SLCGE-Tourism: a computable general equilibrium model of the Sri Lankan economy for tourism policy analysis,

Abstract

Following the end of nearly three decades of civil war in May 2009, Sri Lanka has witnessed an unprecedented post-war tourism boom beyond its expectation. Recognising the key role that the tourism industry can play in post-war development the Sri Lankan government launched a Tourism Development Strategy (TDS). There is a dearth of research on integrated economy-wide modelling capable of simulating the effects of tourism related policies and measuring the impact of the current tourism boom on the Sri Lankan economy quantitatively. This paper attempts to fill this gap by developing a tourism focused Computable General Equilibrium Model of the Sri Lankan Economy (SLCGE–Tourism) and creating a suitable database for its operationalisation. The usefulness of this model is demonstrated via a policy simulation aimed at examining the economy-wide effects of tourism growth on the Sri Lankan economy. The results of the simulation support the view that tourism can play a major role in post-war development in Sri Lanka in terms of enhancing economic growth and employment generation.