negative impacts of tourism on economy

10 Economic impacts of tourism + explanations + examples

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There are many economic impacts of tourism, and it is important that we understand what they are and how we can maximise the positive economic impacts of tourism and minimise the negative economic impacts of tourism.

Many argue that the tourism industry is the largest industry in the world. While its actual value is difficult to accurately determine, the economic potential of the tourism industry is indisputable. In fact, it is because of the positive economic impacts that most destinations embark on their tourism journey.

There is, however, more than meets the eye in most cases. The positive economic impacts of tourism are often not as significant as anticipated. Furthermore, tourism activity tends to bring with it unwanted and often unexpected negative economic impacts of tourism.

In this article I will discuss the importance of understanding the economic impacts of tourism and what the economic impacts of tourism might be. A range of positive and negative impacts are discussed and case studies are provided.

At the end of the post I have provided some additional reading on the economic impacts of tourism for tourism stakeholders , students and those who are interested in learning more.

 Foreign exchange earnings

Contribution to government revenues, employment generation, contribution to local economies, development of the private sector, infrastructure cost, increase in prices, economic dependence of the local community on tourism, foreign ownership and management, economic impacts of tourism: conclusion, further reading on the economic impacts of tourism, the economic impacts of tourism: why governments invest.

Tourism brings with it huge economic potential for a destination that wishes to develop their tourism industry. Employment, currency exchange, imports and taxes are just a few of the ways that tourism can bring money into a destination.

In recent years, tourism numbers have increased globally at exponential rates, as shown in the World Tourism Organisation data below.

There are a number of reasons for this growth including improvements in technology, increases in disposable income, the growth of budget airlines and consumer desires to travel further, to new destinations and more often.

Here are a few facts about the economic importance of the tourism industry globally:

• The tourism economy represents 5 percent of world GDP
• Tourism contributes to 6-7 percent of total employment
• International tourism ranks fourth (after fuels, chemicals and automotive products) in global exports
• The tourism industry is valued at US$1trillion a year
• Tourism accounts for 30 percent of the world’s exports of commercial services
• Tourism accounts for 6 percent of total exports
• 1.4billion international tourists were recorded in 2018 (UNWTO)
• In over 150 countries, tourism is one of five top export earners
• Tourism is the main source of foreign exchange for one-third of developing countries and one-half of less economically developed countries (LEDCs)

There is a wealth of data about the economic value of tourism worldwide, with lots of handy graphs and charts in the United Nations Economic Impact Report .

In short, tourism is an example of an economic policy pursued by governments because:

•      it brings in foreign exchange
•      it generates employment
•      it creates economic activity

Building and developing a tourism industry, however, involves a lot of initial and ongoing expenditure. The airport may need expanding. The beaches need to be regularly cleaned. New roads may need to be built. All of this takes money, which is usually a financial outlay required by the Government.

For governments, decisions have to be made regarding their expenditure. They must ask questions such as:

How much money should be spent on the provision of social services such as health, education, housing?

How much should be spent on building new tourism facilities or maintaining existing ones?

If financial investment and resources are provided for tourism, the issue of opportunity costs arises.

By opportunity costs, I mean that by spending money on tourism, money will not be spent somewhere else. Think of it like this- we all have a specified amount of money and when it runs out, it runs out. If we decide to buy the new shoes instead of going out for dinner than we might look great, but have nowhere to go…!

In tourism, this means that the money and resources that are used for one purpose may not then be available to be used for other purposes. Some destinations have been known to spend more money on tourism than on providing education or healthcare for the people who live there, for example.

This can be said for other stakeholders of the tourism industry too.

There are a number of independent, franchised or multinational investors who play an important role in the industry. They may own hotels, roads or land amongst other aspects that are important players in the overall success of the tourism industry. Many businesses and individuals will take out loans to help fund their initial ventures.

So investing in tourism is big business, that much is clear. What what are the positive and negative impacts of this?

Positive economic impacts of tourism

So what are the positive economic impacts of tourism? As I explained, most destinations choose to invest their time and money into tourism because of the positive economic impacts that they hope to achieve. There are a range of possible positive economic impacts. I will explain the most common economic benefits of tourism below.

One of the biggest benefits of tourism is the ability to make money through foreign exchange earnings.

Tourism expenditures generate income to the host economy. The money that the country makes from tourism can then be reinvested in the economy. How a destination manages their finances differs around the world; some destinations may spend this money on growing their tourism industry further, some may spend this money on public services such as education or healthcare and some destinations suffer extreme corruption so nobody really knows where the money ends up!

Some currencies are worth more than others and so some countries will target tourists from particular areas. I remember when I visited Goa and somebody helped to carry my luggage at the airport. I wanted to give them a small tip and handed them some Rupees only to be told that the young man would prefer a British Pound!

Currencies that are strong are generally the most desirable currencies. This typically includes the British Pound, American, Australian and Singapore Dollar and the Euro .

Tourism is one of the top five export categories for as many as 83% of countries and is a main source of foreign exchange earnings for at least 38% of countries.

Tourism can help to raise money that it then invested elsewhere by the Government. There are two main ways that this money is accumulated.

Direct contributions are generated by taxes on incomes from tourism employment and tourism businesses and things such as departure taxes.

Taxes differ considerably between destinations. I will never forget the first time that I was asked to pay a departure tax (I had never heard of it before then), because I was on my way home from a six month backpacking trip and I was almost out of money!

Japan is known for its high departure taxes. Here is a video by a travel blogger explaining how it works.

According to the World Tourism Organisation, the direct contribution of Travel & Tourism to GDP in 2018 was $2,750.7billion (3.2% of GDP). This is forecast to rise by 3.6% to $2,849.2billion in 2019.

Indirect contributions come from goods and services supplied to tourists which are not directly related to the tourism industry.

Take food, for example. A tourist may buy food at a local supermarket. The supermarket is not directly associated with tourism, but if it wasn’t for tourism its revenues wouldn’t be as high because the tourists would not shop there.

There is also the income that is generated through induced contributions . This accounts for money spent by the people who are employed in the tourism industry. This might include costs for housing, food, clothing and leisure Activities amongst others. This will all contribute to an increase in economic activity in the area where tourism is being developed.

The rapid expansion of international tourism has led to significant employment creation. From hotel managers to theme park operatives to cleaners, tourism creates many employment opportunities. Tourism supports some 7% of the world’s workers.

There are two types of employment in the tourism industry: direct and indirect.

Direct employment includes jobs that are immediately associated with the tourism industry. This might include hotel staff, restaurant staff or taxi drivers, to name a few.

Indirect employment includes jobs which are not technically based in the tourism industry, but are related to the tourism industry. Take a fisherman, for example. He does not have any contact of dealings with tourists. BUT he does sell his fish to the hotel which serves tourists. So he is indirectly employed by the tourism industry, because without the tourists he would not be supplying the fish to the hotel.

It is because of these indirect relationships, that it is very difficult to accurately measure the economic value of tourism.

It is also difficult to say how many people are employed, directly and indirectly, within the tourism industry.

Furthermore, many informal employments may not be officially accounted for. Think tut tut driver in Cambodia or street seller in The Gambia – these people are not likely to be registered by the state and therefore their earnings are not declared.

It is for this reason that some suggest that the actual economic benefits of tourism may be as high as double that of the recorded figures!

All of the money raised, whether through formal or informal means, has the potential to contribute to the local economy.

If sustainable tourism is demonstrated, money will be directed to areas that will benefit the local community most.

There may be pro-poor tourism initiatives (tourism which is intended to help the poor) or volunteer tourism projects.

The government may reinvest money towards public services and money earned by tourism employees will be spent in the local community. This is known as the multiplier effect.

The multiplier effect relates to spending in one place creating economic benefits elsewhere. Tourism can do wonders for a destination in areas that may seem to be completely unrelated to tourism, but which are actually connected somewhere in the economic system.

Let me give you an example.

A tourist buys an omelet and a glass of orange juice for their breakfast in the restaurant of their hotel. This simple transaction actually has a significant multiplier effect. Below I have listed just a few of the effects of the tourist buying this breakfast.

The waiter is paid a salary- he spends his salary on schooling for his kids- the school has more money to spend on equipment- the standard of education at the school increases- the kids graduate with better qualifications- as adults, they secure better paying jobs- they can then spend more money in the local community…

The restaurant purchases eggs from a local farmer- the farmer uses that money to buy some more chickens- the chicken breeder uses that money to improve the standards of their cages, meaning that the chickens are healthier, live longer and lay more eggs- they can now sell the chickens for a higher price- the increased money made means that they can hire an extra employee- the employee spends his income in the local community…

The restaurant purchase the oranges from a local supplier- the supplier uses this money to pay the lorry driver who transports the oranges- the lorry driver pays road tax- the Government uses said road tax income to fix pot holes in the road- the improved roads make journeys quicker for the local community…

So as you can see, that breakfast that the tourist probably gave not another thought to after taking his last mouthful of egg, actually had the potential to have a significant economic impact on the local community!

The private sector has continuously developed within the tourism industry and owning a business within the private sector can be extremely profitable; making this a positive economic impact of tourism.

Whilst many businesses that you will come across are multinational, internationally-owned organisations (which contribute towards economic leakage ).

Many are also owned by the local community. This is the case even more so in recent years due to the rise in the popularity of the sharing economy and the likes of Airbnb and Uber, which encourage the growth of businesses within the local community.

Every destination is different with regards to how they manage the development of the private sector in tourism.

Some destinations do not allow multinational organisations for fear that they will steal business and thus profits away from local people. I have seen this myself in Italy when I was in search of a Starbucks mug for my collection , only to find that Italy has not allowed the company to open up any shops in their country because they are very proud of their individually-owned coffee shops.

Negative economic impacts of tourism

Unfortunately, the tourism industry doesn’t always smell of roses and there are also several negative economic impacts of tourism.

There are many hidden costs to tourism, which can have unfavourable economic effects on the host community.

Whilst such negative impacts are well documented in the tourism literature, many tourists are unaware of the negative effects that their actions may cause. Likewise, many destinations who are inexperienced or uneducated in tourism and economics may not be aware of the problems that can occur if tourism is not management properly.

Below, I will outline the most prominent negative economic impacts of tourism.

Economic leakage in tourism is one of the major negative economic impacts of tourism. This is when money spent does not remain in the country but ends up elsewhere; therefore limiting the economic benefits of tourism to the host destination.

The biggest culprits of economic leakage are multinational and internationally-owned corporations, all-inclusive holidays and enclave tourism.

I have written a detailed post on the concept of economic leakage in tourism, you can take a look here- Economic leakage in tourism explained .

Another one of the negative economic impacts of tourism is the cost of infrastructure. Tourism development can cost the local government and local taxpayers a great deal of money.

Tourism may require the government to improve the airport, roads and other infrastructure, which are costly. The development of the third runway at London Heathrow, for example, is estimated to cost £18.6billion!

Money spent in these areas may reduce government money needed in other critical areas such as education and health, as I outlined previously in my discussion on opportunity costs.

One of the most obvious economic impacts of tourism is that the very presence of tourism increases prices in the local area.

Have you ever tried to buy a can of Coke in the supermarket in your hotel? Or the bar on the beachfront? Walk five minutes down the road and try buying that same can in a local shop- I promise you, in the majority of cases you will see a BIG difference In cost! (For more travel hacks like this subscribe to my newsletter – I send out lots of tips, tricks and coupons!)

Increasing demand for basic services and goods from tourists will often cause price hikes that negatively impact local residents whose income does not increase proportionately.

Tourism development and the related rise in real estate demand may dramatically increase building costs and land values. This often means that local people will be forced to move away from the area that tourism is located, known as gentrification.

Taking measures to ensure that tourism is managed sustainably can help to mitigate this negative economic impact of tourism. Techniques such as employing only local people, limiting the number of all-inclusive hotels and encouraging the purchasing of local products and services can all help.

Another one of the major economic impacts of tourism is dependency. Many countries run the risk of becoming too dependant on tourism. The country sees $ signs and places all of its efforts in tourism. Whilst this can work out well, it is also risky business!

If for some reason tourism begins to lack in a destination, then it is important that the destination has alternative methods of making money. If they don’t, then they run the risk of being in severe financial difficulty if there is a decline in their tourism industry.

In The Gambia, for instance, 30% of the workforce depends directly or indirectly on tourism. In small island developing states, percentages can range from 83% in the Maldives to 21% in the Seychelles and 34% in Jamaica.

There are a number of reasons that tourism could decline in a destination.

The Gambia has experienced this just recently when they had a double hit on their tourism industry. The first hit was due to political instability in the country, which has put many tourists off visiting, and the second was when airline Monarch went bust, as they had a large market share in flights to The Gambia.

Other issues that could result in a decline in tourism includes economic recession, natural disasters and changing tourism patterns. Over-reliance on tourism carries risks to tourism-dependent economies, which can have devastating consequences.

The last of the negative economic impacts of tourism that I will discuss is that of foreign ownership and management.

As enterprise in the developed world becomes increasingly expensive, many businesses choose to go abroad. Whilst this may save the business money, it is usually not so beneficial for the economy of the host destination.

Foreign companies often bring with them their own staff, thus limiting the economic impact of increased employment. They will usually also export a large proportion of their income to the country where they are based. You can read more on this in my post on economic leakage in tourism .

As I have demonstrated in this post, tourism is a significant economic driver the world over. However, not all economic impacts of tourism are positive. In order to ensure that the economic impacts of tourism are maximised, careful management of the tourism industry is required.

If you enjoyed this article on the economic impacts of tourism I am sure that you will love these too-

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What is overtourism and how can we overcome it? 

The issue of overtourism has become a major concern due to the surge in travel following the pandemic. Image:  Reuters/Manuel Silvestri (ITALY - Tags: ENTERTAINMENT)

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• Overtourism has once again become a concern, particularly after the rebound of international travel post-pandemic.
• Communities in popular destinations worldwide have expressed concerns over excess tourism on their doorstep.
• Here we outline the complexities of overtourism and the possible measures that can be taken to address the problem.

The term ‘overtourism’ has re-emerged as tourism recovery has surged around the globe. But already in 2019, angst over excessive tourism growth was so high that the UN World Tourism Organization called for “such growth to be managed responsibly so as to best seize the opportunities tourism can generate for communities around the world”.

This was especially evident in cities like Barcelona, where anti-tourism sentiment built up in response to pent-up frustration about rapid and unyielding tourism growth. Similar local frustration emerged in other famous cities, including Amsterdam , Venice , London , Kyoto and Dubrovnik .

While the pandemic was expected to usher in a new normal where responsible and sustainable travel would emerge, this shift was evidently short-lived, as demand surged in 2022 and 2023 after travel restrictions eased.

Have you read?

Ten principles for sustainable destinations: charting a new path forward for travel and tourism.

This has been witnessed over the recent Northern Hemisphere summer season, during which popular destinations heaved under the pressure of pent-up post-pandemic demand , with grassroots communities articulating over-tourism concerns.

Concerns over excess tourism have not only been seen in popular cities but also on the islands of Hawaii and Greece , beaches in Spain , national parks in the United States and Africa , and places off the beaten track like Japan ’s less explored regions.

What is overtourism?

The term overtourism was employed by Freya Petersen in 2001, who lamented the excesses of tourism development and governance deficits in the city of Pompei. Her sentiments are increasingly familiar among tourists in other top tourism destinations more than 20 years later.

Overtourism is more than a journalistic device to arouse host community anxiety or demonize tourists through anti-tourism activism. It is also more than simply being a question of management – although poor or lax governance most definitely accentuates the problem.

Governments at all levels must be decisive and firm about policy responses that control the nature of tourist demand and not merely give in to profits that flow from tourist expenditure and investment.

Overtourism is often oversimplified as being a problem of too many tourists. While that may well be an underlying symptom of excess, it fails to acknowledge the myriad factors at play.

In its simplest iteration, overtourism results from tourist demand exceeding the carrying capacity of host communities in a destination. Too often, the tourism supply chain stimulates demand, giving little thought to the capacity of destinations and the ripple effects on the well-being of local communities.

Overtourism is arguably a social phenomenon too. In China and India, two of the most populated countries where space is a premium, crowded places are socially accepted and overtourism concerns are rarely articulated, if at all. This suggests that cultural expectations of personal space and expectations of exclusivity differ.

We also tend not to associate ‘overtourism’ with Africa . But uncontrolled growth in tourist numbers is unsustainable anywhere, whether in an ancient European city or the savannah of a sub-Saharan context.

Overtourism must also have cultural drivers that are intensified when tourists' culture is at odds with that of host communities – this might manifest as breaching of public norms, irritating habits, unacceptable behaviours , place-based displacement and inconsiderate occupation of space.

The issue also comes about when the economic drivers of tourism mean that those who stand to benefit from growth are instead those who pay the price of it, particularly where gentrification and capital accumulation driven from outside results in local resident displacement and marginalization.

Overcoming overtourism excesses

Radical policy measures that break the overtourism cycle are becoming more common. For example, Amsterdam has moved to ban cruise ships by closing the city’s cruise terminal.

Tourism degrowth has long been posited as a remedy to overtourism. While simply cutting back on tourist numbers seems like a logical response, whether the economic trade-offs of fewer tourists will be tolerated is another thing altogether.

The Spanish island of Lanzarote moved to desaturate the island by calling the industry to focus on quality tourism rather than quantity. This shift to quality, or higher yielding, tourists has been mirrored in many other destinations, like Bali , for example.

Dispersing tourists outside hotspots is commonly seen as a means of dealing with too much tourism. However, whether sufficient interest to go off the beaten track can be stimulated might be an immoveable constraint, or simply result in problem shifting .

Demarketing destinations has been applied with varying degrees of success. However, whether it can address the underlying factors in the long run is questioned, particularly as social media influencers and travel writers continue to give attention to touristic hotspots. In France, asking visitors to avoid Mont Saint-Michelle and instead recommending they go elsewhere is evidence of this.

Introducing entry fees and gates to over-tourist places like Venice is another deterrent. This assumes visitors won’t object to paying and that revenues generated are spent on finding solutions rather than getting lost in authorities’ consolidated revenue.

Advocacy and awareness campaigns against overtourism have also been prominent, but whether appeals to tourists asking them to curb irresponsible behaviours have had any impact remains questionable as incidents continue —for example, the Palau Pledge and New Zealand’s Tiaki Promise appeal for more responsible behaviours.

Curtailing the use of the word overtourism is also posited – in the interest of avoiding the rise of moral panics and the swell of anti-tourism social movements, but pretending the phenomenon does not exist, or dwelling on semantics won’t solve the problem .

Solutions to address overtourism

The solutions to dealing adequately with the effects of overtourism are likely to be many and varied and must be tailored to the unique, relevant destination .

The tourism supply chain must also bear its fair share of responsibility. While popular destinations are understandably an easier sell, redirecting tourism beyond popular honeypots like urban heritage sites or overcrowded beaches needs greater impetus to avoid shifting the problem elsewhere.

Local authorities must exercise policy measures that establish capacity limits, then ensure they are upheld, and if not, be held responsible for their inaction .

Meanwhile, tourists themselves should take responsibility for their behaviour and decisions while travelling, as this can make a big difference to the impact on local residents .

Those investing in tourism should support initiatives that elevate local priorities and needs, and not simply exercise a model of maximum extraction for shareholders in the supply chain.

How is the World Economic Forum supporting the development of cities and communities globally?

The Data for the City of Tomorrow report highlighted that in 2023, around 56% of the world is urbanized. Almost 65% of people use the internet. Soon, 75% of the world’s jobs will require digital skills.

The World Economic Forum’s Centre for Urban Transformation is at the forefront of advancing public-private collaboration in cities. It enables more resilient and future-ready communities and local economies through green initiatives and the ethical use of data.

Learn more about our impact:

• Net Zero Carbon Cities: Through this initiative, we are sharing more than 200 leading practices to promote sustainability and reducing emissions in urban settings and empower cities to take bold action towards achieving carbon neutrality .
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National tourist offices and destination management organizations must support development that is nuanced and in tune with the local backdrop rather than simply mimicking mass-produced products and experiences.

The way tourist experiences are developed and shaped must be transformed to move away from outright consumerist fantasies to responsible consumption .

The overtourism problem will be solved through a clear-headed, collaborative and case-specific assessment of the many drivers in action. Finally, ignoring historical precedents that have led to the current predicament of overtourism and pinning this on oversimplified prescriptions abandons any chance of more sustainable and equitable tourism futures .

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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• INTELLIGENT TRAVEL

Is Tourism Destroying the World?

Travel is transforming the world, and not always for the better. Though it’s an uncomfortable reality (who doesn’t like to travel?), it’s something award-winning journalist Elizabeth Becker   devoted five years of her life to investigating. The result is Overbooked: The Exploding Business of Travel and Tourism .

