The regional economic role of tourism consumption and its inter-industry linkages: evidence from a subnational region in Japan

Tourism is recorded in input-output tables as expenditure across industries rather than as a standalone sector, making its regional production linkages and local retention difficult to assess. This study develops an integrated diagnostic framework based on input-output tables and applies it to Kanagawa Prefecture, Japan, using prefectural tables and tourism consumption data for 2015 and the pandemic-disrupted year of 2020. Each industry’s output is decomposed into Direct Tourism, Supporting Tourism, and Non-tourism components within an expanded 111-component system. A tourism-disaggregated Hypothetical Extraction Method measures tourism-induced system dependence, while a prefectural retention rate captures the share of induced production generated locally under alternative import assumptions. Tourism-induced output contracted sharply in 2020, particularly in transport and personal services. Aggregate extraction losses from Direct Tourism components were more than three times those from Supporting Tourism components in both years. Despite the contraction, the aggregate retention rate rose from 34 to 41%. A decomposition attributes this increase almost entirely to measured changes in sourcing structure rather than demand composition.