CHAPTER 3

FUTURE ECONOMIC DEVELOPMENT

IN TOURISM
 LEARNING OBJECTIVES

• Understand the projected growth in international

tourism globally.
• Understand the determinants of tourism growth.
• Understand the distinction between tourism led
growth and growth led tourism.
• Understand the challenges to tourism growth in
lesser developed countries (LDCs).
• Understand the types of policies that can help
countries achieve and maintain destination
competitiveness.
 1 PROJECTIONS OF TOURISM GROWTH

• Travel and tourism (T&T) is a key sector in the world

economy and is a catalyst for economic growth and
development in many countries.

• Tourism is growing rapidly in many countries,

particularly in the developing world.

• International tourist arrivals worldwide are expected

to increase by 3.3% a year from 2010 to 2030 to
reach 1.4 billion by 2020 and 1.8 billion by 2030.
1 PROJECTIONS OF TOURISM GROWTH

• A dynamic world economy creates the economic

basis for continued growth in domestic and
international tourism worldwide.

• A growing national T&T sector contributes to

employment, raises national income, and can
improve a country’s balance of payments and
general infrastructure.
2 DRIVERS OF TOURISM GROWTH

Demand side: shifting demographics, increased

longevity, increasing urbanization, higher
standards of health care, changing work patterns
allowing for more flexibility of travel plans, wider
spread of education, migration, stress
management through holiday escapes, changes in
people’s values and needs, aspirations and
expectations.
2 DRIVERS OF TOURISM GROWTH

Supply side: globalization drives the expansion of a

unified global market facilitating the movement of
capital, goods and people, including mass tourism; new
information technologies give consumers more power
and control through knowledge of travel and destination
options; advances in the technology of air, water and
ground transportation systems and electronic data
systems continues to reduce real travel costs and
facilitate the making of travel arrangements.

The continued deregulation and liberalization of air

transport further supports the growth of trade and
tourism.
3 TOURISM AND ECONOMIC GROWTH

• The greatest generator of tourism flows

worldwide, international and domestic, is
increasing income (Growth led tourism; GLT).

• Proponents of the tourism-led growth (TLG)

hypothesis emphasise that international
tourism can generate foreign exchange,
generate employment, spur local investments,
exploit economies of scale and diffuse technical
knowledge.
3 TOURISM AND ECONOMIC GROWTH

Issues:
o Economic equality.
o Interindustry effects of tourism growth.
o Challenges to tourism growth in LDCs.
o Estimating tourism’s economic contribution.
o Dependency.
o Neglect of domestic tourism.
o Industry consolidation.
o Leakages.
 THE COSTS OF TOURISM GROWTH

• On the standard view, economic growth is

paramount – more is better, despite the
fact that tourism’s obsessive drive for
expansion is destroying the very natural
and socio-cultural environments that
attract visitation.
 THE COSTS OF TOURISM GROWTH

• Critics argue that tourism growth can

generate income inequalities, destroy local
industries and create greater dependency of
developing economies on developed ones,
with adverse effects on small business. Local
level negative effects include increased prices
of consumer goods and services, increased
price of land and housing beyond local
affordability, increasing inequality between
rich and poor and increased demands on
public services and facilities.
 THE COSTS OF TOURISM GROWTH

• Some critics advance stronger claims that

increased industry growth, through the operation
of TNCs, include resource exploitation, loss of
biodiversity, habitat destruction, pollution, social
alienation and degradation of culture, the
displacement of indigenous peoples from lands,
human rights abuses, unfair labour and wages,
commodification of cultures and environmental
degradation.
POLICIES TO ENHANCE DESTINATION COMPETITIVENESS

• Researchers have developed frameworks

for assessing destination competitiveness.
• To build advantage over competing
countries, policymakers and destination
managers need to identify and leverage
capabilities that make their destination
distinctive.
POLICIES TO ENHANCE DESTINATION COMPETITIVENESS

• Factors driving stable inbound tourism

growth:
o Affinity for travel and tourism.
o Policy rules and regulations.
o Price competitiveness.
o Environmental sustainability.
o Safety and security.
 CONCLUSIONS

1. The causes of future tourism growth, on both the

demand side and supply side must be understood
by tourism stakeholders in both developed and
lesser developed countries.
2. Researchers have determined links between
tourism growth and economic growth.
3. A focus on economic forces has led to a neglect of
the costs of tourism growth to the socio-cultural
fabric of destinations as well as to the quality of
environmental resources that are important
attractors of visitation.
 CONCLUSIONS

4. Understanding the challenges to tourism growth

is particularly important for LDCs if they are to
avoid the mistakes of more developed
destinations.
5. The particular strategies developed will depend
on the characteristics of the destination, and the
type of tourism development favoured by the
host community.