I caught up with the author to get the inside scoop on the book, what prompted her to write it, and what she learned along the way, and this is what she had to say.

Leslie Trew Magraw: You made a name for yourself as a war correspondent covering Cambodia for The Washington Post . What prompted you to write this book?

Elizabeth Becker: My profession has been to understand world events.   I reported from Asia and Europe [for the Post ] and later was the senior foreign editor at NPR.   At The New York Times ,   I became the international economics correspondent in 2002, and that is when I began noticing the explosion of tourism and how much countries rich and poor were coming to rely on it.

But tourism isn’t treated as a serious business or economic force. Travel sections are all about the best vacations. So I used a fellowship at Harvard to begin my research and then wrote this book to point out what seemed so obvious: Tourism is among the biggest global industries and, as such, has tremendous impacts—environmental, cultural, economic—that have to be acknowledged and addressed.

Which country can you point to as a model for sustainable tourism?

One of the more ambitious is France , which is aiming for sustainability in the whole country. The key, I think, is that the French never fully bought in to the modern obsession with tourist overdevelopment. They have been nurturing their own culture and landscape, cities, and villages for decades. Since they have tied their economy to tourism, they have applied a   precise and country-wide approach that mostly works.

All relevant ministries are involved, including culture, commerce, agriculture, sports, and transportation. Planning is bottom up, beginning with locals at destinations who decide what they want to promote and how they want to improve. The French obsession with protecting their culture—some would call it arrogance—has worked in their favor. The planning and bureaucracy required to make this work would try the patience of many governments.

Now, even though the country is smaller than the state of Texas, France is the most popular destination in the world. Tourism officials told me one of their biggest worries is becoming victims of their success: too many foreigners buying second homes or retirement homes in French villages and Parisian neighborhoods, which could tip the balance and undermine that sustainable and widely admired French way of life.

Many destinations are making impressive changes. Philanthropists are helping African game parks find their footing. I was lucky to see how Paul Allen , for instance, is helping in Zambia .

Which country is doing it all wrong?

Cambodia has made some bad choices in tourism. It is blessed with the magnificent temples of Angkor , glorious beaches in the south, cities with charming overlay of the French colonial heritage, and   a rural landscape of sugar palms, rice paddies, and houses on stilts.

Yet, rather than protect these gems, the government has allowed rapacious tourism to threaten the very attractions that bring tourists. Tourism is seen as a cash cow.

Some of the capital’s most stunning historic buildings are being razed to build look-alike modern hotels.   In Angkor, a thicket of new hotels has outpaced infrastructure and is draining the water table so badly the temples are sinking—and profits from tourism do not reach the common people, who are now among the poorest in the country.

In addition, Cambodia has become synonymous with sex tourism that exploits young girls and boys. The latest wrinkle is to encourage tourists on the “genocide trail” to see the killing fields and execution centers from the Khmer Rouge era.

With more than a billion people traveling each year, how can we see the world without destroying it?

That is the essential question.   Countries are figuring out how to protect their destinations in quiet, non-offensive ways. They control the number of hotel beds, the number of flights to and from a country, the number of tour buses allowed. Some have “sacrifice zones,” where tourists are allowed to flood one section of beachfront, for example, while the rest is protected as a wildlife preserve or [reserved] for locals. Most countries are heavily promoting off-season travel as the most obvious way to control crowds.

Countries are also putting more muscle into regulations [governing] pollution. The toughest problem is breaking the habit of politicians being too close to the industry to the detriment of their country. Money talks in tourism as in any other big business. Luxury chains wanting a store near a major tourist attraction will pay high rents to push out locals. Officials fail to enforce rules against phony “authentic” souvenirs.

One of the worst offenders are the supersize cruise ships that swarm localities, straining local services and sites and giving back little in return.

What do you think will be the biggest challenge for 21st-century travelers?

Avoiding “drive-by tourism.” This is a phrase coined by Paul Bennett of   Context Travel ,   referring to the growing habit of people visiting a destination for a few hours—maybe a few days—and seeing only a blur of sights with little appreciation for the country, culture, or people.

One of the eureka moments in my five years of research was reading old guidebooks in the   Library of Congress.

The Baedeker Guides were written in consultation with historians and archaeologists who presumed the tourists wanted to immerse themselves in a country. They included a short dictionary of the language of the country and, only at the very end, short lists of hotels and restaurants.

Today it is the reverse: Guides have short paragraphs about history, culture, and politics and long lists of where to eat and sleep.

• Nat Geo Expeditions

My advice is to first be a tourist where you live. Explore the museums, the farms, the churches, the night life, the historic monuments—and then read up on local politics and history.

If you’re interested in volunteering overseas, first volunteer at home. Then when you’re planning your next trip abroad, use that experience as a template and study up on the destination you’re about to visit.

Don’t forget to try to learn something of the local language. It is a gift.

Q: Are there any tourism trends that give you hope for the future of travel?

A: People are again recognizing that travel is a privilege. Responsible tourism in its various forms—volunteer tourism, adventure tourism, slow tourism (where people take their time), agro-tourism (where visitors live and work on a farm), ecotourism , geotourism—all speak to tourists’ desire to respect the places they visit and the people they meet.   I think people are also recognizing that bargain travel has hidden expenses and dangers.

Costa Rica was an eye-opener for me; it deserves its reputation as a leader in responsible tourism that nurtures nature and society.

Finally, several groups including the United Nations World Tourism Organization have put together a global sustainable tourism council with a certification program to show tourists which places are genuinely making the effort.

Thoughts? Counterpoints? Leave a comment to let us know how you feel about this important topic.

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The COVID-19 travel shock hit tourism-dependent economies hard

• Download the paper here

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Gian maria milesi-ferretti gian maria milesi-ferretti senior fellow - economic studies , the hutchins center on fiscal and monetary policy.

August 12, 2021

The COVID crisis has led to a collapse in international travel. According to the World Tourism Organization , international tourist arrivals declined globally by 73 percent in 2020, with 1 billion fewer travelers compared to 2019, putting in jeopardy between 100 and 120 million direct tourism jobs. This has led to massive losses in international revenues for tourism-dependent economies: specifically, a collapse in exports of travel services (money spent by nonresident visitors in a country) and a decline in exports of transport services (such as airline revenues from tickets sold to nonresidents).

This “travel shock” is continuing in 2021, as restrictions to international travel persist—tourist arrivals for January-May 2021 are down a further 65 percent from the same period in 2020, and there is substantial uncertainty on the nature and timing of a tourism recovery.

We study the economic impact of the international travel shock during 2020, particularly the severity of the hit to countries very dependent on tourism. Our main result is that on a cross-country basis, the share of tourism activities in GDP is the single most important predictor of the growth shortfall in 2020 triggered by the COVID-19 crisis (relative to pre-pandemic IMF forecasts), even when compared to measures of the severity of the pandemic. For instance, Grenada and Macao had very few recorded COVID cases in relation to their population size and no COVID-related deaths in 2020—yet their GDP contracted by 13 percent and 56 percent, respectively.

International tourism destinations and tourism sources

Countries that rely heavily on tourism, and in particular international travelers, tend to be small, have GDP per capita in the middle-income and high-income range, and are preponderately net debtors. Many are small island economies—Jamaica and St. Lucia in the Caribbean, Cyprus and Malta in the Mediterranean, the Maldives and Seychelles in the Indian Ocean, or Fiji and Samoa in the Pacific. Prior to the COVID pandemic, median annual net revenues from international tourism (spending by foreign tourists in the country minus tourism spending by domestic residents overseas) in these island economies were about one quarter of GDP, with peaks around 50 percent of GDP, such as Aruba and the Maldives.

But there are larger economies heavily reliant on international tourism. For instance, in Croatia average net international tourism revenues from 2015-2019 exceeded 15 percent of GDP, 8 percent in the Dominican Republic and Thailand, 7 percent in Greece, and 5 percent in Portugal. The most extreme example is Macao, where net revenues from international travel and tourism were around 68 percent of GDP during 2015-19. Even in dollar terms, Macao’s net revenues from tourism were the fourth highest in the world, after the U.S., Spain, and Thailand.

In contrast, for countries that are net importers of travel and tourism services—that is, countries whose residents travel widely abroad relative to foreign travelers visiting the country—the importance of such spending is generally much smaller as a share of GDP. In absolute terms, the largest importer of travel services is China (over $200 billion, or 1.7 percent of GDP on average during 2015-19), followed by Germany and Russia. The GDP impact for these economies of a sharp reduction in tourism outlays overseas is hence relatively contained, but it can have very large implications on the smaller economies their tourists travel to—a prime example being Macao for Chinese travelers.

How did tourism-dependent economies cope with the disappearance of a large share of their international revenues in 2020? They were forced to borrow more from abroad (technically, their current account deficit widened, or their surplus shrank), but also reduced net international spending in other categories. Imports of goods declined (reflecting both a contraction in domestic demand and a decline in tourism inputs such as imported food and energy) and payments to foreign creditors were lower, reflecting the decline in returns for foreign-owned hotel infrastructure.

The growth shock

We then examine whether countries more dependent on tourism suffered a bigger shock to economic activity in 2020 than other countries, measuring this shock as the difference between growth outcomes in 2020 and IMF growth forecasts as of January 2020, just prior to the pandemic. Our measure of the overall importance of tourism is the share of GDP accounted for by tourism-related activity over the 5 years preceding the pandemic, assembled by the World Travel and Tourism Council and disseminated by the World Bank . This measure takes into account the importance of domestic tourism as well as  international tourism.

Among the 40 countries with the largest share of tourism in GDP, the median size of growth shortfall compared to pre-COVID projections was around 11 percent, as against 6 percent for countries less dependent on tourism. For instance, in the tourism-dependent group, Greece, which was expected to grow by 2.3 percent in 2020, shrunk by over 8 percent, while in the other group,  Germany, which was expected to grow by around 1 percent, shrunk by 4.8 percent. The scatter plot of Figure 2 provides more striking visual evidence of a negative correlation (-0.72) between tourism dependence and the growth shock in 2020.

Of course, many other factors may have affected differences in performance across economies—for instance, the intensity of the pandemic as well as the stringency of the associated lockdowns. We therefore build a simple statistical model that relates the “growth shock” in 2020 to these factors alongside our tourism variable, and also takes into account other potentially relevant country characteristics, such as the level of development, the composition of output, and country size. The message: the dependence on tourism is a key explanatory variable of the growth shock in 2020. For instance, the analysis suggests that going from the share of tourism in GDP of Canada (around 6 percent) to the one of Mexico (around 16 percent) would reduce growth in 2020 by around 2.5 percentage points. If we instead go from the tourism share of Canada to the one of Jamaica (where the share of tourism in GDP approaches one third), growth would be lower by over 6 percentage points.

Measures of the severity of the pandemic, the intensity of lockdowns, the level of development, and the sectoral composition of GDP (value added accounted for by manufacturing and agriculture) also matter, but quantitatively less so than tourism. And results are not driven by very small economies; tourism is still a key explanatory variable of the 2020 growth shock even if we restrict our sample to large economies. Among tourism-dependent economies, we also find evidence that those relying more heavily on international tourism experienced a more severe hit to economic activity when compared to those relying more on domestic tourism.

Given data availability at the time of writing, the evidence we provided is limited to 2020. The outlook for international tourism in 2021, if anything, is worse, though with increasing vaccine coverage the tide could turn next year. The crisis poses particularly daunting challenges to smaller tourist destinations, given limited possibilities for diversification. In many cases, particularly among emerging and developing economies, these challenges are compounded by high starting levels of domestic and external indebtedness, which can limit the space for an aggressive fiscal response. Helping these countries cope with the challenges posed by the pandemic and restoring viable public and external finances will require support from the international community.

Read the full paper here.

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A Year Without Travel

How Bad Was 2020 for Tourism? Look at the Numbers.

The dramatic effects of the coronavirus pandemic on the travel industry and beyond are made clear in six charts.

By Stephen Hiltner and Lalena Fisher

Numbers alone cannot capture the scope of the losses that have mounted in the wake of the coronavirus pandemic. Data sets are crude tools for plumbing the depth of human suffering , or the immensity of our collective grief .

But numbers can help us comprehend the scale of certain losses — particularly in the travel industry , which in 2020 experienced a staggering collapse.

Around the world, international arrivals are estimated to have dropped to 381 million in 2020, down from 1.461 billion in 2019 — a 74 percent decline . In countries whose economies are heavily reliant on tourism , the precipitous drop in visitors was, and remains, devastating.

According to recent figures from the United Nations World Tourism Organization, the decline in international travel in 2020 resulted in an estimated loss of $1.3 trillion in global export revenues. As the agency notes, this figure is more than 11 times the loss that occurred in 2009 as a result of the global economic crisis.

The following charts — which address changes in international arrivals, emissions, air travel, the cruise industry and car travel — offer a broad overview of the effects of the coronavirus pandemic within the travel industry and beyond.

International arrivals in tourism-dependent economies

Macau, a top gambling destination, is highly dependent on travelers, as measured by the share

of its G.D.P. that is generated by tourism. Its international visitor numbers plummeted in 2020:

ARRIVALS IN 2020

The following countries are also among the world’s most dependent on travel, in terms of both their

G.D.P. and their international tourism receipts as a percent of total exports:

U.S. Virgin Islands

The Bahamas

Antigua and Barbuda

Saint Lucia

Cook Islands

0.5 million

Macau, a gambling destination, is dependent on travelers,

as measured by the share of its G.D.P. that is generated by

tourism. Its international visitor numbers plummeted in 2020:

The following countries are also among the world’s most

dependent on travel, in terms of both their G.D.P. and their

international tourism receipts as a percent of total exports:

Before the pandemic, tourism accounted for one out of every 10 jobs around the world. In many places, though, travel plays an even greater role in the local economy.

Consider the Maldives, where in recent years international tourism has accounted for around two-thirds of the country’s G.D.P. , when considering direct and indirect contributions.

As lockdowns fell into place worldwide, international arrivals in the Maldives plunged; from April through September of 2020, they were down 97 percent compared to the same period in 2019. Throughout all of 2020, arrivals were down by more than 67 percent compared with 2019. (Arrival numbers slowly improved after the country reopened in July; the government, eager to promote tourism and mitigate losses, lured travelers with marketing campaigns and even courted influencers with paid junkets .)

Similar developments played out in places such as Macau, Aruba and the Bahamas: shutdowns in February and March, followed by incremental increases later in the year.

The economic effect of travel-related declines has been stunning. In Macau, for example, the G.D.P. contracted by more than 50 percent in 2020.

And the effects could be long-lasting; in some areas, travel is not expected to return to pre-pandemic levels until 2024.

Travelers passing through T.S.A. airport security checkpoints

The pandemic upended commercial aviation. One way to visualize the effect of lockdowns on air travel is to consider the number of passengers screened on a daily basis at Transportation Security Administration checkpoints.

Traveler screenings plunged in March before hitting a low point on April 14, when 87,534 passengers were screened — a 96 percent decline as compared with the same date in 2019.

Numbers have risen relatively steadily since then, though today the screening figures still sit at less than half of what they were a year earlier.

According to the International Air Transport Association, an airline trade group, global passenger traffic in 2020 fell by 65.9 percent as compared to 2019, the largest year-on-year decline in aviation history.

Daily carbon dioxide emissions from aviation

3.0 million metric tons

Another way to visualize the drop-off in air travel last year is to consider the amount of carbon dioxide (CO2) emitted by aircraft around the world.

According to figures from Carbon Monitor , an international initiative that provides estimates of daily CO2 emissions, worldwide emissions from aviation fell by nearly 50 percent last year — to around 500 million metric tons of CO2, down from around 1 billion metric tons in 2019. (Those numbers are expected to rebound, though the timing will depend largely on how long corporate and international travel remain sidelined .)

All told, CO2 emissions from fossil fuels dropped by 2.6 billion metric tons in 2020, a 7 percent reduction from 2019, driven in large part by transportation declines.

Yearly revenues of three of the biggest cruise lines

$20 billion

ROYAL CARIBBEAN

Few industries played as central and public a role in the early months of the coronavirus pandemic as did the major cruise lines — beginning with the outbreak aboard the Diamond Princess .

In a scathing rebuke of the industry issued in July, the Centers for Disease Control and Prevention blamed cruise companies for widespread transmission of the virus, pointing to 99 outbreaks aboard 123 cruise ships in U.S. waters alone.

While precise passenger data for 2020 is not yet available, the publicly disclosed revenues — which include ticket sales and onboard purchases — from three of the largest cruise lines offer a dramatic narrative: strong revenues in the early months of 2020, followed by a steep decline.

Third-quarter revenues for Carnival Corporation, the industry’s biggest player, showed a year-to-year decline of 99.5 percent — to $31 million in 2020, down from $6.5 billion in 2019.

The outlook remains bleak for the early months of 2021: For now, most cruise lines have canceled all sailings into May or June.

Long-distance car travel, before and during the pandemic

Driving trips at least 50 miles from home, with stays of two hours or more, based on a daily index from

mobile location data.

Trips at least 50 miles from home, with stays of two hours

or more, based on a daily index from mobile location data.

Air travel, both international and domestic, was markedly curtailed by the pandemic. But how was car travel affected?

One way to measure the change is to look at the Daily Travel Index compiled by Arrivalist , a company that uses mobile location data to measure consumer road trips of 50 miles or more in all 50 U.S. states.

The figures tell the story of a rebound that’s slightly stronger than that of air travel: a sharp drop in March and April, as state and local restrictions fell into place , followed by a gradual rise to around 80 percent of 2019 levels.

Difference in visits to four popular national parks, 2019 to 2020

1.0 MILLION

GREAT SMOKY

GRAND CANYON

CUYAHOGA VALLEY

YELLOWSTONE

1.0 million

Another way to consider car travel in 2020 — and domestic travel in the U.S. more broadly — is to look at the visitation numbers for America’s national parks.

Over all, national park visitation decreased by 28 percent in 2020 — to 237 million visitors, down from 327.5 million in 2019, largely because of temporary park closures and pandemic-related capacity restrictions.

The caveat, though, is that several parks saw record numbers of visitors in the second half of the year, as a wave of travel-starved tourists began looking for safe and responsible forms of recreation.

Consider the figures for recreational visits at Yellowstone National Park. After a shutdown in April, monthly visitation at the park quickly rose above 2019 levels. The months of September and October of 2020 were both the busiest on record, with numbers in October surpassing the previous monthly record by 43 percent .

Some national parks located near cities served as convenient recreational escapes throughout the pandemic. At Cuyahoga Valley National Park, 2020 numbers exceeded 2019 numbers from March through December. At Great Smoky Mountains National Park, numbers surged after a 46-day closure in the spring and partial closures through August; between June and December, the park saw one million additional visits compared to the same time period in 2019.

Stephen Hiltner is an editor on the Travel desk. You can follow his work on Instagram and Twitter . More about Stephen Hiltner

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UN Tourism | Bringing the world closer

Secretary-general’s policy brief on tourism and covid-19.

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Tourism and COVID-19 – unprecedented economic impacts

The Policy Brief provides an overview of the socio-economic impacts from the pandemic on tourism, including on the millions of livelihoods it sustains. It highlights the role tourism plays in advancing the Sustainable Development Goals, including its relationship with environmental goals and culture. The Brief calls on the urgency of mitigating the impacts on livelihoods, especially for women, youth and informal workers.

The crisis is an opportunity to rethink how tourism interacts with our societies, other economic sectors and our natural resources and ecosystems; to measure and manage it better; to ensure a fair distribution of its benefits and to advance the transition towards a carbon neutral and resilient tourism economy.

The brief provides recommendations in five priority areas to cushion the massive impacts on lives and economies and to rebuild a tourism with people at the center. It features examples of governments support to the sector, calls for a reopening that gives priority to the health and safety of the workers, travelers and host communities and provides a roadmap to transform tourism.

• Tourism is one of the world’s major economic sectors. It is the third-largest export category (after fuels and chemicals) and in 2019 accounted for 7% of global trade .
• For some countries, it can represent over 20% of their GDP and, overall, it is the third largest export sector of the global economy.
• Tourism is one of the sectors most affected by the Covid-19 pandemic, impacting economies, livelihoods, public services and opportunities on all continents. All parts of its vast value-chain have been affected. 
• Export revenues from tourism could fall by $910 billion to $1.2 trillion in 2020. This will have a wider impact and could reduce global GDP by 1.5% to 2.8% .
• Tourism supports one in 10 jobs and provides livelihoods for many millions more in both developing and developed economies.
• In some Small Island Developing States (SIDS), tourism has accounted for as much as 80% of exports, while it also represents important shares of national economies in both developed and developing countries.

