Tourism LESSON 4 ECONOMIC IMPACT OF TOURISM STRUCTURE 4.0 Introduction 4.1 Objectives 4.2 Earner of foreign exchange 4.3 Multiplier effect 4.4 Growth of infrastructure 4.5 Tourism and taxation 4.6 Balanced regional development 4.7 Generation of employment 4.8 Other dimensions 4.9 Summary 4.10 Glossary 4.11 Keywords 4.12 Self assessment questions 4.13 Sources and further readings 4.0 INTRODUCTION ‘Tourism is a developmental strategy.’ You have read how tourism can be used as an effective tool to turn the wheels of development in any economy. In the previous lesson, you have also read about the impact that tourism has on the redistribution of income between sectors and companies within the economy and how tourism can be employed as an effective developmental strategy in poverty alleviation. Tourism impacts various sectors of the economy. An attempt has been made in the current lesson to touch upon the economic impact of tourism to enhance your understanding about the overall importance of tourism in the current world order. 4.1 OBJECTIVES To understand the overall economic impact of tourism To analyze how tourism helps in earning foreign exchange To link tourism with its multiplier effect on the economy To learn how tourism leads to growth of infrastructure To understand how tourism expands the tax base of a country To appreciate the value of tourism in achieving balanced regional development To evaluate the role of tourism in employment generation 4.2 EARNER OF FOREIGN EXCHANGE Tourism has major economic significance for a country. The receipts from international tourism are a valuable source of earning for all countries, particularly, the developing. Visitor-spending generates income for both public and private sectors, besides affecting wages and employment opportunities. Although tourism is sensitive to the level of economic activity in the tourist-generating countries, it provides more fixed earnings than primary products. The income from tourism has increased at a higher rate than primary products. The income from tourism has tended to increase at a higher rate than merchandise export in a number of countries especially in countries having a low industrial base. Now there is practically an assured channel for financial flows from the developed countries to the developing countries raising the latter’s export earnings and rate of economic growth. Tourism, therefore, provides a very important source of income for a number of countries, both developed and developing. The figures from World Tourism Organization (WTO) indicate that, among the world’s top 40 tourism earners about 18 were developing countries including India, in the year 1995. Regarding the number of visitor arrivals, in some countries there were more visitor arrivals than the population. France with a population of 57 million received 74.5 million visitors in the year 2000. Similarly Spain with a population of 37 million received 48.5 million visitors during the same year. Several island countries, like the Caribbean Islands, depend greatly on tourist income resulting from visitor arrivals. These earnings form a major part of the gross domestic product (GDP). Even developed countries like Canada which derived over 13 per cent of its gross domestic product from international visitors in the year 1999, rely heavily on income from tourism. Tourism forms a very important source of foreign exchange, for several countries. Although the quantum contributed in foreign currency per visitor varies from destination to destination, the importance of receipts from tourism in the balance of payment accounts and of tourist activities in the national revenue has become considerable for a number of countries. The major economic benefit in promoting the tourism industry is in the form of earning foreign exchange. Income from these foreign-exchange earnings adds to the national income and, as an invisible export, may offset a loss of the visible trading account and be of critical importance in the overall financial reckoning. This is truer in the case of developing countries particularly the small countries, which depend heavily upon primary products such as a few basic cash crops where tourism often offers a more reliable form of income. In the case of some European countries, namely Spain, Portugal, Austria, France and Greece, the invisible earnings from tourism are of a major significance and have a very strong positive effect on the balance of payments. Tourism is therefore a very useful means of earning the much-needed foreign currency. It is almost without a rival as an earning source for many developed as well as developing countries. These earnings assume a great significance in the balance of payment position of many countries. The balance of payments shows the relationship between a country’s total payments to all other countries and its total receipts from them. In other words, it may be defined as a statement of income and expenditure on international account. Payments and receipts on international account are of three kinds: (i) The visible balance of trade relating to the import and export of goods (ii) Invisible items (relating to the services such as shipping and Insurance) (iii) Capital transfers. The receipts from foreign tourism form an ‘invisible export’, just like other invisibles which come from transportation and shipping, banking and insurance, income on investments, etc. Because most countries at times have serious problems with their international payments, much attention comes to be focused on tourism because of its potentially important contribution to, and also effect upon, the balance of payments. The receipts from international tourism, however, are not always net. Sometimes expenditures are involved which must be set against