Economic impacts of cultural events on local economies: an input output analysis of the Kaustinen Folk Music Festival

Transcription

1 Tourism Economics, 2005, 11 (3), Economic impacts of cultural events on local economies: an input output analysis of the Kaustinen Folk Music Festival TIMO TOHMO School of Business and Economics, Centre for Economic Research, University of Jyväskylä, PO Box 35, Jyväskylä, Finland. This paper examines the economic impacts of Finland s Kaustinen Folk Music Festival. The impacts are calculated on output, demand and wages, employment and on national and regional taxes. The results indicate, first, that the effects of the festival on output are about 1.7 million. Kaustinen can also be seen as a good investment for the local municipality, as regional tax revenues increased by about 65,600 in the year studied, while the annual subsidy was 40,365. From the perspective of the Keski-Pohjanmaa region as a whole, the Kaustinen Folk Music Festival has a substantial impact on regional incomes through subsidies (about one-fifth of the costs of the festival is offset by subsidies from the Arts Council of Finland (Ilmonen et al, 1995) and the direct and indirect effects of consumption by festival visitors in different economic sectors. The impact on employment in the region is low (27 employees). The mobilization of voluntary labour, not measured in this study, is, however, considerable. Although the input output method is laborious and statistically complex, it is very suitable for measuring the impact of tourism or cultural events on local economies. The method provides results that can be used in framing regional policy. Keywords: economic impacts; music festival; input output analysis There have been many analyses of the economic impacts of cultural events. Various authors (Myerscough, 1988; Bohlin & Ternhag, 1990; Gratton & Taylor, 1986) have calculated the short-term impacts of cultural services on economic indicators such as consumption, employment, personal income and public income (income taxes). In general, such studies have found significant economic impacts. Culture is increasingly connected with tourism but, besides persuading tourists to visit its attractions, the cultural services sector has the yet more important task of enriching the empirical world of its regional population. Nonetheless, the arguments for cultural support often rest on the economic impacts of the cultural sector. Porter (1989) argues that the establishment of cultural facilities can make an important contribution to the quality of life in the regions and play a

2 432 TOURISM ECONOMICS significant role in regional development. A flourishing cultural life may be a great attraction. It may be a deciding factor in whether a company establishes a new plant or research unit in a particular area. It may also attract good workers to the area. Overall, arts and culture account for a significant amount of economic activity. For example, visitors to music festivals spend a lot of money in the festival area itself as well as in local shops, restaurants, hotels, etc. By applying an input output analysis, we can determine the economic impact of specific events in the present case, the Kaustinen Folk Music Festival. Input output tables describe the economic structures and interdependencies of regions. Here, we analyse the extent to which each economic sector depends on itself and on other sectors for its inputs in the Keski-Pohjanmaa region (K-P region), home of the Kaustinen Folk Music Festival. In 2000 Statistics Finland published regional input output tables for the Finnish regions in The tables were compiled at the NUTS-3 level, which divides Finland into 20 regions. The data describe the economic structures and interdependencies of each region. The core of the Finnish regional input output system is based on so-called regional and use tables. First, supply and use tables are compiled for each region, and then the regional input output tables are derived. The availability of the input output tables enables the regional impacts to be measured fairly accurately. Study aims and data collection Let us assume that a researcher intends to ascertain the regional economic effects of certain events. There are usually no regional input and output figures available, so the only alternative is to adjust the national coefficients to produce a regional table. A very common approach is to use location quotients (see Richardson, 1972a). The purpose of the study discussed here was to investigate the economic value of the Kaustinen Folk Music Festival at the regional level. Kaustinen (held annually in the K-P region) is one of the biggest summer festivals in Finland, with annual ticket sales in excess of 45,000 (over 10,000 visitors). The festival thus constitutes a very important part of the local economy. The 27th Kaustinen Folk Music Festival was held on July Visitors (individuals) were asked to answer a questionnaire. On 17, 19, 23 and 24 July the questionnaires were given to 1,357 visitors in different parts of the festival area and at different times of day. Properly completed questionnaires were returned by 878 people. 1 This response rate 65% can be regarded as good in the case of a questionnaire. We estimated the total number of visitors to the festival at around 13,350, which means that our sample represented 7% of the total. We used regional input output analysis 2 in our study. The publication of regional input output figures made it possible to calculate the economic importance of the festival to the K-P region, one of the smallest regions in Finland, at the end of The population of K-P was then 72,915, or 1.4% of Finland s total population of 5,116,826. At the time, about 16% (5,000 people) of the labour force in the K-P region were unemployed. People in

