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Tourism and national economies in developing countries

Tourism is  often described as one of the world’s largest industries on the basis of its contribution to  global GDP, the number of jobs it generates and the number of people it transports. Developing countries currently have only a minority share of the international tourism market (approximately 30 per cent) but their share is growing. International tourism arrivals in developing countries have grown by an average of 9.5 per cent per year since 1990, compared to 4.6 per cent worldwide. The contribution that tourism makes to national economies is also far more pronounced in the South – particularly in the Least Developed Countries (LDCs).

The role of Tourism in sustainable development

Proponents of the travel and tourism industry claim that it is well placed to contribute to sustainable development on the grounds that it:

• has less impact on the environment than many other industries;
  
  
• is based on an enjoyment of the natural and cultural environment and so is motivated to protect them;
  
  
• can play a positive role in awareness raising and consumer education through its vast distribution channels;
  
  
• provides an economic incentive to protect habitat which might otherwise be converted  to less environmentally friendly land uses. 

The pro-poor potential of Tourism

Concerns about the sustainability of tourism include the high "leakage" of tourism-generated foreign exchange, whereby such revenue ends up benefiting foreign-owned tour operators, hotels and airlines as well as the impacts of mass tourism on the natural environment and on the culture of local people. However research on pro-poor tourism notes that many of the supposed disadvantages of tourism are in fact common to many types of economic development in a globalising world and at the same time, tourism appears to have certain characteristics that have greater pro-poor potential than other industries:

• Tourism delivers consumers to the product rather than the other way round. This opens up huge opportunities for local access to markets for other goods and services. 
  
  
• Tourism has considerable potential for linkage with other economic sectors – particularly agriculture and fisheries. Realising these linkages will increase the proportion of tourism revenue retained in the host country. 
  
  
• Tourism provides opportunities for off-farm diversification.
  
  
• Tourism provides relatively labour-intensive opportunities.
  
  
• Tourism employs a relatively high proportion of women and can contribute to gender equality.
  
  
• Tourism products can be built on, and help to preserve, natural resources and culture. These are assets that some of the poor have, even though they may lack financial assets, and whose protection can serve as a safety net for some of the poorest.

IIED’s role:

Despite the clear significance of tourism to developing countries and to poor people, while many donors are involved in tourism activities, few see it as a key development sector and it is not considered as a significant engine for poverty alleviation compared to agriculture, primary health and education as a means for poverty alleviation – although no cost-benefit analysis has been undertaken to test this assumption.

The objective of IIED’s work on tourism is therefore to highlight its contribution to sustainable development – and in particular to poverty reduction and pro-poor growth in developing countries.

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