By Matt Burdett, 14 December 2017
On this page, we look at the costs and benefits of tourism as a national development strategy, including economic and social/cultural effects.
What is a national development strategy?
A national tourism strategy is a government policy that encourages tourism that brings benefits to the country. Most countries have national development strategies relating to aspect of their economic or social development; for example, China has had a series of five year plans since 1953 where goals are set and initiatives to meet those goals are outlined. At the time of writing, China is currently implementing the ‘Thirteenth Five Year Plan’ (from 2016-2020) which includes plans for the economy, national defence, and even demographic change.
Many lower income countries have adopted national plans for tourism. Tourism is seen as a beneficial industry to focus on for several reasons, including:
- It is one of the world’s largest industries, accounting for around 10% of global GDP, 7% of global trade and 10% of global employment (UNWTO, 2017) (see graphic below)
- It can begin with relatively little investment by attracting small groups of explorers and gradually growing the infrastructure over time
- Tourism can operate at a variety of scales
- Sustainable tourism can help to preserve the economic, social and environmental ‘uniqueness’ of the country, especially when compared to some other industries such as steel production
- Source: UNWTO, 2017. Why tourism? http://www2.unwto.org/content/why-tourism Accessed 14th December 2017.
Features of national tourism strategies
Most countries include a commitment to sustainable tourism in their national tourism development plans. In practical terms, there are some other common elements that most national tourism strategies focus include:
- Promote English (and increasingly Chinese) speaking in the country, so that international visitors can travel more easily
- Reduction of visa requirements. Visas are permits that allow people to enter countries. Many countries require visitors to have a visa because the visitor has to pay for it, and it is a way for countries to gain foreign income. (For example, visitors to Egypt usually pay the visa cost in US dollars, British pounds or Euros). However, many countries are scrapping their visa entry requirements because they want to encourage people to come to the country and visas are a barrier to this.
- Improve secondary tourist facilities, including updating (and in some cases, building) airports, railways and roads
- Allowing more investment from TNCs. Many countries charge taxes on foreign companies, but big companies such as airlines and hotel chains may invest more if these taxes are reduced.
- Open tourism offices in other countries to promote the country as a destination
- Reduce regulation. Foreign companies may invest more if they do not have to abide by strict labour laws and so on.
Costs and Benefits of tourism for development
The costs and benefits of tourism as a development strategy can be evaluated by the geographical themes of economic, social and environment issues.
Economic development is often seen as the priority for lower income countries because without additional money, projects to improve health, education, environment and so on cannot be funded.
The theory of cumulative causation is relatively simple, as shown in the diagram below. The impact of tourism can be positive because the money from tourists circulates through the economy, benefiting people at different stages.
Leakage refers to the loss of economic benefit from tourism due to the foreign ownership of parts of the tourist experience. Usually the profits from each part of the tourist experience are repatriated back to a high income country.
For example, think of the typical package holiday:
- The travel agent takes a profit from the total cost of the holiday
- The transfers to the airport in the tourists’ own country stay in their country
- The airport charges fees which remain in their own country
- The airline is likely owned by a company in the country of origin. Even if it isn’t, the majority of aeroplanes are built in the USA by Boeing and the European Union by Airbus, so part of the ticket price for the flight will go towards paying these countries for manufacturing the plane
- On arrival, a foreign company may own the airport and transport company used to get the tourist to their hotel. Even if not, the manufacturing of the vehicle is again likely to have been done elsewhere and part of the ticket price will go towards the purchase of the vehicle
- The hotel may be foreign owned, and the food and drink for the tourists may be imported (because many tourists are quite psychocentric and want to have food and drink that is familiar to them), so money again leaks out to pay for it
The diagram below shows out economic leakage can operate on even more levels:
- SPRINGSTREAM EDU Nd. Economic Leakage. http://springstream.weebly.com/tourism-impacts.html Accessed 14th December 2017.
There are several other economic impacts:
- Currency fluctuation – the varying price for the currency of a country can make it less or more expensive for tourists to go, so the tourist industry is quite vulnerable to changes in the value of the national currency.
- Jobs – these are often jobs like cleaners, gardners and waiters. They are often low skill, informal work and poorly paid. Management is often brought in from the country where the TNC is based.
- Inflation – as tourists are willing and able to pay higher prices, the local people can find that the cost of items goes up.
- Entrepreneurship – a positive impact is that local people may take it upon themselves to offer a service e.g. a guide of the local area, which can stimulate the local economy.
- Inequality and regional imbalance – as an area (e.g. a coastline) becomes wealthy through tourism, non-tourist areas can be left behind. This can later result in migration and other effects.
Social impacts are those that primarily affect people and culture, although they can overlap with economy and environment.
- New infrastructure can be used by both locals and tourists
- Language development – local people can learn foreign languages which later help them to get jobs
- Pressure to stay in school to become skilled for tourism work – a positive impact is that school children may stay in school longer in order to become qualified for a specific tourist-related job e.g. construction
- Dissatisfaction with their situation – local people can see the difference between the living standards of themselves and the tourists
- Cultural changes e.g. tipping – tipping is not common in many parts of the world but ignorance on the part of tourists leads it to occur, which can gradually alter the culture of the economy
- Exploitation and job insecurity
There are several negative impacts but also some positives:
- Land grabbing – this occurs where land is taken for tourist development without payment or consultation with local people, often because the land is not registered in any individual person’s name
- Water supplies to cater for tourists can withdraw more water than is available, leading to shortages for those who cannot pay
- Increased pollution (air pollution from traffic, noise pollution from tourists etc.)
- Incentive to preserve natural features as they now have a ‘value’ e.g. prevent deforestation because ecotourism is a good way to earn money
SPRINGSTREAM EDU Nd. Economic Leakage. http://springstream.weebly.com/tourism-impacts.html Accessed 14th December 2017.
UNWTO, 2017. Why tourism? http://www2.unwto.org/content/why-tourism Accessed 14th December 2017.
UNWTO, 2017a. United Nations World Tourism Organisation Annual Report 2016. UNWTO. Madrid.
Tourism as a national development strategy: Learning activities
- What is a national tourism strategy? 
- Suggest why some countries use tourism as a part of their development strategy. 
- Identify and describe three barriers to tourism that are commonly removed or reduced as part of a national tourism strategy. 
- Explain how cumulative causation can improve the economy of a country. 
- Outline the issue of ‘leakage’. 
- Create a list of other social, economic and environmental impacts of using tourism as a development strategy. 
Would tourism be a suitable way to develop your local area? Why? Consider:
- What needs to be in place for tourism to develop (e.g. primary and secondary tourist facilities)
- Would any government policies need to change?
- What might be the impact on the local area? Consider social, economic and environmental aspects.