Economic Analysis: Tourism in Developing World - Report

This report provides an in-depth analysis of the tourism industry's impact on developing countries. It examines the economic effects, focusing on concepts like leakage (import and export) and enclave tourism. The report details the negative impacts of these factors, such as infrastructure costs, price increases, and seasonal employment, while also exploring strategies for sustainable management. It covers the importance of foreign exchange earnings, government contributions, and the role of enclave tourism. The report highlights the socio-cultural impacts of tourism, including changes in value systems and potential conflicts between tourists and local residents. The report concludes by emphasizing the need for developing countries to implement strategies to mitigate negative effects and maximize the benefits of tourism.

Tourism in Developing World

TABLE OF CONTENTS
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................3
Leakage:...........................................................................................................................................3
Negative effects of leakage on tourism development.............................................................5
Sustainable management of leakage in tourism development................................................6
Enclave:............................................................................................................................................7
Negative effects of enclave on tourism development.............................................................7
Sustainable management of enclave on tourism development...............................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

Illustration Index
Illustration 1: Negative impact on tourism leakage.........................................................................4
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Executive summary
Tourism industry is very helpful in promoting harmony and stability in the countries which are
developing. It is helpful in providing job opportunities, generating income, promotes cross
culture awareness, diversifying the economy and in protecting environment. Mostly rich
countries are able to gain huge profits through tourism than poor countries. In tourism there are
many hidden cost involved which have unfavourable effects on economy of developing
countries. All the tourist expenditure which remains after deducting wages, profit and taxes are
the direct income which the people get of a particular area. According to an estimation it has
been found that more than 80% of the tourist expenditure goes to airlines, hotels and other
international companies. All the amount which has been deducted and the other expenses for
hotel or to other companies are the leakages of the country. There are mainly two types of
leakage which are import leakage and export leakage. On more term which is covered in this
report is about Enclave tourism and their impact on the country.
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INTRODUCTION
Tourism industry plays a vital role in promoting stability and peace in developing
countries as it helps in generating income, providing job opportunities, promoting cross culture
awareness, protecting environment and in diversifying the economy(Timothy and Nyaupane,
2009). In addition to this, tourism in the global economy is the fourth largest industry. Present
report covers the leaking effort and their types which effects the development of tourism.
Further, it also covers how tourist plan for enclave tourism.
Negative economic impact of Tourism
Mostly developing countries are able to gain some profits through tourism than poor
countries. There are many hidden cost which involved in tourism. These hidden cost have many
unfavourable effects on economy of developing countries (Maitland and Newman, 2014).
Developing countries are those countries which have most urgent need of employment, income
and this is all possible by understanding the importance of tourism. Following are the hidden
element which effects the economy:
Leakage:
Tourist expenditure which remains after profit, wages and taxes is the direct income of an area.
All the subtracted money are the leakage. 80% of the tourist expenditure goes to hotels and
airlines or other international companies (Karanasios and Burgess, 2008). As a result the local
workers or businesses do not earn much. There are many problems which a tourist face and
mostly it is because of food or due to place of stay. These are all leakage as poor countries fail in
providing the all the required service which a tourist refers. There are mainly tow types of
leakages, which are as follows:
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Import leakage: This type of leakage occurs when the host country fail in providing all the
required thing which have to be fulfilled by the host country and this is possible only through
importing the things which is required by the tourist (UNEP, 2014). For example,, if a tourist
visit India and he is found of organic food but the place where he stays do not have organic food,
then to fulfil this demand organic food has to be imported this is said to be import leakage. The
tourist visits the host country but uses all the imported products, then that is an import leakage.
Export leakage: According to this leakage when a person invests in a country and takes back the
profit to his country then it is an export leaking (Mowforth and Munt, 2008). For example,, A
person form Australia visits Sri Lanka and opens up a hotel and all the profit which he earns,
when he takes all of it to his own country that is Australia then it is import leakage. In simple
words, the person earns all the profit ultimately to his country. These are the two hidden problem
which effect the economy of the developing country. Mostly developing country do not new
technology through which they could provide all the required things for the tourists.
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Illustration 1: Negative impact on tourism leakage
(Source: UNEP, 2014)

