tourism has become a major source of income

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• 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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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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• Published: 24 February 2024

Modeling the link between tourism and economic development: evidence from homogeneous panels of countries

• Pablo Juan Cárdenas-García   ORCID: orcid.org/0000-0002-1779-392X 1 ,
• Juan Gabriel Brida 2 &
• Verónica Segarra 2  

Humanities and Social Sciences Communications volume  11 , Article number:  308 ( 2024 ) Cite this article

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Having previously analyzed the relationship between tourism and economic growth from distinct perspectives, this paper attempts to fill the void existing in scientific research on the relationship between tourism and economic development, by analyzing the relationship between these variables using a sample of 123 countries between 1995 and 2019. The Dumistrescu and Hurlin adaptation of the Granger causality test was used. This study takes a critical look at causal analysis with heterogeneous panels, given the substantial differences found between the results of the causal analysis with the complete panel as compared to the analysis of homogeneous country groups, in terms of their dynamics of tourism specialization and economic development. On the one hand, a one-way causal relationship exists from tourism to development in countries having low levels of tourism specialization and development. On the other hand, a one-way causal relationship exists by which development contributes to tourism in countries with high levels of development and tourism specialization.

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Introduction.

Across the world, tourism is one of the most important sectors. It has undergone exponential growth since the mid-1900s and is currently experiencing growth rates that exceed those of other economic sectors (Yazdi, 2019 ).

Today, tourism is a major source of income for countries that specialize in this sector, generating 5.8% of the global GDP (5.8 billion US$) in 2021 (UNWTO, 2022 ) and providing 5.4% of all jobs (289 million) worldwide. Although its relevance is clear, tourism data have declined dramatically due to the recent impact of the Covid-19 health crisis. In 2019, prior to the pandemic (UNWTO, 2020 ), tourism represented 10.3% of the worldwide GDP (9.6 billion US$), with the number of tourism-related jobs reaching 10.2% of the global total (333 million). With the evolution of the pandemic and the regained trust of tourists across the globe, it is estimated that by 2022, approximately 80% of the pre-pandemic figures will be attained, with a full recovery being expected by 2024 (UNWTO, 2022 ).

Given the importance of this economic activity, many countries consider tourism to be a tool enabling economic growth (Corbet et al., 2019 ; Ohlan, 2017 ; Xia et al., 2021 ). Numerous works have analyzed the relationship between increased tourism and economic growth; and some systematic reviews have been carried out on this relationship (Brida et al., 2016 ; Ahmad et al., 2020 ), examining the main contributions over the first two decades of this century. These reviews have revealed evidence in this area: in some cases, it has been found that tourism contributes to economic growth while, in other cases, the economic cycle influences tourism expansion. Moreover, other works offer evidence of a bi-directional relationship between these variables.

Distinct international organizations (OECD, 2010 ; UNCTAD, 2011 ) have suggested that not only does tourism promote economic growth, it also contributes to socio-economic advances in the host regions. This may be the real importance of tourism, since the ultimate objective of any government is to improve a country’s socio-economic development (UNDP, 1990 ).

The development of economic and other policies related to the economic scope of tourism, in addition to promoting economic growth, are also intended to improve other non-economic factors such as education, safety, and health. Improvements in these factors lead to a better life for the host population (Lee, 2017 ; Todaro and Smith, 2020 ).

Given tourism’s capacity as an instrument of economic development (Cárdenas-García et al., 2015 ), distinct institutions such as the United Nations Conference on Trade and Development, the United Nations Economic Commission for Africa, the United Nations World Tourism Organization and the World Bank, have begun funding projects that consider tourism to be a tool for improved socio-economic development, especially in less advanced countries (Carrillo and Pulido, 2019 ).

This new trend within the scientific literature establishes, firstly, that tourism drives economic growth and, secondly, that thanks to this economic growth, the population’s economic conditions may be improved (Croes et al., 2021 ; Kubickova et al., 2017 ). However, to take advantage of the economic growth generated by tourism activity to boost economic development, specific policies should be developed. These policies should determine the initial conditions to be met by host countries committed to tourism as an instrument of economic development. These conditions include regulation, tax system, and infrastructure provision (Cárdenas-García and Pulido-Fernández, 2019 ; Lejárraga and Walkenhorst, 2013 ; Meyer and Meyer, 2016 ).

Therefore, it is necessary to differentiate between the analysis of the relationship between tourism and economic growth, whereby tourism boosts the economy of countries committed to tourism, traditionally measured through an increase in the Gross Domestic Product (Alcalá-Ordóñez et al., 2023 ; Brida et al., 2016 ), and the analysis of the relationship between tourism and economic development, which measures the effect of tourism on other factors (not only economic content but also inequality, education, and health) which, together with economic criteria, serve as the foundation to measure a population’s development (Todaro and Smith, 2020 ).

However, unlike the analysis of the relationship between tourism and economic growth, few empirical studies have examined tourism’s capacity as a tool for development (Bojanic and Lo, 2016 ; Cárdenas-García and Pulido-Fernández, 2019 ; Croes, 2012 ).

To help fill this gap in the literature analyzing the relationship between tourism and economic development, this work examines the contribution of tourism to economic development, given that the relationship between tourism and economic growth has been widely analyzed by the scientific literature. Moreover, given that the literature has demonstrated that tourism contributes to economic growth, this work aims to analyze whether it also contributes to economic development, considering development in the broadest possible sense by including economic and socioeconomic variables in the multi-dimensional concept (Wahyuningsih et al., 2020 ).

Therefore, based on the results of this work, it is possible to determine whether the commitment made by many international organizations and institutions in financing tourism projects designed to improve the host population’s socioeconomic conditions, especially in countries with lower development levels, has, in fact, resulted in improved development levels.

It also presents a critical view of causal analyses that rely on heterogeneous panels, examining whether the conclusions reached for a complete panel differ from those obtained when analyzing homogeneous groups within the panel. As seen in the literature review analyzing the relationship between tourism and economic development, empirical works using panel data from several countries tend to generalize the results obtained to the entire panel, without verifying whether, in fact, they are relevant for all of the analyzed countries or only some of the same. Therefore, this study takes an innovative approach by examining the panel countries separately, analyzing the homogeneous groups distinctly.

Therefore, this article presents an empirical analysis examining whether a causal relationship exists between tourism and economic development, with development being considered to be a multi-dimensional variable including a variety of factors, distinct from economic ones. Panel data from 123 countries during the 1995–2019 period was considered to examine the causal relationship between tourism and economic development. For this, the Granger causality test was performed, applying the adaptation of this test made by Dumistrescu and Hurlin. First, a causal analysis was performed collectively for all of the countries of the panel. Then, a specific analysis was performed for each of the homogeneous groups of countries identified within the panel, formed according to levels of tourism specialization and development.

This article provides information on tourism’s capacity to serve as an instrument of development, helping to fill the gap in scientific research in this area. It critically examines the use of causal analyses based on heterogeneous samples of countries. This work offers the following main novelties as compared to prior works on the same topic: firstly, it examines the relationship between tourism and economic development, while the majority of the existing works only analyze the relationship between tourism and economic growth; secondly, it analyzes a large sample of countries, representing all of the global geographic areas, whereas the literature has only considered works from specific countries or a limited number of nations linked to a specific country in a specific geographical area, and; thirdly, it analyzes the panel both individually and collectively, for each of the homogenous groups of countries identified, permitting the adoption of specific policies for each group of countries according to the identified relationship, as compared to the majority of works that only analyze the complete panel, generalizing these results for all countries in the sample.

Overall, the results suggest that a relationship exists between tourism and development in all of the analyzed countries from the sample. A specific analysis was performed for homogeneous country groups, only finding a causal relationship between tourism and development in certain country groups. This suggests that the use of heterogeneous country samples in causal analyses may give rise to inappropriate conclusions. This may be the case, for example, when finding causality for a broad panel of countries, although, in fact, only a limited number of panel units actually explain this causal relationship.

The remainder of the document is organized as follows: the next section offers a review of the few existing scientific works on the relationship between tourism and economic development; section three describes the data used and briefly explains the methodology carried out; section four details the results obtained from the empirical analysis; and finally, the conclusions section discusses the main implications of the work, also providing some recommendations for economic policy.

Tourism and economic development

Numerous organizations currently recognize the importance of tourism as an instrument of economic development. It was not until the late 20th century, however, when the United Nations World Tourism Organization (UNWTO), in its Manila Declaration, established that the development of international tourism may “help to eliminate the widening economic gap between developed and developing countries and ensure the steady acceleration of economic and social development and progress, in particular of the developing countries” (UNWTO, 1980 ).

From a theoretical point of view, tourism may be considered an effective activity for economic development. In fact, the theoretical foundations of many works are based on the relationship between tourism and development (Ashley et al., 2007 ; Bolwell and Weinz, 2011 ; Dieke, 2000 ; Sharpley and Telfer, 2015 ; Sindiga, 1999 ).

The link between tourism and economic development may arise from the increase in tourist activity, which promotes economic growth. As a result of this economic growth, policies may be developed to improve the resident population’s level of development (Alcalá-Ordóñez and Segarra, 2023 ).

Therefore, it is essential to identify the key variables permitting the measurement of the level of economic development and, therefore, those variables that serve as a basis for analyzing whether tourism results in improved the socioeconomic conditions of the host population (Croes et al., 2021 ). Since economic development refers not only to economic-based variables, but also to others such as inequality, education, or health (Todaro and Smith, 2020 ), when analyzing the economic development concept, it has been frequently linked to human development (Pulido-Fernández and Cárdenas-García, 2021 ). Thus, we wish to highlight the major advances resulting from the publication of the Human Development Index (HDI) when measuring economic development, since it defines development as a multidimensional variable that combines three dimensions: health, education, and income level (UNDP, 2023 ).

However, despite the importance that many organizations have given to tourism as an instrument of economic development, basing their work on the relationship between these variables, a wide gap continues to exist in the scientific literature for empirical studies that examine the existence of a relationship between tourism and economic development, with very few empirical analyses analyzing this relationship.

First, a group of studies has examined the causal relationship between tourism and economic development, using heterogeneous samples, and without previously grouping the subjects based on homogeneous characteristics. Croes ( 2012 ) analyzed the relationship between tourism and economic development, measured through the HDI, finding that a bidirectional relationship exists for the cases of Nicaragua and Costa Rica. Using annual data from 2001 to 2014, Meyer and Meyer ( 2016 ) performed a collective analysis of South African regions, determining that tourism contributes to economic development. For a panel of 63 countries worldwide, and once again relying on the HDI to define economic development, it was determined that tourism contributes to economic development. Kubickova et al. ( 2017 ), using annual data for the 1995–2007 period, analyzed Central America and Caribbean nations, determining the existence of this relationship by which tourism influences the level of economic development and that the level of development conditions the expansion of tourism. Another work examined nine micro-states of America, Europe, and Africa (Fahimi et al., 2018 ); and 21 European countries in which human capital was measured, as well as population density and tourism income, analyzing panel data and determining that tourism results in improved economic development. Finally, within this first group of works, Chattopadhyay et al. ( 2022 ), using a broad panel of destinations, (133 countries from all geographic areas of the globe) determined that there is no relationship between tourism and economic development.

Studies performed with large country samples that attempt to determine the causal relationship between tourism and economic development by analyzing countries that do not necessarily share homogeneous characteristics, may lead to erroneous conclusions, establishing causality (or not) for panel sets even when this situation is actually explained by a small number of panel units.

Second, another group of studies have analyzed the causal relationship between tourism and economic development, considering the previous limitation, and has grouped the subjects based on their homogeneous characteristics. Cárdenas-García et al. ( 2015 ) used annual data from 1990–2010, in a collective analysis of 144 countries, making a joint panel analysis and then examining two homogeneous groups of countries based on their level of economic development. They determined that tourism contributes to economic development, but only in the most developed group of countries. They determined that tourism contributes to economic development, both for the total sample and for the homogeneous groups analyzed. Pulido-Fernández and Cárdenas-García ( 2021 ), using annual data for the 1993–2017 period, performed a joint analysis of 143 countries, followed by a specific analysis for three groups of countries sharing homogeneous characteristics in terms of tourism growth and development level. They determined that tourism contributes to economic development and that development level conditions tourism growth in the most developed countries.