them. Net foreign exchange receipts from tourism are reduced principally by the import cost of goods and services used by visitors, foreign exchange costs of capital investment in tourist amenities and promotion and publicity expenditure abroad. According to Peters, “Certain imports associated with tourist expenditures must be deduced… the importation of material and equipment for constructing hotels and other amenities, and necessary supplies to run them; foreign currency costs of imports for consumption by international tourists; remittances of interests and profits on overseas investment in tourism enterprises, mainly hotel construction; foreign currency costs of conducting a tourism development programme, including marketing expenditure overseas”. Reliance on imports to meet the tourist’s needs does not, in any way deny developing countries the opportunity of earning foreign exchange in supplying such goods and services. Imports are, to a large extent, essential to the operation of the tourist sector as to that of other sectors. The important question is whether the value added domestically on an item or service in is maximized? Maximization of import substitution without due regard to the effect on overall tourism receipts (i.e., demand) may be counterproductive. Also, differences in the pattern and level of reliance on imported goods and services, capital equipment and manpower are very wide, depending upon the level of development of a country. In some cases, this reliance is simply due to a lack of resources that transform into items which are to be sold by the industry. In others, the industry has not yet drawn on such supply potential, for which it may be an important stimulus. There is a general need for careful programmes of positive import substitution. CHECK YOUR PROGRESS 1 1) Which countries attract some of the highest international travellers? ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 2) Mention some ‘invisible exports’ which can earn foreign exchange for a country. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 3) Arrange the following keywords in their order of appearance in the above section…… receipts, financial flows, value added, invisible exports, primary products, import substitution, economic growth. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 4) List out some ways in which foreign exchange can be earned by a country. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 4.3 MULTIPLIER EFFECT The discussion in earlier paragraphs clearly indicates that earnings from tourism occupy an important place in the national income of any country. Without taking into account receipts from domestic tourism, international tourism receipts alone contribute to a great extent. The flow of money generated by tourist spending multiplies as it passes through various sections of the economy. In addition to an important source of income, tourism provides a number of other economic benefits, which vary in importance from one country to another; depending upon the nature and scale of tourism. The benefits from infrastructure investments, justified primarily for tourism such as airports, roads, water supply and other public utilities, may be widely shared by the other sectors of the economy. This enables us to understand how tourism impacts development in the economy. Tourist facilities such as hotels, restaurants, museums, clubs, sports complexes, public transport, and national parks are also used by domestic tourists and visitors, businessmen and residents, but still a significant portion of the costs are sometimes borne by international tourists. Tourists also contribute to tax revenue both directly through sales tax and indirectly through property, profits and income taxes. Tourism provides employment, develops infrastructural facilities and may also help regional development. Each of these economic aspects can be dealt with separately, but they are all closely related and are many times considered together. Let us first look at the income aspect of tourism. Income from tourism cannot be easily measured with accuracy and precision. This is because of the multiplier effect. The flow of money generated by tourist spending multiplies as it passes through various sections of the economy through the operation of the multiplier effect. The multiplier is an income concept. The Concept: The ‘multiplier’ measures the impact of extra expenditure introduced into an economy by a person. It is, therefore, concerned with the marginal rather than average changes. In the case of tourism, this extra expenditure in a particular area can take the following forms: (i) Spending on goods and services by tourists visiting the areas (ii) Investment of external sources in tourism infrastructure or services; (iii) Government (foreign or domestic) spending (e.g., domestic government spending on infrastructure in a region or foreign government aid) (iv) Exports of goods stimulated by tourism The expenditure can be analyzed as follows: Direct Expenditure: In the case of tourism, this expenditure is made by tourists on goods and services in hotels and other supplementary accommodation units, restaurants, other tourist facilities like buses, taxis coaches, railways, domestic airlines, and for tourism-generated exports, or by tourism related investment in the area. Indirect Expenditure: This covers a sum total of inter-business transactions which result from the direct expenditure, such as purchase of goods by hoteliers from local suppliers and purchases by local suppliers from wholesalers. Included Expenditure: This is the increased consumer spending resulting from the additional personal income generated by the direct expenditure, e.g., hotel workers using their wages for the purchase of goods and