3 Economic impacts of cultural events 433 Table 1. Characteristics of questionnaire respondents. Variable Gender Male 40% Female 60% Total 821 Age Under 20 18% % % % % 60 and older 9% Total 851 Place of residence Kaustinen 10% Kokkola (closest big city) 8% K-P region as a whole 30% Province of Vaasa as a whole 38% Southern Finland a 32% Rest of the country 30% Total 845 Education Comprehensive school 33% Upper secondary school 48% Higher education 19% Total 848 Occupation Entrepreneur/farmer 11% Lower white-collar 23% Upper white-collar 21% Manual worker 18% Student/schoolchild 27% Total 808 Visits to Kaustinen Folk Music Festival First time 21% 1 2 previous visits 22% 3 5 previous visits 20% 6 times or more 37% Total 844 a Southern Finland in this study consists of the provinces of Uusimaa, Turku and Pori, Häme and Kymi. These provinces belong to industrialized Finland or have a high public-service concentration and thus account for a high proportion of Finland s inhabitants. employment in the region accounted for 1% of the national total. In 1994 the gross regional product was also about 1% ( 856 million) of Finland s GNP ( 75,806 million). About 10% of the respondents came from Kaustinen and 20% were from

4 434 TOURISM ECONOMICS other parts of the K-P region (Table 1). One-third were from regions in southern Finland, and about 30% were from other parts of the country. About 60% of the respondents were female. The age distribution of visitors to the Kaustinen Folk Music Festival is unusually even, with about 40% of respondents between the ages of 30 and 49. Around 18% were under 20 and 9% were 60 or over. With reference to education, the majority had not been educated beyond upper secondary school. Many of the respondents were whitecollar workers, but there were also many students. The numbers of respondents were quite evenly distributed with regard to the number of times they had visited the festival. One-fifth of them were firsttime visitors, one-fifth had made one or two previous visits and one-fifth had made three to five previous visits. Finally, there was a large group (over onethird) of people who were regular visitors to Kaustinen. About 15% were particularly loyal, having visited the festival at least 20 times. Expenditure by visitors The mean expenditure in various sectors by visitors to the Kaustinen Folk Music Festival is shown in the Table 2. Daytime visitors spent on average less than people who were at the festival for several days. Furthermore, the structure of spending varies according to length of stay. For example, tickets are the greatest item of expenditure for day-visitors, accounting for nearly 40% of total expenditure. As the number of days of the visit increases, the proportion of hotels and restaurants in total expenditure also increases and the share of tickets correspondingly decreases. Expenditure by festival visitors can also be examined according to their place of residence. Table 3 shows the expenditure of local citizens and the spending of visitors from outside the region. The general expenditure of local citizens on different items or sectors can be reliably determined. However, it is usually difficult to determine how much more local citizens spend on account of the festival than they would without it. Does this extra expenditure simply represent a Table 2. Expenditure of visitors by duration of stay. Expenditure/ Daytime 2 4 days 5 9 days Daytime 2 4 days, 5 9 days, duration of stay visitors (% of total (% of total visitors, mean ( ) mean ( ) (% of total expenditure) expenditure) mean ( ) expenditure) Wholesale and retail trade Off-licence sales Hotels and restaurants Transport Tickets Overall