Finally, another group of studies has analyzed the causal relationship between tourism and economic development in specific cases examined on an individual basis. In a specific analysis by Aruba et al. ( 2016 ), it was determined that tourism contributes to human development. Analyzing Malaysia, Tan et al. ( 2019 ) determined that tourism contributes to development, but only over the short term, and that level of development does not influence tourism growth. Similar results were obtained by Boonyasana and Chinnakum ( 2020 ) in an analysis carried out in Thailand. In this case of Thailand (Boonyasana and Chinnakum, 2020 ), which relied on the HDI, the relationship with economic growth was also analyzed, finding that an increase in tourism resulted in improved economic development. Finally, Croes et al. ( 2021 ), in a specific analysis of Poland, determined that tourism does not contribute to development.

As seen from the analysis of the most relevant publications detailed in Table 1 , few empirical works have considered the relationship between tourism and economic development, in contrast to the numerous works from the scientific literature that have examined the relationship between tourism and economic growth. Most of the works that have empirically analyzed the relationship between tourism and economic development have determined that tourism positively influences the improved economic development in host destinations. To a lesser extent, some studies have found a bidirectional relationship between these variables (Croes, 2012 ; Kubickova et al., 2017 ; Pulido-Fernández and Cárdenas-García, 2021 ) while others have found no relationship between tourism and economic development (Chattopadhyay et al., 2022 ; Croes et al., 2021 ).

Furthermore, in empirical works relying on panel data, the results have tended to be generalized to the entire panel, suggesting that tourism improves economic development in all countries that are part of the panel. This has been the case in all of the examined works, with the exception of two studies that analyzed the panel separately (Cárdenas-García et al., 2015 ; Pulido-Fernández and Cárdenas-García, 2021 ).

Thus, it may be suggested that the use of very large country panels and, therefore, including very heterogeneous destinations, as was the case in the works of Biagi et al. ( 2017 ) using a panel of 63 countries, as well as that of Chattopadhyay et al. ( 2022 ) working with a panel of 133 countries, may lead to error, given that this relationship may only arise in certain destinations of the panel, although it is generalized to the entire panel.

This work serves to fill this gap in the literature by analyzing the panel both collectively and separately, for each of the homogenous groups of countries that have been previously identified.

The lack of relevant works on the relationship between tourism and development, and of studies using causal analyses to examine these variables based on heterogeneous panels, may lead to the creation of rash generalizations regarding the entirety of the analyzed countries. Thus, conclusions may be reached that are actually based on only specific panel units. Therefore, we believe that this study is justified.

Methodological approach

Given the objective of this study, to determine whether a causal relationship exists between tourism and socio-economic development, it is first necessary to identify the variables necessary to measure tourism activity and development level. Thus, the indicators are highly relevant, given that the choice of indicator may result in distinct results (Rosselló-Nadal and He, 2020 ; Song and Wu, 2021 ).

Table 2 details the measurement variables used in this work. Specifically, the following indicators have been used in this paper to measure tourism and economic development:

Measurement of tourist activity. In this work, we decided to consider tourism specialization, examining the number of international tourists received by a country with regard to its population size as the measurement variable.

This information on international tourists at a national level has been provided annually by the United Nations World Tourism Organization since 1995 (UNWTO, 2023 ). This variable has been relativized based on the country’s population, according to information provided by the World Bank on the residents of each country (WB, 2023 ).

Tourism specialization is considered to be the level of tourism activity, specifically, the arrival of tourists, relativized based on the resident population, which allows for comparisons to be made between countries. It accurately measures whether or not a country is specialized in this economic activity. If the variable is used in absolute values, for example, the United States receives more tourists than Malta, so based on this variable it may be that the first country is more touristic than the second. However, in reality, just the opposite happens, Malta is a country in which tourist activity is more important for its economy than it is in the United States, so the use of tourist specialization as a measurement variable classifies, correctly, both Malta as a country with high tourism specialization and to the United States as a country with low tourism specialization.

Therefore, most of the scientific literature establishes the need to use the total number of tourists relativized per capita, given that this allows for the determination of the level of tourism specialization of a tourism destination (Dritsakis, 2012 ; Tang and Abosedra, 2016 ); furthermore, this indicator has been used in works analyzing the relationship between tourism and economic development (for example, Biagi et al., 2017 ; Boonyasana and Chinnakum; 2020 ; Croes et al., 2021 ; Fahimi et al., 2018 ).

Although some works have used other variables to measure tourism, such as tourism income, exports, or tourist spending, these variables are not available for all of the countries making up the panel, so the sample would have been significantly reduced. Furthermore, the data available for these alternative variables do not come from homogeneous databases, and therefore cannot be compared.

Measurement of economic development. In this work, the Human Development Index has been used to measure development.

This information is provided by the United Nations Development Program, which has been publishing it annually at the country level since 1990 (UNDP, 2023 ).

The selection of this indicator to measure economic development is in line with other works that have defended its use to measure the impact on development level (for example, Jalil and Kamaruddin, 2018 ; Sajith and Malathi, 2020 ); this indicator has also been used in works analyzing the relationship between tourism and economic development (for example, Meyer and Meyer, 2016 ; Kubickova et al., 2017 ; Pulido-Fernández and Cárdenas-García, 2021 ).

Although some works have used other variables, such as poverty or inequality, to measure development, these variables are not available for all of the countries forming the panel. Therefore the sample would have been considerably reduced and the data available for these alternative variables do not come from homogenous databases, and therefore comparisons cannot be made.

These indicators are available for a total of 123 countries, across the globe. Thus, these countries form part of the sample analyzed in this study.

As for the time frame considered in this work, two main issues were relevant when determining this period: on the one hand, there is an initial time restriction for the analyzed series, given that information on the arrival of international tourists is only available as of 1995, the first year when this information was provided by the UNWTO. On the other hand, it was necessary to consider the effect of the Covid-19 pandemic and the resulting tourism sector crisis, which also affected the global economy as a whole. Therefore, our time series ended as of 2019, with the overall time frame including data from 1995 to 2019, a 25-year period.

Previous considerations

Caution should be taken when considering causality tests to determine the relationships between two variables, especially in cases in which large heterogeneous samples are used. This is due to the fact that generalized conclusions may be reached when, in fact, the causality is only produced by some of the subjects of the analyzed sample. This study is based on this premise. While heterogeneity in a sample is clearly a very relevant aspect, in some cases, it may lead to conclusions that are less than appropriate.

In this work, a collective causal analysis has been performed on all of the countries of the panel, which consists of 123 countries. However, given that it is a broad sample including countries having major differences in terms of size, region, development level, or tourism performance, the conclusions obtained from this analysis may lead to the generalization of certain conclusions for the entire sample set, when in fact, these relationships may only be the case for a very small portion of the sample. This has been the case in other works that have made generalized conclusions from relatively large samples in which the sample’s homogeneity regarding certain patterns was not previously verified (Badulescu et al., 2021 ; Ömer et al., 2018 ; Gedikli et al., 2022 ; Meyer and Meyer, 2016 ; Xia et al., 2021 ).

Therefore, after performing a collective analysis of the entire panel, the causal relationship between tourism and development was then determined for homogeneous groups of countries that share common patterns of tourism performance and economic development level, to analyze whether the generalized conclusions obtained in the previous section differ from those made for the individual groups. This was in line with strategies that have been used in other works that have grouped countries based on tourism performance (Min et al., 2016 ) or economic development level (Cárdenas-García et al., 2015 ), prior to engaging in causal analyses. To classify the countries into homogeneous groups based on tourism performance and development level, a previous work was used (Brida et al., 2023 ) which considered the same sample of 123 countries, relying on the same data to measure tourism and development level and the same time frame. This guarantees the coherence of the results obtained in this work.

From the entire panel of 123 countries, a total of six country groups were identified as having a similar dynamic of tourism and development, based on qualitative dynamic behavior. In addition, an “outlier” group of countries was found. These outlier countries do not fit into any of the groups (Brida et al., 2023 ). The three main groups of countries were considered, discarding three other groups due to their small size. Table 3 presents the group of countries sharing similar dynamics in terms of tourism performance and economic development level.

Applied methodology

As indicated above, this work uses the Tourist Specialization Rate (TIR) and the Human Development Index (HDI) to measure tourism and economic development, respectively. In both cases, we work with the natural logarithm (l.TIR and l.HDI) as well as the first differences between the variables (d.l.TIR and d.l.HDI), which measure the growth of these variables.

A complete panel of countries is used, consisting of 123 countries. The three main groups indicated in the previous section are also considered (the first of the groups contains 36 countries, the second contains 29 and the last group contains 43).

The Granger causality test ( 1969 ) is used to analyze the relationships between tourism specialization and development level; this test shows if one variable predicts the other, but this should not be confused with a cause-effect relationship.

In the context of panel data, different tests may be used to analyze causality. Most of these tests differ with regard to the assumptions of homogeneity of the panel unit coefficients. While the standard form of the Granger causality test for panels assumes that all of the coefficients are equal between the countries forming part of the panel, the Dumitrescu and Hurlin test (2012) considers that the coefficients are different between the countries forming part of the panel. Therefore, in this work, Granger’s causality is analyzed using the Dumitrescu and Hurlin test (2012). In this test, the null hypothesis is of no homogeneous causality; in other words, according to the null hypothesis, causality does not exist for any of the countries of the analyzed sample whereas, according to the alternative hypothesis, in which the regression model may be different in the distinct countries, causality is verified for at least some countries. The approach used by Dumitrescu and Hurlin ( 2012 ) is more flexible in its assumptions since although the coefficients of the regressions proposed in the tests are constant over time, the possibility that they may differ for each of the panel elements is accepted. This approach has more realistic assumptions, given that countries exhibit different behaviors. One relevant aspect of this type of tests is that they offer no information on which countries lead to the rejection of the lack of causality.

Given the specific characteristics of this type of tests, the presence of very heterogeneous samples may lead to inappropriate conclusions. For example, causality may be assumed for a panel of countries, when only a few of the panel’s units actually explain this relationship. Therefore, this analysis attempts to offer novel information on this issue, revealing that the conclusions obtained for the complete set of 123 countries are not necessarily the same as those obtained for each homogeneous group of countries when analyzed individually.

Given the nature of the variables considered in this work, specifically, regarding tourism, it is expected that a shock taking place in one country may be transmitted to other countries. Therefore, we first analyze the dependency between countries, since this may lead to biases (Pesaran, 2006 ). The Pesaran cross-sectional dependence test (2004) is used for the total sample and for each of the three groups individually.

First, a dependence analysis is performed for the countries of the sample, verifying the existence of dependence between the panel subjects. A cross-sectional dependence test (Pesaran, 2004 ) is used, first for the overall set of countries in the sample and second, for each of the groups of countries sharing homogeneous characteristics.

The results are presented in Table 4 , indicating that the test is statistically significant for the two variables, both for all of the countries in the sample and for each of the homogeneous country clusters, for the variables taken in logarithms as well as their first differences.

Upon rejecting the null hypothesis of non-cross-sectional dependence, it is assumed that a shock occurs in a country that may be transmitted to other countries in the sample. In fact, the lack of dependence between the variables, both tourism and development, is natural in this type of variables, given the economic cycle through the globalization of the economic activity, common regions visited by tourists, the spillover effect, etc.

Second, the stationary nature of the series is tested, given that cross-sectional dependence has been detected between the variables. First-generation tests may present certain biases in the rejection of the null hypothesis since first-generation unit root tests do not permit the inclusion of dependence between countries (Pesaran, 2007 ). On the other hand, second-generation tests permit the inclusion of dependence and heterogeneity. Therefore, for this analysis, the augmented IPS test (CIPS) proposed by Pesaran ( 2007 ) is used. This second-generation unit root test is the most appropriate for this case, given the cross-sectional dependence.