services. Indirect and induced expenditure together are called secondary expenditure. There are several different concepts of the multiplier. Most multipliers in common use incorporate the general principle of the Keynesian model. The four types of multipliers are intrinsically linked as follows: Sales (Transaction) Multiplier: This measures the extra business turnover created (direct and secondary) by an extra unit of tourist expenditure. Output Multiplier: This is similar to the sales multiplier but it also takes into account inventory changes, such as the increase in stock levels by hotels, restaurants and shops because of increased trading activity. Income Multiplier: This measures the income generated by an extra unit of tourist expenditure. The problem arises over the definition of income. Many researchers define income as disposable income accruing to households within the area, which is available to them to spend. However, although salaries paid to overseas residents are often excluded, a proportion of these salaries may be spent in the local area and should therefore be included. Income Multipliers can be expressed in two ways: a) the ratio method which expresses the direct and indirect incomes (or the direct and secondary incomes) generated per unit of direct income; b) normal method, which expresses total income (direct and secondary) generated in the study area per unit increase in final demand created within a particular sector. Ratio multipliers indicate the internal linkages which exist between various sectors of the economy, but do not relate income generated to extra sales. Hence, on their own, ratio multipliers are valueless as a planning tool. Employment Multiplier: The employment multiplier can be expressed in one of the two ways: a) as a ratio of the combination of direct and secondary employment generated per additional unit of tourist expenditure; b) direct employment created by tourism per unit of tourist expenditure. Multipliers can be further categorized by the geographical area which is covered by the research, such as local community, a region within a country or the country as a whole. The multiplier mechanism has also been applied to tourism and, in particular, to tourist expenditure. The nature of the tourism multiplier and its effect may be described in the following example: “The money paid by a tourist in paying his hotel bill will be used by the management of the hotel to provide for the costs which the hotel had incurred in meeting the demands of the visitor, e.g., such goods and services as food, drink, furnishing, laundering, electricity, and entertainment. The recipients, in turn, use the money they have thus received to meet their financial commitments and so on. Therefore, tourist expenditure not only supports the tourist industry directly but also helps indirectly to support many other industries which supply goods and services to the tourist industry. In this way money spent by tourists is actually used several times and spreads into various sectors of the economy. In sum, the money paid by the tourist, after a long series of transfers over a given period of time, passes through all sectors of the national economy, stimulating each in turn throughout the process”. On each occasion when the money changes hands, it provides ‘new’ income and these continuing series of exchanges of the money spent by the tourists form what economists term the multiplier effect. The more often the conversion occurs, the greater its beneficial effect on the economy of the recipient country. However, this transfer of money is not absolute as there are ‘leakages’ which occur. Such leakages may occur as a result of importing foreign goods, paying interest on foreign investments, etc. The following are some examples of such leakages: (i) Payment for goods and services produced outside, and imported into, the area; (ii) remittance of incomes outside the area, for example, by foreign workers; (iii) indirect and direct taxation where the tax proceeds are not re-spent in the area; (iv) savings out of income received by workers in the area (i.e., where there is a low propensity to consume). Any leakages of these kinds will reduce the stream of expenditure which, in consequence, will limit and reduce the multiplier effect. Income generated by foreign tourist expenditure in countries possessing more advanced economies, which generally are more self-sufficient and less in need of foreign imports which are less self-sufficient and need to support their tourist industries by substantial import. If the developing countries are desirous of gaining maximum economic benefits from tourism, they should strictly control the imported items for tourist consumption and keep foreign investment expenditure at a reasonable level. If the leakages are not controlled then the benefits arising from tourism will be greatly reduced or even cancelled. The most important leakage would arise from expenditure on import of agricultural products like food and drink. In a primary macro-economic approach to the prospects opened up by tourism establishment in a developing country, it is regarded as advantageous that a good portion of tourist consumption should consist of food products. It is estimated that the major part of these products can be found in those countries, whose economic structure is largely agricultural in character. In this sense tourist consumption, derived from international flow, can offer an assured outlet to a production which is already active within the domestic economy, without raising problems connected with export of such products and could thus be substituted for imported foodstuffs and a significant saving effected thereafter. The host country derives maximum economic benefits from the tourism industry