Using System Dynamics Methodology to analyse the Economic Impact of Tourism Multipliers Mohamed Loutfi, Alfredo Moscardini School of Computing, Engineering and Technology, University of Sunderland, Sunderland, SR6 0DD United Kingdom +44 191 515 2763 mohamed.loutfi@sunderland.ac.uk a.moscardini@sunderland.ac.uk and Kevin Lawler Sunderland Business School, University of Sunderland, Sunderland, SR6 0DD United Kingdom +44 191 515 2341 kevin.lawler@sunderland.ac.uk Abstract The importance of tourism for economic development is widely recognised . This is reflected in the great interest shown by governments by promoting foreign direct investment and freeing both public and private sector projects. Most tourism studies concentrate on analysing the economic and social effects of tourism. The impact of the multiplier has been studied widely using traditional econometric techniques. This paper focuses on analysing the economic impact of tourism revenue on the Egyptian economy. The economic theory and the mathematical modelling involved in such scenarios is discussed but the main thrust of the paper is the encapsulation of this situation by Causal Loop Models . A dynamic model, run in Powersim, is then described where important non-linear dynamical movements and the significance of systems thinking in this framework are considered . This model considers the dynamics of tourism in Egypt and its impact on GNP. 1. Introduction The importance of tourism for an economy is independent of whether it is developed or developing. . Inskeep showed that in 1989 tourism revenues world-wide were nearly 209 billion dollars growing at 9% yearly. This revenue then represented nearly 7% of total international trade and 30% of total international income. Tourism played a major role in modernising the Spanish economy. In the USA, tourism generated 5 million jobs and was 6.7% of GNP in the USA in 1989 (Inskeep, 1991). It is not only income effects that make tourism sectors important. These sectors include foreign investment, subsidies and taxation. Infrastructure and resources are considered the most important feature for any country in a competitive world fighting to attract market share. In developing and advanced countries, tourism is viewed as an important means to