Negative effects of leakage on tourism development
1. Cost of infrastructure: In order to attract more and more tourists the local authorities and
government has to spent heavily on constructing or developing attractive places or in
maintaining historic places government has to spent in order to maintain it so that the
tourist can visit. In addition to this, government has to make improvement in transport
facilities like road, airport and railways (Jensen, 2010). These all are negative impact on
the host countries. India has many historic places like Taj Mahal which was build in the
year 1648. In order to preserve and maintain these type of place, government has to spend
highly so that it may remain as it was.
2. Increase in price: Basic increase in all the goods and services from services will affect
negatively the local residents whose income has no change or no increase in the income.
3. Diversification: In an economy diversification is the sign of health, if a country becomes
dependent for the survival of an industry then it will cause in major stress upon the
industry and on the local people who performed well (Rogerson, 2012). Countries which
has a little ability to explore resources, they have focused on tourism as a way to boost up
the economy. It can be evaluated that tourism possess varied negative impacts on many
of the destinations which tourists visit. However, it involves economic, socio-cultual and
environmental. However, it can be stated that economic effects of tourism are usually
responsible for encouraging tourism in the country. While, the negative impact of tourism
relate to particularly increase in demand for imported products once tourists begin to
appear, leakages of revenue out of the economy, local residents became over dependent
upon tourism and land value inflation. Further, it can be stated that there are varied
negative economic impact of tourism (Rogerson, 2012). For example, there are varied
hidden costs to tourism that posses unfavourable economic effects on the host
community. Also, it has been assessed that often rich countries are being able to profit
from tourism than poor or weaker countries. Moreover, the least developed countries
possess the most urgent requirement for income, employment and general rise of the
standard of living through increase in tourism. Also, the main reason behind negative
impact of tourism which are large scale transfer of tourism revenues out of the host
country and that excludes local businesses and products.
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4. Seasonal change: Most of the individuals get employment only when there is season in
which people of particular country. During seasons time, individuals get employment as
increase in tourism require more people to take care of and as a result more and more
individuals are hired. When the season gets over, then those individuals get unemployed.
Sustainable management of leakage in tourism development
1. This type of leakage occurs when the host country fails to fulfil the requirements of the
travellers. In order to satisfy the tourist, demanded thing are imported which is known as
import leakage. In order to manage this the developing country should try to bring new
technology in the country (Hopkins and et.al., 2010). This will be helpful in providing the
tourists according to there needs. In addition to this, they should try to develop and
maintain their road and airlines so that they could effectively provide their services.
Moreover, they should focus on maintaining their tourist places clean so that tourist visit
in more number. Host country should try to provide all the required things which a tourist
may need. Mostly tourist prefer to have an environment in which they can have all the
required thing as they have it in their places. So host country should try to have all the
thing which they prefer.
2. In managing export leakage, the developing countries should try to make more strict rules
or it should impose high taxes on the profit which the investors earn through tourism. In
addition to this, the country should mainly focus on providing employment opportunities
so that the local people could help in increasing the GDP of the country (Dubois and
et.al., 2011). Government should provide proper education to the people so that they
could come up with new ideas or innovation which would help the country to grow.
When people get proper education then they will be able to think more critically and will
be able to understand regarding the development of the country.
3. Foreign exchange earning: Tourism expenditure are helpful in generating income to the
host economy and can stimulate the investment which are necessary for the financial
growth in other sectors of economy (Maitland and Newman, 2014). Tourism comes under
top five categories and that also for more that 83% of the countries and which is one of
the main sources of foreign exchange for more than 38% of the countries.
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4. Contribution to Government: Contribution can be generated by imposing taxes from the
tourism business, tourism employment. Further, it can also contribute from duties and
taxes levied on services or goods which are supplied to tourists.
Enclave:
This is a tourism in destination in which all the activities are congregated and planned in
a geographical area. This basically focuses on all the major area of the host place under a given
package (Ghimire, 2013). This is very helpful as tourist has to pay a certain amount and he will
be able to visit all the place which are involved in the package. For example, Suppose a personal
wants to visit Nepal. Tourist has no idea what all places are famous or are place which should be
visited. In such case travelling agencies provides different packages in which it involves all the
major places of that particular region. The traveller can select any package which will help him
in visiting all the major places with a given span of time. In addition to this, a guide will
accompany the tourist who will explain all the places which they visit. When these packages
provides all the required things which are required, then it becomes a negative impact on the host
country (Ghimire, 2013). Because of this not much opportunity is left for the local people of the