100 to 120 MILLON

direct tourism jobs at risk

Massive Impact on Livelihoods

• As many as 100 million direct tourism jobs are at risk , in addition to sectors associated with tourism such as labour-intensive accommodation and food services industries that provide employment for 144 million workers worldwide. Small businesses (which shoulder 80% of global tourism) are particularly vulnerable.
• Women, who make up 54% of the tourism workforce, youth and workers in the informal economy are among the most at-risk categories.
• No nation will be unaffected. Destinations most reliant on tourism for jobs and economic growth are likely to be hit hardest: SIDS, Least Developed Countries (LDCs) and African countries. In Africa, the sector represented 10% of all exports in 2019.  

US$ 910 Billon to US$ 1.2 Trillon

in export from tourism - international visitors' spending

Preserving the Planet -- Mitigating Impacts on Nature and Culture

• The sudden fall in tourism cuts off funding for biodiversity conservation . Some 7% of world tourism relates to wildlife , a segment growing by 3% annually.
• This places jobs at risk and has already led to a rise in poaching, looting and in consumption of bushmeat , partly due to the decreased presence of tourists and staff.
• The impact on biodiversity and ecosystems is particularly critical in SIDS and LDCs. In many African destinations, wildlife accounts for up to 80% of visits, and in many SIDS, tourism revenues enable marine conservation efforts.
• Several examples of community involvement in nature tourism show how communities, including indigenous peoples, have been able to protect their cultural and natural heritage while creating wealth and improve their wellbeing. The impact of COVID-19 on tourism places further pressure on heritage conservation as well as on the cultural and social fabric of communities , particularly for indigenous people and ethnic groups.
• For instance, many intangible cultural heritage practices such as traditional festivals and gatherings have been halted or postponed , and with the closure of markets for handicrafts, products and other goods , indigenous women’s revenues have been particularly impacted.
• 90% of countries have closed World Heritage Sites, with immense socio-economic consequences for communities reliant on tourism. Further, 90% of museums closed and 13% may never reopen.

1.5% to 2.8 of global GDP

Five priorities for tourism’s restart.

The COVID-19 crisis is a watershed moment to align the effort of sustaining livelihoods dependent on tourism to the SDGs and ensuring a more resilient, inclusive, carbon neutral, and resource efficient future.

A roadmap to transform tourism needs to address five priority areas:

• Mitigate socio-economic impacts on livelihoods , particularly women’s employment and economic security.
• Boost competitiveness and build resilience , including through economic diversification, with promotion of domestic and regional tourism where possible, and facilitation of conducive business environment for micro, small and medium-sized enterprises (MSMEs).
• Advance innovation and digital transformation of tourism , including promotion of innovation and investment in digital skills, particularly for workers temporarily without jobs and for job seekers.
• Foster sustainability and green growth to shift towards a resilient, competitive, resource efficient and carbon-neutral tourism sector. Green investments for recovery could target protected areas, renewable energy, smart buildings and the circular economy, among other opportunities.
• Coordination and partnerships to restart and transform sector towards achieving SDGs , ensuring tourism’s restart and recovery puts people first and work together to ease and lift travel restrictions in a responsible and coordinated manner.

a lifelive for

SIDS, LDCs and many AFRICAN COUNTRIES

tourism represents over 30% of exports for the majority of SIDS and 80% for some

Moving Ahead Together

• As countries gradually lift travel restrictions and tourism slowly restarts in many parts of the world, health must continue to be a priority and coordinated heath protocols that protect workers, communities and travellers, while supporting companies and workers, must be firmly in place.
• Only through collective action and international cooperation will we be able to transform tourism, advance its contribution to the 2030 Agenda and its shift towards an inclusive and carbon neutral sector that harnesses innovation and digitalization, embraces local values and communities and creates decent job opportunities for all, leaving no one behind. We are stronger together.

RESOURCES FOR CONSEVATION

of natural and cultural heritage

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Economic Impact Research

• In 2023, the Travel & Tourism sector contributed 9.1% to the global GDP; an increase of 23.2% from 2022 and only 4.1% below the 2019 level.
• In 2023, there were 27 million new jobs, representing a 9.1% increase compared to 2022, and only 1.4% below the 2019 level.
• Domestic visitor spending rose by 18.1% in 2023, surpassing the 2019 level.
• International visitor spending registered a 33.1% jump in 2023 but remained 14.4% below the 2019 total.

Click here for links to the different economy/country and regional reports

Why conduct research?

From the outset, our Members realised that hard economic facts were needed to help governments and policymakers truly understand the potential of Travel & Tourism. Measuring the size and growth of Travel & Tourism and its contribution to society, therefore, plays a vital part in underpinning WTTC’s work.

What research does WTTC carry out?

Each year, WTTC and Oxford Economics produce reports covering the economic contribution of our sector in 185 countries, for 26 economic and geographic regions, and for more than 70 cities. We also benchmark Travel & Tourism against other economic sectors and analyse the impact of government policies affecting the sector such as jobs and visa facilitation.

Visit our Research Hub via the button below to find all our Economic Impact Reports, as well as other reports on Travel and Tourism. 

• Open access
• Published: 05 January 2021

The relationship between tourism and economic growth among BRICS countries: a panel cointegration analysis

• Haroon Rasool   ORCID: orcid.org/0000-0002-0083-4553 1 ,
• Shafat Maqbool 2 &
• Md. Tarique 1  

Future Business Journal volume  7 , Article number:  1 ( 2021 ) Cite this article

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85 Citations

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Metrics details

Tourism has become the world’s third-largest export industry after fuels and chemicals, and ahead of food and automotive products. From last few years, there has been a great surge in international tourism, culminates to 7% share of World’s total exports in 2016. To this end, the study attempts to examine the relationship between inbound tourism, financial development and economic growth by using the panel data over the period 1995–2015 for five BRICS (Brazil, Russia, India, China and South Africa) countries. The results of panel ARDL cointegration test indicate that tourism, financial development and economic growth are cointegrated in the long run. Further, the Granger causality analysis demonstrates that the causality between inbound tourism and economic growth is bi-directional, thus validates the ‘feedback-hypothesis’ in BRICS countries. The study suggests that BRICS countries should promote favorable tourism policies to push up the economic growth and in turn economic growth will positively contribute to international tourism.

Introduction

World Tourism Day 2015 was celebrated around the theme ‘One Billion Tourists; One Billion Opportunities’ highlighting the transformative potential of one billion tourists. With more than one billion tourists traveling to an international destination every year, tourism has become a leading economic sector, contributing 9.8% of global GDP and represents 7% of the world’s total exports [ 59 ]. According to the World Tourism Organization, the year 2013 saw more than 1.087 billion Foreign Tourist Arrivals and US $1075 billion foreign tourism receipts. The contribution of travel and tourism to gross domestic product (GDP) is expected to reach 10.8% at the end of 2026 [ 61 ]. Representing more than just economic strength, these figures exemplify the vast potential of tourism, to address some of the world´s most pressing challenges, including socio-economic growth and inclusive development.

Developing countries are emerging as the important players, and increasingly aware of their economic potential. Once essentially excluded from the tourism industry, the developing world has now become its major growth area. These countries majorly rely on tourism for their foreign exchange reserves. For the world’s forty poorest countries, tourism is the second-most important source of foreign exchange after oil [ 37 ].

The BRICS (Brazil, Russia, India, China and South Africa) countries have emerged as a potential bloc in the developing countries which caters the major tourists from developed countries. Tourism becomes major focus at BRICS Xiamen Summit 2017 held in China. These countries have robust growth rate, and are focal destinations for global tourists. During 1990 to 2014, these countries stride from 11% of the world’s GDP to almost 30% [ 17 ]. Among BRICS countries, China is ranked as an important destination followed by Brazil, Russia, India and South Africa [ 60 ].

The importance of inbound tourism has grown exponentially, because of its growing contribution to the economic growth in the long run. It enhances economic growth by augmenting the foreign exchange reserves [ 38 ], stimulating investments in new infrastructure, human capital and increases competition [ 9 ], promoting industrial development [ 34 ], creates jobs and hence to increase income [ 34 ], inbound tourism also generates positive externalities [ 1 , 14 ] and finally, as economy grows, one can argue that growth in GDP could lead to further increase in international tourism [ 11 ].

The tourism-led growth hypothesis (TLGH) proposed by Balaguer and Cantavella-Jorda [ 3 ], states that expansion of international tourism activities exerts economic growth, hence offering a theoretical and empirical link between inbound tourism and economic growth. Theoretically, the TLGH was directly derived from the export-led growth hypothesis (ELGH) that postulates that economic growth can be generated not only by increasing the amount of labor and capital within the economy, but also by expanding exports.

The ‘new growth theory,’ developed by Balassa [ 4 ], suggests that export expansion can trigger economic growth, because it promotes specialization and raises factors productivity by increasing competition, creating positive externalities by advancing the dispersal of specialized information and abilities. Exports also enhance economic growth by increasing the level of investment. International tourism is considered as a non-standard type of export, as it indicates a source of receipts and consumption in situ. Given the difficulties in measuring tourism activity, the economic literature tends to focus on primary and manufactured product exports, hence neglecting this economic sector. Analogous to the ELGH, the TLGH analyses the possible temporal relationship between tourism and economic growth, both in the short and long run. The question is whether tourism activity leads to economic growth or, alternatively, economic expansion drives tourism growth, or indeed a bi-directional relationship exists between the two variables.

To further substantiate the nexus, the study will investigate the plausible linkages between economic growth and international tourism while considering the relative importance of financial development in the context of BRICS nations. Financial markets are considered a key factor in producing strong economic growth, because they contribute to economic efficiency by diverting financial funds from unproductive to productive uses. The origin of this role of financial development may is traced back to the seminal work of Schumpeter [ 50 ]. In his study, Schumpeter points out that the banking system is the crucial factor for economic growth due to its role in the allocation of savings, the encouragement of innovation, and the funding of productive investments. Early works, such as Goldsmith [ 18 ], McKinnon [ 39 ] and Shaw [ 51 ] put forward considerable evidence that financial development enhances growth performance of countries. The importance of financial development in BRICS economies is reflected by the establishment of the ‘New Development Bank’ aimed at financing infrastructure and sustainable development projects in these and other developing countries. To the best of the authors’ knowledge, no attempt has been made so far to investigate the long-run relationship Footnote 1 between tourism, financial development and economic growth in case of BRICS countries. Hence, the present study is an attempt to fill the gap in the existing literature.

Review of past studies

From last few decades there has been a surge in the research related to tourism-growth nexus. The importance of growth and development and its determinants has been studied extensively both in developed and developing countries. Extant literature has recognized tourism as an important determinant of economic growth. The importance of tourism has grown exponentially, courtesy to its manifold advantages in form of employment, foreign exchange production household income and government revenues through multiplier effects, improvements in the balance of payments and growth in the number of tourism-promoted government policies [ 21 , 41 , 53 ]. Empirical findings on tourism and economic development have produced mixed finding and sometimes conflicting results despite the common choice of time series techniques as a research methodology. On empirical grounds, four hypotheses have been explored to determine the link between tourism and economic growth [ 12 ]. The first two hypotheses present an account on the unidirectional causality between the two variables, either from tourism to economic growth (Tourism-led economic growth hypothesis-TLGH) or its reserve (economic-driven tourism growth hypothesis-EDTH). The other two hypotheses support the existence of bi-directional hypothesis, (bi-directional causality hypothesis-BC) or that there is no relationship at all (no causality hypothesis-NC), respectively. According to TLEG hypothesis, tourism creates an array of benefits which spillover though multiple routes to promote the economic growth [ 55 ]. In particular, it is believed that tourism (1) increases foreign exchange earnings, which in turn can be used to finance imports [ 38 ], (2) it encourages investment and drives local firms toward greater efficiency due to the increased competition [ 3 , 31 ], (3) it alleviates unemployment, since tourism activities are heavily based on human capital [ 10 ] and (4) it leads to positive economies of scale thus, decreasing production costs for local businesses [ 1 , 14 ]. Other recent studies which find evidence in favor of the TLGH hypothesis include [ 44 , 52 ]. Even though literature is dominated by TLGH, few studies produce a result in support of EDTH [ 40 , 41 , 45 ]. Payne and Mervar [ 45 ] posit that tourism growth of a country is mobilized by the stability of well-designed economic policies, governance structures and investments in both physical and human capital. This positive and vibrant environment creates a series of development activities which proliferate and flourish the tourism. Pertaining to the readily available information, bi-directional causality could also exist between tourism income and economic growth [ 34 , 49 ]. From a policy view, a reciprocal tourism–economic growth relationship implies that government agendas should cater for promoting both areas simultaneously. Finally, there are some studies that do not offer support to any of the aforementioned hypotheses, suggesting that the impact between tourism and economic growth is insignificant [ 25 , 47 , 57 ]. There is a vast literature examining the relationship between tourism and growth as a result, only a selective literature review will be presented here.

Banday and Ismail [ 5 ] used ARDL cointegration model to test the relationship between tourism revenue and economic growth in BRICS countries from the time period of (1995–2013). The study validates the tourism-led growth hypothesis for BRICS countries, which evinces that tourism has positive influence on economic growth.

Savaş et al. [ 54 ] evaluated the tourism-led growth hypothesis in the context of Turkey. The study employed gross domestic product, real exchange rate, real total expenditure and international tourism arrivals to sketch out the causality among variables. The result reveals a unidirectional relationship between tourism and real exchange rate. The findings suggest that tourism is the driving force for economic growth, which in turn helps turkey to culminate its current account deficit.

Dhungel [ 15 ] made an effort to investigate causality between tourism and economic growth, In Nepal for the period of (1974–2012), by using Johansen’s cointegration and Error correction model. The result states that unidirectional causality exists in the long run, while in short run no causality exists between two constructs. The study emphasized that strategies should be devised to attain causality running from tourism to economic growth.

Mallick et al. [ 36 ] analyzed the nexus between economic growth and tourism in 23 Indian states over a period of 14 years (1997–2011). Using panel autoregressive distributed lag model based on three alternative estimators such as mean group estimator, pooled mean group and dynamic fixed effects, Research found that tourism exerts positive influence on economic growth in the long run.

Belloumi [ 8 ] examines the causal relationship between international tourism receipts and economic growth in Tunisia by using annual time series data for the period 1970–2007. The study uses the Johansen’s cointegration methodology to analyze the long-run relationship among the concerned variables. Granger causality based Vector error correction mechanism approach indicates that the revenues generated from tourism have a positive impact on economic growth of Tunisia. Thus, the study supports the hypothesis of tourism-driven economic growth, which is specific to developing countries that base their foreign exchange earnings on the existence of a comparative advantage in certain sectors of the economy.

Tang et al. [ 58 ] explored the dynamic Inter-relationships among tourism, economic growth and energy consumption in India for the period 1971–2012. The study employed Bounds testing approach to cointegration and generalized variance decomposition methods to analyze the relationship. The bounds testing and the Gregory-Hansen test for cointegration with structural breaks consistently reveals that energy consumption, tourism and economic growth in India are cointegrated. The study demonstrated that tourism and economic growth have positive impact on energy consumption, while tourism and economic growth are interrelated; with tourism exert significant influence on economic growth. Consequently, this study validates the tourism-led growth hypothesis in the Indian context.

Kadir and Karim [ 24 ]) examined the causal nexus between tourism and economic growth in Malaysia by applying panel time series approach for the period 1998–2005. By applying Padroni’s panel cointegration test and panel Granger causality test, the result indicated both short and long-run relationship. Further, the panel causality shows unidirectional causality directing from tourism receipts to economic growth. The result provides evidence of the significant contribution of tourism industry to Malaysia’s economic growth, thereby justifying the necessity of public intervention in providing tourism infrastructure and facilities.

Antonakakis et al. [ 2 ] test the linkage between tourism and economic growth in Europe by using a newly introduced spillover index approach. Based on monthly data for 10 European countries over the period 1995–2012, the findings suggested that the tourism–economic growth relationship is not stable over time in terms of both magnitude and direction, indicating that the tourism-led economic growth (TLEG) and the economic-driven tourism growth (EDTG) hypotheses are time-dependent. Thus, the findings of the study suggest that the same country can experience tourism-led economic growth or economic-driven tourism growth at different economic events.

Oh [ 41 ] verifies the contribution of tourism development to economic growth in the Korean economy by applying Engle and Granger two-stage approach and a bivariate Vector Autoregression model. He claimed that economic expansion lures tourists in the short run only, while there is no such long-run stable relationship between international tourism and economic development in Korea.

Empirical studies have pronouncedly focused on the literature that tourism promotes economic growth. To further substantiate the nexus, the study will investigate the plausible linkages between economic growth and international tourism while considering the relative importance of financial development in the context of BRICS nations. The inclusion of financial development in the examination of tourism-growth nexus is a unique feature of this study, which have an influencing role in economic growth as financial development has been theoretically and empirically recognized as source of comparative advantage [ 22 ].

This study employs panel ARDL cointegration approach to verify the existence of long-run association among the variables. Further, study estimated the long-run and short-run coefficients of the ARDL model. Subsequently, Dumitrescu and Hurlin [ 16 ] panel Granger causality test has been employed to check the direction of causality between tourism, financial development and economic growth among BRICS countries.

Database and methodology

Data and variables.

The study is analytical and empirical in nature, which intends to establish the relationship between economic growth and inbound tourism in BRICS countries. For the BRICS countries, limited studies have been conducted depicting the present scenario. Therefore, present study tries to verify the relevance of tourism in economic growth to further enhance the understanding of economic dynamics in BRICS countries. The data used in the study are annual figures for the period stretching from 1995 to 2015, consisting of one endogenous variable (GDP per capita, a proxy for economic growth) and two exogenous variables (international tourism receipts per capita and financial development). The variables employed in the study are based on the economic growth theory, proposed by Balassa [ 4 ], which states that export expansion has a relevant contribution in economic growth. Further, this study incorporates financial development in the model to reduce model misspecification as it is considered to have an influencing role in economic growth both theoretically and empirically [ 22 , 33 ].

The annual data for all the variables have been collected from the World Development Indicators (WDI, 2016) database. The variables used in the study includes gross domestic product per capita (GDP) in constant ($US2010) used as a proxy for economic growth (EG), international tourism receipts per capita (TR) in current US$ as it is widely accepted that the most adequate proxy of inbound tourism in a country is tourism expenditure normally expressed in terms of tourism receipts [ 32 ] and financial development (FD). In line with a recent study on the relationship between financial development and economic growth by Hassan et al. [ 19 ], financial development is surrogated by the ratio of the broad money (M3) to real GDP for all BRICS countries. Here we use the broadest definition of money (M3) as a proportion of GDP– to measure the liquid liabilities of the banking system in the economy. We use M3 as a financial depth indicator, because monetary aggregates, such as M2 or M1, may be a poor proxy in economies with underdeveloped financial systems, because they ‘are more related to the ability of the financial system to provide transaction services than to the ability to channel funds from savers to borrowers’ [ 26 ]. A higher liquidity ratio means higher intensity in the banking system. The assumption here is that the size of the financial sector is positively associated with financial services [ 29 ]. All the variables have been taken into log form.

Unit root test

To verify the long-run relationship between tourism and economic growth through Bounds testing approach, it is necessary to test for stationarity of the variables. The stationarity of all the variables can be assessed by different unit root tests. The study utilizes panel unit root test proposed by Levin et al. [ 35 ] henceforth LLC and Im et al. [ 23 ] henceforth IPS based on traditional augmented Dickey–Fuller (ADF) test. The LLC allows for heterogeneity of the intercepts across members of the panel under the null hypothesis of presence of unit root, while IPS allows for heterogeneity in intercepts as well as in the slope coefficients [ 48 ].

Panel ARDL approach to Cointegration

After checking the stationarity of the variables the study employs panel ARDL technique for Cointegration developed by Pesaran et al. [ 23 ]. Pesaran et al. [ 23 ] have introduced the pooled mean group (PMG) approach in the panel ARDL framework. According to Pesaran et al. [ 23 ], the homogeneity in the long-run relationship can be attributed to several factors such as arbitration condition, common technologies, or the institutional development which was covered by all groups. The panel ARDL bounds test [ 46 ] is more appropriate by comparing other cointegration techniques, because it is flexible regarding unit root properties of variables. This technique is more suitable when variables are integrated at different orders but not I (2). Haug [ 20 ] has argued that panel ARDL approach to cointegration provides better results for small sample data set such as in our case. The ARDL approach to cointegration estimates both long and short-run parameters and can be applied independently of variable order integration (independent of whether repressors are purely I (0), purely I(1) or combination of both. The ARDL bounds test approach used in this study is specified as follows:

where Δ is the first-difference operator, \(\alpha_{0}\) stands for constant, t is time element, \(\omega_{1} , \omega_{2} \;\;{\text{and}}\;\; \omega_{3}\) represent the short-run parameters of the model, \(\emptyset_{1} , \emptyset_{2} ,and \emptyset_{3}\) are long-run coefficients, while \(V_{it}\) is white noise error term and lastly, it represents country at a particular time period. In the ARDL model, the bounds test is applied to determine whether the variables are cointegrated or not.

