Tourism also has the potential to bring currency to a destination. Thus, tourism geographers are concerned not only with the movement of people from one place to another but also with money. In the case of domestic tourism, this signifies a spatial redistribution of currency within the country. This is particularly significant when destinations are developed in poorer, peripheral regions of a country. Tourism is considered an important means of allowing some of the wealth that is typically concentrated in the country’s primary urban area to be channeled into these destinations, thereby decreasing regional inequalities. In the case of international tourism, this indicates an influx of currency that contributes to the country’s gross domestic product (GDP) and has the potential to improve its trade balance (i.e., increase its surplus or decrease its deficit). Similarly, this signifies a means of redistributing some of the wealth from the more developed countries of the world to the less developed ones.
The travel account is defined as the difference between the income that the destination country receives from tourism and the expenditures of that country’s citizens when they travel abroad. The recent trend toward tourism in less developed countries such as Honduras, Mozambique, or Cambodia has allowed these destinations to develop a positive travel account. In other words, such destinations receive international tourists and therefore derive income from these tourists, but because international tourism is beyond the financial means of much of their population, they send relatively few tourists to other countries. In contrast, more developed countries such as Germany and Japan have traditionally had a negative travel account. These countries are significant tourist-generating areas and send substantial numbers of tourists abroad every year who spend money in other countries, yet they are not among the world’s leading destinations. As smaller numbers of tourists visit these destinations, the income derived from them is less than the amount being spent abroad.
The direct economic effect of tourism is often used to refer to the initial introduction of currency into the local economy by tourists themselves. This is in the form of tourist dollars, or the money that tourists bring with them and spend at the destination on lodging, food, excursions, souvenirs, and more. The indirect economic effect of tourism refers to the second round of spending that is a direct result of the tourist dollars. The recipients of tourist dollars use this money to pay expenses, employees, taxes, and so on, as well as reinvestment in the tourism business. This involves buying the goods and services demanded by tourists or the new equipment that will allow them to better serve the tourist market. This round of spending is primarily intended to improve or expand the tourism industry in a way that will encourage future visitation and spending (i.e., greater direct effects) at the destination. As long as the additional spending takes place within the local economy (e.g., hiring local workers, buying locally produced goods), it can create additional economic benefits for the destination. Finally, the induced economic effect constitutes an additional round of spending. For example, recipients of tourist dollars pay taxes, licenses, or fees on their business; then the government may use this money to subsidize local development projects. Likewise, recipients may use tourist dollars to pay their employees, who then purchase the goods and services that they need for their own consumption.
This process of spending and respending may be quantified by the multiplier effect. This is typically expressed as a ratio. For example, the ratio of 1 to 1.25 means that for every tourist dollar that is spent directly on tourism, an additional 25 cents is created indirectly in the local economy. The multiplier effect may be used to estimate the economic benefits of tourism because it provides an indication of how the income from tourism is distributed throughout the economy. The greater the ratio, the more likely it is that money is staying within that economy. Consequently, the ratio will generally be higher at the national scale rather than at the local scale, where some money will necessarily be spent outside of the community. Businesses will be required to pay federal taxes, which may not be reinvested in that particular place. Not all goods can be obtained locally, and not all employees live at the destination and spend their earnings locally. The multiplier effect is often criticized because it can be extremely difficult to calculate depending on a wide range of factors. As such, it should be considered with caution, as a general guide to describe the potential for additional economic benefits to the destination as opposed to a precise measure.
The development of tourism has the potential to contribute to further economic development and diversification. The tourism industry can take advantage of existing local industries or encourage the development of new ones to support tourism and provide the goods or services demanded by tourists. These are called linkages and are typically part of the indirect economic effects. For instance, tourism has the potential for strong linkages to local agricultural industries where foods typical to a particular region are produced and prepared locally for tourist consumption at markets, restaurants, or resorts (figures 8.3 and 8.4). These linkages may be used to create a sense of place-based distinctiveness for the destination, where tourists will have the opportunity to experience things that they would not be exposed to at home. In the case of agricultural linkages, this may be a type of cuisine that is based on local ingredients not readily accessible or commonly used at the tourists’ place of origin. Thus, tourists feel like they tried something new and authentic. At the same time, linkages may be used to appeal to a particular brand of “responsible” tourists, typically those socially conscious consumers interested in things like organic and fair trade products.
