The Economic Effect of Tourism in Ireland 1990-1993

Prepared for the Irish Tourist Industry Confederation by Tansey Webster and Associates

The aim of the project is to provide a comprehensive report on the economic impact of tourism in Ireland.
Approach Taken

The terms of reference required that economic data relating to tourism be collated under the following headings:

  • Trends in Irish tourism’s revenue;
  • Tourism’s contribution to the growth process;
  • Tourism and Balance of Payments;
  • Tourism’s impact on Irish employment;
  • The tax take from tourism;
  • The importance of tourism investment;
  • The regional impact of Irish tourism.


Extracts from the summary of principal findings;

Chapter 1

  • Total Irish tourist revenues, comprising earnings from both foreign and domestic tourism, doubled in cash terms between 1985 and 1993;
  • Adjusting for inflation, real foreign exchange earnings from tourism rose by over one-half between 1985 and 1993 and by one-ninth between 1990 and 1993;
  • Adjusting for inflation and changes in data collection methods, real revenue generated by domestic tourism increased by 10.7% between 1990 and 1993.

Chapter 2

  • On a conservative basis, tourism’s contribution to Ireland’s Gross National Product has risen from 5.8% in 1990 to 6.4% in 1993. This conservative assessment only takes cognisance of tourism’s direct, indirect and induced impacts on GNP.

Chapter 3

  • Tourism is an internationally-traded service industry. In 1993, tourism accounted for 56% of all export earnings from services;
  • In each year since 1990, the balance of payments surplus on the tourism account has ranged between Ir£400 million and Ir£500 million;
  • Tourism represented 6.3% of all exports of Irish goods and services in 1993. That is, £1 out of every £16 earned in export markets during 1993 was generated by tourism.

Chapter 4

  • Tourism now accounts for one in every eight people employed in the services sector in Ireland. Tourism’s share of services employment has risen from 11.8% in 1990 to 12.3% by 1993. Preliminary data for 1994 indicates a further rise in tourism’s share of services employment to 12.4%;
  • Tourism is closing the gap on primary agriculture as a source of employment in Ireland.

Chapter 5

  • Tourism is a major source of tax revenue for the Exchequer. Some 26p of every £1 spent by foreign tourists goes directly to the Government. When indirect effects are included, the tax take from the foreign tourist £ rises to 34p. Finally, when the economy-wide impact of foreign tourists’ spending is also included, each £1 of expenditure generates ultimately 45p of tax revenue for the Exchequer. Al of these tax inflows represent fresh funds for the Government;
  • Directly and indirectly, each £1 spent on domestic tourism generates 33p and 42p respectively of tax revenue for the Government. However, these are gross, rather than net receipts;
  • Tax revenues derived from tourism are estimated to have increased from £681 million in 1990 to £892 million in 1993, an increase of 31.3% in the space of three years.

Chapter 6

  • On narrow sectoral definitions, new fixed asset investment in tourism amounted to £550 million in the four years ending 1993. The private sector accounted for almost two-thirds (56.8%) of total new fixed asset investment in tourism over the period. Less than half private sector investment in tourism (46.9%) was grant-aided directly;
  • New fixed asset investment in tourism – narrowly-defined – stood equivalent to just under 3% of national investment each year between 1990 and 1993. Capital expenditure in tourism accounted for roughly 5% of all gross fixed investment undertaken by market services in the four years ended 1993.

Chapter 7

  • Since tourism must be consumed at the point of its production, the sector can act as a powerful instrument for securing a better balance of income and employment across the country;
  • The western regions of the country enjoy a greater share of total tourism revenue than would be merited by their shares of the national population. In 1993, the South West, with only 13.3% of the national population, earned 19.3% of total tourism revenue. Similarly, the West, with just 9.7% of the country’s population, accounted for 15.3% of total tourism revenue in 1993;
  • Conversely, tourism in the east of the country under-performed its share of the national population in 1993. Dublin earned 24.1% of all tourism revenue but comprised 29.1% of the national population. The Midlands/East region accounted for one-sixth of the population but less than one-tenth of total tourism revenues in 1993.


This significant report confirmed that tourism had become a major economic sector in the economy. It demonstrated that tourism was making a major contribution to economic growth, to Exchequer revenues, to employment and to regional development. The report formed the basis of ITIC’s proposal relating to the Operational Programme for Tourism 1994 – 1999.

Share this:Share on FacebookTweet about this on TwitterShare on Google+Share on TumblrPin on PinterestShare on LinkedIn