Commerce | Tourism » The role of tourism in an economy of any country

Source: http://www.doksinet The tourism industry generates substantial economic benefits to both host countries and tourists home countries. Especially in developing countries, one of the primary motivations for a region to promote itself as a tourism destination is the expected economic improvement. According to the World Tourism Organization, 698 million people traveled to a foreign country in 2000, spending 478 billion dollars. International tourism receipts combined with passenger transport reached 575 billion dollars. The main economic impacts of tourism relate to foreign exchange earnings, contributions to government revenues, and generation of employment and business opportunities. An important indicator of the role of international tourism is its generation of foreign exchange earnings. Tourism is one of the top five export categories for as many as 83% of countries and is a main source of foreign exchange earnings for at least 38% of countries. Foreign exchange earnings

Tourism expenditures and the export and import of related goods and services generate income to the host economy and can stimulate the investment necessary to finance growth in other economic sectors. Some countries seek to accelerate this growth by requiring visitors to bring in a certain amount of foreign currency for each day of their stay. Contribution to government revenues Government revenues from the tourism sector can be categorized as direct and indirect contributions. Direct contributions are generated by taxes on incomes from tourism employment and tourism businesses, and by direct levies on tourists such as departure taxes. Indirect contributions are those originated from taxes and duties levied on goods and services supplied to tourists. The World Travel and Tourism Council estimates that travel and tourisms direct, indirect, and personal tax contribution worldwide was over US$ 800 billion in 1998 - a figure it expects to double by 2010. Source: http://www.doksinet

Employment generation The rapid expansion of international tourism has led to significant employment creation. For example, the hotel accommodation sector alone provided around 113 million jobs worldwide in 1995. Tourism can generate jobs directly through hotels, restaurants, nightclubs, taxis, and souvenir sales, and indirectly through the supply of goods and services needed by tourism-related businesses. According to the WTO, tourism supports 7% of the worlds workers. Stimulation of infrastructure investment Tourism can induce the local government to make infrastructure improvements such as better water and sewage systems, roads, electricity, telephone and public transport networks, all of which can improve the quality of life for residents as well as facilitate tourism. Contribution to local economies Tourism can be a significant, even essential, part of the local economy. As the environment is a basic component of the tourism industrys assets, tourism revenues are often used to

measure the economic value of protected areas. The importance of tourism to local economies can also be illustrated by the impacts when it is disrupted: the catastrophic 1997 floods that closed Yosemite National Park in California cause locally severe economic losses to the areas around the park. In the most heavily impacted county, Mariposa County, personal income was reduced by 6.6% The county was also estimated to have lost US$167 million in county occupancy and sales tax revenues, and 956 jobs, a significant number in a county of fewer than 16,000 residents. To prove the enormous impact of tourism on the economy, let’s take Australia for an example. Tourism is one of Australias largest industries. It accounts for $487 billion or 86% of Australias Gross Domestic Product. This represents a greater contribution than the agriculture or communication services sectors. As part of the international economy, tourism is a major force as it generates 11.2% of Australias total export

earnings, more than traditional exports such as coal, iron Source: http://www.doksinet and steel products. It is forecast that tourisms export growth rate will outperform all key sectors by 2004-2005. Tourism is an important economic driver In Victoria, $11 billion was spent by domestic and international visitors in 1998. Revised forecasts from the Tourism Forecasting Council predict international visitor arrivals to Australia will reach 9.4 million by the year 2010 International visitors are forecast to grow at an average annual rate of 6.6% over the next 10 years The Australian economy is fundamentally shifting from primary industry to a service and knowledge base. The total number of jobs increased by 173% between 1986 and 1996. Tourism can promote and facilitate economic activity that supports aspects of regional life. For example, farm stays, cellar doors and the purchase of local produce support agriculture, while the purchase of other products supports local retail and

industry. Tourism spending also has a multiplier effect in the local economy as it is spent and re-spent by employers and employees. Tourism may generate income for local government in the form of rates and levies or as a result of patronage of local government owned attractions and services. This income contributes to the quality and quantity of local services and facilities provided for the benefit of both residents and visitors. As we can see the tourism industry has significant impact and potential for job creation, export earnings, and social cohesion. It is estimated that the role of tourism in an economy will grow constantly in the next few years. So we can expect that tourism will become one of the major industries all over the world