The results are presented in Table 5 , showing the statistics of the CIPS test for both the overall set of countries in the sample and in each of the homogeneous clusters of countries. The results are presented for models with 1, 2, and 3 delays, considering both the variables in the logarithm and their first differences.

As observed, the null hypothesis of unit root is not rejected for the variables in levels, but it is rejected for the first differences. This result is found in all of the cases, for both the total sample and for each of the homogeneous groups, with a significance of 1%. Therefore, the variables are stationary in their first differences, that is, the variables are integrated at order 1. Given that the causality test requires stationary variables, in this work it is used with the variation or growth rate of the variables, that is, the variable at t minus the variable at t−1.

Finally, to analyze Granger’s causality, the test by Dumitrescu and Hurlin ( 2012 ) is used. This test is used to analyze the causal relationship in both directions; that is, whether tourism contributes to economic development and whether the economic development level conditions tourism specialization. Statistics are calculated considering models with 1, 2, and 3 delays. Considering that cross-sectional dependence exists, the p-values are corrected using bootstrap techniques (making 500 replications). Given that the test requires stationary variables, primary differences of both variables were considered.

Table 6 presents the result of the Granger causality analysis using the Dumitrescu and Hurlin test (2012), considering the null hypothesis that tourism does not condition development level, either for all of the countries or for each homogeneous country cluster.

For the entire sample of countries, the results suggest that the null hypothesis of no causality from tourism to development was rejected when considering 3 delays (in other works analyzing the relationship between tourism and development, the null hypothesis was rejected with a similar level of delay: Rivera ( 2017 ) when considering 3–4 delays or Ulrich et al. ( 2018 ) when considering 3 delays). This suggests that for the entire panel, one-way causality exists whereby tourism influences economic development, demonstrating that tourism specialization contributes positively to improving the economic development of countries opting for tourism development. This is in line with the results of Meyer and Meyer ( 2016 ), Ridderstaat et al. ( 2016 ); Biagi et al. ( 2017 ); Fahimi et al. ( 2018 ); Tan et al. ( 2019 ), or Boonyasana and Chinnakum ( 2020 ).

However, the previous conclusion is very general, given that it is based on a very large sample of countries. Therefore, it may be erroneous to generalize that tourism is a tool for development. In fact, the results indicate that, when analyzing causality by homogeneous groups of countries, sharing similar dynamics in both tourism and development, the null hypothesis of no causality from tourism to development is only rejected for the group C countries, when considering three delays. Therefore, the development of generalized policies to expand tourism in order to improve the socioeconomic conditions of any destination type should consider that this relationship between tourism and economic development does not occur in all cases. Thus, it should first be determined if the countries opting for this activity have certain characteristics that will permit a positive relationship between said variables.

In other words, it may be a mistake to generalize that tourism contributes to economic development for all countries, even though a causal relationship exists for the entire panel. Instead, it should be understood that tourism permits an improvement in the level of development only in certain countries, in line with the results of Cárdenas-García et al. ( 2015 ) or Pulido-Fernández and Cárdenas-García ( 2021 ). In this specific work, this positive relationship between tourism and development only occurs in countries from group C, which are characterized by a low level of tourism specialization and a low level of development. Some works have found similar results for countries from group C. For example, Sharma et al. ( 2020 ) found the same relationship for India, while Nonthapot ( 2014 ) had similar findings for certain countries in Asia and the Pacific, which also made up group C. Some recent works have analyzed the relationship between tourism specialization and economic growth, finding similar results. This has been the case with Albaladejo et al. ( 2023 ), who found a relationship from tourism to economic growth only for countries where income is low, and the tourism sector is not yet developed.

These countries have certain limitations since even when tourism contributes to improved economic development, their low levels of tourism specialization do not allow them to reach adequate host population socioeconomic conditions. Therefore, investments in tourism are necessary there in order to increase tourism specialization levels. This increase in tourism may allow these countries to achieve development levels that are similar to other countries having better population conditions.

Therefore, in this group, consisting of 43 countries, a causal relationship exists, given that these countries are characterized by a low level of tourism specialization. However, the weakness of this activity, due to its low relevance in the country, prevents it from increasing the level of economic development. In these countries (details of these countries can be found in Table 3 , specifically, the countries included in Group C), policymakers have to develop policies to improve tourism infrastructure as a prior step to improving their levels of development.

On the other hand, in Table 7 , the results of Granger’s causal analysis based on the Dumitrescu and Hurlin test (2012) are presented, considering the null hypothesis that development level does not condition an increase in tourism, both in the overall sample set and in each of the homogeneous country clusters.

The results indicate that, for the entire country sample, the null hypothesis of no causality from development to tourism is not rejected, for any type of delay. This suggests that, for the entire panel, one-way causality does not exist, with level of development influencing the level of tourism specialization. This is in line with the results of Croes et al. ( 2021 ) in a specific analysis in Poland.

Once again, this conclusion is quite general, given that it has been based on a very broad sample of countries. Therefore, it may be erroneous to generalize that the development level does not condition tourism specialization. Past studies using a large panel of countries, such as the work of Chattopadhyay et al. ( 2022 ) analyzing panel data from 133 countries, have been generalized to all of the analyzed countries, suggesting that economic development level does not condition the arrival of tourists to the destination, although, in fact, this relationship may only exist in specific countries within the analyzed panel.

In fact, the results indicate that, when analyzing causality by homogeneous country groups sharing a similar dynamic, for both tourism and development, the null hypothesis of no causality from development to tourism is only rejected for country group A when considering 2–3 delays. Although the statistics of the test differ, when the sample’s time frame is small, as in this case, the Z-bar tilde statistic is more appropriate.

Thus, development level influences tourism growth in Group A countries, which are characterized by a high level of development and tourism specialization, in accordance with the prior results of Pulido-Fernández and Cárdenas-García ( 2021 ).

These results, suggesting that tourism is affected by economic development level, but only in the most developed countries, imply that the existence of better socioeconomic conditions in these countries, which tend to have better healthcare systems, infrastructures, levels of human resource training, and security, results in an increase in tourist arrivals to these countries. In fact, when traveling to a specific tourist destination, if this destination offers attractive factors and a higher level of economic development, an increase in tourist flows was fully expected.

In this group, consisting of 36 countries, the high development level, that is, the proper provision of socio-economic factors in their economic foundations (training, infrastructures, safety, health, etc.) has led to the attraction of a large number of tourists to their region, making their countries having high tourism specialization.

Although international organizations have recognized the importance of tourism as an instrument of economic development, based on the theoretical relationship between these two variables, few empirical studies have considered the consequences of the relationship between tourism and development.

Furthermore, some hasty generalizations have been made regarding the analysis of this relationship and the analysis of the relationship of tourism with other economic variables. Oftentimes, conclusions have been based on heterogeneous panels containing large numbers of subjects. This may lead to erroneous results interpretation, basing these results on the entire panel when, in fact, they only result from specific panel units.

Given this gap in the scientific literature, this work attempts to analyze the relationship between tourism and economic development, considering the panel data in a complete and separate manner for each of the previously identified country groups.

The results highlight the need to adopt economic policies that consider the uniqueness of each of the countries that use tourism as an instrument to improve their socioeconomic conditions, given that the results differ according to the specific characteristics of the analyzed country groups.

This work provides precise results regarding the need for policymakers to develop public policies to ensure that tourism contributes to the improvement of economic development, based on the category of the country using this economic activity to achieve greater levels of economic development.

Specifically, this work has determined that tourism contributes to economic development, but only in countries that previously had a lower level of tourism specialization and were less developed. This highlights the need to invest in tourism to attract more tourists to these countries to increase their economic development levels. Countries having major natural attraction resources or factors, such as the Dominican Republic, Egypt, India, Morocco, and Vietnam, need to improve their positioning in the international markets in order to attain a higher level of tourism specialization, which will lead to improved development levels.

Furthermore, the results of this study suggest that a greater past economic development level of a country will help attract more tourists to these countries, highlighting the need to invest in security, infrastructures, and health in order for these destinations to be considered attractive and increase tourist arrival. In fact, given their increased levels of development, countries such as Spain, Greece, Italy, Qatar, and Uruguay have become attractive to tourists, with soaring numbers of visitors and high levels of tourism specialization.

Therefore, the analysis of the relationship between tourism and economic development should focus on the differentiated treatment of countries in terms of their specific characteristics, since working with panel data with large samples and heterogenous characteristics may lead to incorrect results generalizations to all of the analyzed destinations, even though the obtained relationship in fact only takes place in certain countries of the sample.

Conclusions and policy implications

Within this context, the objective of this study is twofold: on the one hand, it aims to contribute to the lack of empirical works analyzing the causal relationship between tourism and economic development using Granger’s causality analysis for a broad sample of countries from across the globe. On the other hand, it critically examines the use of causality analysis in heterogeneous samples, by verifying that the results for the panel set differ from the results obtained when analyzing homogeneous groups in terms of tourism specialization and development level.

In fact, upon analyzing the causal relationship from tourism to development, and the causal relationship from development to tourism, the results from the entire panel, consisting of 123 countries, differ from those obtained when analyzing causality by homogeneous country groups, in terms of tourism specialization and economic development dynamics of these countries.

On the one hand, a one-way causality relationship is found to exist, whereby tourism influences economic development for the entire sample of countries, although this conclusion cannot be generalized, since this relationship is only explained by countries belonging to Group C (countries with low levels of tourism specialization and low development levels). This indicates that, although a causal relationship exists by which tourism contributes to economic development in these countries, the low level of tourism specialization does not permit growth to appropriate development levels.

The existence of a causal relationship whereby the increase in tourism precedes the improvement of economic development in this group of countries having a low level of tourism specialization and economic development, suggests the appropriateness of the focus by distinct international organizations, such as the United Nations Conference on Trade and Development or the United Nations Economic Commission for Africa, on funding tourism projects (through the provision of tourism infrastructure, the stimulation of tourism supply, or positioning in international markets) in countries with low economic development levels. This work has demonstrated that investment in tourism results in the attracting of a greater flow of tourists, which will contribute to improved economic development levels.

Therefore, both international organizations financing projects and public administrations in these countries should increase the funding of projects linked to tourism development, in order to increase the flow of tourism to these destinations. This, given that an increase in tourism specialization suggests an increased level of development due to the demonstrated existence of a one-way causal relationship from tourism to development in these countries, many of which form part of the group of so-called “least developed” countries. However, according to the results obtained in this work, this relationship is not instantaneous, but rather, a certain delay exists in order for economic development to improve as a result of the increase in tourism. Therefore, public managers must adopt a medium and long-term vision of tourism activity as an instrument of development, moving away from short-term policies seeking immediate results, since this link only occurs over a broad time horizon.

On the other hand, this study reveals that a one-way causal relationship does not exist, by which the level of development influences tourism specialization level for the entire sample of countries. However, this conclusion, once again, cannot be generalized given that in countries belonging to Group A (countries with a high development level and a high tourism specialization level), a high level of economic development determines a higher level of tourism specialization. This is because the socio-economic structure of these countries (infrastructures, training or education, health, safety, etc.) permits their shaping as attractive tourist destinations, thereby increasing the number of tourists visiting them.

Therefore, investments made by public administrations to improve these factors in other countries that currently do not display this causal relationship implies the creation of the necessary foundations to increase their tourism specialization and, therefore, as shown in other works, tourism growth will permit economic growth, with all of the associated benefits for these countries.

Therefore, to attract tourist flows, it is not only important for a country to have attractive factors or resources, but also to have an adequate level of prior development. In other words, the tourists should perceive an adequate level of security in the destination; they should be able to use different infrastructures such as roads, airports, or the Internet; and they should receive suitable services at the destination from personnel having an appropriate level of training. The most developed countries, which are the destinations having the greatest endowment of these resources, are the ones that currently receive the most tourist flows thanks to the existence of these factors.

Therefore, less developed countries that are committed to tourism as an instrument to improve economic development should first commit to the provision of these resources if they hope to increase tourist flows. If this increase in tourism takes place in these countries, their economic development levels have been demonstrated to improve. However, since these countries are characterized by low levels of resources, cooperation by organizations financing the necessary investments is key to providing them with these resources.