as these savings help in increasing the benefits from the tourism multiplier. This aspect of the question is all the more important as the multiplier effect maintains its efficacy and effectiveness as long as no importation takes place. It follows that if the national economy is to derive the maximum benefit from the impact of international and national tourism, there is an elementary obligation to find all those products needed for tourist consumption. The dynamics of agricultural production in recent years confirms the ability of developing countries to produce the major part of their agricultural products required for tourist consumption without resorting to massive imports. The tourist economy of any country, if it is to remain healthy, must rely upon local agricultural production and this condition seems today to be on its way to realization in most of the developing countries. Multiplier of Tourism Income To sum up, Multipliers are a means of estimating how much extra income is produced in an economy as a result of initial spending or after cash is injected. Every time the money changes hands it provides new income and the continuing series of conversion of money spent by the tourists form the multiplier effect. The more often the conversion occurs, the greater its beneficial effect on the economy of the recipient country. CHECK YOUR PROGRESS 2 1) In how many ways can you express the employment multiplier? ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 2) Enlist some of the tourist facilities, the cost of a significant portion of which, are borne by international tourists. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 3) Give an example of Direct, Indirect and Included tourist expenditure. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 4.4 GROWTH OF INFRASTRUCTURE A significant benefit of tourism is development and improvement of infrastructure. The benefits from infrastructure investments, justified primarily for tourism – airports, roads, water supply and other public utilities – may be widely shared by the other sectors of the economy. In addition to development of new infrastructure, the improvements in the existing infrastructure which are undertaken in order to attract tourists are also of great importance. These improvements may benefit the resident population by providing them with amenities which they desire. Furthermore, the provision of infrastructure may provide the basis or serve as an encouragement for greater economic diversification. A variety of secondary industries may be promoted which may not directly serve the needs of tourism. Therefore, it is evident that tourist expenditure is responsible for stimulating other economic activities. One of the characteristics of under development is that of deficiencies in the basic infrastructures, which lie at the root of a series of problems related to the development of tourism. Development of infrastructure requires a certain size of investment. Tourism provides the size of demand which justifies the development of infrastructure. On the basis of this minimum demand for such facilities and for such social capital, the size of such infrastructural services evolves. Construction of primary infrastructures represents the foundation of any future economic growth, even though they are not directly productive. The tourism industry illustrates the elementary need for basic infrastructure. It has today the important benefit of being able to profit from the existing infrastructures and thus to make a decisive contribution to the growth of the national economy. The international and national tourist traffic, moreover, represents a reward for the capital invested and can now contribute to the financial efforts required for maintenance. The satisfactory degree of development achieved in this specific sector now permits major tourist progress, while also giving further proof of the complementary character of tourism in relation to other economic sectors. Creation of basic infrastructures for tourist usage will also be of service to the other sectors of the economy such as industry and agriculture. This results in better equilibrium of general economic growth. CHECK YOUR PROGRESS 3 1) What is the major bottleneck in the development of tourism in India? ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 2) List out some of the tourist facilities that you think are lacking in India. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 4.5 TOURISM AND TAXATION Tourism also results in tax revenues both at national and local levels. Taxes can provide the financial resources for the development of infrastructure, enhancing and maintenance of some types of attractions and other public facilities and services, tourism marketing and training required for developing tourism, as well as to help finance poverty alleviation programmes by governments both at local and national levels. In addition, tourism-related tax revenues help finance general community improvements and services used by all residents. WTO’s 1998 report on tourism taxation emphasizes that taxation policies in a country must be carefully evaluated in an integrated manner to ensure that tourism-related taxes are giving the necessary substantial revenues. However, taxes should not be so high for the country’s international competitive position to be counter productive and produce a loss of tourist traffic. The aim should be to strike a balance between, a level of taxation that maintains a competitive position for the country and reasonable profits for the industry, and, receiving adequate revenues to support investment in and maintenance of the tourism sector, and to contribute towards general community welfare. 