This test is based on the joint significance of F -statistic and the χ 2 statistic of the Wald test. The null hypothesis of no cointegration among the variables under study is examined by testing the joint significance of the F -statistic of \(\omega_{1} , \omega_{2} ,\omega_{3}\) .

In case series variables are cointegrated, an error correction mechanism (ECM) can be developed as Eq. ( 2 ), to assess the short-run influence of international tourism and financial development on economic growth.

where ECT is the error correction term, and \(\varPhi\) is its coefficient which shows how fast the variables attain long-term equilibrium if there is any deviation in the short run. The error correction term further confirms the existence of a stable long-run relationship among the variables.

Panel granger causality test

To examine the direction of causality Dumitrescu and Hurlin [ 16 ] test is employed. Instead of pooled causality, Dumitrescu and Hurlin [ 16 ] proposed a causality based on the individual Wald statistic of Granger non-causality averaged across the cross section units. Dumitrescu and Hurlin [ 16 ] assert that traditional test allows for homogeneous analysis across all panel sets, thereby neglecting the specific causality across different units.

This approach allows heterogeneity in coefficients across cross section panels. The two statistics Wbar-statistics and Zbar-statistics provides standardized version of the statistics and is easier to compute. Wbar-statistic, takes an average of the test statistics, while the Zbar-statistic shows a standard (asymptotic) normal distribution.

They proposed an average Wald statistic that tests the null hypothesis of no causality in a panel subgroup against an alternative hypothesis of causality in at least one panel. Following equations will be used to check the direction of causality between the variables.

Estimation, results and Discussion

Descriptive statistics.

Table  1 presents descriptive statistics of variables selected for the period 1995–2015. The variable set includes GDP, FD and TR for all BRICS countries. Brazil tops the list with GDP per capita of 4.18, while India lagging behind all BRICS nations. In the recent economic survey by International Monetary Fund (IMF report 2016), India was ranked 126 for its per capita GDP. India’s GDP per capita went up to $7170 against all other BRICS countries which were placed in the above $10,000 bracket. China has the highest tourism receipts in comparison to other BRICS countries. China is a very popular country for foreign tourists, which ranks third after France and USA. In 2014, China invested $136.8 billion into its tourist infrastructure, a figure second only to the United States ($144.3 billion). Tourism, based on direct, indirect, and induced impact, accounted for near 10% in the GDP of China (WTTC report 2017).

Stationarity results

Primarily, we employed LLC and IPS unit root test to assess the integrated properties of the series. The results of IPS and PP tests are presented in Table  2 . Panel unit root test result evinces that FD and TR are stationary at level, while GDP per capita is integrated variable of order 1. The result exemplifies that GDP per capita, Tourism receipts and Financial Development are integrated at 1(0) and 1(1). Consequently, the panel ARDL approach to cointegration can be applied.

Cointegration test results

In view of the above results with a mixture of order integration, the panel ARDL approach to cointegration is the most appropriate technique to investigate whether there exists a long-run relationship among the variables [ 42 ]. Table  3 illustrates that the estimated value of F-statistics, which is higher than the lower and upper limit of the bound value, when InEG is used as a dependent variable. Hence, we reject the null hypothesis of no cointegration \(H_{0 } : \emptyset_{1} = \emptyset_{2} = \emptyset_{3} = 0\) of Eq. ( 1 ). Therefore, the result asserts that international tourism, financial development and economic growth are significantly cointegrated over the period (1995–2015).

Subsequently, the study investigates the long-run and short-run impact of international tourism and financial development on economic growth. Lag length is selected on the principle of minimum Bayesian information criterion (SBC) value, which is 2 in our case. The long-run coefficients of financial development and tourism receipts with respect to economic growth in Table  4 indicate that tourism growth and financial development exerts positive influence on economic growth in the long run. In other words, an increase in volume of tourism receipts per capita and financial depth spurs economic growth and both the coefficients are statistically significant in case of BRICS nations in the long run. The results are interpreted in detail as below:

The elasticity coefficient of economic growth with respect to tourism shows that 1% rise in international tourism receipts per capita would imply an estimated increase of almost 0.31% domestic real income in the long run, all else remaining the same. Thus, the earnings in the form of foreign exchange from international tourism affect growth performance of BRICS nations positively. This finding of our study is in consonance with the empirical results of Kreishan for Jordan [ 30 ], Balaguer and Cantavella-Jordá [ 3 ] for Spain and Ohlan [ 43 ] for India.

Further our finding lend support to the wide applicability of the new growth theory proposed by Balassa which states that export expansion promote growth performance of nations. Thus, validates TLGH coined by Balaguer and Cantavell-Jorda [ 3 ] which states that inbound tourism acts a long-run economic growth factor. The so called tourism-led growth hypothesis suggests that the development of a country’s tourism industry will eventually lead to higher economic growth and, by extension, further economic development via spillovers and other multiplier effects.

Likewise, financial development as expected is found to be positively associated with economic growth. The coefficient of financial development states that 1% improvement in financial development will push up economic growth by 0.22% in the long run, keeping all other variables constant. The empirical results are consistent with the finding of Hassan et al. [ 19 ] for a panel of South Asian countries. Well-regulated and properly functioning financial development enhances domestic production through savings, borrowings & investment activities and boosts economic growth. Further, it promotes economic growth by increasing efficiency [ 7 ]. Levine [ 33 ] believes that financial intermediaries enhance economic efficiency, and ultimately growth, by helping allocation of capital to its best use. Modern growth theory identifies two specific channels through which the financial sector might affect long-run growth; through its impact on capital accumulation and through its impact on the rate of technological progress. The sub-prime crisis which depressed the economic growth worldwide in 2007 further substantiates the growth-financial development nexus.

In the third and final step of the bounds testing procedure, we estimate short-run dynamics of variables by estimating an error correction model associated with long-run estimates. The empirical finding indicates that the coefficient of error correction term (ECT) with one period lag is negative as well as statistically significant. This finding further substantiates the earlier cointegration results between tourism, financial development and economic growth, and indicates the speed of adjustment from the short-run toward long-run equilibrium path. The coefficient of ECT reveals that the short-run divergences in economic growth from long-run equilibrium are adjusted by 43% every year following a short-run shock.

The short-run parameters in Table  5 demonstrates that tourism and financial development acts as an engine of economic growth in the short run as well. The coefficient of both tourism receipts per capita and financial development with one period lag is also found to be progressive and significant in the short run. These results highlight the role of earnings from international tourism and financial stability as an important driving force of economic growth in BRICS nations in the short run as well.

Further, a comparison between short-run and long-run elasticity coefficients evince that long-run responsiveness of economic growth with respect to tourism and financial development is higher than that of short run. It exemplifies that over time higher international tourism receipts and well-regulated financial system in BRICS nations give more boost to economic growth.

Analysis of causality

At this stage, we investigate the causality between tourism, financial development and economic growth presented in Table  6 . The result shows bi-directional causal relationship between tourism and economic growth, thereby validates ‘feedback hypothesis’ and consequently supported both the tourism-led growth hypothesis (TLGH) and its reciprocal, the economic-driven tourism growth hypothesis (EDTH). The bi-directional causality between inbound tourism and GDP, which directs the level of economic activity and tourism growth, mutually influences each other in that a high volume of tourism growth leads to a high level of economic development and reverse also holds true. These results replicate the findings of Banday and Ismail [ 5 ] in the context of BRICS countries, Yazdi et al. [ 27 ] for Iran and Kim et al. [ 28 ] for Taiwan. One of the channels through which tourism spurs economic growth is through the use of receipts earned in the form of foreign currency. Thus, growth in foreign earnings may allow the import of technologically advances goods that will favor economic growth and vice versa. Thus, results demonstrate that international tourism promotes growth and in turn economic expansion is necessary for tourism development in case of BRICS countries. With respect to policy context, this finding suggests that the BRICS nations should focus on economic policies to promote tourism as a potential source of economic growth which in turn will further promote tourism growth.

Similarly, in case of economic growth and financial development, the findings demonstrate the presence of bi-directional causality between two constructs. The findings validate thus both ‘demand following’ and supply leading’ hypothesis. The findings suggests that indeed financial development plays a crucial role in promoting economic activity and thus generating economic growth for these countries and reverse also holds. Our findings are in line with Pradhan [ 48 ] in case of BRICS countries and Hassan et al. [ 19 ] for low and middle-income countries. This suggests that finance development can be used as a policy variable to foster economic growth in the five BRICS countries and vice versa. The study emphasizes that the current economic policies should recognize the finance-growth nexus in BRICS in order to maintain sustainable economic development in the economy. The empirical results in this paper are in line with expectations, confirming that the emerging economies of the BRICS are benefiting from their finance sectors.

Finally, two-sided causal relationship is found between tourism receipts and financial development. That is, tourism might contribute to financial development and, in return, financial development may positively contribute to tourism. This means that financial depth and tourism in BRICS have a reinforcing interaction. The positive impact of tourism on financial development can be attributed to the fact that inflows of foreign exchange via international tourism not only increases income levels but also leads to rise in official reserves of central banks. This in turn enables central banks to adapt expansionary monetary policy. The positive contribution of financial sector to tourism is further characterized by supply leading hypothesis. Further, better financial and market conditions will attract tourism entrepreneurship, because firms will be able to use more capital instead of being forced to use leveraging [ 13 ]. Hence, any shocks in money supply could adversely affect tourism industry in these countries. Song and Lin [ 56 ] found that global financial crisis had a negative impact on both inbound and outbound tourism in Asia. This result is in consistent with Başarir and Çakir [ 6 ] for Turkey and four European countries.

Stability tests

In addition, to test the stability of parameters estimated and any structural break in the model CUSUM and CUSUMSQ tests are employed. Figs.  1 and 2 show blue line does not transcend red lines in both the tests, thus provides strong evidence that our estimated model is fit and valid policy implications can be drawn from the results.

Plot of CUSUM

Plot of CUSUMQ

Summary and concluding remarks

A rigorous study of the relationship between tourism and economic growth, through the tourism-led growth hypothesis (TLGH) perspective has remained a debatable issue in the economic growth literature. This study aims to empirically investigate the relationship between inbound tourism, financial development and economic growth in BRICS countries by utilizing the panel data over the period 1995–2015. The study employs the panel ARDL approach to cointegration and Dumitrescu-Hurlin panel Granger causality test to detect the direction of causation.

To the best of authors’ knowledge, this is the first study which explored the relationship between economic growth and tourism while considering the relative importance of financial development in the context of BRICS nations. The empirical results of ARDL model posits that in BRICS countries inbound tourism, financial development and economic growth are significantly cointegrated, i.e., variables have stable long-run relationship. This methodology has allowed obtaining elasticities of economic growth with respect to tourism and financial development both in the long run and short run. The result reveals that international tourism growth and financial development positively affects economic growth both in the long run and short run. The coefficient of tourism indicates that with a 1% rise in tourism receipts per capita, GDP per capita of BRICS economies will go up by 0.31% in the long run. This finding lends support to TLGH coined by Balaguer and Cantavell-Jorda [ 3 ] which states that inbound tourism acts a long-run economic growth factor. The so called tourism-led growth hypothesis suggests that the development of a country’s tourism industry will eventually lead to higher economic growth and, by extension, further economic development via spillovers and other multiplier effects.

Likewise, 1% improvement in financial development, on average, will increase economic growth in BRICS countries by 0.22% in the long run. The result seems logical as modern growth theory identifies two channels through which the financial sector might affect long-run growth: first, through its impact on capital accumulation and secondly, through its impact on the rate of technological progress. The sub-prime crisis which hit the economic growth Worldwide in 2007 further substantiates the growth-financial development nexus.

The negative and statistically significant coefficient of lagged error correction term (ECT) further substantiates the long-run equilibrium relationship among variables. The negative coefficient of ECT also shows the speed of adjustment toward long-run equilibrium is 43% per annum if there is any short-run deviation. The estimates of parameters are found to be stable by applying CUSUM and CUSUMQ for the time period under consideration. Therefore, inbound tourism earnings and financial institutions can be used as a channel to increase economic growth in BRICS economies.

Further, Granger causality test result indicates the bi-directional causation in all cases. Hence, the causal relationship between international tourism and economic growth is bi-directional. And, consequently this empirical finding lends support to both the tourism-led growth hypothesis (TLGH) and its reciprocal, the economic-driven tourism growth hypothesis (EDTH). This means that tourism is not only an engine for economic growth, but the economic outcome on itself can play an important role in providing growth potential to tourism sector.

The Granger causality findings provide useful information to governments to examine their economic policy, to adjust priorities regarding economic investment, and boost their economic growth with the given limited resources. Thus, it is suggested that more resources should be allocated to tourism industry and tourism-related industries if the tourism-led growth hypothesis holds true. On the other side, if economic-driven tourism growth is supported then more resources should be diverted to leading industries rather than the travel and tourism sector, and the tourism industry will in turn benefit from the resulting overall economic growth. And, when bi-directional causality is detected, a balanced allocation of economic resources for the travel and tourism sector and other industries is important and necessary. The policy implication is that resource allocation supporting both the tourism and tourism-related industries could benefit both tourism development and economic growth.

To sum up, the major finding of this study lends support to wide applicability of the tourism-led growth hypothesis in case of BRICS countries. Thus, in the Policy context, significant impact of tourism on BRICS economy rationalizes the need of encouraging tourism. Tourism can spur economic prosperity in these countries and for this reason; policymakers should give serious consideration toward encouraging tourism industry or inbound tourism. BRICS countries should focus more on tourism infrastructure, such as, convenient transportation, alluring destinations, suitable tax incentives, viable hostels and proper security arrangements to attract the potential tourists. Most of these countries are devoid of rich facilities and popular tourist incentives, to get promoted as important destination and in the long-run promotes economic growth. Further, they need a staunch support from all sections of authorities, non-government organizations (NGOs), and private and allied industries, in the endeavor to attain sustainable growth in tourism. Both state and non-state actors must recognize this growing industry and its positive implication on economy.

For future research, we suggest that researchers should consider the nonlinear factor in the dynamic relationship of tourism and economic growth in case of BRICS countries. Further one can go for comparative study to examine the TLGH in BRICS countries.

Availability of data and materials

Data used in the study can be provided by the corresponding author on request.

There are no fixed definitions of short, medium and long run and generally in macroeconomics, short run can be viewed as 1 to 2 or 3 years, medium up to 5 years and long run from 5 years to 20 or 25 years.

Abbreviations

autoregressive distributed lag model

Brazil, Russia, India, China and South-Africa

United Nations World Tourism Organization

World Travel & Tourism Council

gross domestic product

world development indicators

tourism-led growth hypothesis

export-led growth hypothesis

economic-driven tourism hypothesis

augmented Dickey–Fuller test

error correction model

error correction term

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Rasool, H., Maqbool, S. & Tarique, M. The relationship between tourism and economic growth among BRICS countries: a panel cointegration analysis. Futur Bus J 7 , 1 (2021). https://doi.org/10.1186/s43093-020-00048-3

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POSITIVE VS NEGATIVE ECONOMIC IMPACTS OF TOURISM DEVELOPMENT: A REVIEW OF ECONOMIC IMPACT STUDIES

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Understanding and overcoming negative impacts of tourism in city destinations: conceptual model and strategic framework

Journal of Tourism Futures

ISSN : 2055-5911

Article publication date: 15 November 2017

Issue publication date: 15 December 2017

The purpose of this paper is to clarify the mechanisms of conflict between residents and tourists and to propose a conceptual model to assess the impact of such conflicts on city tourism and to suggest a framework to develop strategies to deal with such conflicts and mitigate negative impacts.

Design/methodology/approach

Based on desk research a conceptual model was developed which describes the drivers of conflicts between residents and visitors. Building blocks of the model are visitors and their attributes, residents and their attributes, conflict mechanisms and critical encounters between residents and visitors, and indicators of the quality and quantity of tourist facilities. Subsequently the model was used to analyse the situation in Hamburg. For this analysis concentration values were calculated based on supply data of hotels and AirBnB, app-data, and expert consultations.

The study shows that in Hamburg there are two key mechanisms that stimulate conflicts: (1) the number of tourists in relation to the number of residents and its distribution in time and space; (2) the behaviour of visitors measured in the norms that they pose onto themselves and others (indecent behaviour of tourists).

Research limitations/implications

The model that was developed is a conceptual model, not a model with which hypotheses can be tested statistically. Refinement of the model needs further study.

Practical implications

Based on the outcomes of the study concrete strategies were proposed with which Hamburg could manage and control the balance of tourism.

Originality/value

City tourism has been growing in the last decades, in some cases dramatically. As a consequence, conflicts between tourists, tourism suppliers and inhabitants can occur. The rise of the so-called sharing economy has recently added an additional facet to the discussion. The ability to assess and deal with such conflicts is of importance for the way city tourism can develop in the future. This study is an attempt to contribute to the understanding of the mechanism behind and the nature of those conflicts, and the way they can be managed and controlled. Besides it illustrates how data generated by social media (apps) can be used for such purposes.

• City tourism

Conflict mechanisms

• Host-guest relations
• Overtourism
• Tourism impact studies
• Visitor management

Postma, A. and Schmuecker, D. (2017), "Understanding and overcoming negative impacts of tourism in city destinations: conceptual model and strategic framework", Journal of Tourism Futures , Vol. 3 No. 2, pp. 144-156. https://doi.org/10.1108/JTF-04-2017-0022

Emerald Publishing Limited

Copyright © 2017, Albert Postma Dirk Schmuecker

Published in the Journal of Tourism Futures. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

Tourism is subject to massive growth. Projections made by the World Tourism Organisation anticipate a growth to 1.8 billion international arrivals worldwide till 2030. Based on its World Tourism Monitor, IPK states that city tourism is the fastest growing market segment in tourism ( IPK International, 2016 ). The direct and indirect effects of this increase in visitor numbers seem to cause an increase in annoyance among residents, which could lead to conflicts between tourists, tourism suppliers and inhabitants. The rise of the so-called sharing economy has recently added an additional facet to the discussion. During the past few years various media have reported on incidents, residents protests and the like. However, the humming-up of media may occasionally obscure the difference between actual conflicts perceived in the population and what interested actors in the media make of it. Here, only a careful analysis of the actual situation would help. On the other hand, such conflicts and the discussion about it are neither new nor limited to large cities. Yet, the focus of the discussion has shifted over the last decades: from tourism to developing countries, residents of villages in the Alps which have found themselves into ski-circuses, or greenlanders suffering from the rush of cruise ships. Recently, the discussion has shifted to where a large proportion of tourists go: from and to the European cities. Data from the German Reiseanalyse, an annual survey on holiday travel in Germany ( Schmücker et al. , 2016 ), suggest that in 2014, 31 per cent of the population and 33 per cent of German holiday makers were at home in cities with more than 100,000 inhabitants. In the cities, holiday travel is more than 80 per cent higher than in the countryside.

Tourism generates income and employment for cities, and thanks to tourism the liveliness and liveability in cities is boosted because many shops, services and facilities would not exist without that additional customer base. However, with an eye on the (social) sustainability of city tourism development, it is important to understand whether and how residents’ annoyance comes about and with which measures residents’ attitude could be kept within the margins of their tolerance level. Postma (2013) studied residents’ experiences with tourism in four tourism destinations. He identified three categories of so called “critical encounters”, four levels of annoyance, four levels on tolerance, and three levels of loyalty towards tourism development. The European Tourism Futures Research Network did a pilot study in Riga, Berlin and Amsterdam to investigate the applicability of Postma’s outcomes in an urban context. When this proved valid, the approach was used by the Dutch Centre of Expertise in Leisure, Tourism and Hospitality (CELTH) in a European study on visitor pressure in the city centres of Copenhagen, Berlin, Munich, Amsterdam, Barcelona and Lisbon. A second phase of this study just started in the Flemish cities of art (Antwerp, Bruges, Ghent, Leuven and Mechelen), Tallin and Salzburg. In this study residents were consulted to identify critical encounters and the support for various kinds of strategies to deal with it. Finally, NIT and ETFI conducted a study in Hamburg addressing these issues in 2015/2016.

