The Role of Tourism in Economic Development: Literature Review
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Having knowledge of what types of tourists a destination attracts can be useful in determining the level of impacts which they might generate as well as being able to cater for their touristic needs more accurately (Wickens, 2002). Ray, et al., (2018) state that marketing has a critical role to play in attracting the right types of tourists which are relevant and interested in what the destination has to offer. For example, a traditional sand, sun and sea holiday may appeal to leisure travellers who are looking to go away for a short break in a safe environment (Harrison & Sharpley, 2017). On the other hand, millennials may be drawn to a back-packing trip around Asia, where they are able to experience the cultural and natural aspects of the destination more closely. In order to understand the significance of this, Cohen (1979) introduced a typology of tourists which helps establish the characteristics of different tourists. Figure 1 demonstrates the four types of tourists commonly found in tourism.
Individual Mass Tourist
Adapted from: Cohen (1979)
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Types of Economic Development in Tourism
The World Travel and Tourism Council [WTTC] (2018) reported that in 2017, one in every ten jobs was supported by the tourism industry, contributing to a total of 313 million jobs worldwide. The importance of employment generation as a result of tourism has been emphasised by Huybers (2007), especially in developing countries where he states that for a majority of these destinations such as India, tourism is a sacred form of income and employment for the population. Therefore, tourism creates opportunities to employ people who otherwise may struggle to find work (Choy, 1995). Baum (2002) also states that businesses often have a high skill set requirement and with a limited number of people having access to education in order to gain and refine new skills required for professional careers, tourism can become an outlet for those who are unable to find employment elsewhere. In this respect, employment will continue to rise as tourism grows.
This leads into another economic development that is stimulated as a result of employment which is income. An inflow of money can be a determining factor in reducing poverty levels and tourism provides destinations with an opportunity to do this (Vanegas, 2014). The United Nations World Tourism Organisation [UNWTO] (2018) stipulates that poverty alleviation should be a priority for all tourism industries and to be included in governmental agendas. Due to how much success tourism has gained over the years, including its ability to perform and compete with destinations and tourism business enterprises, it is argued that in order for those who are less fortunate to benefit, the industry must actively use tourism as a tool to help eliminate this (Hadi, et al., 2013). On the contrary, some scholars also state that the travel and tourism industry is characterised by low pay and long working hours which in fact deters people from working (Weaver, 2009).
Being able to develop the economy is another significant way which tourism contributes to economic development (Dwyer, et al., 2010). This is one of the most common and cited forms of development that arises from touristic activity due to an increased amount of spending (Aguilo, 2017). Also known as gross domestic product (GDP) this has an important role in the wellbeing of a destination, more so in developing tourist destinations which was discovered in an earlier study by Eugenio-Martin, et al., (2004), who found that Latin American countries displayed a positive growth and correlation between the increase of tourists per capita and their economic gain. However, the authors also stipulated that the positive effects on GDP were more profound when tourism was occurring in developing countries as opposed to developed countries.
Destination facilities and features
Vietze and Freytag (2005) revealed another correlation between the features of a destination and higher tourism receipts. They found that the biodiversity of a destination influenced economic growth in a destination as well. Although this did not have a direct effect, they concluded that a destination’s natural features such as greenery, sea life and wildlife habitat did contribute to a higher level of spending, especially from inbound tourism. This demonstrates the importance of maintaining the attributes of a destination. Protecting the biodiversity of a destination also ensures that they can be more sustainable in their approach as a way of not only aiming to keep their country intact, but also the future of their tourism industry (David, 2011). The triple bottom line (TBL) introduced by Elkington (1998) differs from traditional frameworks as it was one of the first to incorporate ecological and social dimensions as seen in figure 2. It also provides useful measures for economic growth such as identifying income, establishment sizes, revenue by sector, growth in employment and so forth.
Figure 2: Triple Bottom Line
Source: Ng, et al., (2017, p.12)
Negative Impacts of Tourism and Effects on Economic Development
There are a number of factors that can impact the growth of economic development which stems from tourism. The leakage effect is known as one of the ways in which economic development can be hindered in destinations as it usually involves the revenue generated from tourism leaking out into other countries (Anderson, 2013). This can pose a threat to developing countries as the income generated from tourism might be completely neutralised through the leakage (Lacher & Nepal, 2010). As a result of this, residents argue to what extent they are being profitable from tourism. There are a number of ways which leakage can occur in tourism, especially during the transportation process where tourists use flights to get to their desired destination (Chirenje, et al., 2013). The fare which they pay ultimately goes to a company that has no relationship with the destination whatsoever. A study carried out by the United Nations Environment Programme [UNEP] (2013, cited in, Wood, 2017) found that for every 100 dollars which a tourist spends, approximately 5 dollars of that reaches the host community. This equates to a huge tourism leakage of around 95%, suggesting that economic development becomes restricted.
Leakage is also closely intertwined with multinational corporations (MNC’s) as well due to the tourist consuming a majority of their services from international enterprises (Rylance, 2017). A general study of economic growth in Nigeria by Brown & Joseph (2018) suggested that oil and agricultural MNC’s in the country were beneficial for technology transfer, allowing the country to benefit and expand their expertise in those areas. However, even when it comes to the consumption of the smallest things in host destinations in developing countries such as food and drink, tourists often end up purchasing brands which they are familiar with such as Coca-Cola for instance. Essentially, the profits accumulated from transactions like this are received by the MNC’s, continuing to limit economic development for the host country (Akama, & Kieti, 2007). However, this is most often argued from the perspective that MNC’s provide the opportunity for more employment and income for local residents (Liu & Wall, 2006).