5 Economic impacts of cultural events 435 Table 3. Respondents per-day expenditure by place of residence. Expenditure Proportion of total expenditure Mean expenditure Local citizens Visitors from Local citizens, Visitors from (%) outside the mean ( ) outside local municipality municipality, (%) mean ( ) Wholesale and retail trade Off-licence Hotels and restaurants Transport Tickets Overall displacement of other expenditure that they would have made in the region or are they substituting a local holiday for one elsewhere? We ignore the impact of the expenditure of local citizens and calculate the impact of expenditure of visitors from outside the local municipality as a distinct contribution to regional income and employment. On the one hand, as we have seen, the loyalty of visitors to the festival is substantial and only 30% of the festival audience is from the K-P region. Thus the contribution of the music festival to the local economy is a significant one. Visitors to the Kaustinen Folk Music Festival broadly spend an equal sum of money on average regardless of whether or not they are local residents. However, the structure of this expenditure differs, as over one-third of the total expenditure of visitors from outside the local municipality is on hotels and restaurants and about one-quarter is on tickets. Local visitors spend around onethird of their total expenditure on tickets and around one-quarter in the wholesale and retail trade sectors. The aggregate spending of visitors to an event is typically identified by multiplying individual expenditure by the numbers of visitors or by the days spent at the event. In this study the aggregate spending of festival visitors was calculated by multiplying the average expenditure by the number of visitors from outside the local municipality (Table 4). Visitors to the Kaustinen Folk Music Festival spent on average 133 on different products and services. 3 Around 35% of their total expenditure was on hotels and restaurants and around 27% was on tickets. Economic impact of the festival: an input output analysis The economic impact of events in general on regions and on the economic structures and interdependencies of regions can be analysed by input output analysis (see Smith and Morrison, 1974). With the sums of the input coefficients (total intermediate inputs) in the input output tables we can calculate the direct effects of an injection on a given area. With the sums of the rows in an inverse matrix (production multipliers) we can calculate the total effects of an injection on a given area. Table 5 shows the total intermediate inputs and production multipliers for the K-P region.

6 436 TOURISM ECONOMICS Table 4. Aggregate spending of visitors to Kaustinen Folk Music Festival. Expenditure Sample daily mean ( ) Whole festival ( ) Wholesale and retail trade ,979 Off-licence ,459 Hotels and restaurants ,726 Transport ,861 Tickets ,818 Overall ,240,082 Respondents/number of visitors from outside the local municipality in festival 845/592 9,345 (70/100 * 13,350) The economic structure of the region is broadly dependent on that of other regions. Products used as inputs in production processes are widely bought outside the K-P region. When the regional supply sector is relatively small in comparison to the purchasing sector, some of the required inputs must be imported from outside the region. 4 With input output tables we can analyse the extent to which each sector is dependent on other sectors for its inputs. With the input coefficients and inverse (Leonie inverse) matrix, we study the impact of production on different sectors. Using input coefficients we can calculate the direct effects of the consumption of the Kaustinen Folk Music Festival visitors. Indirect impacts can be calculated after we have calculated the total effects. The column totals of the inverse matrix are referred to as production multipliers. The multipliers can be used to identify the strength of the interdependencies of regions and sectors. In the K-P region a change in the fruit and vegetables sector would influence the local economy to the greatest extent. The smallest change would be in the sectors of (a) forestry and logging; (b) machinery and equipment manufacture; and (c) financial intermediation. By multiplying specific columns in the inverse matrix by the value of an injection (consumption of the music festival), we can show a particular sector s total inputs and their value. Kaustinen Folk Music Festival visitors use hotels and restaurants. Hotels and restaurants need inputs, some of which originate in manufacturing itself or are purchased from other sectors. Visitors to Kaustinen used hotels and restaurants to the value of 474,726. In Table 6 we analyse the direct and total effects of this consumption on hotels and restaurants in the K-P region. In the regional input output table, each column shows the source of a specific sector s inputs and their value. In the case of hotels and restaurants the greatest input values come from the product groups of hotels and restaurants ( 474,916), real estate activities ( 55,306), and other food products and tobacco products ( 11,204). For these product groups the direct impact is greater than the indirect impact, which means that hotels and restaurants purchase inputs directly from particular product group sources. Festival visitors consumption of wholesale and retail trade and transport generates growth of sales turnover in these product groups. Increase in sales