4.6 BALANCED REGIONAL DEVELOPMENT Another important domestic effect relates to the regional aspects of tourist expenditure. Such expenditure is of special significance in marginal areas, which are relatively isolated, economically underdeveloped, and have unemployment problems. The United Nations Conference on International Travel and Tourism held in Rome in 1963 stated that tourism was important not only as a source of earning foreign exchange, but also as a factor determining the location of industry and in the development of underdeveloped regions. It further stated that in some cases the development of tourism may be the only means of promoting the economic advancement of less-developed areas lacking in other resources. In fact underdeveloped regions of the country usually greatly benefit from tourism development. Many of the economically backward regions contain areas of high scenic beauty and of cultural attractions. These areas, if developed for use by tourists, can bring in a lot of prosperity to the local people. Tourism development in these regions accordingly becomes a significant factor in redressing regional imbalances in employment and income. Tourist expenditure at a particular tourist area helps the development of the many areas around it. Many countries both developed as well as developing have realized this aspect of tourism development and are contemplating developing tourist facilities in underdeveloped regions with a view to bringing prosperity there. Khajuraho in India, which is now an internationally famous tourist spot, is an example of one such region. To illustrate, Khajuraho, a remote and unknown small village about forty years ago, is now on the world tourist map which attracts thousands of tourists, both domestic as well as international. Today, Indian Airlines (India’s domestic carrier) flies a jet plane between the capital city of New Delhi and Khajuraho and seats are not easy to come by. Thousands of tourists visit the place by air, rail and road transport every month to see the architectural beauty of temples and erotic sculptures whose creators were the Chandela kings, who ruled in North India from the 9th to the 13th centuries. Today 22 glorious temples remind us of the classic Indian architecture and culture of those times and represent the finest expression of the art of medieval India. The area around Khajuraho is well developed and full of life. The place has provided employment to hundreds of local people in hotels and shops. There is a thriving clay-model industry devoted to making replicas of the famous temple sculptures and a number of shops dealing with items of presentation, handlooms and handicrafts, have created jobs for many. Tourists love to purchase various souvenirs to take home. Thus local people are recipients of additional income which has increased the prosperity of the region. Subsequently areas around Khajuraho have also prospered and reaped the benefits from the tourist multiplier. There is no dearth of areas which could, after they are developed for tourism, become great assets to the region in particular and to the country as a whole. The French government has created a series of new resorts particularly to bring prosperity to the areas which traditionally have been underdeveloped. The Italian government is likewise attempting to develop tourism in Southern Italy in order to help redress the economic imbalances which have long existed between the northern and the southern parts of Italy. Tourism is to be regarded not as an area of peripheral investment whose benefits will help in creating employment opportunities and in the regeneration of backward regions. In India a similar approach needs to be adopted to develop areas with great tourism potential. 4.7 GENERATION OF EMPLOYMENT Employment is an important economic effect of tourism. The problems of unemployment and under-employment are more active in the developing countries. Tourism can be looked upon in this light as a major industry which employs manpower on a large scale. The problems which the industrialized countries face in recruiting manpower for the tourists industry confirm that, in any productive process consisting of services, human labour remains the basic need. If a comparison is to be drawn with the productive sector none of the technological progress achieved has succeeded in rendering the human factor less indispensable than in this sector, and this is true to an absolutely indisputable extent. The high social impact of the tourist industry is well known, for it has repercussions in every other national economic sector through the multiplier effect, which is particularly marked in those services that are complementary to the tourist accommodation industry. The tourist industry is a highly labour-intensive service industry and hence is a valuable source of employment. It employs a large number of people and provides a wide range of jobs which extend from the unskilled to the highly specialized. In addition to those involved in management there are a large number of specialist personnel required to work as accountants, housekeepers, waiters, cooks and entertainers, who in turn need a large number of semi-skilled workers such as porters, chambermaids, kitchen staff, gardeners, etc. Tourism is also responsible for creating employment outside the industry in its more narrowly defined sense and in this respect those who supply goods and services to those directly involved in tourism are beneficiaries from tourism. Such indirect employment includes, those involved in the furnishing and equipment industries, souvenir industries and farming and food supply. Construction industry is another very big source of employment. The basic infrastructures-roads, airports, water supply and other public utilities and also construction of hotels and other