, having attained at least a college educational level. 212 respondents (63.9%) earn a monthly salary under US$ The majority of respondents were students, with service industry staff and business owners, accounting for 35.3% and 28.4% respectively. Most respondents (68.6%) were visiting Xiao-liu-qiu Island for the first time, with only 3.7% of respondents having had visited five times or more. Respondents coming from the South of Taiwan represented 46.2%, while, the proportion of tourists from the North (26.3%) and center (25.1%) of Taiwan were comparable. Most tourists stayed in Xiao-liu-qiu Island for two days 7 or more; however, a relatively high proportion of tourists (38.9%) merely took a one day tour. Key industry sectors of Pingtung County In 2011, the share of Pingtung County in total employment in Taiwan was 3.63 percent. The ratio of location quotients of Pingtung County was calculated (see Figure 3). According to the results, Pingtung County was specialized in the following industries: agriculture, forestry, fishing & animal husbandry (2.946), arts, entertainment & recreation (1.465), construction (1.292), human health & social work services (1.215), accommodation & food services (1.210), other services (1.131), industry, commence, & services (1.090), education (1.051), and electricity, water & gas supply (1.020). As aforementioned, quotients higher than 1 indicate regional concentration compared to the respective industry output of the whole nation, which means that Pingtung County has higher concentration on these sectors. In which, both arts, entertainment & recreation and accommodation & food services are tourism-related sectors. Furthermore, the

8 location coefficients are used to adjust the national input coefficient table to regional input coefficient table. Table 2 Profile of respondents Variables Categories Valid number (%) Gender Male 151 (44.2%) (N=347) Female 191 (55.8%) Age (55.3%) (N=342) (32.2%) (8.5%) (3.8%) Education (N=342) Income (N=332) (Unit: US$) Occupation (N=337) Visiting experience (N=347) Region (N=342) (0.3%) Elementary school 2 (0.6%) Junior high school 3 (0.9%) Senior high school 46 (13.5%) College 246 (71.9%) Graduate school and above 45 (13.2%) lower than (38.3%) , (25.6%) 1, , (19.6%) 1, (8.7%) , (4.8%) , (1.2%) Above 2, (1.8%) Military, Civil and Teaching 46 (13.6%) Business 15 (4.5%) Agriculture, Forestry, Fishing & Animal Husbandry 2 (0.6%) Service Industry & Business owners 96 (28.4%) Students 119 (35.3%) Others 59 (17.5%) 1 time 238 (68.6%) 2-4 times 96 (27.6%) 5 times and above 13 (3.7%) North 90 (26.3%) Center 86 (25.1%) South 158 (46.2%) East & off-shore land 8 (2.3%) Stay (N=347) One day 135 (38.9%) Two days 193 (55.6%) Three days and above 19 (5.5%) 8

9 Other Services Arts, Entertainment & Recreation* Human Health & Social Work Services Education Support Services Professional, Scientific & Technical Services Real Estate Finance & Insurance Industry, Commence, & Services Accommodation & Food Services* Transportation & Storage* Wholesale & Retail Trade* Construction Electricity, water & Gas Supply Manufacturing Agriculture, Forestry, Fishing & Animal Figure 4 Industry concentrations on Pingtung County Location quotients Direct contribution Table 3 summarizes the estimated, average, and total tourist expenditures via four categories: transportation, accommodation, food & beverage, leisure & recreation services, and shopping. The total average expenditure for each tourist was US$ As one might expect, accommodation, food & beverage accounted for the highest average expenditure (US$ 53.31) at 53.54% of the total average expenditure. Transportation was the second largest part with 27.24% of total average expenditure, with each tourist spending an average of US$ Leisure & recreation services amounted to only US$7.07 on average for each tourist, which was the lowest of the four categories. According to the Tourism Bureau s Annual Statistical Report on Tourism 2011, Republic of China, the annual number of tourists visiting Xiao-liu-qiu Island in 2011 was 295,304. Total expenditure was calculated from each sector by multiplying by the amount of tourists (N=295,304). The sum of total expenditures in 2011 was estimated to be US$ 29,399,570.38, with the categories of accommodation, food & beverage and transportation representing around 80% of total expenditure, and amounting to US$ 15,741,835.16, and US$ 8,007,131.96, respectively. In order to further estimate industry impacts from tourist expenditure to regional economy, four types of tourist expenditure were categorized into the revenue of tourism industries, which are based on the categories of tourism product and tourism-related sector in Taiwan Tourism Satellite Account Therefore, tourist expenditure on transportation is the income to transportation & storage sector, spending on accommodation, food & beverage is the revenues of accommodation & food services sector, the payment on leisure & recreation services is the profits to the sector of arts, entertainment & recreation ; and the cost on shopping is the gain of the sector of wholesale & retail trade. Table 3 Average tourist expenditures in Xiao-liu-qiu Island Category of Average Percentage Total Tourist-related 9