7 Economic impacts of cultural events 437 Table 5. Total intermediate inputs and production multipliers for the K-P region in Sector K-P region Total Production intermediate multipliers inputs 01 Agriculture Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish Fruit and vegetables; animal and vegetable oils Other food products and tobacco products Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products Manufacture of other non-metallic mineral products Basic metals and metal products Manufacture of machinery and equipment Manufacture of office machinery and computers Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling Electricity, gas and heat supply Collection, purification and distribution of water Construction Wholesale and retail trade Hotels and restaurants Transport Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities Post and telecommunications Financial intermediation Real estate activities Renting and business activities Public administration and defence; compulsory social security Education Health and social work Other community, social and personal service activities Source: Statistics Finland, turnover is 564,438 in wholesale and retail trade (together with off-licence sales) and 315,861 in transport. The impacts (increase in sales turnover) on wholesale and retail trade and on transport are shown in Appendix Tables A1 and A2.

8 438 TOURISM ECONOMICS Table 6. Direct and total effects of consumption valued at 474,726 by festival visitors in hotels and restaurants in the K-P region. Sector Intermediate Production Direct Total inputs multipliers impact ( ) impact ( ) 01 Agriculture , Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish ,557 4, Fruit and vegetables; animal and vegetable oils ,273 5, Other food products and tobacco products ,204 11, Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing ,756 2, Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products , Manufacture of other non-metallic mineral products Basic metals and metal products Manufacture of machinery and equipment Manufacture of office machinery and computers Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling Electricity, gas and heat supply ,044 4, Collection, purification and distribution of water , Construction ,605 9, Wholesale and retail trade ,795 6, Hotels and restaurants , , Transport , Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities Post and telecommunications , Financial intermediation ,329 1, Real estate activities ,306 58, Renting and business activities ,118 9,257

9 Economic impacts of cultural events 439 Table 6 continued. Sector Intermediate Production Direct Total inputs multipliers impact ( ) impact ( ) 34 Public administration and defence; compulsory social security , Education Health and social work Other community, social and personal service activities ,605 5,507 Overall , ,871 The Kaustinen Folk Music Festival produces an overall increase in consumption of 1.35 million (Table 7). The regional input output analysis indicates that this increase in consumption generates direct and indirect impacts worth a total of 1.67 million in the different product groups in the K-P region. Impact on demand and wages The impacts of an increase in firms sales turnover on demand and wages are calculated by basic inputs (primary inputs), which represent the compensation of employees (wages and salaries), imports (domestic and foreign), taxes and gross profits (other value-added). We examine next the impact on demand and wages with the basic inputs shown in the K-P regional tables. When calculating the impacts of increases in firms sales turnover on demand and wages, we build a matrix in which the rows represent primary inputs: foreign imports, valueadded tax (VAT), other product taxes, compensation of employees, other taxes on production, subsidies on production and other value-added. The columns represent different product groups. We multiply the inverse matrix (Leontief inverse) by the primary input matrix (regional tables), (Miyazawa, 1976; Miller and Blair, 1985). Columns can be summed to one. In Appendix Table A3 we present the basic inputs for the K-P region. In Table 8 we study the primary inputs used by hotels and restaurants, wholesale and retail trade and transport in the K-P region. From Table 8, we can see that for hotels and restaurants and transport the largest component of primary inputs is other value-added. In hotels and restaurants they account for over one-third and in transport for over 40% of primary inputs. In hotels and restaurants and transport, compensation of employees is also very important and accounts for more than a quarter of primary inputs. In the wholesale and retail trade the greatest share of primary inputs is compensation of employees, which forms over 40% of primary inputs. Other value-added accounts for one-third of primary inputs. The K-P regional input output tables indicate that in hotels and restaurants the domestic imports account for about one-quarter of primary inputs. In wholesale and retail trade and transport, domestic imports account for about 15% of primary inputs.