Thus, a critical perspective is necessary when considering the relationship between tourism and economic development based on global causal analysis using heterogeneous samples with numerous subjects. As in this case, carrying out analyses on homogeneous groups may offer interesting results for policymakers attempting to suitably manage population development improvements due to tourism growth and tourism increases resulting from higher development levels.

One limitation of this work is its national scope since evidence suggests that tourism is a regional and local activity. Therefore, it may be interesting to apply this same approach on a regional level, using previously identified homogeneous groups.

And given that the existence of a causal relationship (in either direction) between tourism and development has only been determined for a specific set of countries, future works could consider other country-specific factors that may determine this causal relationship, in addition to the dynamics of tourism specialization and development level.

Data availability

The datasets generated during and/or analyzed during the current study are available from the corresponding author upon reasonable request.

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Cárdenas-García, P.J., Brida, J.G. & Segarra, V. Modeling the link between tourism and economic development: evidence from homogeneous panels of countries. Humanit Soc Sci Commun 11 , 308 (2024). https://doi.org/10.1057/s41599-024-02826-8

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Article contents

The role of tourism in sustainable development.

• Robert B. Richardson Robert B. Richardson Community Sustainability, Michigan State University
• https://doi.org/10.1093/acrefore/9780199389414.013.387
• Published online: 25 March 2021

Sustainable development is the foundational principle for enhancing human and economic development while maintaining the functional integrity of ecological and social systems that support regional economies. Tourism has played a critical role in sustainable development in many countries and regions around the world. In developing countries, tourism development has been used as an important strategy for increasing economic growth, alleviating poverty, creating jobs, and improving food security. Many developing countries are in regions that are characterized by high levels of biological diversity, natural resources, and cultural heritage sites that attract international tourists whose local purchases generate income and support employment and economic development. Tourism has been associated with the principles of sustainable development because of its potential to support environmental protection and livelihoods. However, the relationship between tourism and the environment is multifaceted, as some types of tourism have been associated with negative environmental impacts, many of which are borne by host communities.

The concept of sustainable tourism development emerged in contrast to mass tourism, which involves the participation of large numbers of people, often in structured or packaged tours. Mass tourism has been associated with economic leakage and dependence, along with negative environmental and social impacts. Sustainable tourism development has been promoted in various ways as a framing concept in contrast to these economic, environmental, and social impacts. Some literature has acknowledged a vagueness of the concept of sustainable tourism, which has been used to advocate for fundamentally different strategies for tourism development that may exacerbate existing conflicts between conservation and development paradigms. Tourism has played an important role in sustainable development in some countries through the development of alternative tourism models, including ecotourism, community-based tourism, pro-poor tourism, slow tourism, green tourism, and heritage tourism, among others that aim to enhance livelihoods, increase local economic growth, and provide for environmental protection. Although these models have been given significant attention among researchers, the extent of their implementation in tourism planning initiatives has been limited, superficial, or incomplete in many contexts.

The sustainability of tourism as a global system is disputed among scholars. Tourism is dependent on travel, and nearly all forms of transportation require the use of non-renewable resources such as fossil fuels for energy. The burning of fossil fuels for transportation generates emissions of greenhouse gases that contribute to global climate change, which is fundamentally unsustainable. Tourism is also vulnerable to both localized and global shocks. Studies of the vulnerability of tourism to localized shocks include the impacts of natural disasters, disease outbreaks, and civil unrest. Studies of the vulnerability of tourism to global shocks include the impacts of climate change, economic crisis, global public health pandemics, oil price shocks, and acts of terrorism. It is clear that tourism has contributed significantly to economic development globally, but its role in sustainable development is uncertain, debatable, and potentially contradictory.

• conservation
• economic development
• environmental impacts
• sustainable development
• sustainable tourism
• tourism development

Introduction

Sustainable development is the guiding principle for advancing human and economic development while maintaining the integrity of ecosystems and social systems on which the economy depends. It is also the foundation of the leading global framework for international cooperation—the 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs) (United Nations, 2015 ). The concept of sustainable development is often associated with the publication of Our Common Future (World Commission on Environment and Development [WCED], 1987 , p. 29), which defined it as “paths of human progress that meet the needs and aspirations of the present generation without compromising the ability of future generations to meet their needs.” Concerns about the environmental implications of economic development in lower income countries had been central to debates about development studies since the 1970s (Adams, 2009 ). The principles of sustainable development have come to dominate the development discourse, and the concept has become the primary development paradigm since the 1990s.

Tourism has played an increasingly important role in sustainable development since the 1990s, both globally and in particular countries and regions. For decades, tourism has been promoted as a low-impact, non-extractive option for economic development, particularly for developing countries (Gössling, 2000 ). Many developing countries have managed to increase their participation in the global economy through development of international tourism. Tourism development is increasingly viewed as an important tool in increasing economic growth, alleviating poverty, and improving food security. Tourism enables communities that are poor in material wealth, but rich in history and cultural heritage, to leverage their unique assets for economic development (Honey & Gilpin, 2009 ). More importantly, tourism offers an alternative to large-scale development projects, such as construction of dams, and to extractive industries such as mining and forestry, all of which contribute to emissions of pollutants and threaten biodiversity and the cultural values of Indigenous Peoples.

Environmental quality in destination areas is inextricably linked with tourism, as visiting natural areas and sightseeing are often the primary purpose of many leisure travels. Some forms of tourism, such as ecotourism, can contribute to the conservation of biodiversity and the protection of ecosystem functions in destination areas (Fennell, 2020 ; Gössling, 1999 ). Butler ( 1991 ) suggests that there is a kind of mutual dependence between tourism and the environment that should generate mutual benefits. Many developing countries are in regions that are characterized by high levels of species diversity, natural resources, and protected areas. Such ideas imply that tourism may be well aligned with the tenets of sustainable development.

However, the relationship between tourism and the environment is complex, as some forms of tourism have been associated with negative environmental impacts, including greenhouse gas emissions, freshwater use, land use, and food consumption (Butler, 1991 ; Gössling & Peeters, 2015 ; Hunter & Green, 1995 ; Vitousek et al., 1997 ). Assessments of the sustainability of tourism have highlighted several themes, including (a) parks, biodiversity, and conservation; (b) pollution and climate change; (c) prosperity, economic growth, and poverty alleviation; (d) peace, security, and safety; and (e) population stabilization and reduction (Buckley, 2012 ). From a global perspective, tourism contributes to (a) changes in land cover and land use; (b) energy use, (c) biotic exchange and extinction of wild species; (d) exchange and dispersion of diseases; and (e) changes in the perception and understanding of the environment (Gössling, 2002 ).

Research on tourism and the environment spans a wide range of social and natural science disciplines, and key contributions have been disseminated across many interdisciplinary fields, including biodiversity conservation, climate science, economics, and environmental science, among others (Buckley, 2011 ; Butler, 1991 ; Gössling, 2002 ; Lenzen et al., 2018 ). Given the global significance of the tourism sector and its environmental impacts, the role of tourism in sustainable development is an important topic of research in environmental science generally and in environmental economics and management specifically. Reviews of tourism research have highlighted future research priorities for sustainable development, including the role of tourism in the designation and expansion of protected areas; improvement in environmental accounting techniques that quantify environmental impacts; and the effects of individual perceptions of responsibility in addressing climate change (Buckley, 2012 ).

Tourism is one of the world’s largest industries, and it has linkages with many of the prime sectors of the global economy (Fennell, 2020 ). As a global economic sector, tourism represents one of the largest generators of wealth, and it is an important agent of economic growth and development (Garau-Vadell et al., 2018 ). Tourism is a critical industry in many local and national economies, and it represents a large and growing share of world trade (Hunter, 1995 ). Global tourism has had an average annual increase of 6.6% over the past half century, with international tourist arrivals rising sharply from 25.2 million in 1950 to more than 950 million in 2010 . In 2019 , the number of international tourists reached 1.5 billion, up 4% from 2018 (Fennell, 2020 ; United Nations World Tourism Organization [UNWTO], 2020 ). European countries are host to more than half of international tourists, but since 1990 , growth in international arrivals has risen faster than the global average, in both the Middle East and the Asia and Pacific region (UNWTO, 2020 ).

The growth in global tourism has been accompanied by an expansion of travel markets and a diversification of tourism destinations. In 1950 , the top five travel destinations were all countries in Europe and the Americas, and these destinations held 71% of the global travel market (Fennell, 2020 ). By 2002 , these countries represented only 35%, which underscores the emergence of newly accessible travel destinations in Africa, Asia, the Middle East, and the Pacific Rim, including numerous developing countries. Over the past 70 years, global tourism has grown significantly as an economic sector, and it has contributed to the economic development of dozens of nations.

Given the growth of international tourism and its emergence as one of the world’s largest export sectors, the question of its impact on economic growth for the host countries has been a topic of great interest in the tourism literature. Two hypotheses have emerged regarding the role of tourism in the economic growth process (Apergis & Payne, 2012 ). First, tourism-led growth hypothesis relies on the assumption that tourism is an engine of growth that generates spillovers and positive externalities through economic linkages that will impact the overall economy. Second, the economic-driven tourism growth hypothesis emphasizes policies oriented toward well-defined and enforceable property rights, stable political institutions, and adequate investment in both physical and human capital to facilitate the development of the tourism sector. Studies have concluded with support for both the tourism-led growth hypothesis (e.g., Durbarry, 2004 ; Katircioglu, 2010 ) and the economic-led growth hypothesis (e.g., Katircioglu, 2009 ; Oh, 2005 ), whereas other studies have found support for a bidirectional causality for tourism and economic growth (e.g., Apergis & Payne, 2012 ; Lee & Chang, 2008 ).

The growth of tourism has been marked by an increase in the competition for tourist expenditures, making it difficult for destinations to maintain their share of the international tourism market (Butler, 1991 ). Tourism development is cyclical and subject to short-term cycles and overconsumption of resources. Butler ( 1980 ) developed a tourist-area cycle of evolution that depicts the number of tourists rising sharply over time through periods of exploration, involvement, and development, before eventual consolidation and stagnation. When tourism growth exceeds the carrying capacity of the area, resource degradation can lead to the decline of tourism unless specific steps are taken to promote rejuvenation (Butler, 1980 , 1991 ).

The potential of tourism development as a tool to contribute to environmental conservation, economic growth, and poverty reduction is derived from several unique characteristics of the tourism system (UNWTO, 2002 ). First, tourism represents an opportunity for economic diversification, particularly in marginal areas with few other export options. Tourists are attracted to remote areas with high values of cultural, wildlife, and landscape assets. The cultural and natural heritage of developing countries is frequently based on such assets, and tourism represents an opportunity for income generation through the preservation of heritage values. Tourism is the only export sector where the consumer travels to the exporting country, which provides opportunities for lower-income households to become exporters through the sale of goods and services to foreign tourists. Tourism is also labor intensive; it provides small-scale employment opportunities, which also helps to promote gender equity. Finally, there are numerous indirect benefits of tourism for people living in poverty, including increased market access for remote areas through the development of roads, infrastructure, and communication networks. Nevertheless, travel is highly income elastic and carbon intensive, which has significant implications for the sustainability of the tourism sector (Lenzen et al., 2018 ).

Concerns about environmental issues appeared in tourism research just as global awareness of the environmental impacts of human activities was expanding. The United Nations Conference on the Human Environment was held in Stockholm in 1972 , the same year as the publication of The Limits to Growth (Meadows et al., 1972 ), which highlighted the concerns about the implications of exponential economic and population growth in a world of finite resources. This was the same year that the famous Blue Marble photograph of Earth was taken by the crew of the Apollo 17 spacecraft (Höhler, 2015 , p. 10), and the image captured the planet cloaked in the darkness of space and became a symbol of Earth’s fragility and vulnerability. As noted by Buckley ( 2012 ), tourism researchers turned their attention to social and environmental issues around the same time (Cohen, 1978 ; Farrell & McLellan, 1987 ; Turner & Ash, 1975 ; Young, 1973 ).

