Data for the model stem from three sources: (a) the structure of income and expenditures at the regional level calculated from the 2003 Living Standards Measurement Survey for Panama, (b) visitation and expenditures by domestic and foreign tourists at the regional level calculated from the tourism survey carried out between 2006 and 2007 by the _Contraloría_ for the Tourism Satellite Accounts (TSA),<sup>12</sup> and (c) I-O and aggregated SAM tables that represent the structure of the Panamanian economy at the national level. A SAM multiplier model is estimated using these data sources as inputs. These data sources are sufficient to estimate the magnitude of the impacts on income and employment at the province level for different categories of households.

The SAM model shows the overall direct and indirect impacts and impacts on income and employment disaggregated by province and by household type. Four province archetypes have been selected for the analysis: Panama Province, Bocas del Toro, Chiriqui, and the rest of Panama. Showing disaggregated results for the _comarcas_ was not possible because of the lack of statistical significance of these results, as very few foreign tourists in the tourism survey sample report visiting the _comarcas_ . Modeling results are disaggregated for the following social strata: urban poor, urban nonpoor, rural poor, rural nonpoor, indigenous, nonidgenous poor, and nonindigenous nonpoor.

This analysis of growth linkages of tourism industry in Panama uses a variant of the fixed-price, linear input-output (IO) model, the semi-input-output (SIO) model.<sup>13</sup> The SIO model uses fixed coefficients to simulate inter-industry production and consumption linkages, assuming fixed prices in all sectors. To simulate real-world supply rigidities, the model disaggregates sectors into those which are either supply-constrained (Z1) or perfectly elastic in supply (Z2) (Bell and Hazell 1980). In supply-constrained sectors (Z1), firms operate at full capacity, and output cannot increase without additional capital investment or introduction of new, more productive technology.

Total supply in each sector (Z) is modeled as the sum of inter-industry input demand (AZ) and final demand (F), where final demand includes consumption by households (  Y) and exogenous sources of demand such as exports (E). Income (Y) is related to production through a fixed value added share (v) in gross commodity output (Z), (Equation 1).

As indicated in equation (2), the SIO model permits output responses only in those sectors with excess capacity (Z2). Perfect substitutability between domestic and

> 12 Surveys of foreign tourists were implemented at two main entry points into the country—Tocumen Aiport and Canoas Pass—over the course of six weeks throughout different seasons in 2006 and 2007 and include data for 1,626 foreign tourists (surveyed at the Tucuman Airport and at Paso Canoas) that account for a total of 4,687 trips. Surveys of domestic tourism were implemented in July 2006 and April 2007 and collected data on trips completed throughout 2006; these surveys collected data for 3,498 Panamanian households (of which 34 percent report having gone on trips in the previous year). Data on expenditures is available for 1,604 foreign tourists in the sample; 252 tourists travel with a package and their expenditures are not included in the calculations in this paper. Thus, results shown here are based on averages for 1,352 foreign tourists with non-missing data on expenditures and who did not travel with a package.

> 13 This presentation of the SIO model is derived from Dorosh and Haggblade (2003), ―Growth Linkages, Price Effects and Income Distribution in Sub-Saharan Africa‖.  Journal of African Economies, 12(2).

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