Overview of tourism and economic development
Economists are focusing their attention to the tourism sector because of what is seen as positive economic returns from the industry. The tourism industry is proactive and has undergone diversification resulting in further expansion of the industry. The industry ranges from real tourist sites and activities to travel, entertainment for tourists and accommodation.
Countries have continued to invest in the tourism industry because of the returns that they have been getting from people who have already invested in the industry. The economic worth of the tourism industry is significantly to economic growth and development of many nations in the world. The global tourism industry brings substantial economic returns to economies.
The tourism industry has been expanding at an accelerating pace. As it stands today, the industry has expanded thus becoming a significant contributor to gross domestic product of states. Tourism presents an extended number of economic opportunities to countries that embrace tourist activities.
The economic opportunities that accrue to the tourism industry include increased investment, which creates many other benefits to national economies like the creation of jobs. The other most significant benefit of tourism, especially cross border tourism, is the improvement of balance of payments (UNWTO, para. 1). This promotes the growth of national economies by raising their ability to take part in international trade.
Tourism and economic opportunities
One of the notable explanations why tourism sectors receive voluminous support from governments is that tourism presents many opportunities for the growth of national economies. Tourism brings about a vast number of economic opportunities for economies. Economic researches and surveys present a number of benefits that are derived from tourism by nations across the world.
The first outcome, which is backed by economic evidence from countries across the world, is that tourism helps in the creation of income and employment. The second finding is that tourism helps in eliminating deficits in the balance of payments of countries that practice it. Tourism also stimulates investment and growth of other sectors in national and the global economy.
All these are pointers to positive signs on the quantitative measure of growth and development of the economy. The contribution of tourism to gross domestic product of countries can no longer be ignored. Many economies have reported a contribution of up to 10 percent of the tourism industry to their annual total gross domestic product (UNWTO, para. 2).
Tourism and the creation of income and employment
Income and employment are critical factors of measuring the rate of economic growth and development of any given economy in the world. Tourism is a crucial contributor to these macroeconomic factors in most nations in the world. There are a vast number of investments in many countries, in the world, by both private and public investors in the tourism industry.
These investments are strategic and are used as a means of positioning countries and regions as tourism icons. Tourist vibrant regions in the world are pumping large sums of money in the industry. This has broadened its capacity to attract a high number of tourists which translates to increased income from the industry. Tourists have enormous pattern of expenditure which boosts economies in tourist destinations.
Income from tourism comes from the diverse investment in tourism. Income in the tourism industry arises from the investments that are made by individuals and firms. Incomes are also attributed to regular earnings that are received by people who are employed in the industry.
The hotel industry, which is one of the main subsections of the large tourism industry, receives most of its income from tourists. Without guests from travel and tourism, revenues from the hotel industry crash significantly (UNWTO, para. 3).
Vast amounts of job opportunities have been created in the tourism industry. Of all the jobs that are created across the globe, the tourism industry contributes about 10 percent of the total jobs. This figure is exclusive of opportunities in other sectors, which accrue to the growth of tourism.
Tourism provides both permanent and temporary jobs. The kind of employment created in the tourism industry depends on the nature of tourism. Temporary employment mostly emanates from short term tourism events. Such events are common in sports tourism. Tourism also sustains many other sectors of the economy. A clear example is the global transport industry which consists of a large number of airline companies.
The industry is heavily backed by tourism. Most of revenues in the industry are generated from the transportation of tourists across the globe. With the generation of more revenues, the industry expands hence creating job opportunities.
Economic indicators continue to show that most of the opportunities in the tourism industry remain unexploited. This is common in the developing world where there is limited investment in the industry. Tourism remains to be a key industry in terms of the creation of job opportunities in countries that embrace the industry (Aykac 12).
Tourism and balance of payments
The main aspect that is seen as a contribution of the tourism industry to national economies is its contribution to balance of payments. International tourist activities lead to the exchange of currencies between different countries. National government value tourism a lot because it is one of the main sources of foreign currency.
This forms another key reason why tourism development is emphasized by national governments. The balance of payments for each country determines its economic worth in bilateral and multilateral trade practices.
The availability of foreign currency eases trading activities between states. Countries that have highly developed tourism sectors receive a large number of tourists. A country increases its foreign currency earning through receiving foreign tourists (Sexton 543).