The domain of tourism impact studies

The study presented here is an example of a tourism impact study. The domain of tourism impact studies has evolved since the second world war, echoing the development of tourism, its characteristics and its perception. During the first phase (1960-1970) the emphasis of tourism impact studies was on the positive economic impacts of tourism. Tourism was mainly seen as a means to strengthen economies. In the 1970s and 1980s, the focus gradually shifted to the negative social, cultural and environmental impacts. This reflected the growing concern of industrialisation, sustainability and quality of life. Ultimately in the 1980s and 1990s the interest of tourism impact studies moved to integrating the economic perspective with the social and environmental one. Tourism had continued to grow, had become more diffuse, and had become more interconnected with societies and economies. The divide in tourism impact studies between economic and social and environmental perspectives, and the emphasis on tourism and destinations as two different worlds impacting upon each other (nicely illustrated in binary terminology such as host and guest) gradually moved to a growing interest into the multidimensional relation between tourism and communities; the process by which tourism is shaped by the interactions between, tourism, host environments, economy and societies; and the meaning of tourism for society ( Postma, 2013 ; Pizam, 1978 ; Jafari, 1990, 2005, 2007 ; Butler, 2004 ; Hudson and Lowe, 2004 ; Ateljevic, 2000 ; Crouch, 1999, 2011 ; Williams, 2009 ; Sherlock, 2001 ). This so called cultural turn in tourism impact studies ( Milne and Ateljevic, 2001 ) opened the door to new research areas raising attention on themes and issues that were largely overlooked or marginalised before ( Causevic and Lynch, 2009 ), for instance, “the multiple readings of local residents while working, living, playing or, in other words, consuming and producing their localities through encounter with tourism” ( Ateljevic, 2000 , pp. 381-382).

According to Deery et al. (2012) , tourism impact studies have grown into a massive and mature field of study covering a wide spectrum of economic, social and environmental dimensions. However, Williams asserts that there is still a lack of understanding of the relationship between tourism and destination communities, both because the number of empirical studies, inconclusive or conflicting results of empirical studies, and a contested conceptual basis ( Williams, 2009 ). Postma (2013) confirms that mainstream tourism impact literature does not offer useful theoretical frameworks for tourism impact studies that focus on the tourism community relations.

Sustainable tourism

Although the notion of sustainable development has led to considerable debate since its introduction which in part is due to its vagueness for concrete action, it is incorporated as an important starting point in contemporary policy and planning worldwide. This also applies to tourism, where the basic ideas of sustainable development were gradually translated into the concept of sustainable tourism development. The first ideas were introduced by Krippendorf (1984) , and they were elaborated in the Brundtland report ( World Commission on Environment and Development, 1987 ) and the United Nations Conference on Environment and Development in Rio de Janeiro in 1992. The ideas presented in the Rio Declaration on Environment and Development and in Agenda 21 guided the World Conference on Sustainable Tourism in Lanzarote in 1995, where the core principles were established ( France, 1997 ; Martin, 1995 ). In line with sustainable development, sustainable tourism development tries to establish a suitable balance between economic, environmental and social aspects of tourism development to guarantee its long-term sustainability ( World Tourism Organisation, 2004 ). The World Tourism Organisation’s core principles of sustainable tourism development are: to improve the quality of life of the host community; to provide high quality experience for visitors; and to maintain the quality of the environment, on which both the host community and the visitors depend ( Mill and Morrison, 2002 ).

Sustainable development and sustainable tourism development do not aim at prosperity and material gains but primarily at well-being and quality of life ( Postma, 2001, 2003 ; Postma and Schilder, 2007 ; Jackson, 1989 ; Burns, 1999 ). In this view residents should be both the starting point and the checkpoint for tourism policy and planning. As the negative perception of tourism affects the way in which residents perceive their quality of community life ( Kim, 2002 ), the long-term sustainability of tourism might be negatively affected by any impacts from tourism causing irritation, annoyance, or anger among local residents. The threshold level at which enthusiasm and support for tourism turns into irritation could be regarded as an indicator of the edge of sustainable development. Therefore, sustainable tourism development requires both greater efforts to incorporate the input of residents in the planning process both in communities exposed to tourism for the first time and in established destinations experiencing increased volumes of tourists ( Burns and Holden, 1997 ; Harrill, 2004 ), as well as to studying host community attitudes and the antecedents of residents’ reactions ( Zhang et al. , 2006 ). As Haywood (1988) states: “Local governments should be more responsible to the local citizens whose lives and communities may be affected by tourism in all its positive and negative manifestations” (in Burns and Holden, 1997 ).

Thus, understanding current and potential conflicts between residents and tourists is an integral part of the sustainable tourism debate. By definition, sustainable tourism development does have an ecological, economic and social dimension. It may be argued that the inclusion of the needs of the inhabitants stimulates the traditional understanding of a tourism market between buyers and sellers: while consumers look for tourism experiences and providers look for business opportunities, the claims of residents are more extensively focussed on an adequate quality of life ( Postma, 2003 ). The larger the interfaces between these three stakeholder groups, the more conflict-free tourism will be able to develop ( Figure 1 ).

For (city) tourism, it seems advisable to define the concept of sustainability in a broad and comprehensive way. Sustainable tourism thus entails “acceptance by the population”, and the population is clearly a part of the social dimension. The participation of the population and securing/increasing the acceptance of tourism is therefore also one of the objectives for Hamburg’s sustainable tourism development. To develop tourism in a sustainable way, in Hamburg as in other cities, the challenge is to bring the quality of life demands of the inhabitants (social dimension) and the quality-of-opportunity requirements of the providers (economic dimension) as far as possible into line.

The case of Hamburg

The aim of this viewpoint paper is to contribute to the conceptualisation of tourism community relations and to clarify the mechanisms of conflict between residents and tourists and to propose a conceptual model to assess the impact of such conflicts on city tourism and to suggest a framework to develop strategies to deal with such conflicts and mitigate negative impacts. This model was developed for a study in Hamburg that addressed the balanced and sustainable growth of tourism in the city. Hamburg is one of the most popular city destinations in Germany. The city, located in the north of the country, is faced with a gradual increase of visitor numbers, especially during the past few years. Internal papers of Hamburg’s Destination Management Organisation, Hamburg Tourismus ( HHT, 2015 ), show that between 2001 and 2015, the number of overnight stays in Hamburg increased with over 150 per cent, which is more than, for example, Barcelona (+112 per cent), Venice (+120 per cent), Amsterdam (+54 per cent) and Berlin (+153 per cent). Although the negative implications of tourism are not as visible as in some other European cities, critiques are getting louder in selected parts of the city, as shown by a regular resident monitoring implemented by HHT. Strategies to distribute tourism flows in time and space could help to prevent or to counteract. The study, commissioned by HHT, is an attempt to contribute to the understanding of the mechanisms behind and the nature of possible conflicts between tourists, tourism suppliers and residents and the way they can be managed and controlled, for example, by making use of data generated by social media. Based on desk research, a conceptual model was developed which describes the drivers of conflict between residents and visitors. Building blocks of the model are visitors and their attributes, residents and their attributes, conflict mechanisms and areas of conflict between both parties, and indicators of quality and quantity of tourist facilities. Subsequently the model was used to analyse the situation in Hamburg.

Conflict drivers and irritation factors

To develop a better understanding of the mechanism of conflict between tourists, tourism suppliers and residents, desk research was conducted into potential areas of conflict between locals and tourists, which factors would characterize particularly vulnerable residents and particularly disturbing locals, and what would be strategic options to manage and control the (occurrence) of such conflicts.

There is danger that for a focus on only negative aspects in the interaction between tourists and locals would cause bias. Therefore, it should be stressed that – for the destination – tourism is not an end in itself, but primarily an economic and, second, a social potential. Economically, tourism usually has positive effects for the inhabitants, mainly through the money flowing in from the outside, which tourists spend in the city and for the city. This money leads to tourist turnover, which is reflected in income. This income can be in the form of salaries, income from self-employment, company profits, or from the leasing or sale of land, buildings or flats. Indirectly, tourism revenues also contribute to the creation and maintenance of infrastructures and (tourist) offers which can also be used by residents. This applies to most cultural institutions (from the opera to the zoo), but also for public transport offers, gastronomy, etc. Socially, tourism can lead to desirable effects in the destination as well. This includes the (simple) encounter with others (provided they are “encounters on eye”), a general stimulation and a social enrichment and liveliness of the city.

It is especially in the economic dimension, where the dilemma to which involvement with tourism could sometimes lead, becomes clear. If an apartment is rented as a holiday home rather than as a permanent living space, because the landlord will get a higher income (in some cases at lower costs and lower risk), this is undoubtedly disadvantageous for the regular tenants and land-lords of houses undoubtedly advantageous. An assessment of this dilemma is therefore not only possible based on (short-term) economic considerations, but must consider long-term and non-economic aspects. The understanding of such balancing processes and the existence of potentially positive and negative effects of tourism is fundamental to the overall further consideration.

The study of the interaction between tourists and the residents of the destination has already shown a longer academic tradition (see Harrill, 2004 ; Zhang et al. , 2006 ; Andereck et al. , 2005 ; Vargas-Sánchez et al. , 2008 ). However, Postma notes: “A review of the literature concerning residents’ attitude toward tourism revealed an absence of research exploring factors that specifically contribute or cause irritation development, with the exception of Doxey’s (1975) article and the authors who quote him or elaborated and described his model in more detail, such as Murphy (1985) , Fridgen (1991) , Ryan (1991) , Matthieson and Wall (1982) , Wall and Mathieson (2006) , Vanderwerf (2008) and Milligan (1989) . Based on empirical investigations he designed an irritation index, describing four stages in the development of irritation: euphoria, apathy, annoyance, and antagonism. The model of this “irridex” describes the changing attitude of residents ensuing from reciprocal impacts between tourists and residents and varying degrees of compatibility between the residents and outsiders. According to Doxey (1975) irritation differs from person to person: it is affected by various personal characteristics and various characteristics of the tourist destination.

Much literature is devoted to investigating the positive and negative impacts of tourism. Rátz and Puczkó (2002) have summarised these impacts. This overview indicates that irritation might develop along four dimensions: population impacts, transformation of the labour market, changes in community characteristics and community structure, impacts at the individual and family level, and impacts on the natural and cultural resources ( Postma, 2013 , p. 25) lists the socio-cultural impacts of tourism, which is the focus of this study.

Model construction

The results of the desk research were put together in a conceptual framework to conceptualise the complex issue under study, that has largely been unexplored in this way so far. The model helps to identify and visualise possible irritation points on the part of the inhabitants and their (possibly disturbing) interaction with visitors. Just like other models, this conceptual model is a schematic abstraction of reality. It takes individual, relevant aspects into account, while other aspects might be neglected. The intention is not to be complete, but to visualise reality and identify relevant issues. So, the model presented here is abstract and descriptive. It is not a scientific structure or measurement model from which statistical hypotheses can be derived, but rather a “thinking structure” for further investigation.

The overview of positive and negative possible effects of tourism on the social dimension of tourism by Rátz and Puczkó (2002) is a first starting point for the modelling process. A second starting point is the Tourist Destination Model as developed by NIT, which has been evolved throughout many years ( Schmücker, 2011 ). Further starting points for the modelling process were reports and survey results from cities in which there have already been clearly observed annoyances among the local population because of tourism. A particularly prominent example is Barcelona (even a film was recorded), but also cities like Venice, Vienna, Amsterdam or Berlin are not only reported in the local, national and international press.

For the elaboration of a conceptual model, it is first necessary to clarify which content should be taken into account. First, the key actors: tourists and their characteristics, and residents and their characteristics. Second, attributes of the tourist product because their quantity and quality of the tourism opportunity spectrum are the prerequisite for tourists to visit the city at all. This includes both the specific tourist offer (hotel industry, semi-professional, private and sharing offers, MICE offers) as well as the offers which are aimed at both tourists and locals (cultural offers, gastronomy, mobility, etc.).

With these building blocks, the essential conflict mechanisms and concrete fields of conflict can be described, as well as strategic courses of action against the objectives of sustainable tourism development. The model is displayed in Figure 2 .

The model shows the interaction between local residents and tourists, its conditions and consequences. Conditioned by the attributes of both parties, and of conflict mechanisms between the two (sensitivity to) areas of conflict do arise. The model helps to understand how this process works. Based on intensive data collection and data analysis the model was applied in Hamburg to make an analysis of the distribution in time and space of overnight stay accommodation, events and visitor flows, the annoyance tourism caused among local residents, and the strategies that could be taken to manage tourism flows in a sustainable way. In the following sections the components of the model will be described in detail.

Relevant characteristics of tourists

“Adaptivity”: the ability of tourists to adapt to the people in the destination and their habits. “Adaptive” behaviour can be divided into general and specific. General adaptive behaviour is at work in many cultures, for example, general friendliness and restraint. Specific adaptive behaviour can include behaviour accepted by some cultures, but by others (e.g. preparing food in the hotel room or visiting sacred buildings with/without head cover). The larger the cultural distance between the locals and the tourists, the greater their adaptiveness should be to avoid conflicts.

“Tourism culture”: it seems plausible to attribute a greater potential for irritation to tourists with certain behaviours, travel situations or group sizes than others. In particular tourist trips that are mainly aimed at enjoyment in the city. Eye-catching examples can be actions such as bachelor parties, visits to sporting events and the like. In connection with conspicuous behaviour (e.g. shouting, drinking, etc.) the irritation potential increases significantly. This behaviour is often different from home. “[It] can be labelled as a tourist culture, a subset of behavioural patterns and values that tend to emerge only when the visitors are travelling but which, when viewed by local people in receiving areas, project a false and misleading image of the visitors and the societies they represent” ( Postma, 2013 , p. 144). Group size belongs to the same category: it can be assumed that tourists coming in (large) groups, tend to generate irritation easier than individual tourists.

Other demographic, socio-cultural and personal characteristics: of course there are other characteristics of tourists that could cause irritation or annoyance. However, it seems plausible to consider, for example, purely demographic attributes (such as age, gender, household type and size) as background variables rather than primary features in the model. The same applies to other attributes that contribute to the adaptivity, to socio-cultural attributes (nationality, ethnicity, language, attitude to women), to socio-economic attributes (such as income and consumption patterns) and to the regional origin of the visitors. Regardless of the adaptivity, the regional origin can be a relevant driver of irritation. Even if tourists behave in a very friendly and reserved manner, their appearance may be irritating some inhabitants due to specific characteristics (such as skin colour, language/dialect or clothing). Even if there is no objective cause for complaint, strangeness as such can cause irritation.

It is important to emphasise that these background variables are not directly affecting behaviour in a direct way. Stephen Williams (2009 , p. 144) comments: “The behaviour patterns of visitors often divert from their socio-cultural norms and do not accurately represent the host societies from which they originate, with conspicuous increases in levels of expenditure and consumption, or adoption of activities that might be on the margins pf social acceptability at home (e.g. drinking, overeating, gambling, atypical dress codes, nudity, semi nudity)”.

Relevant characteristics of inhabitants

On the part of the inhabitants, a fairly large number of potential attributes can be identified in the literature which could influence their attitude towards the tourists.

demographic characteristics: gender, age, education;

socio-economic characteristics: employment and income situation, housing situation (place of residence, duration of residence, property/rented), personal relationship to the city/district, attitude to economic growth;

socio-psychological and socio-cultural characteristics: orientation (new vs traditional) and lifestyle, origin (born and raised or migrant, born in city or country), personality traits such as self-image and group identity; and

tourism-specific characteristics: knowledge about tourism and its effects, income dependence from tourism, spatial distance to tourist hotspots and actual contacts with tourists, involvement in decisions about tourism development.

Harrill (2004) , Zhang et al. (2006) , Andereck et al. (2005) , Vargas-Sánchez et al. (2008) , Faulkner and Tideswell (1997) .

Investigations into residents’ perceptions of tourism have been approached from several perspectives: the balance between positive and negative perceived impacts (social exchange theory), the shared social representations of tourism with other community members (social representations theory; Moscovici, 1981, 1983, 1984, 1988 ), the speed and intensity of tourism growth, especially in the early phases of tourism development (social disruption theory; England and Albrecht, 1984 ; Kang, Long and Perdue, 1996 ) and increasing investments and associated commodification and destruction of the landscape and idyll (theory of creative destruction ( Mitchell, 1998 )).

“Cultural Distance” as a collective term for the cultural difference between tourists and locals. It can take the form of a lack of adaptivity, appearance in (large) groups, disturbing behaviour on the part of the tourists, and a sensitivity on the part of the local (which has its roots in the factors mentioned above) Altogether, cultural distance can be understood as the socio-cultural difference between locals and tourists. The term goes back to Stephen Williams (2009) : the larger the cultural distance, the greater the potential for conflict.

Spatial and temporal distribution. This refers to the crowding (the sheer number of tourists) or the concentration of tourists in space and/or time. This crowding can lead to irritation irrespective of “cultural distance”: even with the highest degree of “correct behaviour” by highly adaptive individual tourists without further disturbing characteristics, crowding can occur.

Each aspect can potentially cause irritation on its own, but in combination the effects become potentially stronger.

Concrete fields of conflict

The components of the model described in the previous section point at conflicts in a more abstract way (which characteristics and features could lead to conflicts and how does this work in general?). This section will focus on the actual (concrete) conflict fields that can occur. The basis for the collection of these fields of conflict is derived from the illustrated antecedents, yet it is mainly about what has been reported by destinations (especially big cities) and survey results.

The numerous arguments, which are mentioned in the literature, but above all in reports and interviews on areas of conflict, can be divided into possible direct restrictions (those which are perceived at the moment of occurrence) and indirect consequences. Table I shows the concrete fields of conflict that were identified in an overview. The fields of conflict are characterised as “potential”, because it is a structured collection without any further statement as to whether and how far these are relevant to Hamburg. Moreover, it is not an overview of fears by the authors, but about fears of local residents as they experienced in their daily lives (e.g. the authors do not believe that the employment of people with an immigration background is a negative consequence of tourism).

It becomes clear that the number of possible conflict fields is large and their structure heterogeneous and not always clearly assignable. In addition, specific developments do not only impact upon the direct interests of the local residents, but also upon the relations between different tourist actors and economic groups. For example, it is not clear yet how the renting through sharing portals has an impact upon the price development in the hotel industry ( Zervas et al. , 2016 ), and how much “sharing” (as opposed to businesses) there really is in the sharing economy ( O’Neill and Ouyang, 2016 ; European Commission, 2016 ).

In the case of Hamburg, conflicts arose from both temporary or seasonal and permanent sources of conflict. Examples of temporary sources of conflict can be large events, but also groups of cruise passengers who flood the city during daytime in the summer season. In the Hamburg case, there are few very large events in the course of the year which can be conflicting with the interests of the inhabitants, although mitigation and management measures have been taken. But also, a permanent area of conflict can be found in the concrete case, e.g. the misbehaviour of groups of drunken or otherwise intoxicated young males (mostly), entering the red-light district around Reeperbahn.

Strategic approaches

For the residents: to secure and increase the acceptance of tourism.

For tourists and touristic providers: to secure and increase tourist value creation.

Against this background, it is important to ask which measures are appropriate to achieve these goals (see also Figure 1 ).

Although this project is primarily aimed at the equalisation of tourism flows, further strategies and actions are conceivable that mitigate the perceived negative effects of tourism.

improved spatial distribution of visitors (Spreading visitors around the city and beyond);

better time distribution of visitors (time-based rerouting);

regulation (regulation);

incentives through creating itineraries;

improved audience segmentation (visitor segmentation);

making the benefit of the inhabitants clearer (make residents benefit from the visitor economy);

tourist offers with benefits for the inhabitants (create city experiences);

communicating with and involving local stakeholders;

communication approaches towards visitors (communicating with and involving visitors); and

improvement of infrastructure (Improve city infrastructure and facilities).

Each of those strategies is linked to specific actions (CELTH, 2016).

Conclusions and discussion

Currently tourism is on the rise and city tourism has a large share in this increase. The UN World Tourism Organisation anticipates a further growth during the years to come. Emerging economies play a major role in the vast increase of tourism. Driven by an increase of wealth the middle classes in these economies are discovering the world and for example, in Europe it is evident that this is causing a growing level of annoyance among residents of (urban) destinations. Because of the rise of international tourism it is likely that the situation will worsen if visitor flows are not managed properly. This requires a thorough understanding of the forces, the conditions and mechanisms at work. This paper is an attempt to contribute to this understanding by means of a case study in Hamburg and the construction of a model that could help to manage visitor flows and anticipate possible effects of potential measures. Future studies are needed to refine the model.

The model developed in this paper is a conceptual model. It is based upon desk research on and expert interviews in various European cities and a literature review. As a conceptual model, it’s main value lies in sorting and arranging the many possible aspects of visitor pressure occurring in city tourism. It can be (and in the case of Hamburg has been) used as a working structure to assess possible fields of conflict arising from the conflict mechanisms contained in the model. Furthermore, it is intended to help clarify the relation between stakeholders (i. e. the residents, the tourism suppliers and the visitors) and their respective objectives. Being conceptual, however, it is not intended to serve as a structural model delivering graphical representations of hypotheses or structural relationships.

