Economic Benefits and Costs of Tourism

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Table of Contents

Overview of Economic benefits and costs of tourism
Economic benefits of tourism – an overview
Tourism and employment
Tourism and the promotion of the balance of payments
Cultural development through tourism
Economic costs of tourism
Works Cited

Overview of Economic benefits and costs of tourism

According to Sexton (543), tourism is one of the fastest growing industries in the services sector of the world. The industry is comprised of numerous services sectors. In a substantial number of countries in the world, tourism is highly embraced. This is attributed to the fact that tourism is the sole earner of foreign exchange for those countries.

Many economists have begun shifting their attention from other sectors and are now focusing on analysing the tourism sector. They see tourism as a larger industry than what it was thought to be. There is no doubt that tourism encourages economic development. However, there exists a number of negative aspects in the global tourism sector.

The tourism industry encourages other vices like poor development of infrastructure, which impacts negatively on the environment. Tourism also has other negative social effects to tourist destinations. This paper discuses tourism and brings out the key economic benefits of tourism. The paper also looks into the negative aspects of tourism. These negative aspects are termed as the economic costs of tourism.

Economic benefits of tourism – an overview

Tourism brings about numerous benefits to countries. Most countries are converting tourism into their main economic activities. This means that a substantive number of economic benefits are derived from tourism. Tourism is closely associated with economic development.

The tourism industry is open and promotes the development of many other economic sectors. Other benefits of tourism include improvement of the balance of payments of countries, the creation of employment opportunities and the enhancement of cultural heritage.

It is imperative to say that tourism brings about economic development (Sexton 543). The benefits of tourism can be assessed from its direct effects on economic performance of countries. The benefits can also be analysed based on its indirect contribution to economic development.

Tourism and employment

As mentioned in the introductory note, tourism is among the fastest growing industries in the world. Each county in the world today strives to improve its tourism sector so as to attract more tourists. Employment is one of the critical aspects of macroeconomic development.

Each economy in the world strives to attain full employment. Therefore, any economic sector, which creates job opportunities to the population, is considered a strong force in economic development. Tourism cannot be easily separated from the generation of employment opportunities.

According to the global statistics that are compiled by the International Labor Organisation, tourism employs millions of people in the world. Apart from the manufacturing sector, the services sector of the world provide a substantial number of job opportunities to the citizens. Being an active industry in the global services sector, tourism provides direct and indirect employment opportunities (International Labor Organisation, para. 5).

A relatively high number of people in the world today have shifted from other industries and are now investing in the tourism sector. Basing on the trends in the industry, these people project to get desirable results from the investments. This not only enhances economic development, but also creates job opportunities.

Direct investors in the tourism sector are considered to be self employed. They also employ many other people to help manage their investments. Other sources of employment in the industry are the supportive sectors of the industry like the hotel industry and global transport industry. The transport industry receives significant boosts from the tourism industry. This is also implicated in the hotel industry (Eddie, Webber and White 26).

This enhances the capacity of the industry to create employment. Employment also comes from infrastructure developments that are geared towards improving the tourism industry. All these forms of employment top up the number of people who are directly employed in the industry (International Labor Organisation, para. 6).

Tourism and the promotion of the balance of payments

The balance of payments is a critical factor of economic growth and development of each country in the world. It is a measure of the rate of economic growth and competitiveness of a given country relative to the growth of the global economy. The balance of payments is often enhanced by the ability of a country to gain foreign currency. When a country secures more foreign currency, it becomes advantaged in international trade.

Tourism entails the movement of people to foreign destinations. When they move to these destinations, tourists carry with them the foreign currency which is exchanged with the currency of the destination country. Therefore, when a country creates a favorable environment for tourists, it is bound to receive more foreign currency from the tourists. The value of the foreign currency is often cited as one of the vital reasons why states keep advocating for tourism (Cooper and Michael 2).

Countries, which promote tourist activities, gain a lot of foreign currency. This ends up boosting the rate of foreign trade and other financial transactions. States with highly developed tourist structures entice a substantial number of tourists. The result of this is that these countries reduce the deficit in their balance of payments.

Real examples of tourism and the promotion of balance of payments can be cited in sports tourism. Sports tourism is a prime tourism activity in the world. Sporting events often attract a high number of people. Notable events include the FIFA World Cup and the Olympic Games. These events attract thousands of participants and hundreds of thousands of spectators who flock and spend in the destination country (Cooper and Michael 100).