The notion of sustainable development is often associated with the publication of Our Common Future , the report of the World Commission on Environment and Development, also known as the Brundtland Commission (WCED, 1987 ). The report characterized sustainable development in terms of meeting “the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987 , p. 43). Four basic principles are fundamental to the concept of sustainability: (a) the idea of holistic planning and strategy making; (b) the importance of preserving essential ecological processes; (c) the need to protect both human heritage and biodiversity; and (d) the need to develop in such a way that productivity can be sustained over the long term for future generations (Bramwell & Lane, 1993 ). In addition to achieving balance between economic growth and the conservation of natural resources, there should be a balance of fairness and opportunity between the nations of the world.

Although the modern concept of sustainable development emerged with the publication of Our Common Future , sustainable development has its roots in ideas about sustainable forest management that were developed in Europe during the 17th and 18th centuries (Blewitt, 2015 ; Grober, 2007 ). Sustainable forest management is concerned with the stewardship and use of forests in a way that maintains their biodiversity, productivity, and regeneration capacity as well as their potential to fulfill society’s demands for forest products and benefits. Building on these ideas, Daly ( 1990 ) offered two operational principles of sustainable development. First, sustainable development implies that harvest rates should be no greater than rates of regeneration; this concept is known as maximum sustainable yield. Second, waste emission rates should not exceed the natural assimilative capacities of the ecosystems into which the wastes are emitted. Regenerative and assimilative capacities are characterized as natural capital, and a failure to maintain these capacities is not sustainable.

Shortly after the emergence of the concept of sustainable development in academic and policy discourse, tourism researchers began referring to the notion of sustainable tourism (May, 1991 ; Nash & Butler, 1990 ), which soon became the dominant paradigm of tourism development. The concept of sustainable tourism, as with the role of tourism in sustainable development, has been interpreted in different ways, and there is a lack of consensus concerning its meaning, objectives, and indicators (Sharpley, 2000 ). Growing interest in the subject inspired the creation of a new academic journal, Journal of Sustainable Tourism , which was launched in 1993 and has become a leading tourism journal. It is described as “an international journal that publishes research on tourism and sustainable development, including economic, social, cultural and political aspects.”

The notion of sustainable tourism development emerged in contrast to mass tourism, which is characterized by the participation of large numbers of people, often provided as structured or packaged tours. Mass tourism has risen sharply in the last half century. International arrivals alone have increased by an average annual rate of more than 25% since 1950 , and many of those trips involved mass tourism activities (Fennell, 2020 ; UNWTO, 2020 ). Some examples of mass tourism include beach resorts, cruise ship tourism, gaming casinos, golf resorts, group tours, ski resorts, theme parks, and wildlife safari tourism, among others. Little data exist regarding the volume of domestic mass tourism, but nevertheless mass tourism activities dominate the global tourism sector. Mass tourism has been shown to generate benefits to host countries, such as income and employment generation, although it has also been associated with economic leakage (where revenue generated by tourism is lost to other countries’ economies) and economic dependency (where developing countries are dependent on wealthier countries for tourists, imports, and foreign investment) (Cater, 1993 ; Conway & Timms, 2010 ; Khan, 1997 ; Peeters, 2012 ). Mass tourism has been associated with numerous negative environmental impacts and social impacts (Cater, 1993 ; Conway & Timms, 2010 ; Fennell, 2020 ; Ghimire, 2013 ; Gursoy et al., 2010 ; Liu, 2003 ; Peeters, 2012 ; Wheeller, 2007 ). Sustainable tourism development has been promoted in various ways as a framing concept in contrast to many of these economic, environmental, and social impacts.

Much of the early research on sustainable tourism focused on defining the concept, which has been the subject of vigorous debate (Bramwell & Lane, 1993 ; Garrod & Fyall, 1998 ; Hunter, 1995 ; Inskeep, 1991 ; Liu, 2003 ; Sharpley, 2000 ). Early definitions of sustainable tourism development seemed to fall in one of two categories (Sharpley, 2000 ). First, the “tourism-centric” paradigm of sustainable tourism development focuses on sustaining tourism as an economic activity (Hunter, 1995 ). Second, alternative paradigms have situated sustainable tourism in the context of wider sustainable development policies (Butler, 1991 ). One of the most comprehensive definitions of sustainable tourism echoes some of the language of the Brundtland Commission’s definition of sustainable development (WCED, 1987 ), emphasizing opportunities for the future while also integrating social and environmental concerns:

Sustainable tourism can be thought of as meeting the needs of present tourists and host regions while protecting and enhancing opportunity for the future. Sustainable tourism development is envisaged as leading to management of all resources in such a way that we can fulfill economic, social and aesthetic needs while maintaining cultural integrity, essential ecological processes, biological diversity and life support systems. (Inskeep, 1991 , p. 461)

Hunter argued that over the short and long terms, sustainable tourism development should

“meet the needs and wants of the local host community in terms of improved living standards and quality of life;

satisfy the demands of tourists and the tourism industry, and continue to attract them in order to meet the first aim; and

safeguard the environmental resource base for tourism, encompassing natural, built and cultural components, in order to achieve both of the preceding aims.” (Hunter, 1995 , p. 156)

Numerous other definitions have been documented, and the term itself has been subject to widespread critique (Buckley, 2012 ; Hunter, 1995 ; Liu, 2003 ). Nevertheless, there have been numerous calls to move beyond debate about a definition and to consider how it may best be implemented in practice (Garrod & Fyall, 1998 ; Liu, 2003 ). Cater ( 1993 ) identified three key criteria for sustainable tourism: (a) meeting the needs of the host population in terms of improved living standards both in the short and long terms; (b) satisfying the demands of a growing number of tourists; and (c) safeguarding the natural environment in order to achieve both of the preceding aims.

Some literature has acknowledged a vagueness of the concept of sustainable tourism, which has been used to advocate for fundamentally different strategies for tourism development that may exacerbate existing conflicts between conservation and development paradigms (Garrod & Fyall, 1998 ; Hunter, 1995 ; Liu, 2003 ; McKercher, 1993b ). Similar criticisms have been leveled at the concept of sustainable development, which has been described as an oxymoron with a wide range of meanings (Adams, 2009 ; Daly, 1990 ) and “defined in such a way as to be either morally repugnant or logically redundant” (Beckerman, 1994 , p. 192). Sharpley ( 2000 ) suggests that in the tourism literature, there has been “a consistent and fundamental failure to build a theoretical link between sustainable tourism and its parental paradigm,” sustainable development (p. 2). Hunter ( 1995 ) suggests that practical measures designed to operationalize sustainable tourism fail to address many of the critical issues that are central to the concept of sustainable development generally and may even actually counteract the fundamental requirements of sustainable development. He suggests that mainstream sustainable tourism development is concerned with protecting the immediate resource base that will sustain tourism development while ignoring concerns for the status of the wider tourism resource base, such as potential problems associated with air pollution, congestion, introduction of invasive species, and declining oil reserves. The dominant paradigm of sustainable tourism development has been described as introverted, tourism-centric, and in competition with other sectors for scarce resources (McKercher, 1993a ). Hunter ( 1995 , p. 156) proposes an alternative, “extraparochial” paradigm where sustainable tourism development is reconceptualized in terms of its contribution to overall sustainable development. Such a paradigm would reconsider the scope, scale, and sectoral context of tourism-related resource utilization issues.

“Sustainability,” “sustainable tourism,” and “sustainable development” are all well-established terms that have often been used loosely and interchangeably in the tourism literature (Liu, 2003 ). Nevertheless, the subject of sustainable tourism has been given considerable attention and has been the focus of numerous academic compilations and textbooks (Coccossis & Nijkamp, 1995 ; Hall & Lew, 1998 ; Stabler, 1997 ; Swarbrooke, 1999 ), and it calls for new approaches to sustainable tourism development (Bramwell & Lane, 1993 ; Garrod & Fyall, 1998 ; Hunter, 1995 ; Sharpley, 2000 ). The notion of sustainable tourism has been reconceptualized in the literature by several authors who provided alternative frameworks for tourism development (Buckley, 2012 ; Gössling, 2002 ; Hunter, 1995 ; Liu, 2003 ; McKercher, 1993b ; Sharpley, 2000 ).

Early research in sustainable tourism focused on the local environmental impacts of tourism, including energy use, water use, food consumption, and change in land use (Buckley, 2012 ; Butler, 1991 ; Gössling, 2002 ; Hunter & Green, 1995 ). Subsequent research has emphasized the global environmental impacts of tourism, such as greenhouse gas emissions and biodiversity losses (Gössling, 2002 ; Gössling & Peeters, 2015 ; Lenzen et al., 2018 ). Additional research has emphasized the impacts of environmental change on tourism itself, including the impacts of climate change on tourist behavior (Gössling et al., 2012 ; Richardson & Loomis, 2004 ; Scott et al., 2012 ; Viner, 2006 ). Countries that are dependent on tourism for economic growth may be particularly vulnerable to the impacts of climate change (Richardson & Witkoswki, 2010 ).

The early focus on environmental issues in sustainable tourism has been broadened to include economic, social, and cultural issues as well as questions of power and equity in society (Bramwell & Lane, 1993 ; Sharpley, 2014 ), and some of these frameworks have integrated notions of social equity, prosperity, and cultural heritage values. Sustainable tourism is dependent on critical long-term considerations of the impacts; notions of equity; an appreciation of the importance of linkages (i.e., economic, social, and environmental); and the facilitation of cooperation and collaboration between different stakeholders (Elliott & Neirotti, 2008 ).

McKercher ( 1993b ) notes that tourism resources are typically part of the public domain or are intrinsically linked to the social fabric of the host community. As a result, many commonplace tourist activities such as sightseeing may be perceived as invasive by members of the host community. Many social impacts of tourism can be linked to the overuse of the resource base, increases in traffic congestion, rising land prices, urban sprawl, and changes in the social structure of host communities. Given the importance of tourist–resident interaction, sustainable tourism development depends in part on the support of the host community (Garau-Vadell et al., 2018 ).

Tourism planning involves the dual objectives of optimizing the well-being of local residents in host communities and minimizing the costs of tourism development (Sharpley, 2014 ). Tourism researchers have paid significant attention to examining the social impacts of tourism in general and to understanding host communities’ perceptions of tourism in particular. Studies of the social impacts of tourism development have examined the perceptions of local residents and the effects of tourism on social cohesion, traditional lifestyles, and the erosion of cultural heritage, particularly among Indigenous Peoples (Butler & Hinch, 2007 ; Deery et al., 2012 ; Mathieson & Wall, 1982 ; Sharpley, 2014 ; Whitford & Ruhanen, 2016 ).

Alternative Tourism and Sustainable Development

A wide body of published research is related to the role of tourism in sustainable development, and much of the literature involves case studies of particular types of tourism. Many such studies contrast types of alternative tourism with those of mass tourism, which has received sustained criticism for decades and is widely considered to be unsustainable (Cater, 1993 ; Conway & Timms, 2010 ; Fennell, 2020 ; Gursoy et al., 2010 ; Liu, 2003 ; Peeters, 2012 ; Zapata et al., 2011 ). Still, some tourism researchers have taken issue with the conclusion that mass tourism is inherently unsustainable (Sharpley, 2000 ; Weaver, 2007 ), and some have argued for developing pathways to “sustainable mass tourism” as “the desired and impending outcome for most destinations” (Weaver, 2012 , p. 1030). In integrating an ethical component to mass tourism development, Weaver ( 2014 , p. 131) suggests that the desirable outcome is “enlightened mass tourism.” Such suggestions have been contested in the literature and criticized for dubious assumptions about emergent norms of sustainability and support for growth, which are widely seen as contradictory (Peeters, 2012 ; Wheeller, 2007 ).

Models of responsible or alternative tourism development include ecotourism, community-based tourism, pro-poor tourism, slow tourism, green tourism, and heritage tourism, among others. Most models of alternative tourism development emphasize themes that aim to counteract the perceived negative impacts of conventional or mass tourism. As such, the objectives of these models of tourism development tend to focus on minimizing environmental impacts, supporting biodiversity conservation, empowering local communities, alleviating poverty, and engendering pleasant relationships between tourists and residents.