Obviously, in order to assess the situation in a specific destination, the conceptual model is only one basic tool. For concrete applications, two more steps need to be taken, building on the model.

First, the concrete fields of conflict have to be identified. These fields will differ in their importance from city to city and from destination to destination. While in one city, cruise tourists flooding the city centre impose problems, it might be stag parties or beer bikes in another destination and the rise of housing prices because of increasing numbers of Airbnbs in the next. Typically, public discussion about “visitor pressure” or “overtourism” starts with one publicly visible field of conflict. The conceptual model can then help to embed this problem into a larger framework and thus prevent it from being discussed in isolation. In other cases, cities want to assess their current status and vulnerability to unbalanced tourism development. Then, the conceptual model can help to get a more holistic view to the problem.

Second, indicators and metrics have to be applied to the concrete fields of conflict. If, e.g. crowding is identified as a field of conflict, then indicators and measurement for crowding need to be found. These can be visitor counts or usage data from apps and mobile phones. If shared accommodation seems to be the problem, then the number of hosts, listings and overnights at Airbnb and other platforms can be appropriate metrics. A major drawback, however, in the current situation seems to be the lack of comparable metrics. Each city and destination has to rely on its own assessment of “how much is too much”. In terms of overnight stays in hotels, a reasonably well maintained European database exists (TourMIS). Furthermore, some methodological approaches to assess some fields of visitor pressure have been published by McElroy (2006) or Boley et al. (2014) . However, comparable indicators and metrics specific for the field of visitor pressure are not at hand at the moment.

Third, taking action and implementing measures is a logical consequence in cases where the assessment phase has shown problems of visitor pressure. These actions might be in the fields of regulation, visitor management, pricing or communication. The model does not give suggestions as to which actions to take. It can work, however, as a guideline for the strategic objectives of such actions, namely to secure (and possibly increase) the economic value from tourism for the city and its tourism suppliers on the one hand and to secure (and possibly increase) tourism acceptance on the residents’ side on the other hand.

Quality of life: equal demands on tourism

Conceptual model of conflict drivers and irritation factors

Potential areas of conflict

Source: Adapted from Postma (2013)

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Acknowledgements

© Albert Postma and Dirk Schmuecker. Published in the Journal of Tourism Futures . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Corresponding author

About the authors.

Albert Postma is a Professor of Applied Sciences at the European Tourism Futures Institute, Stenden University of Applied Sciences, Leeuwarden, The Netherlands.

Dirk Schmuecker is the Head of Research at the NIT Institute for Tourism Research in Northern Europe, Kiel, Germany.

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The impact of tourism: How can we all do this better?

John perrottet, beril benli.

Tourism is growing, and growing fast. After surpassing 1 billion international visitors in 2012, we are expecting 1.8 billion by 2030. Tourism is growing faster than the global economy and, for the first time, the statistics for 2015 are expected to show that there were more trips taken to the developing world than to the developed world. But what does this actually mean? Growth, on its own, is not enough. Destinations and their stakeholders are responsible for ensuring that growth is well-managed; that benefits are maximized; and that any negative externalities are minimized. This requires a continuous process of planning and management that evolves and that can be measured over time. For the World Bank Group, our clients and our development partners, this process of planning and management is a central interest. How can we help these processes to deliver more and better development impact? What kinds of interventions or types of assistance will deliver the best results? How do you define the best results – for whom? – and how do we measure them? Being able to demonstrate how the tourism sector contributes to the Bank Group’s twin goals of eliminating extreme poverty and promoting shared prosperity is an imperative for all stakeholders. It’s relevant for national governments, sub-national state agencies, businesses (both multinationals and SMEs), multilateral development banks, NGOs, academics and think tanks. Moreover, it’s vital in helping guide future planning and development, gaining access to and applying for funding, and demonstrating progress to constituents at all levels.

Despite the great breadth and depth of existing impact information, however, serious concerns remain about the accuracy, complexity, gaps, comparability and sustainability of the types of the impact analyses that have been carried out. The Bank Group’s Sustainable Tourism Global Solutions Group recently convened a thought-leadership event in Washington to begin a preliminary discussion about how all stakeholders can come together to try and address some of the current shortcomings. During the “ Measuring for Impact in Touris m” event, we heard about a wide range of challenges for those working in this area and we began to map out the greatest gaps and issues. As Anabel Gonzalez, the Senior Director of the Trade and Competitiveness Global Practice, said at that conference: “We want to be better at monitoring and evaluating our impact, we want to learn from others, and we want to contribute more effectively to tourism development.  I believe these are goals most of you will share. We invite you to join this discussion – and be frank, open and provocative.”The findings can be found in our report, “ Towards More Effective Impact Measurement in the Tourism Sector: Observations and Key Issues ,” which highlights a number of priorities. Some of those challenges concern the availability, quality and consistency of data; the high cost of impact measurement for SMEs; the proliferation of different systems; issues of attribution; quantifying notions of “value”; and the ability to communicate effectively to a wide range of audiences. Some key areas for immediate follow-up and further analysis were also identified. They include:

• Exploring the theory of change by examining more closely the proposition  that, when tourism growth occurs, those living in extreme poverty benefit and by digging deeper into what tourism growth really means for the poor, especially in terms of employment. 
• Assessing the impact value of different types of tourism.
• Assessing and developing the role of technology for data collection, impact measurement and communication.
• Evaluating the use of training for better communication – including assessing what has been tried and what has worked and considering how it could be scaled up. 
• Analyzing the necessity and practicality of improving collaboration among various actors, and assessing the alignment of frameworks along with proposals for greater alignment.
• Developing ideas and proposals for the enhanced sharing and pooling of impact data.
• Developing ideas and proposals for greater inclusion of SMEs.
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• Urban Development

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Positive and Negative Impact of Tourism on the Economy

Tourism forms the backbone of many an economy; in fact, it is one of the largest industries in the world with an annual turnover exceeding 1.75 trillion USD, thereby putting it on par with Oil and other industries. Inbound tourism helps to boost the economy of the host country as it offers several employment opportunities for the locals. Moreover, with the tourist dollars rolling in, the government can use the same to beautify the spot further, provide the locals with additional tools and training so that they are able to provide enhanced services to the customers and even help market their tourist spots to others more effectively than before. But tourism has its own positive and negative impact on the economy and its time that we took a closer look at the same.

The Positive Impact of Tourism on the Economy

• Job creation: Tourism can help create several jobs for the locals; most of the tourist companies require specialized services for their clients and this can help kick start a new industry that helps to cater to the same. In fact, according to the United Nations, one in ten jobs is in the tourism industry which only underscores the fact that tourism as a whole is thriving and remarkably at that. Imagine travelling to a new place and naturally, you would require certain specialized services to help you to relax and enjoy the experience all the more. This is where the local support kicks in, as the local staff can provide you with a wide range of specialized services, designed to cater to most of your needs, be it a ride on a local catamaran or an early morning visit to the local fish market.
• Revenue: As more tourists head to the host country and to its tourist spots, the region nets sizeable revenue as a result of the influx. Because of this influx, the revenues generated should help the local populace better themselves and even attain a better standard of living as a result of continual employment by the tourism industry. Moreover, the additional revenue can be used by the host country to provide the local population with better infrastructure in terms of roads, schools, colleges, transportation facilities and much more.
• Economy: Sizeable revenue generated as a result of tourist influx can help inject much-needed cash into the local economy. This, in turn, can help the nation attract more investors and even help improve its profile globally as an investment destination. And some governments, in a bid to attract more tourists have started offering fantastic travel package deals, resulting in even greater influx than before and thereby, inject more cash into the local economy.

The Negative Impact of Tourism on Economy

• Seasonal: The fact remains that most people tend to travel to other locations only during holidays and as a result, the tourism industry is looking more like a cyclic model, with a seasonal rush and nothing much for the rest of the season. This has a negative impact on the local economy and on the lives of all those who depend on this niche for daily employment. Sadly, this seasonal variation impacts the livelihood of those who depend on this particular industry for regular employment
• Local industries, crafts: With the tourism industry booming, and with more people seeking employment in the same by providing specialized services and products for the various tourists, this has started impacting some of the local industries especially the handicrafts. As a result, some of the host nations have stepped in to offset this effect by marketing some of the local handicrafts more aggressively in the global market.
• Environmental: While a steady influx of tourists means more revenue for the host country, it can often have a negative effect on the environment. Most tourists pay little or no attention to the “do not litter” rule and even Mountain Everest is not safe from litter to the point that it required a massive cleanup just a couple of years before.
• Local customs and traditions: It is important for the visitors to respect the local customs and traditions of any host country that they visit. After all, you would expect all those visiting your nation to pay heed to all the local rules and your customs and traditions. But the sad truth is that very few tourists take the time to understand or even comprehend the various customs and traditions and this can cause irritants to crop up

These are some of the positive and negative impact of tourism on the economy,

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Open Access

Peer-reviewed

Research Article

Do positive and negative shocks of tourism development affect income inequality in a developed country?

Roles Conceptualization, Formal analysis, Investigation, Methodology, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliation Finance, Economic and Management Research Group, Ho Chi Minh City Open University, Ho Chi Minh City, Vietnam

• Ngoc Bui Hoang

• Published: April 16, 2024
• https://doi.org/10.1371/journal.pone.0301628
• Peer Review
• Reader Comments

Income inequality is an essential cause of violence, stagnant development, and political instability. This study will examine the positive and negative shocks in tourism development, and the distribution of the interaction between tourism development, economic growth, human capital, globalization, and income inequality will be discussed in Singapore, a developed and top-visited country. By adopting autoregressive distributed lag and non-linear autoregressive distributed lag approaches for panel data from 1978 to 2022, the results indicate an asymmetric cointegration among variables, and positive and negative changes in tourism development lead to decreased income inequality. More specifically, the asymmetric effect of tourism is found both in the short- and long-term, and positive shock has a greater impact than negative shock. At the same time, the findings also reveal that economic growth and globalization enhance, while human capital negatively affects income inequality in Singapore. These findings strengthen the belief of Singapore policy-makers and recommend several significant lessons for developing countries to promote tourism, sustainable development, and reduce income inequality.

Citation: Bui Hoang N (2024) Do positive and negative shocks of tourism development affect income inequality in a developed country? PLoS ONE 19(4): e0301628. https://doi.org/10.1371/journal.pone.0301628

Editor: Abdullah Mohammad Ghazi Al khatib, Damascus University, SYRIAN ARAB REPUBLIC

Received: February 16, 2024; Accepted: March 19, 2024; Published: April 16, 2024

Copyright: © 2024 Ngoc Bui Hoang. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: We confirm that all sources of data were presented in the paper. We do not own data, and we do not have any special access privileges that others would not have.

Funding: The author(s) received no specific funding for this work.

Competing interests: The authors have declared that no competing interests exist.

1. Introduction

Income inequality (IE) is a social problem, and it is considered an undesirable consequence of economic policies issued by the government over a long time. Unfortunately, it has increased at varied rates in almost all countries [ 1 ]. Income inequality develops depending on the government’s perspective, level of awareness, and residents’ opposition. The widening gap between the rich and poor might limit the opportunities of poorer people and, over time, might cause violence and social and political instability [ 2 , 3 ]. Therefore, reducing income inequality and then wholly eliminating it is the desire of many governments and people worldwide. Thus, economic policies that help reduce income inequality are always sought and welcomed [ 4 – 6 ]. Tourist development (TO) is often expected to be an effective policy for alleviating poverty because it brings a multiplicity of benefits to a country, such as promoting infrastructure, attracting foreign direct investment, generating new jobs, and stimulating cultural change, thereby it could help reduce income inequality [ 4 , 5 , 7 , 8 ]. However, Qiao and Chen [ 9 ] and Carrascal Incera and Fernández [ 10 ] revealed that a significant part of the labor force in tourism is related to self-employment or family enterprises. Njoya and Seetaram [ 11 ] also noted that TO requires investment and management experience, and poor people do not have these inputs. In some cases, a significant portion of tourism revenue may leak out of the local economy through imports, foreign-owned businesses, or multinational hotel chains. This can limit the trickle-down effect of tourism revenue and exacerbate income inequality [ 4 ]. Notably, Kinyondo and Pelizzo [ 12 ] argued that tourism has long been seen as a source of social inequality in Kenya, while Khan, Bibiet al. [ 13 ] revealed that there is a relationship between TO, terrorism, and inequality in Pakistan. Therefore, a comprehensive understanding of the impact of tourism on IE and its consequences has profound implications for policy-makers in planning strategies that prioritize local participation, equitable distribution of tourism benefits, and protect the rights and livelihoods of the poor.

Unfortunately, the debate on whether tourism can help reduce inequality is still ongoing. Studies on this topic have different conclusions and are not definitive. For example, Uzar and Eyuboglu [ 14 ], Porto and Espinola [ 15 ] found that tourism development increases inequality, while Nguyen, Schinckuset al. [ 3 ], Fang, Gozgoret al. [ 6 ], Shahbaz, Solarinet al. [ 16 ] suggested that tourism can lead to fairer income distribution. Another study by Fang, Gozgoret al. [ 6 ] revealed that TO significantly negatively influences IE in developing countries and has an insignificant impact in developed nations. Consequently, some researchers are studying how tourism development affects income distribution by looking at different factors like income, tax, price, and risk. The goal of this exploration is to fully comprehend how tourism impacts economic and social aspects of a country. Some reasons are given to explain the impact of TO on IE, such as ( i ) tourism can reduce income inequality by creating jobs for the poorest workers. However, tourism development may also lead to higher income inequality by increasing demand for infrastructure, benefiting the wealthier population [ 6 ]; ( ii ) the relationship between tourism and income distribution depends on institutions. A better institutional environment and a suitable tax policy can boost tourism opportunities, and in turn, tourism activities can also contribute to creating a more favorable institutional environment [ 3 ].

Singapore presents itself as a captivating context for investigating this association. Analysis of the relationship between tourism development and income inequality is essential for Singapore for the following reasons. First, the tourism industry generated around 527,500 jobs and contributed SGD 52.5 billion to the economy in 2020 [ 17 ]. Singapore’s tourism development is an enticing example for emerging countries, as it enhances per capita income. Singapore, currently ranked among the top 10 countries in the world with the highest income, boasts an impressive per capita income of $60,729 per year (at the fixed price of 2010). However, it is important to note that such prosperity does not necessarily address the prevailing income disparity between the affluent and the less fortunate within Singapore. Startling figures from a recent report on income inequality indicate that in 2010, the income gap between the higher and lower-income classes was $9,288. Shockingly, this gap has widened to $12,840 in 2020, highlighting a growing challenge of eradicating inequality for Singaporean administrators. Second, the significance of tourism section has long been identified, so the Singaporean government has consistently devoted resources to fostering the growth of this industry. At the same time, Singapore has a diverse and well-integrated culture. These characteristics explain Singapore’s spectacular achievement in tourism development, nowadays, it is a top-visited market in the world. Therefore, an analysis of the impact of tourism development on income distribution in Singapore might provide a practical lesson for emerging countries in planning tourism development strategies. Due to the two above reasons, the study is conducted to answer the research questions below:

Does tourism development affect income distribution in Singapore?

Is it the symmetric or asymmetric impact? If the asymmetric influence is found, how do positive and negative changes in tourism development affect income inequality?

2. Literature review

The interaction between economic growth and income inequality.

A fundamental question in sustainable development policies is whether economic growth retards or accelerates income inequality. The pioneering study of Kuznets [ 18 ] predicted that there is an inverted U-shape relationship between economic growth and income inequality. Following this prediction, many scholars investigated whether, how, and to what extent economic growth could affect income distribution. However, the answer remains elusive. A study that found a negative relationship is the study of Braun, Parro and Valenzuela [ 19 ], who conducted research that evaluated the major prediction of their model in terms of the influence of income disparity on growth at various degrees of financial development. They discovered that greater income inequality is related to weaker economic development by utilizing pooled OLS, FEM, and REM approaches in 150 countries between 1978 and 2012. Furthermore, they discovered that as economies’ financial development levels rise, such an influence becomes substantially less pronounced.

In another study, Royuela, Veneri and Ramos [ 20 ] examined the relationship between income inequality and growth in 15 OECD nations from 2003 to 2013. It integrates household survey data and macroeconomic statistics from 15 OECD nations to cover over 200 similar areas. Their econometric findings showed an overall negative relationship between disparities and economic development since the beginning of the economic crisis. The sort of urban structure influences this connection. Higher disparities appear to be more destructive to growth in regions typified by medium to large-sized cities, whereas small cities and rural areas appear to be less affected. Likewise, Breunig and Majeed [ 21 ] recently re-examined the relationship between inequality and economic development in 152 countries. The study employed GMM and discovered that inequality had a detrimental influence on growth from 1956 to 2011. They also discovered that when both poverty and inequality were taken into account, the negative impact of inequality on growth was concentrated in nations with high poverty rates. More precisely, they found that when poverty (daily income below US$ 1.9), the impact of inequality on economic growth is greater.

Some studies show a positive relationship between economic growth and income inequality. Scholl and Klasen [ 22 ] reviewed the inequality-growth link, focusing on the significance of transition (post-Soviet) nations. They discovered a positive relationship between inequality and growth in the total sample using FE, GMM, and IV estimation methodologies driven by transition nations. Brueckner and Lederman [ 23 ] researched the connection between inequality and GDP per capita growth. Using panel data from 1970 to 2010, the researchers discovered that increased income disparity boosted transitory growth in low-income countries while having the opposite impact in high-income nations. However, Benos and Karagiannis [ 24 ] investigated the link between top income inequality and growth in the United States due to physical and human capital buildup. They determined that increases in inequality did not affect growth by utilizing 2SLS and GMM on an annual panel of the United States-level data from 1929 to 2013.

Application to Singapore, a high-income and top-visited country, Agiomirgianakis, Serenis and Tsounis [ 25 ] noted that the effective timing of economic policies actions in Singapore’s tourism industry is not consistent. Moreover, many previous studies [ 22 , 26 ] confirmed that an increase in income of different population strata is not uniform. The rich will get richer, while the poor tend to get poorer. Therefore, the hypothesis is postulated that:

• Hypothesis 1 : Economic growth positively affects income distribution in Singapore .

The relationship between tourism development, globalization, human capital, and income inequality

Some studies showed that tourism contributes to increasing income inequality. In particular, Chi [ 27 ] indicated that the long-run link between tourist revenue and income inequality differs across industrialized and developing nations. In developing countries, income disparity worsens as tourist revenue grows, improves after the first turning point is achieved, and worsens again after the second turning point. Similarly, Oviedo-García, González-Rodríguez and Vega-Vázquez [ 28 ] revealed that tourist income has not relieved poverty and has obviously failed to lessen wealth disparity.

It is plausible that activities associated with tourism might have varying effects on economic disparity, to the point that it has been statistically demonstrated that domestic tourism can make income disparity worse, while foreign tourism can reverse the situation (Nguyen et al., 2021). In contrast to the common idea that tourism contributes to economic expansion and reduces poverty levels, Zhang’s study suggests that more tourism leads to greater income disparity (Zhang, 2021), especially in developing countries (Alam & Paramati, 2016). However, Uzar & Eyuboglu (2019) and Li et al., (2016) assert that tourism helps alleviate economic inequality, and Turkey’s tourism is substantiated to affect income distribution. In Raza and Shad’s paper, with the proviso that the countries make the expansion of their tourism industries a priority, they will be able to reduce the economic inequality that exists in the region (Raza & Shah, 2017). Thus, it is necessary to identify whether Singaporean tourism has a symmetric or asymmetric influence on its income inequality. Based on the above studies, the hypothesis is given as:

• Hypothesis 2 : Tourism development reduces income inequality in Singapore

One of the reported advantages of globalization is that it encourages the development of new employment, which, in turn, leads to an improvement in the standard of living of people all over the world and a reduction in poverty [ 29 ]. While Ghosh and Mitra [ 30 ] indicate that the distribution of income within highly developed countries is mostly unaffected by the growth of the tourism industry, [ 31 ] emphasize that more globalization causes a decline in the economic discrepancy that exists in that country. On the other hand, globalization magnifies the distribution of wealth by creating a skills gap in corporate operations, which in turn leads to a wider disparity in income [ 32 ]. By the same token, globalization has significantly widened the income gap between the rich and the poor in developing countries [ 6 ]. Therefore, globalization acts as a control variable in determining the relationship between tourism and income inequality.

According to social scientists, the term “human capital” refers to the attributes of a person that are deemed valuable to the production process. These attributes might include knowledge, skills, expertise, good health, education, and so on. The findings of Tsaurai [ 33 ] reverberate the findings of Becker [ 34 ], who noted that high levels of human capital development mean that individuals are talented, educated, and trained. They are also believed to be more productive, more marketable, and more likely to find a job that pays a higher salary. Therefore, investments in human capital development will allow developing nations to nurture a labor force of better quality and capable of maximizing earnings from tourism [ 30 ].