10 440 TOURISM ECONOMICS Table 7. Effects of increase in sales turnover of industries in the K-P region. Sector Increase in sales turnover ( ) Total impact ( ) Hotels and restaurants 474, ,871 Wholesale and retail trade 564, ,056 Transport 315, ,670 Overall 1,345,025 1,665,597 Table 8. Basic inputs of the K-P region on product groups. Basic inputs (components of Hotels and Wholesale and Transport price for output) restaurants (%) retail trade (%) (%) Foreign imports Value-added tax (VAT) Other product taxes Product subsidies Compensation of employees Other taxes on production minus subsidies on production Other value-added Domestic imports Overall The Kaustinen Folk Music Festival visitors consumption of hotels and restaurants, wholesale and retail trade and transport generates growth in sales turnover in these product groups. Increased production uses more inputs, some of which are intermediate in the sense that they are purchased from other sectors or they originate in the production sector itself. We are interested in the remaining inputs (primary inputs) and calculate the effects of increased sales turnover on primary inputs (Table 9). From the increased sales turnover ( 474,726) in the hotel and restaurant sector use of domestic products (intermediate inputs) at basic prices (Table 6) accounts for 107,288 (22.60% of increased sales turnover). To basic inputs is left 77.4% of increased sales turnover. The share of basic inputs is then 367,438. From the increased sales turnover in the wholesale and retail trade ( 564,438) and transport ( 315,861) the use of domestic products (Appendix Tables A1 and A2) accounts for 109,840 (19.46% of increased sales turnover) and 31,460 (9.96%) respectively. The share of basic inputs in the wholesale and retail trade is then 454,598 ( ,438) and in transport 284,401 ( ,861). In the hotel and restaurant sector, compensation of employees accounts for about 103,985. National tax is 12.5% and regional tax is 17.5% of wages. The value of national tax is then 12,998 and regional tax 18,197 (Table 10). Household net income is 72,790. The savings rate of Finnish households in 1995 was 6% of net income (Statistics Finland, 2000), which means that average savings per capita are 4,367, leaving 68,423 for consumption.

11 Economic impacts of cultural events 441 Table 9. Effects on basic inputs in the K-P region of consumption by festival visitors to the value of 474,726 on hotels and restaurants, 564,438 on the wholesale and retail trade and 315,861 on transport. Basic inputs (components Hotels and Wholesale and Transport of price for output) restaurants retail trade Total Total Total impact impact impact on basic on basic on basic % inputs ( ) % inputs ( ) % inputs ( ) Foreign imports , , ,202 Value-added tax (VAT) 0.3 1, Other product taxes , , ,156 Product subsidies 0.5 1, Compensation of employees , , ,476 Other taxes on production minus production subsidies 1.5 5, ,422 Other value-added , , ,724 Domestic imports , , ,706 Overall , , ,401 Table 10. Effects on wages, taxes, savings and consumption, and the net income of households of consumption by festival visitors to the value of 474,726 on hotels and restaurants, 564,438 on the wholesale and retail trade and 315, 861 on transport. Effects on consumption Hotels and Wholesale and Transport restaurants ( ) retail trade ( ) ( ) Wages 103, ,658 82,476 National tax (12.5%) 12,998 23,582 10,310 Regional tax (17.5%) 18,197 33,015 14,433 Net income of households 72, ,061 57,733 Savings (6%) 4,367 7,924 3,464 Consumption of households 68, ,137 54,269 Effects of increased consumption on output 10,948 19,862 8,683 National and regional taxes are spent via national and regional budgets and thus generate impacts on production. Households use their income to buy, for example, food and clothing and pay production taxes. This household consumption (that is, change in labour income) generates impacts on production. These consumption impacts on production are estimated at 16%, which in the hotel and restaurant sector represents 10,948. Savings generate multiple effects when banks lend money to firms and households for investment purposes. Impact on employment The impact on employment is calculated using the labour input tables showing the labour input coefficients (employees per 168,188, equivalent to FIM 1.0 million of output before conversion to the euro). We calculate the direct and