accommodation units create jobs for thousands of workers, both unskilled and skilled. In many of the developing countries, where chronic unemployment often exists, the promotion of tourism can be a great encouragement to economic development and, especially, employment. However at this point it is, necessary to consider the seasonal nature of the tourism industry. Where general diversification alternatives are scarce, a combination of heavy dependence on tourism and highly marked seasonality calls for measures to develop off -season traffic. Employment multiplier: This multiplier is similar to the Income Multiplier except that in this case a multiplier impact on employment is observed. Employment Multiplier can be expressed in the following two ways: (a) As a ratio of the combination of direct employment. At the destination, the jobs are directly created in the industry there. (b) As a ratio of secondary employment generated per additional unit of tourist expenditure to direct employment. The workers and their families require their own goods and services giving rise to further indirectly created employment in shops, schools, health care institutions, etc. CHECK YOUR PROGRESS 4 1) What kinds of direct and secondary employment can be generated by tourism? ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 2) Name a city in India which developed primarily due to tourism. ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 3) Can regional imbalances in employment be redressed or removed through tourism development? ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 4.8 OTHER DIMENSIONS The World Tourism conference which was held at Manila, Philippines in October 1980, considered the nature of tourism phenomenon in all its aspects. The role tourism is bound to play in a dynamic and vastly changing world was also identified. Convened by the World Tourism Organization the conference also considered the responsibility of various states for the development and enhancement as more than a purely economic activity of nations and peoples. The significance of tourism was discussed in detail during the conference. The participants in the World Tourism Conference attached particular importance to its effects on the developing countries. It stated its conviction “that the world tourism can contribute to the establishment of a new international economic order that will help to eliminate the widening economic gap between developed and developing countries and ensure the steady acceleration of economic and social development and progress in particular of the developing countries.” For more details please refer to the appendix at the end of the chapter. 4.9 SUMMARY Tourism is a two-sided story. Up till now we have observed how tourism fuels economic and developmental activity. Now it is time that you can see the complete picture as to how development embraces tourism in return. There are many contributions and benefits of having a pro-tourism approach; however, there are some damages and negative impacts which have been observed as well. As the traffic of tourists increased in a particular area, it was observed that environmental and ecological balances were disturbed due to over commercialization. The scenic beauty was made more ‘customer friendly’ and the natural tourism products more accessible and ‘saleable’ by man. Environmentalists are agitated about the damages and carelessness showed by tourists. Culturally and socially, tourism can impact the destination country but its effect cannot be solely attributable to simple tourist activities. Thus we can conclude that there are many dimensions of the economy that are impacted by tourism activities, some positively and some negatively. On the road to development, tourism products have also witnessed some changes. As the world changed and developed, new wants were identified. As people became more aware, the needs changed and new tourism products were developed to satisfy these new found needs. The last few years have seen the emergence of new areas in tourism like, special interest tourism, green tourism, eco tourism, social tourism and so on. You will read in detail about these new products, especially in the Indian context in the later lessons. 4.10 GLOSSARY Here are some related words Forex- foreign exchange International debt- international debt is the net borrowing outstanding of country towards the rest of the world. Circular flow of money- is a schematic representation of money flows in an economy between different entities like households, firms and the Government. Global warming-there has been a noticeable increase in the average temperature in the world, which is believed to have been caused by air pollution. 4.11 KEYWORDS gross domestic product, national development, employment multiplier, infrastructure, foreign exchange, tourist dollar, multiplier effect, host country, regional development, human factor, declaration, technological advances, secondary industries, invisibles, balance of payments, 4.12 SELF ASSESSMENT QUESTIONS 1) Examine the statement ‘receipts from international tourism are not always net.’ 2) What is Balance of Payments? How do tourism receipts affect the balance of payments? 3) Define ‘multiplier effect’. Discuss the various types of multipliers. 4) Write a paragraph on any destination which developed primarily due to tourism activities. (example Uttranchal) 5) How does tourism industry contribute to resolving the unemployment problem in India? 6) How is tourism effective in increasing the expenditure in a particular area in the economy? 