10 expenditure Transportation Accommodation a, Food & Beverage Leisure & Recreation Services Shopping expenditure (per tourist)(us$)* (%) expenditure b (US$)* ,007, ,741, ,088, ,562, sector Transportation & Storage Accommodation & Food Services Arts, Entertainment & Recreation Wholesale & Retail Trade Total ,399, a Calculated from the numbers of overnight tourist (N=212). b Calculated from the expenditure of each category multiplied by the total number of tourists in 2011 (N=295,304) *2012 annual exchange rate (NTD/USD)= (Source: Central Bank of the Republic of China (Taiwan) Multiplier analysis and economic impact Location quotients were applied to adjust the national input coefficients table to regional input coefficients, and the Leontief inverse matrix was used to compute the simple output multiplier effect. According to results, as the expenditure on leisure & recreation service increases one unit, the transaction output multiplier for total sectors would be , which brings the largest effects for the regional economy. The total multiplier effects are from the expenditure of accommodation, food & beverage, from the spending of transportation sector, and from the profit on shopping (see Table 4). It represents that, if sector of arts, entertainment & recreation increases its output, the demands from the other sectors whose goods as its input would increase. In other words, arts, entertainment & recreation is the leading sector among tourism-related industries. The total output multiplier was The economic impact of tourism is estimated by the regional input coefficient table (inverse matrix) and tourist expenditure. The amounts of tourist spending were categorized as the input of four tourism- related sectors. Four categories of tourist spending were redistributed from those sectors to produce the indirect effect to other sectors. As mentioned above, tourists spent US$ 29,399, in Xiao-liu-qiu Island in The total output on all sectors was increased because of the multiplier effect, which was, as calculated from the total output of all sectors (US$ 113,184,172.74) divided by tourists total 10 expenditure (US$29,399,570.38). As the estimation of total output, the greatest effect, 29,084, (25.7% of total output), was felt in manufacturing sector. It represents that tourism spending also highly contributes on non-tourism related sectors because of inter-industries linkage. The next-greatest effect was felt in accommodation & food services, which output was 16,855, (14.89%). The sector of wholesale & retail trade and transportation & storage earned 15,428, (13.63%) and 12,306, (10.87%), respectively. Those sectors are tourism-related sectors, which sectors can obtain higher profits from tourism spending, comparing to non-tourism related sectors. Those aforementioned sectors are more profitable in regional economy; the share of total benefits to each sector is higher than 10 percentages, and the sum of total output share is percentage. However, not all tourism-related sectors gained relatively high benefits from tourism spending, the sector of arts, entertainment & recreation only captured 2.17 percentage of total profits, the cause might be tourists spending on recreational activities (admission tickets of scenic areas, water sports, etc.) are comparatively few.