Approaches to alternative tourism development tend to overlap with themes of responsible tourism, and the two terms are frequently used interchangeably. Responsible tourism has been characterized in terms of numerous elements, including

ensuring that communities are involved in and benefit from tourism;

respecting local, natural, and cultural environments;

involving the local community in planning and decision-making;

using local resources sustainably;

behaving in ways that are sensitive to the host culture;

maintaining and encouraging natural, economic, and cultural diversity; and

assessing environmental, social, and economic impacts as a prerequisite to tourism development (Spenceley, 2012 ).

Hetzer ( 1965 ) identified four fundamental principles or perquisites for a more responsible form of tourism: (a) minimum environmental impact; (b) minimum impact on and maximum respect for host cultures; (c) maximum economic benefits to the host country; and (d) maximum leisure satisfaction to participating tourists.

The history of ecotourism is closely connected with the emergence of sustainable development, as it was born out of a concern for the conservation of biodiversity. Ecotourism is a form of tourism that aims to minimize local environmental impacts while bringing benefits to protected areas and the people living around those lands (Honey, 2008 ). Ecotourism represents a small segment of nature-based tourism, which is understood as tourism based on the natural attractions of an area, such as scenic areas and wildlife (Gössling, 1999 ). The ecotourism movement gained momentum in the 1990s, primarily in developing countries in Latin America and sub-Saharan Africa, and nearly all countries are now engaged in some form of ecotourism. In some communities, ecotourism is the primary economic activity and source of income and economic development.

The term “ecotourism” was coined by Hector Ceballos-Lascuráin and defined by him as “tourism that consists in travelling to relatively undisturbed or uncontaminated natural areas with the specific object of studying, admiring, and enjoying the scenery and its wild plants and animals” (Ceballos-Lascuráin, 1987 , p. 13). In discussing ecotourism resources, he also made reference to “any existing cultural manifestations (both past and present) found in these areas” (Ceballos-Lascuráin, 1987 , p. 14). The basic precepts of ecotourism had been discussed long before the actual use of the term. Twenty years earlier, Hetzer ( 1965 ) referred to a form of tourism “based principally upon natural and archaeological resources such as caves, fossil sites (and) archaeological sites.” Thus, both natural resources and cultural resources were integrated into ecotourism frameworks from the earliest manifestations.

Costa Rica is well known for having successfully integrated ecotourism in its overall strategy for sustainable development, and numerous case studies of ecotourism in Costa Rica appear in the literature (Chase et al., 1998 ; Fennell & Eagles, 1990 ; Gray & Campbell, 2007 ; Hearne & Salinas, 2002 ). Ecotourism in Costa Rica has been seen as having supported the economic development of the country while promoting biodiversity conservation in its extensive network of protected areas. Chase et al. ( 1998 ) estimated the demand for ecotourism in a study of differential pricing of entrance fees at national parks in Costa Rica. The authors estimated elasticities associated with the own-price, cross-price, and income variables and found that the elasticities of demand were significantly different between three different national park sites. The results reveal the heterogeneity characterizing tourist behavior and park attractions and amenities. Hearne and Salinas ( 2002 ) used choice experiments to examine the preferences of domestic and foreign tourists in Costa Rica in an ecotourism site. Both sets of tourists demonstrated a preference for improved infrastructure, more information, and lower entrance fees. Foreign tourists demonstrated relatively stronger preferences for the inclusion of restrictions in the access to some trails.

Ecotourism has also been studied extensively in Kenya (Southgate, 2006 ), Malaysia (Lian Chan & Baum, 2007 ), Nepal (Baral et al., 2008 ), Peru (Stronza, 2007 ), and Taiwan (Lai & Nepal, 2006 ), among many other countries. Numerous case studies have demonstrated the potential for ecotourism to contribute to sustainable development by providing support for biodiversity conservation, local livelihoods, and regional development.

Community-Based Tourism

Community-based tourism (CBT) is a model of tourism development that emphasizes the development of local communities and allows for local residents to have substantial control over its development and management, and a major proportion of the benefits remain within the community. CBT emerged during the 1970s as a response to the negative impacts of the international mass tourism development model (Cater, 1993 ; Hall & Lew, 2009 ; Turner & Ash, 1975 ; Zapata et al., 2011 ).

Community-based tourism has been examined for its potential to contribute to poverty reduction. In a study of the viability of the CBT model to support socioeconomic development and poverty alleviation in Nicaragua, tourism was perceived by participants in the study to have an impact on employment creation in their communities (Zapata et al., 2011 ). Tourism was seen to have had positive impacts on strengthening local knowledge and skills, particularly on the integration of women to new roles in the labor market. One of the main perceived gains regarding the environment was the process of raising awareness regarding the conservation of natural resources. The small scale of CBT operations and low capacity to accommodate visitors was seen as a limitation of the model.

Spenceley ( 2012 ) compiled case studies of community-based tourism in countries in southern Africa, including Botswana, Madagascar, Namibia, South Africa, Tanzania, Zambia, and Zimbabwe. In this volume, authors characterize community-based and nature-based tourism development projects in the region and demonstrate how community participation in planning and decision-making has generated benefits for local residents and supported conservation initiatives. They contend that responsible tourism practices are of particular importance in the region because of the rich biological diversity, abundant charismatic wildlife, and the critical need for local economic development and livelihood strategies.

In Kenya, CBT enterprises were not perceived to have made a significant impact on poverty reduction at an individual household level, in part because the model relied heavily on donor funding, reinforcing dependency and poverty (Manyara & Jones, 2007 ). The study identified several critical success factors for CBT enterprises, namely, awareness and sensitization, community empowerment, effective leadership, and community capacity building, which can inform appropriate tourism policy formulation in Kenya. The impacts of CBT on economic development and poverty reduction would be greatly enhanced if tourism initiatives were able to emphasize independence, address local community priorities, enhance community empowerment and transparency, discourage elitism, promote effective community leadership, and develop community capacity to operate their own enterprises more efficiently.

Pro-Poor Tourism

Pro-poor tourism is a model of tourism development that brings net benefits to people living in poverty (Ashley et al., 2001 ; Harrison, 2008 ). Although its theoretical foundations and development objectives overlap to some degree with those of community-based tourism and other models of AT, the key distinctive feature of pro-poor tourism is that it places poor people and poverty at the top of the agenda. By focusing on a very simple and incontrovertibly moral idea, namely, the net benefits of tourism to impoverished people, the concept has broad appeal to donors and international aid agencies. Harnessing the economic benefits of tourism for pro-poor growth means capitalizing on the advantages while reducing negative impacts to people living in poverty (Ashley et al., 2001 ). Pro-poor approaches to tourism development include increasing access of impoverished people to economic benefits; addressing negative social and environmental impacts associated with tourism; and focusing on policies, processes, and partnerships that seek to remove barriers to participation by people living in poverty. At the local level, pro-poor tourism can play a very significant role in livelihood security and poverty reduction (Ashley & Roe, 2002 ).

Rogerson ( 2011 ) argues that the growth of pro-poor tourism initiatives in South Africa suggests that the country has become a laboratory for the testing and evolution of new approaches toward sustainable development planning that potentially will have relevance for other countries in the developing world. A study of pro-poor tourism development initiatives in Laos identified a number of favorable conditions for pro-poor tourism development, including the fact that local people are open to tourism and motivated to participate (Suntikul et al., 2009 ). The authors also noted a lack of development in the linkages that could optimize the fulfilment of the pro-poor agenda, such as training or facilitation of local people’s participation in pro-poor tourism development at the grassroots level.

Critics of the model have argued that pro-poor tourism is based on an acceptance of the status quo of existing capitalism, that it is morally indiscriminate and theoretically imprecise, and that its practitioners are academically and commercially marginal (Harrison, 2008 ). As Chok et al. ( 2007 ) indicate, the focus “on poor people in the South reflects a strong anthropocentric view . . . and . . . environmental benefits are secondary to poor peoples’” benefits (p. 153).

Harrison ( 2008 ) argues that pro-poor tourism is not a distinctive approach to tourism as a development tool and that it may be easier to discuss what pro-poor tourism is not than what it is. He concludes that it is neither anticapitalist nor inconsistent with mainstream tourism on which it relies; it is neither a theory nor a model and is not a niche form of tourism. Further, he argues that it has no distinctive method and is not only about people living in poverty.

Slow Tourism

The concept of slow tourism has emerged as a model of sustainable tourism development, and as such, it lacks an exact definition. The concept of slow tourism traces its origin back to some institutionalized social movements such as “slow food” and “slow cities” that began in Italy in the 1990s and spread rapidly around the world (Fullagar et al., 2012 ; Oh et al., 2016 , p. 205). Advocates of slow tourism tend to emphasize slowness in terms of speed, mobility, and modes of transportation that generate less environmental pollution. They propose niche marketing for alternative forms of tourism that focus on quality upgrading rather than merely increasing the quantity of visitors via the established mass-tourism infrastructure (Conway & Timms, 2010 ).

In the context of the Caribbean region, slow tourism has been promoted as more culturally sensitive and authentic, as compared to the dominant mass tourism development model that is based on all-inclusive beach resorts dependent on foreign investment (Conway & Timms, 2010 ). Recognizing its value as an alternative marketing strategy, Conway and Timms ( 2010 ) make the case for rebranding alternative tourism in the Caribbean as a means of revitalizing the sector for the changing demands of tourists in the 21st century . They suggest that slow tourism is the antithesis of mass tourism, which “relies on increasing the quantity of tourists who move through the system with little regard to either the quality of the tourists’ experience or the benefits that accrue to the localities the tourist visits” (Conway & Timms, 2010 , p. 332). The authors draw on cases from Barbados, the Grenadines, Jamaica, and Trinidad and Tobago to characterize models of slow tourism development in remote fishing villages and communities near nature preserves and sea turtle nesting sites.

Although there is a growing interest in the concept of slow tourism in the literature, there seems to be little agreement about the exact nature of slow tourism and whether it is a niche form of special interest tourism or whether it represents a more fundamental potential shift across the industry. Conway and Timms ( 2010 ) focus on the destination, advocating for slow tourism in terms of a promotional identity for an industry in need of rebranding. Caffyn ( 2012 , p. 77) discusses the implementation of slow tourism in terms of “encouraging visitors to make slower choices when planning and enjoying their holidays.” It is not clear whether slow tourism is a marketing strategy, a mindset, or a social movement, but the literature on slow tourism nearly always equates the term with sustainable tourism (Caffyn, 2012 ; Conway & Timms, 2010 ; Oh et al., 2016 ). Caffyn ( 2012 , p. 80) suggests that slow tourism could offer a “win–win,” which she describes as “a more sustainable form of tourism; keeping more of the economic benefits within the local community and destination; and delivering a more meaningful and satisfying experience.” Research on slow tourism is nascent, and thus the contribution of slow tourism to sustainable development is not well understood.

Impacts of Tourism Development

The role of tourism in sustainable development can be examined through an understanding of the economic, environmental, and social impacts of tourism. Tourism is a global phenomenon that involves travel, recreation, the consumption of food, overnight accommodations, entertainment, sightseeing, and other activities that simultaneously intersect the lives of local residents, businesses, and communities. The impacts of tourism involve benefits and costs to all groups, and some of these impacts cannot easily be measured. Nevertheless, they have been studied extensively in the literature, which provides some context for how these benefits and costs are distributed.

Economic Impacts of Tourism

The travel and tourism sector is one of the largest components of the global economy, and global tourism has increased exponentially since the end of the Second World War (UNWTO, 2020 ). The direct, indirect, and induced economic impact of global travel accounted for 8.9 trillion U.S. dollars in contribution to the global gross domestic product (GDP), or 10.3% of global GDP. The global travel and tourism sector supports approximately 330 million jobs, or 1 in 10 jobs around the world. From an economic perspective, tourism plays a significant role in sustainable development. In many developing countries, tourism has the potential to play a unique role in income generation and distribution relative to many other industries, in part because of its high multiplier effect and consumption of local goods and services. However, research on the economic impacts of tourism has shown that this potential has rarely been fully realized (Liu, 2003 ).