7) Identify which keywords do not belong to this lesson Balanced growth, afforestation, employment, international work permit, foreign exchange, interest rate, regional diversity, export led growth, excise duty, international debt, multiplier income, training, global warming, income tax. 4.13 SOURCES AND FURTHER READINGS 1. Chandra.R., Recent Trends in World Tourism, Akanksha Publishing House, First edition. 2. Dharmarajan.S and R. Seth, Tourism in India-Trends and Issues, Har Anand Publications Pvt. Ltd. New Delhi, First edition. 3. Gupta. S., World Tourism in New Millennium, ABD Publishers, Jaipur, First edition. 4. Kamra, K.K. and M.Chand, Basics of Tourism-Theory, Operation and Practice, Kanishka Publishers, New Delhi. First Edition. 2006. 5. Maken. D. Strategies and Planning in Tourism and Industry, Adhyayan Publishers and Distributors, Delhi, First edition. 6. Puri M and G.Chand, Tourism Management, Pragun Publications, New Delhi. First Edition. 2006. 7. Sharma. R.B., World Tourism in 21st Century, Alfa Publications, New Delhi, First edition. APPENDIX: THE MANILA DECLARATION Manila Declaration on World Tourism considered almost all the aspects of the tourism phenomenon. Besides the economic aspects, social, cultural, spiritual aspects also were considered. The conference was also convinced that world tourism can be a vital force for world peace and can provide the moral and intellectual basis for international understanding and interdependence The Declaration states (i) Tourism is considered an activity essential to the life of nations because of its direct effects on the social, cultural, educational and economic sectors of national societies and their international relations. Its development is linked to the social and economic development of a nation and can only be possible if man has access to creative rest and holidays and enjoys the freedom to travel, within the framework of free time and leisure. (ii) On the threshold of the twenty-first century and in view of the problems facing mankind, it seems timely and necessary to analyse the phenomenon of tourism, fundamentally in relation to the dimensions it has assumed since the granting to workers of the right to annual paid holidays. This has moved tourism from a restricted elitist activity to a wider activity integrated into social and economic life. (iii) States have recognized that modern tourism had come to play an important role within the range of human activities. A great majority of them have entrusted the World Tourism Organization with the task of ensuring the harmonious and sustained development of tourism, in cooperation, in appropriate cases, with the Specialized Agencies of the United Nations and the other international organizations concerned. (iv) The right to use of leisure, and in particular, the right of access to holidays and to the freedom of travel and tourism, a natural consequence of the right to work, is recognized as an aspect of the fulfillment of the human needs by the Universal Declaration of Human Rights as well as by the legislation of many States. It entails for society the duty of providing for its citizens the best practical, effective and nondiscriminatory access to this type of activity. Such an effort must be in harmony with the priorities, institutions and traditions of each individual country. (v) There are many constrains on the development of tourism, and groups of nations should determine and study those constrains, and adopt measures aimed at removing their negative influence. (vi) The share tourism represents in national economies and in international trade makes it a significant factor in world development. Its consistent major role in national economic activity, in international transactions and in securing balance of payments equilibrium makes it one of the main activities of the world economy. (vii) Within each country, domestic tourism contributes to an improved balance of the national economy through a redistribution of the national income. Domestic tourism also heightens the awareness of common interest and contributes to the development of activities favorable to the general economy of the country. Thus, the development of tourism from abroad should be accompanied by a similar effort to expand domestic tourism. (viii) The economic returns of tourism, however real and significant they may be, do not and cannot constitute the only criterion for the decision by States to encourage this activity. The right to holidays, the opportunity for the citizen to get to know his own environment, a deeper awareness of his national identity and of the solidarity that links him to his compatriots and the sense of belonging to a culture and to a people are all major reasons for stimulating the individual’s participation in domestic and international tourism through access to holidays and travel. (ix) The importance that millions of our contemporaries attach to tourism in the use of their free time and in their concept of the quality of life makes it a need that governments should take into account and support. (x) Social tourism is an objective which society must pursue in the interest of those citizens who are least privileged in the exercise of their rights to rest. (xi) Through its effects on the physical and mental health of individuals practicing it, tourism is a factor that favours social stability, improves the working capacity of communities and promotes individual as well as collective well-being. (xii) Through the wide range of services needed to satisfy its requirements, tourism creates new activities of considerable importance which are a source of new employment. In this respect, tourism constitutes a positive element for social development in all the countries where it is practiced, irrespective of their level of development. (xiii) With respect to International relations and the search for peace, based on justice and respect of individual and national aspirations, tourism stands out as a positive