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Governments around the world view tourism as more than just people going on holiday. It's a powerful economic tool that can transform regions and even entire countries. This is why governments often have clear economic objectives when they develop and manage tourism.
Key Definitions:
Tourism isn't just about attracting visitors. For governments, it's a strategic industry that can help achieve many economic goals. Tourism brings in money from outside the local economy, creates jobs that can't be outsourced and often requires less investment than heavy industries. It can also help spread economic development to rural or underdeveloped regions.
Before the COVID-19 pandemic, tourism accounted for about 10% of global GDP and 1 in 10 jobs worldwide. Even with recent challenges, the industry remains a key economic driver. In some countries like the Maldives, Seychelles and many Caribbean nations, tourism contributes over 25% of their GDP, making it their economic lifeline.
Governments typically focus on five main economic objectives when developing tourism. Understanding these helps explain why certain tourism policies and investments are prioritised.
One of the primary reasons governments invest in tourism is its potential to boost the country's overall economic output.
The combined effect of these three types of spending creates what economists call the 'multiplier effect'. For example, when a tourist pays £100 for a hotel room, that money doesn't just benefit the hotel. The hotel uses it to pay staff wages, buy food from local suppliers, pay for laundry services and so on. Those businesses and workers then spend that money elsewhere in the economy.
Creating jobs is often a top priority for governments and tourism is excellent at generating employment opportunities.
Jobs in hotels, restaurants, tour operators, attractions and transport companies that serve tourists directly.
Jobs in businesses that supply goods and services to tourism companies, such as food suppliers, construction and marketing agencies.
Jobs created when tourism workers spend their wages in the local economy, supporting shops, services and other businesses.
Tourism is particularly valuable for employment because:
When international tourists visit a country, they bring foreign currency with them. This is extremely valuable for governments because:
For many developing countries, tourism is one of the few ways they can earn substantial foreign exchange. Countries like Thailand, Egypt and Mexico rely heavily on tourism for this reason.
Governments often use tourism to develop economically disadvantaged regions. Unlike many industries that cluster in cities, tourism can thrive in rural, coastal, or mountain areas if they have attractive natural or cultural features.
Tourism development in these regions can:
Many countries rely too heavily on a single industry or resource, making their economy vulnerable. For example, oil-producing nations can face economic crisis when oil prices drop. Tourism offers a way to diversify the economy and reduce this risk.
Examples include:
Costa Rica has successfully used tourism to achieve multiple economic objectives:
Costa Rica achieved this by focusing on ecotourism that showcases its natural beauty while protecting its environment. The government invested in national parks, promoted sustainable tourism practices and marketed the country as a nature-lover's paradise with the slogan "Pura Vida" (Pure Life).
This strategy has allowed Costa Rica to attract higher-spending tourists who stay longer and contribute more to the local economy than mass tourism might have done.
While economic objectives are important, governments must balance them with environmental protection, social impacts and long-term sustainability. Tourism that maximises short-term economic gains but damages the environment or local culture will ultimately fail.
Successful tourism strategies typically:
When governments have clear economic objectives for tourism, they can make better decisions about where to invest, what types of tourism to promote and how to measure success. This helps ensure that tourism development actually delivers the economic benefits the country needs most, whether that's jobs in certain regions, foreign exchange, or economic diversification.
Tourism development driven solely by economic objectives can lead to problems like overdevelopment, environmental damage and local resentment. The most successful tourism destinations are those where economic goals are balanced with environmental protection, cultural preservation and community benefits. This creates a sustainable industry that can continue to deliver economic benefits for generations.