Figure 8.3. Kiosks and market stalls selling locally grown/made products can be an important part of the attraction at tourism destinations, which also helps support other local industries. This vendor in Ljubljana, Slovenia, has pršut (prosciutto) and wine, which are well-known products from the country’s Mediterranean region. (Source: Leo Zonn)
Figure 8.4. Touring Viña Montes La Finca de Apalta in the Colchagua Valley, Chile. (Source: Barret Bailey)
Box 8.1. Experience: Wine and Tourism in Chile
I can’t say that I ever planned on going to Chile, but when my girlfriend had to go to Santiago for her job, I decided that I would meet her there. After she finished her work, we would spend a few days in the city, but we both wanted to get out and explore some more of the country. I didn’t know much about Chile before this trip, but I knew about Chilean wine. I manage a restaurant, and we have a selection of South American wines, including a Chilean Malbec. It was my idea to visit the wine regions in the Central Valley. I did some research and found that the company that produces this wine had several vineyards in the region. I chose one of them to visit; it was the largest of their vineyards and located in the area where we wanted to go, south of Santiago in the less-visited Colchagua Valley.
The smog had been getting worse every day we spent in Santiago, and when we drove out of the city, visibility was low. We couldn’t even see the mountains that surround the city. As the morning went on and we got farther from the city, the haze began to burn off. By the time we reached the site, it had turned out to be a beautiful day with clean air and clear skies. We first toured the vineyard; they took us up the vine-covered hillside for a spectacular view of the valley’s scenery. Then we toured the winery and had a tasting. They produce mainly red wines at this winery, and we had the opportunity to try the Cabernet Sauvignon, Syrah, and Carmenère, which is a variety I’d never heard of before. We also tried a Sauvignon Blanc from another one of the company’s vineyards. Although our guide for the tour had limited English, she was plainly knowledgeable about viticulture. She did her best to answer some good questions from our group about the valley’s soils, climate, and varieties of grapes, as well as the processes of hand-picking the grapes and producing the wines.
We were somewhat surprised to learn that taxes make the wines very expensive to purchase locally, so the majority is exported. Because the white wines have a much more limited distribution in the
United States, we purchased a few of these bottles at the winery and brought them home with us. In particular, we wanted to try their award-winning Chardonnay, and we didn’t think we’d be able to get it here. The reds are pretty widely distributed, though, like the Malbec we have at the restaurant, and some of the varieties can also be found at the grocery stores in town.
Wine is clearly an important part of the economy, but at the same time, I think it really adds to what Chile has to offer in terms of tourism. The two industries are, in fact, a perfect complement to each other. For me, our tour of the vineyard and winery was one of the highlights of our trip. We wanted to see some of the countryside beyond the city, and the landscape scenery of the vineyard set in the valley was exceptionally beautiful. As food and wine are my passion, I am always interested in learning more about and trying things that are unique to the places I visit. It gave us a distinctly local experience as well as something local to bring home with us. In addition, I can tell my customers more about the Chilean wine we sell at the restaurant because I’ve actually been to the winery, and my girlfriend has been buying these wines at the store since we’ve been back. While this is partially because she is familiar with them, it also has more meaning for us because it reminds us of our trip.
—Barret
Box 8.2. In-Depth: Pro-Poor Tourism
Critics have said that those who are already economically better off in a community are more likely to receive the benefits of tourism, while the poorest segments of the population are more likely to experience the costs of tourism. As the tourism industry, particularly those segments driven by the private sector, is a profit-oriented venture, tourism development has done little to consider the relationship between tourism and poverty or to view poverty elimination as a goal. Moreover, the poor are not a homogenous group; there is a tremendous range of factors that may prevent people from participating in tourism. The poor may not have access to the education and/or training—including language skills—that would allow them to obtain tourism jobs or to understand and work within the legal framework to start a tourism business. They may not have access to the capital or credit they need to start or expand a tourism or related business. Similarly, they may not have access to or control over the land and other resources that could be used for the purposes of tourism. They may be only small-scale producers of goods or services, and tourism businesses may seek to deal with a single, large supplier of the products they need. Additionally, they may be excluded from the tourism planning and development process.
Yet, there is an undeniable relationship between tourism and poverty. In particular, the regions of the world that have experienced some of the highest tourism growth rates are also the regions that have the highest concentrations of poor people. Particularly since the beginning of the twenty-first century, new studies have been undertaken to better understand this relationship. The Pro-Poor Tourism Partnership was formed as a collaborative research initiative to develop the concept of pro-poor tourism (PPT). PPT is defined as tourism that results in increased net benefits for poor people and ensures that tourism growth contributes to poverty reduction. PPT is not a tourism “product” like those discussed in chapter 3; rather, it is an approach to tourism. It seeks to expand the economic benefits of tourism to the poor by addressing those barriers that prevent them from participating in tourism. Yet, PPT is also intended to help limit the various economic, social, and environmental costs of tourism that are most likely to affect the poor.
Proponents of PPT argue that the tourism industry is better suited to contribute to poverty reduction than many other economic activities because it is a diverse, labor-intensive industry that often utilizes freely available resources (e.g., natural environments or elements of culture). Tourism brings the consumer to the producer, which opens up opportunities for poor people who may not have the ability to take their goods or services to a place of consumption. In addition, tourism has the potential to complement and supplement existing economic activities (e.g., agriculture or fishing), thereby increasing income-earning potential.
