Economic and Employment Impacts of Tourism

• Tourism Impacts

Tourism is regarded as an industry with enormous economic impacts that has been widely studied from a variety of research perspectives. Over the past decade, the interest in tourism development as a regional economic development strategy plan has been increasing rapidly as tourism is now being seen as potential basic industry that provided local employments opportunities, tax revenues and economic diversity (Gursoy et al, 2002; Getz,1986; Jurowski et al, 1997). The travel and tourism industry today is the world’s largest and most diverse business factor where a report by the UNWTO stated that in 2014 there were 1133 million of total international tourist arrivals and US $1245 billion receipts worldwide. The importance of the tourism industry is served as a main source of generating revenues, employment, private sector growth and infrastructure development in many countries (Gee, 1999; Chen & Wei, 2009). Studies on the impacts of tourism have demonstrated that a destination’s population acknowledges the economic and social benefits and also the cost of tourism on the respective community and lives (Murphy, 1985; Harvey et al, 1995; Jurowski et al, 1997; Choi and Sirakaya, 2006; Dyer et al, 2007). Furthermore, the impacts studies that were emerged during the 1960s drew more emphasis on the economic growth that acted as a form of national development which could be measure in terms of “Gross National Product (GDP)”, rate of employment and the multiplier effect (Krannich et al, 1989).

However, some researchers have emerged with some drawbacks of the impact of tourism in local community in terms of economy and ecological vulnerability (Briguglio et al, 2000; Briguglio, 2004; Sutton; 1999; Sutton, 2001). According to the Inter-Organisation Committee (IOC) (1994) the following types of the impact of tourism that needed to be considered is: social, cultural, demographic and economic. The IOC also stated that the focus should be on the more significant impacts, information and appropriate measures should be used and the impacts should be provided in a way that it can be understood by decision makers and leaders. The positive and negative aspects of tourism development may be referred as a chain of impacts with different linkages and is illustrated as a conceptual form in Figure 2.4. The aim of this study is to provide an overview of the effects of the tourism expansion on the economy and briefly understand the mechanisms that bring out the effects of each link in the impact chain. In the next section, the major positive and negative impacts of tourism development will be discussed and Table 2.0 will provide a summarized list of the major positive and negative impacts of tourism on a country.

• Economic Impacts

Tourism play an important role in stimulating economic growth by creating jobs, provide foreign exchange, enhance technology, produce return on investment for emerging countries and improve living standards in different countries (Eadington et al, 1991). Hall et al (2008) indicates that the tourism industry has the largest value in the world’s industry and it is a more effective way in expanding business and increase income than any other sectors compared. The tourism industry acts as an invisible export medium that brings in wealth which is used to toward the contribution of balancing payment, production, account deficit and employment. In 2012, the tourism industry generated 8% of employment worldwide (Candela and Figini, 2012). Eadington and Redman (1991) concluded that countries such as Ireland, the Caribbean and Egypt used the income from tourism to improve their economic development whereas country like Cambodia, tourism is one of the major source of income for future economic development. However, the development of tourism can also reduce the dependency on primary merchandise as a source of export earnings. Brown (1998) stated that over-dependency on a single source of income can be very risky.

• Employment Impact

The tourism industry continues to grow into one of the most dynamic economic sectors according to the UNWTO as it acts as a reliable tool for sustainable job creation. Many studies have concluded that after several research that tourism does help in increasing the amount of jobs (Davis et al, 1988; Tosun, 2002; Weaver & Lawton, 2001). Tyrrell and Sheldon (1984) discovered that the creation of jobs was one of the four most frequently mentioned benefits of tourism. However, Turner and Sears (2014) stated that the travel and tourism sector is a leading employment creator all around the world by employing more than 98 million people and representing around 3% of total world employment. The employment rate in this sector keeps on growing and is more likely to stay high. For example, Table 2.1. displays the tabulated date retrieved from Figure 2.5. i.e. between 2012 and 2022 the estimated creation of extra jobs is listed as 63 million.

Tourism being a service industry, is mostly argued to be labour intensive in nature and that one major impact of tourism is that it acts as an engine for employment creation. However, Mathieson and Wall (1982) stated that such employment can be classified into 3 categories:

• Direct Employment

Direct employment occurs as a result of tourism expenditure. Front offices in hotels, restaurant, travel agencies, tourism information offices, aircrafts, cruise line, resorts or shopping outlets provide direct employment because their employees are in contact with tourist and cater for tourist demand.