strategy

Promoting economic benefits of tourism

Context:
It has been estimated that, worldwide, tourism directly or indirectly supports sixty-five million jobs, including hotel staff, taxi drivers, tour operators, shops attendants and others. Secondary employment is generated in agriculture, industry, handicrafts and services. Tourists prefer to travel in regions with little industrial development. They also tend toward areas of little agricultural value. For these reasons, tourism can become a dynamic force in regional economies. Tourism can contribute to internal income redistribution within a country (favouring non-urban areas), and international income redistribution (favouring less-developed countries). From the production point of view, tourism contributes around 1.5 per cent of world gross national product (GNP). Tourism is also a major source of employment, the hotel accommodation sector alone employing around 11.3 million people worldwide. Furthermore, tourism based on the natural environment is a vital and growing segment of the tourism industry, accounting for $260 billion in 1995. In a number of developing countries, tourism has already overtaken cash-crop agriculture or mineral extraction as their major source of national income.
Implementation:
The tourist income multiplier ([tim]) is a coefficient that expresses the amount of income generated by a unit of tourism expenditure. [Tim] is raised when value is added to local materials and services within the tourism sector: [eg] packaged tours, locally-owned accommodations and nature tourism.

Tourism is one of the world's fastest growing industries and the major source of foreign exchange earnings for many developing countries. The receipts from international tourism grew at an average annual rate of 9 per cent for the ten-year period from 1988 to 1997, reaching $443 billion in 1997. Tourist arrivals worldwide increased by 5 per cent per annum on average during the same period. According to World Trade Organization, tourism receipts accounted for a little over 8 per cent of total world exports of goods and almost 35 per cent of the total world exports of services in 1997. The breakdown of the travel account balance shows that the industrialized countries as a whole are the net importers of such services, while the developing countries as a whole have been increasing their surplus. The surplus for the latter group of countries widened steadily from $4.6 billion in 1980 to $65.9 billion in 1996, offsetting more than two thirds of their current account deficit in 1996. The travel surplus has widened steadily in all developing regions in the past decade. Economies in transition recorded a deficit of $3.5 billion in 1995, which swung back to a surplus of $1.5 billion in 1996.

Claim:
1. The tourism sector contributes to three high-priority goals of developing countries: the generation of income, employment and foreign-exchange earnings. The tourism sector can play an important role as a driving force of economic development.

2. Every room in a three- or four-star hotel in Venezuela generate one job; for five-star hotels, each room creates 1.3 jobs. One job generated by a hotel generates one more job elsewhere in the tourism trade and two in the rest of the economy.

3. The tourism sector, particularly hotels, can play an important role in attracting foreign investment and providing training for nationals. Many tourism ventures include foreign equity participation and technical knowledge about the construction and operation of hotels and encourages ancillary businesses.

4. Tourism offers developing countries the possibility of diversifying their export earnings, particularly given that (i) traditional exports are subject to price fluctuations and (ii) there is a trend toward reducing the administrative, monetary and border formalities that affect international tourism mobility.

5. The tourism sector has the capacity to recover foreign currency investments in a very short period of time. The World Tourism organizations (WTO) estimates, for instance, that a medium-class beach hotel in a developing country will earn back in one year the entire foreign exchange required to build and equip it. In the case of tourist vehicles, such as buses, this period is even shorter.

6. With only few exceptions, the terms of trade for developing countries, [ie] the ratio between the prices that a country receives for its exports and the prices it pays for its imports, have traditionally been unfavourable, because of fluctuations in the prices of raw material exports. But in the case of international tourism, the products are less affected by speculative or strategic offers. It is therefore a sector that tends to improve the terms of trade of an economy in the medium as well as the short term.

Counter Claim:
Not all tourism receipts are retained within the economy. In fact, there is an outflow of foreign exchange for some of the goods and services consumed by visitors, as well as for capital goods invested in tourism and for payments abroad. Import needs depend on the level of development and the degree of diversification of a country's economy.
Type Classification:
G: Very Specific strategies
Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 11: Sustainable Cities and Communities