Numerous studies have examined the impact of tourism expenditure on GDP, income, employment, and public sector revenue. Narayan ( 2004 ) used a computable general equilibrium model to estimate the economic impact of tourism growth on the economy of Fiji. Tourism is Fiji’s largest industry, with average annual growth of 10–12%; and as a middle-income country, tourism is critical to Fiji’s economic development. The findings indicate that an increase in tourism expenditures was associated with an increase in GDP, an improvement in the country’s balance of payments, and an increase in real consumption and national welfare. Evidence suggests that the benefits of tourism expansion outweigh any export effects caused by an appreciation of the exchange rate and an increase in domestic prices and wages.

Seetanah ( 2011 ) examined the potential contribution of tourism to economic growth and development using panel data of 19 island economies around the world from 1990 to 2007 and revealed that tourism development is an important factor in explaining economic performance in the selected island economies. The results have policy implications for improving economic growth by harnessing the contribution of the tourism sector. Pratt ( 2015 ) modeled the economic impact of tourism for seven small island developing states in the Pacific, the Caribbean, and the Indian Ocean. In most states, the transportation sector was found to have above-average linkages to other sectors of the economy. The results revealed some advantages of economies of scale for maximizing the economic contribution of tourism.

Apergis and Payne ( 2012 ) examined the causal relationship between tourism and economic growth for a panel of nine Caribbean countries. The panel of Caribbean countries includes Antigua and Barbuda, Bahamas, Dominica, Dominican Republic, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago. The authors use a panel error correction model to reveal bidirectional causality between tourism and economic growth in both the short run and the long run. The presence of bidirectional causality reiterates the importance of the tourism sector in the generation of foreign exchange income and in financing the production of goods and services within these countries. Likewise, stable political institutions and adequate government policies to ensure the appropriate investment in physical and human capital will enhance economic growth. In turn, stable economic growth will provide the resources needed to develop the tourism infrastructure for the success of the countries’ tourism sector. Thus, policy makers should be cognizant of the interdependent relationship between tourism and economic growth in the design and implementation of economic policy. The mixed nature of these results suggest that the relationship between tourism and economic growth depends largely on the social and economic context as well as the role of tourism in the economy.

The economic benefits and costs of tourism are frequently distributed unevenly. An analysis of the impact of wildlife conservation policies in Zambia on household welfare found that households located near national parks earn higher levels of income from wage employment and self-employment than other rural households in the country, but they were also more likely to suffer crop losses related to wildlife conflicts (Richardson et al., 2012 ). The findings suggest that tourism development and wildlife conservation can contribute to pro-poor development, but they may be sustainable only if human–wildlife conflicts are minimized or compensated.

Environmental Impacts of Tourism

The environmental impacts of tourism are significant, ranging from local effects to contributions to global environmental change (Gössling & Peeters, 2015 ). Tourism is both dependent on water resources and a factor in global and local freshwater use. Tourists consume water for drinking, when showering and using the toilet, when participating in activities such as winter ski tourism (i.e., snowmaking), and when using swimming pools and spas. Fresh water is also needed to maintain hotel gardens and golf courses, and water use is embedded in tourism infrastructure development (e.g., accommodations, laundry, dining) and in food and fuel production. Direct water consumption in tourism is estimated to be approximately 350 liters (L) per guest night for accommodation; when indirect water use from food, energy, and transport are considered, total water use in tourism is estimated to be approximately 6,575 L per guest night, or 27,800 L per person per trip (Gössling & Peeters, 2015 ). In addition, tourism contributes to the pollution of oceans as well as lakes, rivers, and other freshwater systems (Gössling, 2002 ; Gössling et al., 2011 ).

The clearing and conversion of land is central for tourism development, and in many cases, the land used for tourism includes roads, airports, railways, accommodations, trails, pedestrian walks, shopping areas, parking areas, campgrounds, vacation homes, golf courses, marinas, ski resorts, and indirect land use for food production, disposal of solid wastes, and the treatment of wastewater (Gössling & Peeters, 2015 ). Global land use for accommodation is estimated to be approximately 42 m 2 per bed. Total global land use for tourism is estimated to be nearly 62,000 km 2 , or 11.7 m 2 per tourist; more than half of this estimate is represented by land use for traffic infrastructure.

Tourism and hospitality have direct and indirect links to nearly all aspects of food production, preparation, and consumption because of the quantities of food consumed in tourism contexts (Gössling et al., 2011 ). Food production has significant implications for sustainable development, given the growing global demand for food. The implications include land conversion, losses to biodiversity, changes in nutrient cycling, and contributions to greenhouse emissions that are associated with global climate change (Vitousek et al., 1997 ). Global food use for tourism is estimated to be approximately 39.4 megatons 1 (Mt), about 38% than the amount of food consumed at home. This equates to approximately 1,800 grams (g) of food consumed per tourist per day.

Although tourism has been promoted as a low-impact, nonextractive option for economic development, (Gössling, 2000 ), assessments reveal that such pursuits have a significant carbon footprint, as tourism is significantly more carbon intensive than other potential areas of economic development (Lenzen et al., 2018 ). Tourism is dependent on energy, and virtually all energy use in the tourism sector is derived from fossil fuels, which contribute to global greenhouse emissions that are associated with global climate change. Energy use for tourism has been estimated to be approximately 3,575 megajoules 2 (MJ) per trip, including energy for travel and accommodations (Gössling & Peeters, 2015 ). A previous estimate of global carbon dioxide (CO 2 ) emissions from tourism provided values of 1.12 gigatons 3 (Gt) of CO 2 , amounting to about 3% of global CO 2 -equivalent (CO 2 e) emissions (Gössling & Peeters, 2015 ). However, these analyses do not cover the supply chains underpinning tourism and do not therefore represent true carbon footprints. A more complete analysis of the emissions from energy consumption necessary to sustain the tourism sector would include food and beverages, infrastructure construction and maintenance, retail, and financial services. Between 2009 and 2013 , tourism’s global carbon footprint is estimated to have increased from 3.9 to 4.5 GtCO 2 e, four times more than previously estimated, accounting for about 8% of global greenhouse gas emissions (Lenzen et al., 2018 ). The majority of this footprint is exerted by and within high-income countries. The rising global demand for tourism is outstripping efforts at decarbonization of tourism operations and as a result is accelerating global carbon emissions.

Social Impacts of Tourism

The social impacts of tourism have been widely studied, with an emphasis on residents’ perceptions in the host community (Sharpley, 2014 ). Case studies include research conducted in Australia (Faulkner & Tideswell, 1997 ; Gursoy et al., 2010 ; Tovar & Lockwood, 2008 ), Belize (Diedrich & Garcia-Buades, 2008 ), China (Gu & Ryan, 2008 ), Fiji (King et al., 1993 ), Greece (Haralambopoulos & Pizam, 1996 ; Tsartas, 1992 ), Hungary (Rátz, 2000 ), Thailand (Huttasin, 2008 ), Turkey (Kuvan & Akan, 2005 ), the United Kingdom (Brunt & Courtney, 1999 ; Haley et al., 2005 ), and the United States (Andereck et al., 2005 ; Milman & Pizam, 1988 ), among others. The social impacts of tourism are difficult to measure, and most published studies are mainly concerned with the social impacts on the host communities rather than the impacts on the tourists themselves.

Studies of residents’ perceptions of tourism are typically conducted using household surveys. In most cases, residents recognize the economic dependence on tourism for income, and there is substantial evidence to suggest that working in or owning a business in tourism or a related industry is associated with more positive perceptions of tourism (Andereck et al., 2007 ). The perceived nature of negative effects is complex and often conveys a dislike of crowding, traffic congestion, and higher prices for basic needs (Deery et al., 2012 ). When the number of tourists far exceeds that of the resident population, negative attitudes toward tourism may manifest (Diedrich & Garcia-Buades, 2008 ). However, residents who recognize negative impacts may not necessarily oppose tourism development (King et al., 1993 ).

In some regions, little is known about the social and cultural impacts of tourism despite its dominance as an economic sector. Tourism is a rapidly growing sector in Cuba, and it is projected to grow at rates that exceed the average projected growth rates for the Caribbean and the world overall (Salinas et al., 2018 ). Still, even though there has been rapid tourism development in Cuba, there has been little research related to the environmental and sociocultural impacts of this tourism growth (Rutty & Richardson, 2019 ).

In some international tourism contexts, studies have found that residents are generally resentful toward tourism because it fuels inequality and exacerbates racist attitudes and discrimination (Cabezas, 2004 ; Jamal & Camargo, 2014 ; Mbaiwa, 2005 ). Other studies revealed similar narratives and recorded statements of exclusion and socioeconomic stratification (Sanchez & Adams, 2008 ). Local residents often must navigate the gaps in the racialized, gendered, and sexualized structures imposed by the global tourism industry and host-country governments (Cabezas, 2004 ).

However, during times of economic crisis, residents may develop a more permissive view as their perceptions of the costs of tourism development decrease (Garau-Vadell et al., 2018 ). This increased positive attitude is not based on an increase in the perception of positive impacts of tourism, but rather on a decrease in the perception of the negative impacts.

There is a growing body of research on Indigenous and Aboriginal tourism that emphasizes justice issues such as human rights and self-empowerment, control, and participation of traditional owners in comanagement of destinations (Jamal & Camargo, 2014 ; Ryan & Huyton, 2000 ; Whyte, 2010 ).

Sustainability of Tourism

A process or system is said to be sustainable to the extent that it is robust, resilient, and adaptive (Anderies et al., 2013 ). By most measures, the global tourism system does not meet these criteria for sustainability. Tourism is not robust in that it cannot resist threats and perturbations, such as economic shocks, public health pandemics, war, and other disruptions. Tourism is not resilient in that it does not easily recover from failures, such as natural disasters or civil unrest. Furthermore, tourism is not adaptive in that it is often unable to change in response to external conditions. One example that underscores the failure to meet all three criteria is the dependence of tourism on fossil fuels for transportation and energy, which are key inputs for tourism development. This dependence itself is not sustainable (Wheeller, 2007 ), and thus the sustainability of tourism is questionable.

Liu ( 2003 ) notes that research related to the role of tourism in sustainable development has emphasized supply-side concepts such as sustaining tourism resources and ignored the demand side, which is particularly vulnerable to social and economic shocks. Tourism is vulnerable to both localized and global shocks. Studies of the vulnerability of tourism to localized shocks include disaster vulnerability in coastal Thailand (Calgaro & Lloyd, 2008 ), bushfires in northeast Victoria in Australia (Cioccio & Michael, 2007 ), forest fires in British Columbia, Canada (Hystad & Keller, 2008 ); and outbreak of foot and mouth disease in the United Kingdom (Miller & Ritchie, 2003 ).

Like most other economic sectors, tourism is vulnerable to the impacts of earthquakes, particularly in areas where tourism infrastructure may not be resilient to such shocks. Numerous studies have examined the impacts of earthquake events on tourism, including studies of the aftermath of the 1997 earthquake in central Italy (Mazzocchi & Montini, 2001 ), the 1999 earthquake in Taiwan (Huan et al., 2004 ; Huang & Min, 2002 ), and the 2008 Wenchuan earthquake in western Sichuan, China (Yang et al., 2011 ), among others.

Tourism is vulnerable to extreme weather events. Regional economic strength has been found to be associated with lower vulnerability to natural disasters. Kim and Marcoullier ( 2015 ) examined the vulnerability and resilience of 10 tourism-based regional economies that included U.S. national parks or protected seashores situated on the Gulf of Mexico or Atlantic Ocean coastline that were affected by several hurricanes over a 26-year period. Regions with stronger economic characteristics prior to natural disasters were found to have lower disaster losses than regions with weaker economies.

Tourism is extremely sensitive to oil spills, whatever their origin, and the volume of oil released need not be large to generate significant economic losses (Cirer-Costa, 2015 ). Studies of the vulnerability of tourism to the localized shock of an oil spill include research on the impacts of oil spills in Alaska (Coddington, 2015 ), Brazil (Ribeiro et al., 2020 ), Spain (Castanedo et al., 2009 ), affected regions in the United States along the Gulf of Mexico (Pennington-Gray et al., 2011 ; Ritchie et al., 2013 ), and the Republic of Korea (Cheong, 2012 ), among others. Future research on the vulnerability of tourist destinations to oil spills should also incorporate freshwater environments, such as lakes, rivers, and streams, where the rupture of oil pipelines is more frequent.