Cultural development through tourism

Cultural development is an ignored sector in many economies. However, cultural development promotes tourism in most parts of the world. Cultural sites attract a high number of tourists. With this, the preservation and enhancement of culture is a common activity. The significance of reserving culture has expanded in scope. This means that tourist destinations with enriched cultures have a higher affinity for tourists than destinations which do not embrace the preservation of culture.

To this effect, it is imperative to say that cultural development is one of the vital facets of tourism, thence economic development. Cultural development can also be looked at from another perspective. Cultural development can be termed as an industry in itself. The tourism sector promotes traditional industries in a large number of countries. Traditional industries play a critical role in maintaining and reserving culture of different communities.

When looked into from the economic scope, local industries have been found to be pillars of local economies. They provide are sources of employment and income to local populations. Traditional industries can hardly thrive without the support of local and international tourism. As tourism grows, traditional industries also keep growing. The economic scale of traditional industries also keeps expanding. This expansion is highly desired. It denotes the growth in the potential of the industry to provide employment (UNWTO, para. 2-4).

Economic costs of tourism

As far as tourism presents numerous economic opportunities, it also comes with a lot of costs (Stynes 1). Tourist activities promote social, political and ecological effects. The first common cost of tourism is the expenditure of vast sums of money by governments in the building of tourism enhancement infrastructure. Governments have an enormous task of developing of infrastructure like roads, hotels, beeches and other structure.

This is said to enhance tourism attraction amidst the existence of cutthroat competition for tourists. With the investment in the tourist enhancement infrastructure, an assurance of getting tourists does not exist. This means that the costs incurred may take too long to be settled. Too much infrastructure may result in reduced prices of property. The value of property may also depreciate leading to low returns. This is lethal to growth cycles of economies.

Tourism is a source of employment for many people in the world. However, most jobs that are created in the tourism sector are temporary. Most tourist activities are seasonal. They only perform well during certain periods on the calendar. This is a significant problem especially in the developing states.

The majority of employees in the developing world possesses insufficient skills. This means that these people are left out of employment when the temporary jobs in the tourism sector are terminated. Therefore, frictional unemployment is created as a result of the loss of jobs in the tourism sector. In other cases, the jobs that are created in the tourism industry have low pay. Thus, they are economically unsustainable to the employees (Aykac 12).

According to the (Barcelona Field Studies Center (1), there are a lot of events which can adversely affect the number of tourists in tourist destinations across the globe. More often than not, the events pose a risk to tourists and are far beyond the ability of the destinations to control them.

Notable activities include economic recession and terrorist activities. Such events pose economic risks to areas in the world, which heavily depend on tourism. Dependency on tourism is also poses economic threats to the given region. With the risen competition in the sector, it becomes hard for the known tourist destinations when it comes to the attraction of tourists.

Tourist managers are often charged with an extra task of being inventive and innovative. This is displayed by the creation of new attractions. New attractions aim at enticing tourists. This is tasking to the destinations and increase the expenses that are incurred in administering tourist activities (Barcelona Field Studies Center 1).

Other economic costs of tourism come from other societal derivatives. A number of natural features continue to face the possible destruction due to the infrastructure in the tourism industry. These features include coral reefs and beaches. This is a form of economic destruction, which predisposed tourist destinations, to environmental hazards. Tourist activities applauded for promoting social development.

On the contrary, it is argued that these activities pose a lot of threats to positive social development in the society. Incidences like sex tourism are among the examples of social decadence that is caused by tourism. The list of such incidences is long (Barcelona Field Studies Center 1).

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.

Barcelona Field Studies Center. Tourism Costs and Benefits. 2012. Web.

Cooper, Chris and Michael Hall. Contemporary Tourism. UK: Elservior Limited, 2012. Print.

Eddie, Smith, Dominic Webber, and Sean White. “Employment characteristics of UK tourism industries in 2008.” Economic & Labor Market Review 5.1 (2010): 24-45. Print.

International Labor Organisation. Employment in tourism industry to grow significantly over the coming decade, says ILO report. 2012. Web.

Sexton, Robert L. Exploring Microeconomics. Mason, OH: South-Western Cengage Learning, 2013. Print.

Stynes, Daniel. Economic Impacts of Tourism. 2011. Web.

UNWTO. Why Tourism? 2012. Web.

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