Research shows that global trade is a practice that attracts all countries in the world. Therefore, the demand for foreign currency is always on the upward trend for all countries. When tourists enter foreign countries, they undergo two types of expenditure. The first expenditure is often referred to as direct expenditure. This is the total money that is spent on sustaining the tourist in the foreign destination.
Tourists also spent on buying a number of items in foreign destinations. All these expenditures add to the total amount of foreign currency that is fetched by countries as a result of travel and tourism. The gain of foreign currency by countries helps in stabilizing their national economies.
Tourism increases foreign earnings through the injection of foreign currency in economies. It is worthwhile noting that tourism reduces deficit that are witnessed in balance of payments of different countries. Countries have a reason to keep investing in the tourism industry as the payoffs are worth the investments that are made by investors in the industry (International Monetary Fund 8).
Tourism as a stimulator of investment in economies
As earlier mentioned, tourism creates numerous opportunities in the global economy. Stimulation of the investment climate is one of the numerous opportunities and contribution of the tourism sector to economic development. Research reveals that there is a substantial investment that the tourism industry presents in different countries across the globe.
Many economies have already taken initiatives of maximizing on the economic opportunities created by the industry. The tourism industry presents both direct and indirect investment chances. Direct investment opportunities are found in industries that directly support tourism. These are the hotel, food and accommodation industry and the transport industry.
Indirect investments are found in industries which are not directly linked to tourism. A clear example is the building of supportive infrastructure to back the industry (Global Times, para. 2). Competition in the global industry is the motivator of the numerous investment projects, which are being implemented by national bodies that are in charge of tourism at national levels.
Many countries are working on modalities of broadening their capacity to host tourists. This translates to increased investment in the hotel building, beach expansion and the diversification of different factors of tourist attraction.
Countries are also building the new structure and upgrading the existing structures like sporting structures in order to increase their capacity to host international sporting events. These investments are indicators of growth in economies (“Oecd Tourism Trends and Policies 2012” 325).
Competition in the tourism industry
According to the Canadian Tourism Commission (12), there is a notable trend of competition which is being witnessed in the global tourism industry. Just as it has been witnessed in other industries, in the international economy, the tourism industry is becoming extremely competitive for different players. This denotes the worthiness of the industry to the economic development of regional and national economies.
Competition for global customers has become the order of the day in the tourism industry with each country struggling to position itself as a furnished tourist destination. This is seen in all kinds of tourism and their partner industries.
The competition in the global tourism sectors is being encouraged as one way of improving the industry by bettering the services that are offered in the industry. As services are bettered, the rate of returns in the industry is expected to go higher. Tourism marketing and advertising are now a common economic practice for countries that are tourist destinations.
Research shows that this trend will continue into the future and be a basis of attracting tourists by each nation in the world. However, this trend is argued to be unfavorable because of a number of reasons. The first argument is that the trend is favorable to countries that have vast economic resources.
It does not favor countries with limited economic powers. Countries with less economic power are forced to strain their resources in marketing and advertising tourism. This has negative implications for the economic development. The negative implications are pictured in the global economy.
They end up creating minimal opportunities, which are insufficient in paying off for their investments. These countries are, however, learning to be proactive in molding and marketing their tourism industries. Most of them have remained focused and competitive and draw a lot of benefits from the industry (“Oecd Tourism Trends and Policies 2010” 9).
Works Cited
Aykac, Aslihan. “Tourism Employment: Towards an Integrated Policy Approach.” Anatolla: An International Journal of Tourism and Hospitality Research 21.1(2010): ll-27. Print.
Canadian Tourism Commission. Harnessing innovation and alignment: 2012-2016 Corporate plan summary. 2012. Web.
Global Times. Singapore positions as Asian investment hub in tourism. 2012. Web.
International Monetary Fund. Staff Country Reports 2011. Washington D.C: International Monetary Fund. 2011. Print.
Oecd Tourism Trends and Policies 2012. Paris: OECD, 2012. Print.
Oecd Tourism Trends and Policies 2010. Paris: OECD, 2010. Print.
Sexton, Robert L. Exploring Microeconomics. Mason, OH: South-Western Cengage Learning, 2013. Print.
UNWTO. Why Tourism?. 2012. Web.