and ever-present factor in promoting mutual knowledge and understanding and as a basis for reaching a greater level of respect and confidence among all the peoples of the world. (xiv) Modern tourism results from the adoption of a social policy which led to the workers’ gaining annual paid holidays and represents the recognition of a fundamental right of the human being to rest and leisure. It has become a factor contributing to social stability, mutual understanding among individuals and peoples and individual betterment. In addition to its wellknown economic aspects, it has acquired a cultural and moral dimension which must be fostered and protected against the harmful distortions which can be brought about by economic factors. Public authorities and the travel trade should accordingly participate in development of tourism by formulating guidelines aimed at encouraging appropriate investments. (xv) Youth tourism requires the most active attention since young people have less adequate income than others for travelling or taking holidays. A positive policy should provide youth with the utmost encouragement and facilities. The same attention should be provided for the elderly and handicapped. (xvi) In the universal efforts to establish a new international economic order, tourism can under appropriate conditions, play a positive role in furthering equilibrium, cooperation, mutual understanding and solidarity among all countries. (xvii) Nations should promote and improve conditions of employment for workers engaged in tourism and confirm and protect their right to establish professional trade unions and collective bargaining. (xviii) Tourism resources available in various countries consist at the same time of space, facilities and values. These are resources whose use cannot be left uncontrolled without running the risk of their deterioration, or even their destruction. The satisfaction of tourism requirements must not be prejudicial to the economic interests of the population in tourist areas, to the environment or above all, to natural resources, which are the fundamental attractions of tourism, and historical and cultural sites. All tourism resources are part of the heritage of mankind. National communities and the entire international community must take the necessary steps to ensure their preservation. The conservation of historical, cultural and religious sites represents at all times, and notably in time of conflict, one of the fundamental responsibilities of states. (xix) International cooperation in the field of tourism is an endeavor in which the characteristics of peoples and basic interests of individual sates must be respected. In this field, the central and decisive role of the World Tourism Organization as a concept-utilizing and harmonizing body is obvious. (xx) Bilateral and multilateral technical and financial cooperation cannot be looked upon as an act of assistance since it constitutes the pooling of the means necessary for the utilization of resources for the benefit of all parties. (xxi) In the practice of tourism, spiritual elements must take precedence over technical and material elements. The spiritual elements are essentially as follows: (a) the total fulfillment of the human being; (b) a constantly increasing contribution to education; (c) equality of destiny of nations; (d) the liberation of man in a spirit of respect for his identity and dignity. (e) the affirmation of the originality of cultures and respect for the moral heritage of peoples. (xxii) Preparation for tourism should be integrated with the training of the citizen for his civic responsibilities. In this respect, governments should mobilize the means of education and information at their disposal and should facilitate the work of individuals and bodies involved in this endeavor. Preparation for tourism, for holidays and for travel could usefully form part of the process of youth education and training. For these reasons, the integration of tourism into youth education constitutes a basic element favorable to the permanent strengthening of peace. (xxiii) Any long-term analysis of mankind’s social, cultural and economic development should take due account of national and international tourist and recreational activities. These activities now form an integral part of the life of modern national and international societies. Bearing in mind the acknowledged values of tourism which are inseparable from it, the authorities will have to give increased attention to the development of national and international tourist and recreational activities, based on an even wider participation of peoples in holidays and travel as well as the movement of persons for numerous other purposes, with a view to ensuring the orderly growth of tourism in a manner consistent with the other basic needs of society. (xxiv) The States and other participants in the Conference, together with the World Tourism Organization, are strongly urged to take into account the guidelines, viewpoints and recommendations emanating from the Conference so that they can contribute, on the basis of their experience and in the context of their day to day activities, to the practical implementation of the objectives set with a view to broadening the process of development of world tourism and breathing new life into it. (xxv) The Conference urged the World Tourism Organization to take all necessary measures, through its own international machinery and, where appropriate, in cooperation with other international, inter-government and non-governmental bodies, so as to permit the global implementation of the principles, concepts and guidelines contained in this final document.
Posted on: Sat, 15 Feb 2014 11:08:45 +0000
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