Posted by Chester Morton / Sunday 13 May 2018 / No comments
The economic benefits of tourism
Definition of tourism
One of the most used definitions for tourism is the one by
the World Trade Organization (WTO). The WTO defines tourism as “…the activities
of persons travelling to and staying in places outside their usual environment
for not more than one consecutive year for leisure, business and other purposes
not related to the exercise of an activity remunerated from within the place
visited.”
Another definition by Mathieson and Wall, 1982, is also worth
nothing. They wrote in 1982 that tourism is “The temporary movement of people
to destinations outside their normal places of work and residence, the
activities undertaken during their stay in those destinations, and the
facilities created to cater to their needs.”
From the above, one can define tourism as the non-permanent
movement of a person from his or her place of abode to another place for purposes
not limited to business, leisure and pleasure but not receiving any monetary
compensation for it. It includes staying in places provided by others for free
or paid for and using facilities created for the benefit of making life easy
during their stay.
THE ECONOMIC BENEFITS
OF TOURISM
Injects money into the local economy
One of the very important economic benefits of tourism is the
added income that it generates for the local people and their businesses. When
tourists enter a locality, they spend hard cash. Many of the businesses in the
tourism sector are micro-operators so when tourists spend, it goes directly
into their businesses for their personal benefits and for the payment of their
workers. Each dollar that is spent by a tourist is directly injected into the
local economy.
Payment of taxes
Another form of economic benefit of tourism is income to the state
and local government depending on the country of destination. Those who earn
money pay taxes to the state as income tax. Apart from that, in countries where
the Value Added Tax (VAT) operates, everybody who spends on one item or the
other not exempted from the VAT list, adds something little to the coffers of
the state.
Payment of levies
In every country, there are levies to be paid by operators of
businesses and this does not exclude businesses in the tourism sector. There
are different kinds of levies in the tourism sector depending on the particular
country. Some countries charge hotel levies and restaurant levies. In some countries
too, Tour Operators pay a form levy to the state. All these and other levies
paid by entities in the tourism sector serve as a source income for the state
and therefore an economic benefit of tourism.
Payment of fines and licenses
Another source of economic benefit from tourism is licenses
and fines. Many operators in the tourism sector are expected to register their
operations with one government agency or the other, mostly agencies under the
Ministry of Tourism. Such registrations and their annual renewals are paid for.
Any business entity that breaches this provision is fined by the appropriate
authorities. The levies and fines therefore serve as sources revenue to
government.
Balance of payments
Another economic benefit of tourism is that it can positively
affect the Balance of International Payment (BoP) of the country of destination.
Balance of International Payment simply means the record of all economic
transactions between people who reside in one country and those who reside in other
countries. Tourists who visit a country also spend cash and this is included in
the final record of financial transactions constituting the Balance of Payment.
In other words, another benefit of tourism is that it improves the destination country’s
Balance of Payment.
Foreign exchange earnings
Tourism serves as a foreign exchange earner for many
countries. For countries with very popular tourist sites with annual visitation
in the hundreds of thousands or in the millions, such countries earn millions
of dollars in annual income from foreign tourists. When tourists visit a
country, they come with money which they invariably expend into the economy of the
country of visitation. All the dollars, British pounds, Japanese yen, etc, that
is injected into the local economy by foreign visitors serve a source of
critical foreign exchange for the country of destination.
SAMPLE QUESTION(S)
1. a. Define tourism.
b. Highlight five
economic benefits of tourism to your country.
ALSO READ:
The social benefits of tourism
ALSO READ:
The social benefits of tourism
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