11 Table 4 Distribution of the Economic Impact of Tourism in Xiao-liu-qiu Island (Unit: US$, 2012 annual exchange rate; NTD/USD = **) Industry sectors Category of expenditure Transportation Accommodation, Food & Beverage Leisure & Recreation service Shopping Total output Multiplier Agriculture, Forestry, Fishing & Animal Husbandry 321, ,351, , , ,863, (2.53%) Manufacturing 8,233, ,520, ,671, ,659, ,084, (25.7%) Electricity, water & Gas Supply 1,623, ,071, , , ,309, (7.34%) Construction 624, ,203, , , ,455, (2.17%) Wholesale & Retail Trade* 3,235, ,924, , ,600, ,428, (13.63%) Transportation & Storage* 10,111, ,492, , , ,306, (10.87%) Accommodation & Food Services* 311, ,229, , , ,855, (14.89%) Industry, Commence, & Services 1,367, ,082, , , ,344, (5.61%) Finance & Insurance 1,491, ,192, , , ,267, (5.54%) Real Estate 609, ,743, , , ,367, (2.98%) Professional, Scientific & Technical Services 709, ,501, , , ,972, (2.63%) Support Services 457, , , , ,895, (1.68%) Education 89, , , , , (0.32%) Human Health & Social Work Services 139, , , , , (0.56%) Arts, Entertainment & Recreation* 73, , ,197, , ,459, (2.17%) Other Services 525, , , , ,578, (1.39%) Total input 29,924, ,615, ,401, ,241, (26.44%) (54.44%) (7.42%) (11.70%) 113,184, * Sector related to tourism industry **Source: Central Bank of the Republic of China (Taiwan) 11

12 CONCLUSION AND RECOMMENDATIONS Three objectives were achieved in this study, including: (1) to determine the spending pattern of a typical tourist visiting Xiao-liu-qiu Island; (2) to construct a regional input-output model and to calculate its multiplier effects; and (3) to determine the contribution of tourists visiting the island to the economy of Pingtung County. For the first objective, the results of survey indicate that tourists spend an average of US$ on this island. Most of their spending is on accommodation, food & beverage (53.54%) on this island. As accommodation is always regarded as a predominantly significant sector because it accounts for a high proportion of tourist expenditure. With regard to the second objective of this study, the regional input-output table was constructed; it suggested that the tourist spending on leisure & recreation service generates the biggest output multiplier effect, which equals to It means this sector could play the leading role in the regional economy-wide. However, if spending information is taken into account, we find that tourist expenditures on leisure & recreation service was minor, only 7.07 percentage of total expenditure on average. Since this sector could produce the most demands to the other sectors, local government and business managers may put effort to create more consumption opportunities and to encourage tourists spend on it. REFERENCE 1. Baaijens, S. R., Nijkamp, P. & Montfort, K. V. (1998). Explanatory Meta-Analysis Of Tourist Income Multipliers: An Application Of Comparative Research To Island Economies. Amsterdam, The Netherlands: Faculty Of Economics And Econometrics. 2. Briassoulies, H. (1991). Methodological Issues: Tourism Input-Output Analysis. Annals of Tourism Research, 18, Chen, K. (2012). Living It up on Xiaoliuqiu, Ecotourism Paradise! [Online]. Taiwan In Depth. For the last aim of this study, the results show that over 290,000 tourists brought US$ 29,399, to Xiao-liu-qiu Island, and further created US$113,184, of economic value, times of multiplier effect generated. In this case study, not only tourism sector acquire higher profits, but also non-tourism sectors. In this regional economic system, manufacturing sector obtain the biggest financial benefits from tourism spending. The sectors of accommodation & food services, wholesale & retail trade and transportation & storage, in order, earn relatively profitable benefits than other sectors. Therefore, according to our analysis, it has showed that tourism in Xiao-liu-qiu has significant economic contributions to Pingtung County as a whole. This is the first study to estimate the economic contribution from tourism spending in Xiao-liu-qiu Island to Pingtung County. Input-output table of Taiwan was constructed only at national level, location quotients method was applied to estimated regional input-output table. However, there are other methods could be used to construct regional input-output tables; different methods may cause distinct results due to its theoretical principles. Thus, perhaps future research could employ other methods and further examine the difference of economic effects. Besides, in this study, only simple multiplier output was computed, other multiplier effects (e.g., income multipliers) are suggested to estimate in order to obtain more complete and more comprehensive economic impacts. Available: &Ctnode=1923 [Accessed]. 4. Executive Yuan (2012). Yearbook of Manpower Survey Statistics of In: Directorate-General of Budget, A. A. S., Executive Yuan, Republic of China (Ed.). Taiwan, Taipei City: Executive Yuan. 5. Executive Yuan (2013). Offshore Islands Development Act In: Development, C. F. E. P. A. (Ed.). Taipei: Council for Economic Planning And Development, Executive Yuan. 12

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