Potential Multiplier Effect of Tourism Sector in Northern Cyprus

In recent years, tourism has proved to be one of the locomotive sectors in the economy of the Northern Cyprus (TRNC) and has sustained its trajectory, thereby contributing to economic growth. However, tourism statistics show that net tourism income and growth is extremely unstable and tourism revenue per capita is comparably lower compared to that of highly developed countries. Because of this the aim of this study is to determine the potential multiplier effect of tourism and compare it with real figures. In this respect, some factors identified have negative effects on the tourism sector, namely leakages that reduce the multiplier effect. Accordingly, these leakages are the size of the import-export ratio, an inefficient system of incentives, the characteristics of the services provided by the tourism sector, and the nationalities of employers and employees leading to an amplified transfer of tourism income abroad.