Unit 4 Macro: Tourism and Economic Development

For many developing countries tourism is already a major part of their economy and a significant source of extra factor incomes and employment. But there is a fierce debate about the economic and social consequences of tourism - what roles can tourism play in economic development? Can travel to developing countries do more harm than good? This revision blog provides some arguments and resources on this topic.

Benefits from the growth of tourism as an economic sector

Employment creation, tourism is labour-intensive industry. The growth of ethical tourism has been a key recent feature + volunteerismExport earnings - tourism is a service industry - generates important foreign exchange earnings. A source of diversification for many smaller countriesBoost to aggregate demand - creating local and regional income-multiplier effects. Spillover benefits for suppliers of local produce; better informed touristsAccelerator effects from investment in tourism infrastructure and services such as airlinesData on international tourism revenues as a % of total exports

Risks from rapid expansion of tourism as a growth and development driver

Exploitation of local labour by overseas transnational tourist businesses, rapid growth of sex industry in many countries. Many workers in tourism are migrant workers suffering from poor employment conditionsOutflow of profits from foreign-owned tourist resorts, many resorts have few locally-owned and run hotels. All-inclusive deals ignore the local economy. Passengers from cruise ships have little direct effect on the local economy.Externalities - from construction projects, congestion, waste, pressure on the natural environment. Rising property prices makes housing less affordable for local people.Deepening pressures on local cultures from westernization, the doubtful benefits of slum-tourismBackground on the global tourism industry:

• Globally, tourism is a $3 billion a day industry
• The income elasticity of demand for overseas travel and tourism is high
• According to a recent United Nations Report, in over 150 countries, tourism is one of five top export earners, and in 60 it is the number one export
• Developing countries account for 40% of world tourism arrivals and 30% of tourism receipts
• South-South tourism is growing rapidly – i.e. from developing to other developing countries
• Women make up 70 per cent of the labour force in the tourism sector, and half of all tourism workers are 25 or under

Medical tourism in Thailand

Iran seeks tourism boost

Macro Revision Quiz

Related video resources:

South Korea invests in medical tourism (Financial Times)