12 442 TOURISM ECONOMICS Table 11. Effects of consumption to the value of 474,726 by festival visitors on hotels and restaurants in the K-P region. Sector Labour Direct Direct Total Total input impact impact impact impact coefficients divided by (employees) divided by (employees) 168, , Agriculture Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish Fruit and vegetables; animal and vegetable oils Other food products and tobacco products Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products Manufacture of other nonmetallic mineral products Basic metals and metal products Manufacture of machinery and equipment Manufacture of office machinery and computers Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling Electricity, gas and heat supply Collection, purification and distribution of water Construction Wholesale and retail trade Hotels and restaurants Transport

13 Economic impacts of cultural events 443 Table 11 continued. Sector Labour Direct Direct Total Total input impact impact impact impact coefficients divided by (employees) divided by (employees) 168, , Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities Post and telecommunications Financial intermediation Real estate activities Renting and business activities Public administration and defence; compulsory social security Education Health and social work Other community, social and personal service activities Overall Table 12. Effects on employment of consumption by festival visitors to the value of 474,726 on hotels and restaurants, 564,438 on the wholesale and retail trade and 315,861 on transport in the K-P region. Sector Labour Direct Direct Total Total input impact impact impact impact on coefficients ( ) (employees) ( ) (employees) Wholesale and retail trade , , Hotels and restaurants , , Transport , , total impact on employment in each sector. Table 11 shows the effects on employment in the K-P region of consumption estimated at 474,726 by the Kaustinen Folk Music Festival visitors on hotels and restaurants. Table 12 presents the effects on employment in three sectors wholesale and retail trade, hotels and restaurants and transport. The increase in hotel and restaurant sales turnover has a total impact of between eight and nine employees. 5 The output of hotels and restaurants in the K-P regional tables in 1995 is valued at million. The Kaustinen Folk Music Festival accounts for about 1.3% of the output of the hotel and restaurant sector in the region. The output of hotels and restaurants in Kaustinen in 1995 is valued at 5.48 million

14 444 TOURISM ECONOMICS Table 13. Economic impact of the Kaustinen Folk Music Festival. Impact Hotels and Wholesale and Transport Total restaurants ( ) retail trade ( ) ( ) ( ) Direct impact on output 582, , ,321 1,603,613 Indirect impact on output 30,857 24,778 6,349 61,984 Impact of increased demand on output 10,948 19,862 8,683 39,493 Impact on output overall 623, , ,353 1,705,090 Impact on households net income 72, ,061 57, ,584 Impact on national taxes 12,998 23,582 10,310 46,890 Impact on regional taxes 18,197 33,015 14,433 65,645 Impact on employment (employees) (Statistics Finland, 1997). The festival thus accounts for about 9% of the output of the hotel and restaurant sector in Kaustinen. The increase in wholesale and retail trade sales turnover ( 564,438) produces a direct impact on output of the 674,278 and the total impact on production is estimated at 699,056 (Appendix Table A1). The increase in transport sales turnover ( 315,861) requires direct inputs worth 347,321 and the total value of inputs was 353,670 (Appendix Table A2). The impact on employment is about 14 employees in the wholesale and retail trade and five in transport (Table 12; Appendix Tables A1 and A2). Summary and conclusions This study has examined the impact of a cultural event, the Kaustinen Folk Music Festival, on the local economy. We applied regional input output analysis to determine the local economic impacts in Kaustinen. Understanding the economic impact of expenditure by tourists contributes to our understanding of the role of tourism (or other sectors) in regional economic development. Regional development bodies and policy makers may therefore find these results of value when planning future tourist attractions or cultural activities. Local authorities may benefit by strengthening the capability to sell local goods and services during an event, by making improvements to the infrastructure, or by making efforts to diversify the economic structure of the region, so that products used as inputs in the production processes are not bought so extensively outside the region. The input output method can thus be used to aid in decision making for regional development. The technique can also be applied to the other areas for which similar input output tables exist, allowing the economic impact of given events to be estimated. If such tables do not exist for specific regional economies, national statistical offices might invest in the preparation of regional tables. However, if regional input and output figures are lacking, the only way to proceed is to adjust the national coefficients to produce a regional table. A very common approach is to use location quotients (see Richardson, 1972b; Miller and Blair, 1985; Flegg et al, 1995; Tohmo, 2004).