Although there may appear to be little incentive for a tourism venture to take PPT measures, especially profit-oriented private sector ventures, tourism is nonetheless dependent on a supportive and stable local community, and the issues associated with high rates of poverty have the potential to erode this foundation. Furthermore, it may be argued that there is a subset of tourists who are socially conscious and would be interested in supporting such a project. Small-scale, socially responsible niche tourism products (e.g., community-based ecotourism) have been most likely to incorporate PPT strategies. However, it is argued that the full potential of the PPT approach will not be realized until its strategies are also expanded to mass tourism.
Sources
Ashley, Caroline, Charlotte Boyd, and Harold Goodwin. “Pro-Poor Tourism: Putting Poverty at the Heart of the Tourism Agenda.” Natural Resource Perspectives 51 (2000): 1–6.
Ashley, Caroline, Dilys Roe, and Harold Goodwin. “Pro-Poor Strategies: Making Tourism Work for the Poor.” Pro-Poor Tourism Report 1 (2001).
Torres, Rebecca, and Janet Henshall Momsen. “Challenges and Potential for Linking Tourism and Agriculture to Achieve Pro-Poor Tourism Objectives.” Progress in Development Studies 4, no. 4 (2004): 294–318.
Although some existing economic activities might have the potential for linkages as the tourism industry becomes well established, at least initially the local economy may not be sufficiently or appropriately developed to support the tourism industry. Existing activities may require adaptations to meet the specific demands of tourism. The local agricultural industry may make a transition from a single crop (e.g., corn) to more diversified agriculture to supply the range of products in demand by the tourism industry (e.g., lettuce, tomatoes, jalapeño peppers). Likewise, the local fishing industry may need to expand in order to supply the quantity of products demanded by the tourism industry. Additionally, activities may need to be wholly developed; until then, products must be imported. However, to maximize the economic benefits of tourism, local linkages should be created as soon as it is feasible to minimize the dependence on external suppliers.
Economic Costs of Tourism
Places all across the globe would like to get a share of the trillion-dollar international and domestic tourism industry. Consequently, much emphasis is placed on the economic benefits of tourism. Yet, the potential for these benefits must be carefully considered to understand what the actual effect will be on a destination (i.e., who will receive the benefits and what will be the consequences). As such, we need to take a closer look at the nature of the jobs created in the tourism industry at a destination, the extent of economic effects, and the changes that occur in the local economy.
Tourism Employment
The jobs created in the construction industry, the tourism industry, and the various supporting industries can attract immigrants from other regions of a country or other countries. This is particularly the case when tourism is developed in peripheral areas where there may not be a large enough local population to fill the new demand for labor. However, this labor-induced migration may quickly outstrip available jobs and result in a labor surplus. In fact, areas with a high dependence on tourism may have higher levels of unemployment than surrounding regions. This is due to the number of people who move to the destination based on the promise of employment, or the hope of higher-paid employment than would be available to them in their home community.
In addition, tourism is both seasonal and cyclical, which has the potential to affect employment patterns. Even popular tropical destinations, such as the islands of the Caribbean, have a distinct tourist season. Higher rates of precipitation during the wet season, as well as the increased risk of hurricanes, are considered barriers to tourism (chapter 6). At the same time, the majority of tourists come from the Northern Hemisphere during the winter months for the inversion of cold to warm weather (chapter 2). Consequently, at these destinations, th
ere is a high demand for labor during peak months, and tourism businesses may need to hire additional workers. Yet, during the low season, some of these workers may have to find temporary employment in other sectors or face unemployment.
Tourism employment is entirely based on the success of the industry. When a destination is experiencing growth, new jobs will be created in both tourism and related industries. For example, when a destination is developing or expanding, a tremendous amount of local and/or tourism infrastructure may be built, creating a boom in the construction industry. However, when the industry as a whole, or a specific destination, is experiencing a decline, jobs will quickly disappear. Moreover, tourism businesses may only provide services to tourists on an on-demand basis and will therefore require fewer full-time employees and fewer supplies.
One of the most common criticisms of the tourism industry is based on the type of jobs created. Many jobs are unskilled and low-wage, which can have few benefits for the local population. Tourism businesses may seek to minimize costs by providing services to tourists on an on-demand basis. Therefore, instead of a staff of full-time employees, businesses may rely on independent contractors who are paid an hourly wage or per job and who receive no benefits like health care or pension plans. For example, rather than maintaining a salaried staff of tour guides who are available to give regularly scheduled tours whether or not any tourists have signed up, a company is likely to hire guides for specific tours once they have filled. In addition, some of these contract jobs may be in the informal sector of the economy.
An Introduction to the Geography of Tourism Page 24