Some scholars confirmed the adverse effects of human capital and income inequality. Some examples include Ajide and Alimi [ 35 ], who found that the marginal effect of interactions between human capital measures and income inequality indicators is negative. Hu [ 2 ] pointed out the influence of income disparity on human capital inequality in 31 Chinese provinces, municipalities, and autonomous areas from 1996 to 2018. On the contrary, Chani, Janet al. [ 36 ] confirmed the presence of a long-run link and the causal relationship between human capital inequality and income inequality, and the Johanson cointegration and Granger causality tests are utilized. Suhendra, Istikomahet al. [ 37 ] used a panel data model with a fixed effect estimate for data from 34 Indonesia’s provinces from 2013 to 2019 and found that human capital has a negative and significant effect on income inequality. According to the above researches and Table 1 , the hypotheses are specified as:

• Hypothesis 3 : Human capital contributes to reducing income inequality in Singapore
• Hypothesis 4 : There is a positive impact of globalization on income distribution

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https://doi.org/10.1371/journal.pone.0301628.t001

Of course, none of the above studies and Table 1 could fully present the literature on the association between tourism development, economic growth, globalization, human capital, and income distribution. However, these studies also reveal that some natural issues have not been identified. One of the questions is whether the influence of TO on IE is symmetric or asymmetric. In Singapore, Khoi, Le and Ngoc [ 41 ] also indicated that the impact of TO on ecological footprint is asymmetric. Ozturk, Cetin and Demir [ 42 ] revealed that positive and negative income inequality shocks positively affect CO 2 emissions in Turkey. In addition, the asymmetric effect of other macroeconomic variables, such as financial development [ 26 ], foreign direct investment [ 48 ], energy consumption [ 49 , 50 ], and exchange rate [ 51 ], could be found in previous studies. That means linear models may not be appropriate to explain the impacts of TO, and raise doubt about the effectiveness of suggested policies. From a methodological standpoint, an analysis including linear and non-linear frameworks gives a comprehensive understanding of the role and marginal effect of tourism shock on income inequality. Katrakilidis and Trachanas [ 43 ], and Ahmed, Zhang and Cary [ 44 ] pointed out that if the relationship between these variables is asymmetric, the policy implications based on the linear framework could be unreliable. Hence, this work aims to explore the role of tourism in reducing IE in Singapore by considering economic growth, globalization, and human capital in which tourism activities occur. The contribution of this study are summarized in detail:

• Despite the abundance of previous studies on links between tourism and income inequality, the negative and positive changes in tourism development that might lead to effects of different magnitude or directions in income have been ignored. If the nexus between TO and IE is asymmetric, the policy implications based on symmetric methods can be unreliable. This study employs the linear ARDL and non-linear ARDL approaches to identify a symmetric or asymmetric effect of tourism on income inequality to provide a comprehensive understanding of tourism development in Singapore.
• Globalization and human capital are considered the keys to tourism development. However, the impact of two factors on income inequality is still fragmented and unclear in Singapore. In this study, globalization and human capital play as control variables in identifying the tourism-income inequality nexus.
• From 1978 to 2019, Singapore’s economy suffered two financial crises (in 1997 and 2008), implying that the data might have some structural breaks. Therefore, an advanced unit root technique was also employed to probe structural breaks in the data, which is superior to many other tests regarding size and accuracy in identifying breaks. Along with the results obtained from the non-linear ARDL approach, the findings of this study strengthen administrators’ belief in promoting tourism and reducing income inequality in Singapore.

3. Methodology

4. Empirical results

Based on the advantages of geographic location and many effective tourism development policies, Singapore is one of Asia’s leading international passengers nowadays. In 2019, Singapore experienced a record number of visitors (attracting 19.1 million international visitors), following strong year-on-year growth in visitor numbers since 2015 [ 17 ]. Even so, Singapore has managed to market itself as a must-visit tourist destination in its own right, attracting repeat visitors by offering unique city experiences such as the Gardens by the Bay, and integrated resorts boasting casinos and amusement parks. The descriptive statistics of variables are shown in Table 2 .

https://doi.org/10.1371/journal.pone.0301628.t002

Table 2 shows that the highest value of income inequality is 39.30 percent, the human capital is 4.37 points, and the globalization index is 84.69 percent, but the lowest values in these three variables are 36.60, 1.65, and 62.78, respectively. The correlation matrix among variables is presented in Table 3 . Accordingly, the correlation between IE and HC , lnTO , lnGDP , and Glob is 0.41, 0.44, 0,69, and 0,80, respectively, implying that there is a medium correlation between examined variables.

https://doi.org/10.1371/journal.pone.0301628.t003

According to Pesaran and Shin [ 47 ], it is necessary to check the unit root before applying the ARDL approach because if any series is stationary at the second difference I(2), the estimated coefficients will not be valid. Moreover, another issue of time series data analysis is a structural break. To accomplish this, the augmented Dickey-Fuller [ 49 ], and Lee & Strazicich tests [ 50 ] were employed. Results in Table 4 show that all variables are stationarity at the first difference, and no variables are stationarity at the second difference, which implies the first condition to apply ARDL and non-linear ARDL approach is satisfied [ 51 ]. Furthermore, the Lee & Strazicich test provides break years. However, the results are inconsistent, and it could not help choosing a fit break year. Table 3 also indicates that the optimal lag length of IE variable is three, while the optimal order of lnGDP and HC variables is two. Thus, the optimal ARDL model is ARDL(3,0,2,2,0).

https://doi.org/10.1371/journal.pone.0301628.t004

Cointegration test

The findings of the unit root test indicated that our data series is integrated. Thus, the linear and non-linear Bound test of cointegration was applied. The result of two tests in Table 5 reveals that the F-statistic value in Eq 3 (= 9.855) is greater than the value of upper critical Bound at the level of 1 percent significance (= 5.06). Likewise, the result of t-statistic test (= -6.73) confirms that the same conclusion is smaller than the critical value of t-statistic test (= -4.79). These outcomes in Table 5 reveal that the non-linear ARDL approach is best for our model, and applying the linear ARDL approach might provide biased results.

https://doi.org/10.1371/journal.pone.0301628.t005

The short-run and long-run symmetric and asymmetric impacts

The short-run and long-run linear ARDL findings are presented in Table 6 , while the outcomes of non-linear ARDL are shown in Table 7 . In the long term, the coefficient of lnTO obtained from the symmetric ARDL approach is insignificant, implying no relationship between tourism and income inequality in Singapore. However, the results obtained from the asymmetric ARDL approach indicate that the influence of tourism on income inequality is evident. More specifically, the estimated coefficients of positive changes ( lnTO + ) and negative changes ( lnTO - ) are -0.461 and 0.240, respectively. The long-run asymmetric Wald test in the lowest of Table 7 provides evidence to reject the null hypothesis (W LR = 23.29, p-value = 0.000).

https://doi.org/10.1371/journal.pone.0301628.t006

https://doi.org/10.1371/journal.pone.0301628.t007

Likewise, the estimated coefficient of Δ lnTO + variable (= -0.316, p-value = 0.006) is significant, while Δ lnTO - variable is not significant (= -0.083, p-value = 0.109), and the short-run asymmetric Wald test also rejects the null hypothesis (W SR = 6.21, p-value = 0.019). These findings confirm that the impact of tourism development on income inequality is the asymmetry in both the short- and long-run. More specifically, a 1 percent increase in tourism leads to a 0.461 percent decrease in income inequality. Similarly, a 1 percent decrease in tourism leads to a 0.240 percent decrease in income inequality [ 48 ]. Hence, the positive changes in tourism have a greater effect than negative changes. Fig 1 also confirms this conclusion.

https://doi.org/10.1371/journal.pone.0301628.g001

Similarly, Table 7 indicated that the estimated coefficients of lnGDP , HC , and Glob variables are significant in the long term. Economic growth and globalization positively impact income inequality, while increasing human capital might decrease income inequality. In the short term, only lnGDP variable has a positive influence and significant (= 0.752, p-value = 0.012). The estimated coefficient of CointEq(-1) variable is -0.479 and significant, and all diagnostic tests in Table 7 , such as serial correlation, functional form, normality, and heteroskedasticity, have been successfully satisfied. In addition, Figs 2 and 3 demonstrate that both the CUSUM and CUSUMSQ lines comfortably fall within the critical bounds at a significant level of 5 percent, implying that Eq 3 remains stable [ 52 , 53 ]. When all conditions of the non-linear ARDL approach are met, this study ensures that the findings are reliable and relevant for further analysis and the development of policy recommendations.

https://doi.org/10.1371/journal.pone.0301628.g002

https://doi.org/10.1371/journal.pone.0301628.g003

Results of the causality test

The findings from ARDL and NARDL approaches have demonstrated the short- and long-run impacts of tourism development, economic growth, globalization, and human development on income inequality in Singapore. However, information about the causal relationship between these variables is also essential in suggesting lessons and policies. So, the Toda and Yamamoto procedure is employed. According to Sankaran, Kumaret al. [ 54 ], Ha and Ngoc [ 55 ], the Toda-Yamamoto procedure yields robust estimates irrespective of the integration and cointegration properties of the variables. If the value of χ 2 (Chi_square) in the Toda-Yamamoto test has a p-value less than 0.05, implying the null hypothesis is rejected. According to Table 8 and Fig 4 , the study finds a uni-directional causality running from income inequality to tourism development. Similarly, there is a uni-directional causality running from income distribution to globalization, while a bi-directional causality between human capital and income inequality is also confirmed. Overall, these findings are in line with the outcome of regression analysis. Hence, it allows us to conclude that our findings are convincing to suggest policies.

Note: →, ↔, and ≠ denotes a uni-directional, bi-directional, and no causality, respectively.

https://doi.org/10.1371/journal.pone.0301628.g004

https://doi.org/10.1371/journal.pone.0301628.t008

The empirical results suggest that international visitors contribute to reducing income inequalities in Singapore. That means hypothesis 2 is accepted. This finding is in line with Njoya and Seetaram [ 11 ] for Kenya, Li, Chenet al. [ 56 ] for China, and Uzar and Eyuboglu [ 14 ] for Turkey. However, it is inconsistent with Alam and Paramati [ 57 ]. The main contribution of this study shows that the influence of tourism on income inequality is asymmetric both in the short- and long-run. To explain for these findings, some reasons are given: ( i ) Singapore has an effective government and better institutions. It is easy to recognize that a dynamic government might create more opportunities for economic activities, such as tourism and financial services, while institutional security might attract more visitors [ 3 ]; ( ii ) Singapore has strong tax laws. Therefore, the tax evasion and tax avoidance acts are not fully valid in Singapore [ 58 ]; ( iii ) Singapore has a developed education system, giving individuals more jobs and a better income. However, a significant part of the labor force in the tourism industry in Singapore is involved in self-employment or family business, and tourism only benefits the owners. Hence, this might explain why the income inequality index of Singapore is not ranked the lowest in the world.

The positive coefficient of the lnGDP variable suggests that economic growth enhances income inequality in Singapore, implying that hypothesis 1 is also accepted. The finding is also similar to several studies, such as Scholl and Klasen [ 22 ], Benos and Karagiannis [ 24 ], and Elveren and Özgür [ 59 ]. In fact, Singapore has implemented several policies and initiatives to address income inequality and promote economic growth. For example, Singapore’s government has reformed tax policies and applied progressive taxation. This tax system follows a progressive structure, with higher-income earners paying a higher percentage of taxes. Another policy is the “SkillsFuture” program issued by the government, which provides training subsidies and support for individuals to upgrade their skills and stay relevant in the evolving job market. However, the increase in economic growth in the past few decades changed the income structure of individuals and classes. Despite the government’s efforts, income inequality remains an ongoing challenge, and further measures may be needed to create a more equitable distribution of income and wealth in Singapore.

The finding also indicates that hypothesis 4 is accepted, and globalization positively drives income inequality in Singapore. This conclusion aligns with Haseeb, Suryantoet al. [ 60 ], Chishti, Ullahet al. [ 61 ]. Cristiano and İpek [ 62 ] noted that governance institution is a necessary condition to reduce the negative impact of globalization on inequality. In fact, Singapore’s economy heavily depends on trade and foreign investment. So, Singapore’s administrators have implemented policies and initiatives to create an attractive business environment, including favorable tax regimes, ease of doing business, and robust legal and regulatory frameworks to attract multinational corporations. Besides, Singapore’s government has actively pursued free trade agreements with various countries and regions worldwide, emphasizing connectivity and innovation to enhance market access and reduce trade barriers, allowing Singaporean businesses to tap into global markets. However, globalization can widen income disparities within and between individuals [ 60 ] due to those with better access to education, technology, and capital are more likely to benefit from globalization, while those with limited access to such resources may be left behind.

Hypothesis 3 is also confirmed, and human development stimulates income equality in Singapore. This is not surprising since Singapore’s human capital per person index has rapidly increased along with GDP per capita. In the long term, Singapore has achieved high levels of income per capita, low unemployment rates, and a high standard of living. This country also has invested heavily in education, ensuring access to quality schooling for all citizens. Nowadays, Singapore has a well-developed public education system, which ensures holistic human development for all Singaporeans. Moreover, scholarships, bursaries, and financial aid programs are available to support students from lower-income backgrounds. This policy helps to reduce unequal access and improve income for individuals and workers.

5. Conclusion and policy implications

This study is conducted to probe the symmetric and asymmetric effects of tourism development on income inequality in Singapore, as well as economic growth, globalization, and human development in the models. To achieve this goal, first, the study employed the unit root tests proposed by Dickey and Fuller [ 49 ], and Lee and Strazicich [ 50 ] with two structural breaks. Next, the Bound test technique introduced by Pesaran, Shin and Smith [ 51 ] was applied to assess the symmetric and asymmetric cointegration. Afterward, the symmetric ARDL method proposed by Pesaran and Shin [ 47 ], and the asymmetric ARDL approach given by Shin, Yu and Greenwood-Nimmo [ 48 ] were utilized to estimate the short- and long-run impact coefficients. Finally, the Wald test was adopted to conclude that the impact of tourism development on income inequality in Singapore is symmetry or asymmetry.

With a strict econometric strategy, our outcome provides some useful findings. Firstly , the study concludes that the impact of tourism on income inequality is asymmetric. More precisely, the impact of an increase in tourism development on income inequality has a larger effect than a decrease in tourism development. In addition, the causal test confirms a uni-directional causality from income inequality to tourism development. Secondly , the study also indicates that increasing economic growth and globalization might increase income inequality. Thirdly , improving human capital stimulates income distribution more equally in Singapore. Furthermore, there is a bi-directional causality running from human capital to income inequality.

Policy implications

Based on the findings, the study delineates several significant policies that would considerably help Singapore’s government reduce income inequality by developing the tourism industry, improving human capital, and maintaining sustainable development.

First and foremost, we suggest that policy-makers in Singapore should maintain appropriate policies to strengthen the tourism industry and encourage community-based tourism initiatives. That means the government should empower local communities to participate in decision-making, provide training and capacity-building programs, and promote the development of small-scale enterprises and cooperative ventures. Besides, replacing outdated regulations and laws is necessary, especially in tax and transfer policies in tourism. Some policies, such as minimum wage regulations, collective bargaining rights, and workplace safety standards, also help reduce income inequality in Singapore. In addition, we suggest that Singapore’s administrators focus on providing vocational training, promoting entrepreneurship, and fostering partnerships between tourism industry stakeholders and educational institutions. By equipping individuals with the necessary skills and knowledge, they can access higher-paying jobs within the tourism sector, reducing income disparities.

Finally, enhancing economic growth and expanding globalization must be accompanied by the improvement of human capital in order to mitigate the potential increase in income inequality. The government of Singapore should consider implementing social safety nets and welfare programs to reduce income inequality and provide support for vulnerable segments of society. These initiatives are essential to provide a safety net for individuals and families facing economic hardships, through targeted cash transfers, unemployment benefits, healthcare assistance, and other social services. By doing so, Singapore’s government can ensure essential social protection for its citizens and mitigate the adverse effects of income inequality. These actions will lead to a more inclusive society and promote more equitable economic growth. The government can contribute to a fairer distribution of resources and opportunities by supporting those in need and reducing income disparities. It is important to note that the design and implementation of these programs should be tailored to the needs and context of Singapore, taking into account factors such as affordability, sustainability, and the overall impact on the economy.

Even though significant empirical evidence is acknowledged in this study, we agree that it still has some limits. In general, many macroeconomic variables can affect income distribution in Singapore. Thus, some related economic variables, such as foreign direct investment, institutional quality, and the development of the national education system, should be further considered. Furthermore, this research does not delve into the structure of variables (lead-lag variable) and heteroskedasticity impacts of tourism development through quantile analysis. Therefore, future studies should utilize novel econometric techniques such as the time-varying parameter vector autoregressive model and the quantile-on-quantile approach to provide a more comprehensive understanding of the role of tourism development, economic growth, and human capital in income distribution across various contexts. These recommendations are essential for supporting policy-makers in making informed decisions.

Acknowledgments

We thank two anonymous referees and Editor-in-chief for their careful reading of our manuscript and their many insightful comments and suggestions that improved the quality of the original manuscript. Any remaining errors are our sole responsibility.

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Evaluation of economic, environmental, and social impacts of COVID on rural tourism

• Published: 16 April 2024

Cite this article

• Iskandar Muda 1 ,
• Sunil Kumar Vohra 2 ,
• Veer P. Gangwar 3 ,
• Bhadrappa Haralayya 4 ,
• Prabhdeep Singh 5 ,
• Ashish Kumar Pandey 6 &
• Getnet Worke Abate   ORCID: orcid.org/0000-0003-4490-0011 7  

Tourism is widely recognized as the best alternative for improving the financial situation of disadvantaged neighbourhoods and villages, given that they have the necessary capacity for the growth of tourism. However, the COVID epidemic had far-reaching consequences for human life everywhere it appeared. But the COVID epidemic had a significant effect on human life all across the world. The COVID-19 pandemic has had an adverse effect on many parts of the world economy, but it is undeniable that the rural tourism sector has been particularly affected. The purpose of this research was to examine the impacts of the COVID pandemic on rural tourism by comparing the field both before and after the pandemic occurred along three key social, economic, and environmental dimensions. Survey methodology was employed for this quantitative research. Participants in rural tourism were used as the study's population sample. A confirmatory factor analysis reveals a favorable fit between the model's constructs. The study found that the presence of COVID had a negative effect, such as lessening the beneficial effects of tourism on the economy and society, which were emphasized by both experts and rural customers. Those engaged in rural tourism claim that the natural aspects of popular tourist areas earlier and after COVID were distinct, and the lack of tourists in this region has led to a significant reduction in the negative effects on the environment.

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Abbreviations

Coronavirus disease

Confirmatory factor analysis

Central and eastern European

Structural equation modeling

Standard coefficient

Non-normed fit index

Normed fit index

Goodness of fit index

Comparative fit index

Adjusted goodness of fit index

Root mean square residual

Increasing fitness index

Root mean square error of approximation

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Iskandar Muda

Amity Institute of Travel and Tourism, Amity University, Noida, Gautam Buddha Nagar, Noida, Uttar Pradesh, India

Sunil Kumar Vohra

Department of General Marketing, Lovely Professional University, Delhi, GT Road, Phagwara, Punjab, India

Veer P. Gangwar

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Bhadrappa Haralayya

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Prabhdeep Singh

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Ashish Kumar Pandey

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Muda, I., Vohra, S.K., Gangwar, V.P. et al. Evaluation of economic, environmental, and social impacts of COVID on rural tourism. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-024-04884-z

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52 Tips for Responsible and Sustainable Tourism

S ustainable Tourism, also known as Responsible Tourism, creates better communities to live in and better destinations to visit.  It minimizes negative economic, environmental and social impacts of travel.

With Responsible Tourism, travelers often enjoy otherwise remote locations while making positive contributions to the conservation of natural and cultural heritage.  At times, there is even a volunteer component.  To follow are my all-time favorite 52 perfect travel tips and places to visit for responsible tourism. 

1. Support Remote Villages

Visit the remote villages at the foothills of the Eastern Himalayas in India to observe Nepalese folk dances, songs and skits showcasing an amazing local history. Supporting local communities is important in eco-tourism.

2. See the Ngorongoro Crater in Tanzania

Travel to the Ngorongoro Crater in Tanzania.  With its 2000 feet high walls, you can expect to see lions, elephants, giraffes, zebras, cheetahs, hippos, flamingos, jackals, rhinos, antelopes, many birds and other animals.