host country to get profit form tourism. All the inclusive hotels mostly generate the largest
amount of it revenue but the impact on economy is very less than per dollar of revenue then other
accommodation types.
Negative effects of enclave on tourism development
Furthermore, socio-cultural impact of tourism can be stated that tourist possess a
detrimental effect on the quality of life of the host community. For example, crowding and
congestion can be one of the factor that affects the tourists visiting the country. Sometimes,
socio-cultural impact of tourism regarding the changes in value systems and behavior and
thereby it affects the tourism (Frost and Hall, 2009). Also, if individuals of different cultures
meet it impacts on the social culture activity of tourism. However, it can be assessed that tourists
are the main benefit to local residents and areas. Further, there are also a range of negative aspect
of social-cultural impacts on tourist destination. These are as follows-
1. It can be assessed that tourists can be viewed by local people as intruders who are the
people moving in and taking away the best of the local resources. However, it can
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develop a sense of distrust and disapproval towards the tourists that results in the
discouragement of tourists feeling unwelcome and uncomfortable (Hall and et.al., 2009).
2. Also, it is crucial for destination to market its culture so that they can gain high attention
of tourists visiting the country.
3. For example, the behaviour of tourists are imitated by the locals and thus it possesses
negative impacts as often the behaviour of tourists are imitated by the local people.
4. Furthermore, conflicts arise between tourists and locals. Therefore, because of such
differences that arise between the standard of living among tourists and local people raise
conflict as a result of the different opinions, backgrounds and attitudes (Potter and Lloyd-
Evans, 2014).
Moreover, negative socio-cultural impact from tourism involves change or loss of
indigenous identity and values. However, it can be stated that social- cultural changes can
effectively impact on tourism and thus results in declining the demand of destination. It also
affects the tourists to visit the place (Kshetri, 2008). Sometimes, culture clashes among tourists
as there are several cultural people visiting the place and thus it results in over exploitation of
social carrying capacity. Also, the attitude of local residents towards the development of tourism
may unfold through the different stages of tourism where visitors are welcome, through great
respect and thus local people raise clashes.
Sustainable management of enclave on tourism development
Following are the ways buy which enclave can be managed:
1. More organizes tourism: Developing countries like India, Nepal, Uganda, etc. should try
to promote their services with the help of social media. They should include all the
required information regarding their country. This will be helpful for the tourist to know
the country more clearly and they can visit the country without the help of any agencies.
2. Government supported: According to this, the government can develop their own
packages which will be helpful in providing employment opportunities.
3. Contribution to economy: Economy is the basic component of tourism industry, tourism
revenues are often used in order to measure the economic value of protected areas.
4. Increasing the rates: All the tourism agencies should be charged more by increasing the
taxes. This opportunity can be increased.
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CONCLUSION
From the above research it can be articulated there are different negative and positive
impacts of economic, socio-cultural and environmental impact on tourism. However, there are
varied economic impact on tourism such as infrastructural cost, leakage and import and export
cost so that it affects the tourism. While, socio-cultural impact also posses negative impact in the
form of increasing clashes among locals and tourists visiting the country.
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REFERENCES
Books and Journals
Timothy, D. J. and Nyaupane, G. P., 2009. Cultural heritage and tourism in the developing
world: A regional perspective. Routledge.
Maitland, R. and Newman, P., 2014. World tourism cities: Developing tourism off the beaten
track. Routledge.
Karanasios, S. and Burgess, S., 2008. Tourism and Internet adoption: a developing world
perspective. International Journal of Tourism Research. 10(2). pp 169-182.
Mowforth, M. and Munt, I., 2008. Tourism and sustainability: Development, globalisation and
new tourism in the third world. Routledge.
Ghimire, K. B., 2013. The native tourist: Mass tourism within developing countries. Routledge.
Jensen, Ø., 2010. Social mediation in remote developing world tourism locations–the
significance of social ties between local guides and host communities in sustainable
tourism development. Journal of Sustainable Tourism. 18(5). pp. 615-633.
Rogerson, C. M., 2012. Strengthening agriculture-tourism linkages in the developing World:
Opportunities, barriers and current initiatives. African Journal of Agricultural Research.
7(4). pp. 616-623.
Frost, W. and Hall, C. M., 2009. Tourism and national parks: International perspectives on
development, histories, and change. Routledge.
Potter, R. B. and Lloyd-Evans, S., 2014. The city in the developing world. Routledge.
Hopkins, L. and et.al., 2010. Medical tourism today: What is the state of existing
knowledge&quest. Journal of public health policy. 31(2). pp. 185-198.
Dubois, G. and et.al., 2011. The future tourism mobility of the world population: Emission
growth versus climate policy. Transportation Research Part A: Policy and Practice.
45(10). pp. 1031-1042.
Kshetri, N., 2008. Barriers to e-commerce and competitive business models in developing
countries: A case study. Electronic commerce research and applications. 6(4). pp. 443-
452.
Hall, C. M. and et.al., 2009. Wine tourism around the world. Routledge.
Maitland, R. and Newman, P., 2014. World tourism cities: Developing tourism off the beaten
track. Routledge.
Ghimire, K.B., 2013. The native tourist: Mass tourism within developing countries. Routledge.
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