15 Economic impacts of cultural events Table 13 summarizes the results of our examination of the Kaustinen Folk Music Festival. The overall impacts include the effects on output, employment, the net income of households and taxes. The effects of the festival on production are about 1.7 million: the direct impact is 1.6 million and the indirect impact is 61,984. The municipality of Kaustinen has subsidized the festival annually with funding to a maximum of 40,365. Thus the event can be seen as a good investment for Kaustinen in terms of economic aggregates: it increases regional taxes by nearly 66,000 in return for a maximum subsidy of 40,365. Music festivals also affect national taxes. In the case of Kaustinen, the extra amount of national taxes is calculated as 46,890. The impact on employment is estimated at 27 employees and the increase in household net income is estimated at about 262, Endnotes 1. Ten of the questionnaires were completed by Swedish visitors, and thus were discarded. 2. For the constraints of input output models, see Richardson (1972b) and Miller and Blair (1985). 3. Festival visitors also spent 16,819 on sectors not mentioned in Table 4. This expenditure is left out of the calculations in this study. 4. The relative size of the region, the regional industrial structure and the nature of the regional technology are also significant. 5. The assumption is that local sectors are fully engaged with no spare capacity. However, instead of hiring additional full-time employees to meet the peak demand, existing employees are likely to work overtime. References Bohlin, M., and Ternhag, G. (1990), Festivalpublik och Samhälsekonomi- en Studie av Falun Folk Music Festival, Institutet för Turism and Reseforskning, Högskolan Falun/Borlänge. Flegg, A. T., Webber, C. D., and Elliott, M. V. (1995), On the appropriate use of location quotients in generating regional input output tables, Regional Studies, Vol 29, No 6, pp Gratton, C., and Taylor, P. (1986), Economic impact study: Hayfield International Jazz Festival, Leisure Management, Vol 3, pp Ilmonen, K., Kaipainen, J., and Tohmo, T. (1995), Kunta ja Musiikkijuhlat, Kunnallisalan kehittämissäätiö, tutkimusjulkaisut, nro 6. Miller, R. E., and Blair, P. D. (1985), Input Output Analysis: Foundations and Extensions, Prentice- Hall, Englewood Cliffs, NJ. Miyazawa, K. (1976), Input Output Analysis and the Structure of Income Distribution, Lecture Notes in Economics and Mathematical Systems, Mathematical Economics, No 116, Springer-Verlag, Berlin. Myerscough, J. (1988), The Economic Importance of the Arts in Britain. Policy Studies Institute, London. Porter, M. E. (1989), The Competitive Advantage of Nations, Free Press, New York. Richardson, H. W. (1972a), Input Output and Regional Economics, Weidenfeld and Nicolson, London. Richardson, H. W. (1972b), Regional Economics, Location Theory, Urban Structure and Regional Change, Weidenfeld and Nicolson, London. Smith, P., and Morrison, W. I. (1974), Simulating the Urban Economy: Input Output Techniques, Pion, London. Statistics Finland (1997), Corporate Enterprises and Personal Business in Finland 1995, Official Statistics of Finland, Helsinki. Statistics Finland (2000), Regional Input Output 1995: Tables and Complication Methods, Official Statistics of Finland, Helsinki. Tohmo, T. (2004), New developments in the use of location quotients to estimate regional input output coefficients and multipliers, Regional Studies, Vol 38, No 1, pp