3. Visit Katitawa Salasaca in Ecuador

Visit the Katitawa Salasaca Community located near the village of Baños, Ecuador for volunteer work with children at local school.  This amazing program was reviewed in the New York Times.

4. Blyde River Canyon and the Three Rondawels in Mpumalanga

Check out the Blyde River Canyon and the Three Rondawels in Mpumalanga, South Africa.  This canyon consists mostly of red sandstone and is one of the largest canyons on Earth.  The huge, round rocks, are thought to be reminiscent of the houses or huts of the indigenous people, known as rondavels.

5. Knuckles Mountain Range in Sri Lanka

The Knuckles Mountain Range in Sri Lanka, a newly designated UNESCO World Heritage Site, is known for ecotourism and rare untouched beauty.

6. Humacchuco in Peru

Enjoy a visit to Humacchuco in Peru for a day of untouched mountain beauty, authentic food and gorgeous vistas.

7. Pramuka Island’s Coral Reef in Indonesia

Witness the dedication to preserving Pramuka Island’s coral reefs by observing coral reef evaluation procedures, and then set off on an exciting island exploration adventure.

8. See Qutab Minar in Delhi

Make a trip to Qutab Minar (also known as Qutb Minar) located in Delhi .  Built in 1192, it is the tallest minaret tower, Humanyun’s Tomb and an UNESCO World Heritage Site.

9. Akchour Village in Morocco

Visit Akchour Village, Morocco, for viewing the amazing waterfalls and hiking to the natural arch named God’s Bridge.

10. Train from Kandy to Rozella

Travel aboard an antique train from Kandy to Rozella, both in Sri Lanka, to experience views of one of the highest concentrations of waterfalls in the world

11. Visit Freiberg, Germany Sustainable Model District

Visit Freiberg, Germany known as the jewel of the black forest.  The community is a “sustainable model district” and uses solar power is used to power many of the households.  There is a farmers’ market every day except Sundays and Freiberg is a foodie heaven and most restaurant kitchens use local ingredients.

12. Visit Fort McMurray, Alberta for the the Aurora Borealis

The shimmering, neon green curtain of the Northern Lights also known as the Aurora Borealis makes for unforgettable nights in Edmonton.  Head north to Fort McMurray , Alberta’s northernmost city, to experience the mysteries of constellations that spellbind residents and visitors alike in the crisp night sky. For the best Northern lights viewing head a few minutes out of town.

13. Visit the Chimborazo Fauna Reserve Ecuador

Travel to the Chimborazo Fauna Reserve Community in the center of Ecuador, volunteer with a local school at more than 10,000 feet in elevation; enjoy spectacular panoramas of the upper Andes.

14. See the Grasslands of Gorumara Park in Dooars

Experience the grasslands of Gorumara Park in Dooars, India for sighting the Asiatic one-horned rhino as well as many elephants.  Gorumara offers great diversity of plants and animals as well as a large variety of flora and fauna.

15. Murchison Falls National Park in Uganda

Visit Murchison Falls National Park, Uganda where the mighty River Nile explodes through a narrow gorge with deafening perfection.

16. Play Soccer in Vicos, Peru

Immerse yourself in the soccer-crazed community of Vicos, Peru, by engaging in a friendly game with the locals. Afterwards, connect with the heart of the community by interacting with the school children.

17. Visit the Ancient Sri Lankan Veddhas Tribe

Embark on an unforgettable journey to encounter the elusive Veddah tribe, Sri Lanka’s ancient inhabitants. Guided by these skilled hunters, you’ll venture into the heart of the wilderness to witness the majestic wild elephants in their natural habitat.

18. Red Fort UNESCO World Heritage Site

Take a tour of Red Fort UNESCO World Heritage Site and Jama Masjid, the biggest mosque of India and a wonderful preservation of Indian heritage.

19. Explore Yellowstone in Wyoming

Check out Yellowstone in Wyoming for the charismatic wolves.  Reintroduced in 1995, these amazing predators often make an appearance in Lamar Valley.  Also, likely to be seen are elk, bison, coyote, bear, moose and deer.

20. See the Baobab Trees in Tanzania

Soaring high above the plains of Arusha, Tanzania, the majestic baobab trees stand as silent sentinels, their colossal trunks reaching up to 98 feet into the sky. These gentle giants dwarf the creatures that gather beneath their shade, even the mighty elephants, of which up to six thousand may roam the region.

21. Moholoholo Wildlife Rehabilitation Center in South Africa

Travel to the Moholoholo Wildlife Rehabilitation Center in Hoedspruit, South Africa to learn about local conservation efforts.  Visit orphaned, injured and even poisoned animals, get an ‘up close and personal’ experience of these incredible creatures.  Attend a guided tour during which they hear about these problems and the challenges associated with conservation and habitat protection.

22. Great Bear Rainforest in British Columbia

Visit the pristine wilderness of the Great Bear Rainforest in British Columbia, Canada where you can stay at the eco-lodge, King Pacific Lodge on a fishing trip.

23. Explore the Visit the Galapagos Islands

Embark on an unforgettable adventure to the Galapagos Islands, a sanctuary of breathtaking natural beauty and extraordinary wildlife. Where the weather is perpetually perfect and 97% of the islands are protected, you’ll encounter a menagerie of otherworldly creatures that will leave you awestruck.

Encounter the captivating pink iguanas, their vibrant scales adorning the volcanic landscapes. Admire the unique blue-footed boobies, their nimble feet carrying them across the rugged terrain.

Marvel at the Sally Lightfoot crabs, their nimble movements painting the shores with bursts of color. And don’t miss the opportunity to witness the majestic giant tortoises, their ancient shells bearing witness to the islands’ rich history.

24. Talassemtane National Park in Morocco

Travel to the National Reserve of Talassemtane National Park in Morocco.  This location is currently being considered as a UNESCO World Heritage site due to the rare endemic species of fir trees.  Moroccan Fir is unique only in this particular place.

25. Hawksbill Turtle Hatchery in Jakarta Bay

Visit a Hawksbill turtle hatchery in Jakarta Bay, Indonesia to get hands-on experience with these amazing creatures.

26. Build an Adobe Mud in Peru

Try participating in building an adobe mud kitchen construction to include cooking source installation in the Andes Mountains of Peru.

27. Try a Sri Lankan River Bath

Participate in a local Sri Lankan custom of an unforgettable river bath experience.  Explore the riverbanks viewing amazing flora and extensive wildlife or enjoy a tuk-tuk ride back to the village of Kandy.

28. Visit the Taj Mahal in Agra

Visit perhaps the most famous and beautiful monument of love; the Taj Mahal in Agra, India.  It was commissioned by Mughal Emperor Shah Jahan for his pretty wife Mumtaz Mahal and is designated a UNESCO World Heritage Site.

29. Learn About Hydroelectricity in Jaldhaka

Travel to Jaldhaka, India famous for the Hydel Power Station.  The cost of hydroelectricity is relatively low, making it a competitive source of renewable electricity. The hydroelectric complex produces no direct waste and has a considerably lower output level of greenhouse gas carbon dioxide than fossil fuel-powered energy plants.

30. Visit El Yunque National Forest in Puerto Rico

Journey to the Caribbean Island of Puerto Rico in the Greater Antilles group for El Yunque National Forest.  It is the sole tropical rain forest in the U.S. National Forest System and offers a stunning example of immense biodiversity.

31. Visit Mayan Ruins in Belize

Visit the Mayan ruins in Altun-Ha, Belize then enjoys a nature viewing cruise down the Belize River for sightings of crocodiles, manatee, iguanas, exotic birds, bats and monkeys.

32. See the Wildlife in Kampala, Uganda

View elephants, buffalo, bushbucks, lions, hippos, crocodiles, and a variety of bird species outside Kampala, Uganda.

33. Cotopaxi National Park n Ecuador

Travel to Cotopaxi National Park is a protected area in Ecuador.  The volcano that lends its name to the park is located within its boundaries and is among the tallest active volcanoes in the world.

34. Visit the UNESCO World Heritage Site, Uluru

Visit with Aboriginals at the UNESCO World Heritage Site, Uluru, also known as Ayers Rock. The area is home to a plethora of springs, waterholes, rock caves and ancient paintings.

35. See the Sigiriya Rock Fortress in Sri Lanka

35. Explore the UNESCO World Heritage Site from the 5th century A.D. Sigiriya Rock Fortress in the Matale District of Sri Lanka.  This unforgettable lion rock citadel is also renowned for its ancient paintings.

36. Explore Huaraz, Peru

Take a panoramic seven-hour journey to the remote Peruvian town of Huaraz.  The spectacular landscapes along the way will amaze as you ascend to the 10,000+ feet altitude!

37. Lake Manyara in Tanzania

Lake Manyara in Tanzania is a serene and beautiful alkaline lake that hosts thousands of flamingos and a diversity of other bird life.

38. Visit the Historic Agra Fort

Travel to the historic Agra Fort, another UNESCO World Heritage Site located in India. This was the location that four of the mighty rulers from the Mughal dynasty ruled their enormous empire in the Indian Sub-Continent.

39. Learn about the Ancient Tea Gardens in Lava

Visit the ancient tea gardens and historic Buddhist monastery in Lava, India. The Dalai Lama, on his visit to Kalimpong in the year 1956 presented a set of rare manuscripts “Kangyur” of 108 volumes to the monastery.

40. Visit Dambulla Rock Temple

Explore the UNESCO World Heritage Site from the 1st century B.C. Dambulla Rock Temple is also known as the Golden Temple.  This still functional ancient edifice remains the best-preserved in Sri Lanka.

41. Visit Chefchaouen in Morocco

Walk the streets of Chefchaouen to visit the blue medina, observe the local life of Berber people and contemplate the Andalusian architecture which still persists today. 

Meet local teachers and students eager to exchange stories.  Assist with the school for garden beautification project then participate in bread making workshop.  This is the life of typical northern Morocco.

42. Buy Recycled Crafts & Jewelry in Jakarta

Watch local artisans utilize recycled materials to make crafts, jewelry and other household items in Jakarta, Indonesia.

43. Trek the Mindo Tropical Rain Forest in Ecuador

Venture into the heart of Ecuador’s Mindo Valley, where the enchanting Mindo Tropical Rain Forest, also known as the “Cloud Forest”.

Visit established environmental stations, where you’ll gain a deeper understanding of the rainforest’s delicate balance and the importance of conservation efforts. Witness the remarkable transformation of this ever-expanding forest, the only one of its kind in the world, and marvel at the power of nature’s resilience.

44. Kruger National Park in South Africa

Tour the amazing Kruger National Park in South Africa.  It is one of the greatest game reserves in the world; offering vast, unspoiled and beautiful wilderness.  See the world as it was thousands of years ago, the Big Five safari will not disappoint.

45. Experience the The Elephant Pilgrimage in Pinnawala

The Elephant Pilgrimage in Pinnawala has been designed for nature lovers.  10% of the world’s elephant population is concentrated on the small island of Sri Lanka.

46. Volunteer in Gorubathan, India

In Gorubathan, India, participate in various community awareness programs teaching on various subjects such as HIV/Aids, Human Trafficking, Child Labor, Drug Addiction, Medical/Eye Screening or other necessary community outreach. Learn more here .

47. Visit a Monkey Sanctuary in Honduras

Travel to the gorgeous island of Roatan, Honduras where eco-adventure awaits. Zipline through the jungle treetops, visit a monkey sanctuary and a farm for the protected black iguana, found only on Roatan.  Later dine like a local on green iguana, an island delicacy.

48. Volunteer in New Delhi

Volunteer in New Delhi, India visiting homes in the slums to see the lifestyle and culture as well as to interact directly with the villagers, share ideas and experiences to educate locals to improved living conditions. Learn more here .

49. Learn about Polynesian Cultural Heritage in Laie

Soak up Polynesian Cultural Heritage in Laie on the island of Oahu, Hawaii for the ultimate display of the cultures, diversity and spirit of the nations of Polynesia.

50. Tour Copenhagen by Bike

Go bicycling in Copenhagen, Denmark a city with a rich history of maritime industry, business, culture, and tourism.  This is It is perhaps the most environmentally conscious city on earth.

51. Visit the Ecuadorian Upper Amazon Basin

Travel back in time to the Ecuadorian Upper Amazon Basin.  The area is home to several indigenous nations such as Secoyas, Huaorani, Shuaras, Sionas, Cofanes and Quichuas, each one with its own characteristic features such as language, customs and own vision.

52. Spin the Globe and Live Your Passion

The only boundaries are your imagination!

Recommended Travel Resources

* World Nomads provides travel insurance for travelers in over 100 countries. As an affiliate, we receive a fee when you get a quote from World Nomads using this link. We do not represent World Nomads or any other travel insurance company. This is information only and not a recommendation to buy travel insurance.  

• Travel Insurance: World Nomads *.
• Transport: CheapOAir and Skyscanner (Best Sites to Research Flight Prices) 
• Best Car Rental Deals: Rentalcars.com
• Best Sites to Find Hotel Deals: Hotels.com and Booking.com
• My Favorite Hotel Review Website: TripAdvisor
• Best Tours: Viator and Get Your Guide

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The post 52 Tips for Responsible and Sustainable Tourism appeared first on 52 Perfect Days .

• Solar Eclipse 2024

The Eclipse Could Bring $1.5 Billion Into States on the Path of Totality

T he total solar eclipse passing through parts of the U.S. on April 8 stands to have a major economic impact on cities across the country as stargazers flock to the path of totality. 

Factors including the date of the eclipse and the number of states in the path of totality means that millions of people will have the opportunity to view the event— and that the cities hosting them could see a combined $1.5 billion injected into their states’ economies.

“That number will include lodging costs for visitors coming from out of state or far away parts of their own state, as well as gas costs and food costs,” says Bulent Temel, assistant professor of practice in economics at the University of Texas at San Antonio, San Antonio, who performed the calculations to arrive at the $1.5 billion figure.

One to four million people are expected to travel for the eclipse, according to Great American Eclipse , an informational site that tracks solar eclipses around the world. The Federal Aviation Administration (FAA) estimates the days leading up to the eclipse will be some of the busiest travel days of the season, with 50,670 flights on Thursday, April 4 and 48,904 flights on Friday, April 5. That means the spending will be spread out: “[The eclipse] is on a Monday, so you might have folks coming Friday, Saturday, Sunday, spending a few days somewhere ahead of the event,” says John Downen, Director of Impact Analysis at Camoin Associates.

Read More : How Cities Around the U.S. Are Celebrating the Eclipse

Many regions along the path of totality have spent months—if not years—preparing for the upcoming surge of visitors and money. Rochester, NY, is expecting 300,000 to 500,000 visitors across the nine - county Greater Rochester region. Local businesses have a slate of specials and planned events the weekend leading up to the event—including eclipse themed beers from local breweries and a three-day pass from the Rochester Museum and Science Center for visitors to attend a range of talks and performances. 

The area’s tourism board says that some hotels have reported demand skyrocketing an average of 1200% for the four-day span leading up to April 8— unusual demand for a Monday in the region’s off-peak season. 

It’s an economic boost that no amount of planning— or marketing—can replicate. “It’s a really great tourism opportunity,” says Shannon Ealy, Director of Communications and Marketing for the Greater Rochester Chamber of Commerce. “You can spend millions of dollars on media buys to get our regional brand out there, but you can't exactly buy the sun and the moon crossing over us.” 

Read More: See the 2024 Solar Eclipse’s Path of Totality

But unfortunate weather could still put a damper on things, especially for businesses that might be stocking up for an influx of visitors, since many eclipse chasers decide where to view the eclipse based on weather that can’t be predicted until the event draws closer. “Even a simple factor like a cloudy day could just compromise all these expectations quite a bit,” Temel says. 

The real task for local business and tourism boards lies in converting one-time visitors into ones that return—without the promise of a solar eclipse. “Every single one of those visitors is a potential future visitor to the same area as well,” says Temel. “In the long run, the economic impact would be magnified quite significantly. 

Adds Downen: “It definitely presents an opportunity, especially in smaller communities, to showcase themselves and hopefully capture some future repeat visitors.”  

Read More : Where to Find Solar Eclipse Glasses—And Spot Fake Ones

Lebanon, Indiana, for example, is expecting its population to triple during the weekend before the eclipse. Joe Lepage, the city’s communication and community development director, says he hopes that the eclipse will change the way both locals and out-of-towners talk about Lebanon. 

“We have a large business park, great hospitals, establishments where people can work, but actually staying and living in Lebanon has been difficult to sell.” he says. "It'll give people that are going back home a chance to visit and realize, ‘Hey, that little town is nice.’ But then our locals can see all the things they have in their backyard and realize, ‘Hey, my community is pretty special too.’”

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Write to Simmone Shah at [email protected]

• Vajiram --> (current)

Why in the News?

On April 5 the Reserve Bank of India (RBI) green lighted investments in the country’s Sovereign Green Bonds (SGrBs) by Foreign Institutional Investors (FIIS).

What’s in Today’s Article?

• About FIIs (Meaning, Categories, Use)
• About Green Bonds (Meaning, Examples, Data, etc.)
• About SGBF (Aim, Eligibility, Proceeds, Implementing agency, etc.)
• FIIs to Invest in Green Bonds

What are Foreign Institutional Investors (FIIs)?

• Foreign Institutional Investors (FIIs) are organizations or entities that invest money in the financial markets of a country other than their own .
• These investors can include pension funds, mutual funds, insurance companies, banks, and other large financial institutions from foreign countries.
• FIIs play a significant role in the financial markets of a country by providing liquidity, increasing trading volumes, and influencing stock prices.
• They invest in a range of financial instruments, including stocks, bonds, and derivatives, based on their investment strategies and market outlook.
• The inflow of funds from FIIs can have both positive and negative impacts on the local economy, depending on various factors such as market conditions, government policies, and global economic trends.
• Investments by FIIs in India are regulated by the Securities and Exchange Board of India (SEBI) while the ceilings on such investments are maintained by the Reserve Bank of India (RBI).

What are Green Bonds?

• Green bonds are issued by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments .
• The projects can include renewable energy, clean transportation and green buildings, among others.

Example of Green Bonds:

• The World Bank is a major issuer of green bonds and issued $14.4 billion of green bonds between 2008 and 2020 .
• These funds have been used to support 111 projects around the world, largely in renewable energy and efficiency (33%), clean transportation (27%), and agriculture and land use (15%).
• By the end of 2020, 24 national governments had issued Sovereign Green, Social and Sustainability bonds totalling a cumulative $111 billion .

India’s Sovereign Green Bonds Framework:

• First announced in the Union Budget 2022-23, the proceeds of these green bonds will be issued for mobilising resources for green infrastructure.
• To mobilise Rs 16,000 crore through the issuance of green bonds in the current fiscal ending March 2023 .
• Under the framework, the Finance Ministry will, every year, inform the RBI about spending on green projects for which the funds raised through these bonds will be used .

Features of the SGrBs:

• SGrBs will be issued through Uniform Price Auction.
• SGrBs will be eligible for Repurchase Transactions (Repo).
• SGrBs will also be reckoned as eligible investment for Statutory Liquidity Ratio (SLR) purpose.
• SGrBs will be eligible for trading in the secondary market.
• SGrBs will be designated as specified securities under the ‘Fully Accessible Route’ for investment in Government Securities by non-residents .

Eligible Projects:

• All eligible green expenditures will include public expenditure undertaken by the government in the form of investment, subsidies, grants-in-aid, or tax foregone (or a combination of all or some of these) or select operational expenditures.
• R&D expenditures in public sector projects that help in reducing the carbon intensity of the economy and enable country to meet its Sustainable Development Goals (SDGs) are also included in the framework.
• The eligible expenditures will be limited to government expenditures that occurred maximum 12 months prior to issuance of the green bonds .
• Sectors not included –
• Nuclear power generation, landfill projects, alcohol/weapons/tobacco/gaming/palm oil industries and hydropower plants larger than 25 MW have been excluded from the framework.

FIIs to Invest in Green Bonds:

• The Reserve Bank of India (RBI) has approved investments in the country’s Sovereign Green Bonds (SGrBs) by Foreign Institutional Investors (FIIS).
• The RBI had issued SGrBs worth ₹16,000 crore in two tranches in January and February last year with maturities in 2028 and 2033.
• While in both instances the bonds were oversubscribed, the main participants were domestic financial institutions and banks, narrowing the avenues from where the government could borrow.
• SGrBs yield lower interest than conventional G-Secs, and the amount foregone by a bank by investing in them is called a ‘ greenium ’.
• But central banks and governments the world over are encouraging financial institutions to embrace greeniums to hasten the transition to a greener future.

Significance of the RBI’s Decision:

• 2070 net zero goals,
• Ensuring 50% of India’s energy comes from non-fossil fuel based sources and
• To reduce the carbon intensity of the nation’s economy by 45%.

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