Mass tourism has been widely covered by academics and the possible impacts which it generates for the host country (Akis, 2011). Although mass tourism can be harmful for any destination, it can have adverse impacts for those countries that rely on their natural features for a steady stream of income from tourism (Lun, et al., 2011). Host destinations which are developed, often have the ability to recover any damage caused to their tourist facilities or features as they have the advantage of investing into restoring and developing certain parts of their destinations for tourism consumption (Sharpley & Telfer, 2015). Developing countries may not always have the funds to do this and if tourism is not included in their governments’ agenda for example, then it becomes an issue that is rarely addressed, and tourism continues to occur without any proper organisation (Hawkins, 2006).
Aguilo, E., Rossello, J and Vila, M., (2017). Length of stay and daily tourist expenditure: A joint analysis. Tourism Management Perspectives. 21 (1). pp. 10-17
Akama, J and Kieti, D., (2007). Tourism and socio-economic development in developing countries: A case study of the Mombasa Resort in Kenya. Journal of Sustainable Tourism. 15 (6). pp. 735-743
Akis, A., (2011). The effects of mass tourism: A case study from Manavgat (Antalya-Turkey). Procedia – Social and Behavioural Sciences. 19 (1). pp. 289-296
Anderson, W., (2013). Leakages in the tourism systems: case of Zanzibar. Tourism Review. 68 (1). pp. 62-76
Baum, T., (2002). Skills and training for the hospitality sector: A review of issues. Journal of Vocational Education and Training. 54 (3). pp. 343-364
Brown, E and Joseph, U., (2018). Impact of multinational corporation on economic growth in Nigeria. International Journal of Scientific and Education Research. 2 (2). pp. 84-90
Choy, D., (1995). The quality of tourism employment. Tourism Management. 16 (2). pp. 129-137
Cohen, E., (1979). A phenomenology of tourist experience. Sociology. 13 (2). pp. 179-201
David, L., (2011). Tourism ecology: Towards the responsible, sustainable tourism future. Worldwide Hospitality and Tourism Themes. 3 (3). pp. 210-216
Dwyer, L., Forsyth, P and Dwyer, W., (2010). Tourism Economics and Policy. UK: Channelview Publications
Elkington, J., (1998). Accounting for the triple bottom line. Measuring Business Excellence. 2 (3). pp. 18-22
Eugenio-Martin, J., Morales, N.M and Scarpa, R., (2004). Tourism and economic growth in Latin American Countries: A panel data approach. FEEM. 26 (N/A). pp. N/A
Hadi, M., Roddin, R., Razzaq, R.A.A., Mustafa, Z.M and Baser, A.J., (2013). Poverty eradication through vocational education (tourism) among indigenous people communities in Malaysia: Pro-poor tourism approach (PPT). Procedia-Social and Behavioural Sciences. 93 (N/A). pp. 1840-1844
Harrison, D and Sharpley, R., (2017). Mass Tourism in a Small World. UK; USA: CAB International
Hawkins, D and Mann, S., (2006). The world bank’s role in tourism development. Annals of Tourism Research. 34 (2). pp. 348-363
Huybers, T., (2007). Tourism in developing countries. UK: Edward Elgar Publishing Lacher, G and Nepal, S., (2010). From leakages to linkages: Local-level strategies for capturing tourism revenue in Northern Thailand. Tourism Geographies. 12 (1). pp. 77-99
Liu, A and Wall, G., (2006). Planning tourism employment: a developing country perspective. Tourism Management. 27 (1). pp. 159-170
Lun, L-M., Pechlaner, H and Volgger, M., (2016). Rural tourism development in mountain regions: Identifying success factors, challenges and potentials. Journal of Quality Assurance in Hospitality and Tourism. 17 (4). pp. 389-411
Ng, P., King, Z and Ow, Y., (2017). The design process and analysis of an innovative umbrella. UK: Lambert Academic Publishing
Ray, N., Das, K. D and Kumar, R., (2018). Tourism Marketing: A Strategic Approach. Canada; New Jersey: Apple Academic Press.
Rylance, A., (2017). Reducing economic leakages from tourism: A value chain assessment of the tourism industry in Kasane, Botswana. Development Southern Africa. 34 (3). pp. 295-313
Sharpley, R and Telfer, D., (2015). Tourism and development: Concepts and issues. UK: Channel View Publications
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Vanegas, M., (2014). The triangle of poverty, economic growth, and inequality in Central America: does tourism matter? Worldwide Hospitality and Tourism Themes. 6 (3). pp. 277-292
Vietze, C., and Freytag, A., (2006). International Tourism, Development and Biodiversity: First Evidence. (Online). Available at: https://www.researchgate.net/profile/Christoph_Vietze/publication/5140846_International_Tourism_development_and_Biodiversity_First_Evidence/links/0912f5061a4910fc8e000000/International-Tourism-development-and-Biodiversity-First-Evidence.pdf. (Accessed 16th September 2018)
Weaver, A., (2009). Perceptions of job quality in the tourism industry: The views of recent graduates of a university’s tourism management programme. International Journal of Contemporary Hospitality Management. 21 (5). pp. 579-593
Wickens, E., (2002). The sacred and the profrane: A tourist typology. Annals of Tourism Research. 29 (3). pp. 834-851
Wood, M., (2017). Sustainable Tourism on a finite planet: Environmental, business and policy solutions. Oxon: Routledge
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