16 446 TOURISM ECONOMICS Appendix Table A1. Effects on the wholesale and retail trade in the K-P region of consumption valued at 564,438 by festival visitors. Sector Wholesale and retail trade Labour Inter- Production Direct Direct Total Total input mediate multipliers impact impact impact impact coefficients inputs ( ) (employees) ( ) (employees) 01 Agriculture Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish Fruit and vegetables; animal and vegetable oils Other food products and tobacco products Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing , , Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products , , Manufacture of other non-metallic mineral products Basic metals and metal products , Manufacture of machinery and equipment Manufacture of office machinery and computers

17 Economic impacts of cultural events 447 Table A1 continued. Sector Wholesale and retail trade Labour Inter- Production Direct Direct Total Total input mediate multipliers impact impact impact impact coefficients inputs ( ) (employees) ( ) (employees) 19 Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling Electricity, gas and heat supply , , Collection, purification and distribution of water , Construction , Wholesale and retail trade , , Hotels and restaurants , , Transport , , Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities , , Post and telecommunications , , Financial intermediation , , Real estate activities , , Renting and business activities , , Public administration and defence; compulsory social security , , Education Health and social work Other community, social and personal service activities , , Overall , ,

18 448 TOURISM ECONOMICS Table A2. Effects on transport in the K-P region of consumption valued at 315,861 by festival visitors. Sector Transport Labour Inter- Production Direct Direct Total Total input mediate multipliers impact impact impact impact coefficients inputs ( ) (employees) ( ) (employees) 01 Agriculture Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish Fruit and vegetables; animal and vegetable oils Other food products and tobacco products Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products Manufacture of other non-metallic mineral products Basic metals and metal products Manufacture of machinery and equipment Manufacture of office machinery and computers Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling

19 Economic impacts of cultural events 449 Table A2 continued. Sector Transport Labour Inter- Production Direct Direct Total Total input mediate multipliers impact impact impact impact coefficients inputs ( ) (employees) ( ) (employees) 22 Electricity, gas and heat supply , Collection, purification and distribution of water Construction Wholesale and retail trade , , Hotels and restaurants Transport , , Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities , , Post and telecommunications , , Financial intermediation , , Real estate activities , , Renting and business activities , , Public administration and defence; compulsory social security Education Health and social work Other community, social and personal service activities , , Overall , ,

20 450 TOURISM ECONOMICS Table A3. Basic inputs (components of price for output) in the K-P region. Sector Domestic Foreign Value- Other Product Employees Other taxes Production Other imports of imports of added tax product subsidies compen- on subsidies valueproducts products (VAT) taxes sation production added 01 Agriculture Other agricultural activities Hunting and fishing Forestry and logging Mining and quarrying Meat and fish Fruit and vegetables; animal and vegetable oils Other food products and tobacco products Textiles Wearing apparel, leather and leather products Sawmilling and plaining of wood; impregnation of wood Other manufacture of wood and wood products Pulp, paper and paper products; publishing and printing Coke, refined petroleum products, chemicals, chemical products, rubber and plastic products Manufacture of other nonmetallic mineral products Basic metals and metal products Manufacture of machinery and equipment

21 Economic impacts of cultural events Manufacture of office machinery and computers Manufacture of medical and optical instruments Manufacture of transport equipment Manufacture of furniture, recycling Electricity, gas and heat supply Collection, purification and distribution of water Construction Wholesale and retail trade Hotels and restaurants Transport Construction and maintenance of railways, highways and roads Supporting and auxiliary transport activities Post and telecommunications Financial intermediation Real estate activities Renting and business activities Public administration and defence; compulsory social security Education Health and social work Other community, social and personal service activities Source: Statistics Finland, 2000.