Significant attention has been paid to assessing the vulnerability of tourist destinations to acts of terrorism and the impacts of terrorist attacks on regional tourist economies (Liu & Pratt, 2017 ). Such studies include analyses of the impacts of terrorist attacks on three European countries, Greece, Italy, and Austria (Enders et al., 1992 ); the impact of the 2001 terrorist attacks on the United States (Goodrich, 2002 ); terrorism and tourism in Nepal (Bhattarai et al., 2005 ); vulnerability of tourism livelihoods in Bali (Baker & Coulter, 2007 ); the impact of terrorism on tourist preferences for destinations in the Mediterranean and the Canary Islands (Arana & León, 2008 ); the 2011 massacres in Olso and Utøya, Norway (Wolff & Larsen, 2014 ); terrorism and political violence in Tunisia (Lanouar & Goaied, 2019 ); and the impact of terrorism on European tourism (Corbet et al., 2019 ), among others. Pizam and Fleischer ( 2002 ) studied the impact of acts of terrorism on tourism demand in Israel between May 1991 and May 2001 , and they confirmed that the frequency of acts of terrorism had caused a larger decline in international tourist arrivals than the severity of these acts. Most of these are ex post studies, and future assessments of the underlying conditions of destinations could reveal a deeper understanding of the vulnerability of tourism to terrorism.

Tourism is vulnerable to economic crisis, both local economic shocks (Okumus & Karamustafa, 2005 ; Stylidis & Terzidou, 2014 ) and global economic crisis (Papatheodorou et al., 2010 ; Smeral, 2010 ). Okumus and Karamustafa ( 2005 ) evaluated the impact of the February 2001 economic crisis in Turkey on tourism, and they found that the tourism industry was poorly prepared for the economic crisis despite having suffered previous impacts related to the Gulf War in the early 1990s, terrorism in Turkey in the 1990s, the civil war in former Yugoslavia in the early 1990s, an internal economic crisis in 1994 , and two earthquakes in the northwest region of Turkey in 1999 . In a study of the attitudes and perceptions of citizens of Greece, Stylidis and Terzidou ( 2014 ) found that economic crisis is associated with increased support for tourism development, particularly out of self-interest. Economic crisis diminishes residents’ concern for environmental issues. In a study of the behavior of European tourists amid an economic crisis, Eugenio-Martin and Campos-Soria ( 2014 ) found that the probability of households cutting back on travel expenditures depends largely on the climate and economic conditions of tourists’ home countries, and households that do reduce travel spending engage in tourism closer to home.

Becken and Lennox ( 2012 ) studied the implications of a long-term increase in oil prices for tourism in New Zealand, and they estimate that a doubling of oil prices is associated with a 1.7% decrease in real gross national disposable income and a 9% reduction in the real value of tourism exports. Chatziantoniou et al. ( 2013 ) investigated the relationship among oil price shocks, tourism variables, and economic indicators in four European Mediterranean countries and found that aggregate demand oil price shocks generated a lagged effect on tourism-generated income and economic growth. Kisswani et al. ( 2020 ) examined the asymmetric effect of oil prices on tourism receipts and the sensitive susceptibility of tourism to oil price changes using nonlinear analysis. The findings document a long-run asymmetrical effect for most countries, after incorporating the structural breaks, suggesting that governments and tourism businesses and organizations should interpret oil price fluctuations cautiously.

Finally, the sustainability of tourism has been shown to be vulnerable to the outbreak of infectious diseases, including the impact of the Ebola virus on tourism in sub-Saharan Africa (Maphanga & Henama, 2019 ; Novelli et al., 2018 ) and in the United States (Cahyanto et al., 2016 ). The literature also includes studies of the impact of swine flu on tourism demand in Brunei (Haque & Haque, 2018 ), Mexico (Monterrubio, 2010 ), and the United Kingdom (Page et al., 2012 ), among others. In addition, rapid assessments of the impacts of the novel coronavirus SARS-CoV-2 have documented severe disruptions and cessations of tourism because of unprecedented global travel restrictions and widespread restrictions on public gatherings (Gössling et al., 2020 ; Qiu et al., 2020 ; Sharma & Nicolau, 2020 ). Hotels, airlines, cruise lines, and car rentals have all experienced a significant decrease globally because of the COVID-19 pandemic, and the shock to the industry is significant enough to warrant concerns about the long-term outlook (Sharma & Nicolau, 2020 ). Qiu et al. ( 2020 ) estimated the social costs of the pandemic to tourism in three cities in China (Hong Kong, Guangzhou, and Wuhan), and they found that most respondents were willing to pay for risk reduction and action in responding to the pandemic crisis; there was no significant difference between residents’ willingness to pay in the three cities. Some research has emphasized how lessons from the COVID-19 pandemic can prepare global tourism for an economic transformation that is needed to mitigate the impacts of climate change (Brouder, 2020 ; Prideaux et al., 2020 ).

It is clear that tourism has contributed significantly to economic development globally, but its role in sustainable development is uncertain, contested, and potentially paradoxical. This is due, in part, to the contested nature of sustainable development itself. Tourism has been promoted as a low-impact, nonextractive option for economic development, particularly for developing countries (Gössling, 2000 ), and many countries have managed to increase their participation in the global economy through development of international tourism. Tourism development has been viewed as an important sector for investment to enhance economic growth, poverty alleviation, and food security, and the sector provides an alternative opportunity to large-scale development projects and extractive industries that contribute to emissions of pollutants and threaten biodiversity and cultural values. However, global evidence from research on the economic impacts of tourism has shown that this potential has rarely been realized (Liu, 2003 ).

The role of tourism in sustainable development has been studied extensively and with a variety of perspectives, including the conceptualization of alternative or responsible forms of tourism and the examination of economic, environmental, and social impacts of tourism development. The research has generally concluded that tourism development has contributed to sustainable development in some cases where it is demonstrated to have provided support for biodiversity conservation initiatives and livelihood development strategies. As an economic sector, tourism is considered to be labor intensive, providing opportunities for poor households to enhance their livelihood through the sale of goods and services to foreign tourists.

Nature-based tourism approaches such as ecotourism and community-based tourism have been successful at attracting tourists to parks and protected areas, and their spending provides financial support for biodiversity conservation, livelihoods, and economic growth in developing countries. Nevertheless, studies of the impacts of tourism development have documented negative environmental impacts locally in terms of land use, food and water consumption, and congestion, and globally in terms of the contribution of tourism to climate change through the emission of greenhouse gases related to transportation and other tourist activities. Studies of the social impacts of tourism have documented experiences of discrimination based on ethnicity, gender, race, sex, and national identity.

The sustainability of tourism as an economic sector has been examined in terms of its vulnerability to civil conflict, economic shocks, natural disasters, and public health pandemics. Most studies conclude that tourism may have positive impacts for regional development and environmental conservation, but there is evidence that tourism inherently generates negative environmental impacts, primarily through pollutions stemming from transportation. The regional benefits of tourism development must be considered alongside the global impacts of increased transportation and tourism participation. Global tourism has also been shown to be vulnerable to economic crises, oil price shocks, and global outbreaks of infectious diseases. Given that tourism is dependent on energy, the movement of people, and the consumption of resources, virtually all tourism activities have significant economic, environmental, and sustainable impacts. As such, the role of tourism in sustainable development is highly questionable. Future research on the role of tourism in sustainable development should focus on reducing the negative impacts of tourism development, both regionally and globally.

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1. One megatonne (Mt) is equal to 1 million (10 6 ) metric tons.

2. One megajoule (MJ) is equal to 1 million (10 6 ) joules, or approximately the kinetic energy of a 1-megagram (tonne) vehicle moving at 161 km/h.

3. One gigatonne (Gt) is equal to 1 billion (10 9 ) metric tons.

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• Tourism Revenue By Country

Tourism plays an important role in the economy and it is a major source of revenue for most countries around the world. Countries have invested in tourist attraction sites and infrastructure within their countries to attract both domestic and international tourists. International tourists account for more than 50% of revenue earned from tourism in most countries. An expense incurred by inbound international visitors on goods and services and sometimes passenger items received in the country visited is referred to as international tourism receipt. These payments may include airfare, accommodation fees, shopping fee, money spent on food, and entrance fee paid for public facilities.

Countries Earning The Most From International Tourism

United states.

International tourism is an important part of international trade in the United States . The range of tourist attraction sites, including parks, museums, historical sites, hotels, recreation centers, gambling, and sports venues, are among the factors that are responsible for an increase in international tourist receipt in the US. The majority of the international tourists came from Mexico , Canada , and the UK.

Spain is the second highest earning country in the world when it comes to tourism. The number of international tourists visiting Spain have increased over the years. Environmental factors such as favorable weather, romantic coastline, beaches, and the 44 world heritage sites were significant factors that influenced the arrival of international tourists in Spain.

United Kingdom

The United Kingdom (UK) earns the third highest amount from tourism in the world. The majority of those who visited the UK went for holiday, business, and studies. London was the most visited city in the UK with Manchester following closely. Some of the famous sites most frequently visited include the British Museum, the National Gallery, Tower of London, and the Science Museum.

Foreign Tourists Serve as an Economic Boost

International tourism is a major source of revenue that directly affects the growth of a country’s economy. The revenue generated from tourism can be used to develop other sectors of the economy such as transport, health, and education. International tourism has also opened up employment in most countries especially in the local communities. France recorded a total of 1.2 million jobs created as a result of tourism leading to the further generation of revenue through taxes. Hotels have also been built to meet the high demand for accommodation in the visited countries. International relations have also been strengthened through international tourism.

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Sustainable tourism

Related sdgs, promote sustained, inclusive and sustainable ....

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Publications.

Tourism is one of the world's fastest growing industries and an important source of foreign exchange and employment, while being closely linked to the social, economic, and environmental well-being of many countries, especially developing countries. Maritime or ocean-related tourism, as well as coastal tourism, are for example vital sectors of the economy in small island developing States (SIDS) and coastal least developed countries (LDCs) (see also: The Potential of the Blue Economy report as well as the Community of Ocean Action on sustainable blue economy).

The World Tourism Organization defines sustainable tourism as “tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities".

Based on General assembly resolution 70/193, 2017 was declared as the  International Year of Sustainable Tourism for Development.

In the 2030 Agenda for Sustainable Development SDG target 8.9, aims to “by 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products”. The importance of sustainable tourism is also highlighted in SDG target 12.b. which aims to “develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs and promotes local culture and products”.

Tourism is also identified as one of the tools to “by 2030, increase the economic benefits to Small Island developing States and least developed countries” as comprised in SDG target 14.7.

In the Rio+20 outcome document The Future We want, sustainable tourism is defined by paragraph 130 as a significant contributor “to the three dimensions of sustainable development” thanks to its close linkages to other sectors and its ability to create decent jobs and generate trade opportunities. Therefore, Member States recognize “the need to support sustainable tourism activities and relevant capacity-building that promote environmental awareness, conserve and protect the environment, respect wildlife, flora, biodiversity, ecosystems and cultural diversity, and improve the welfare and livelihoods of local communities by supporting their local economies and the human and natural environment as a whole. ” In paragraph 130, Member States also “call for enhanced support for sustainable tourism activities and relevant capacity-building in developing countries in order to contribute to the achievement of sustainable development”.

In paragraph 131, Member States “encourage the promotion of investment in sustainable tourism, including eco-tourism and cultural tourism, which may include creating small- and medium-sized enterprises and facilitating access to finance, including through microcredit initiatives for the poor, indigenous peoples and local communities in areas with high eco-tourism potential”. In this regard, Member States also “underline the importance of establishing, where necessary, appropriate guidelines and regulations in accordance with national priorities and legislation for promoting and supporting sustainable tourism”.

In 2002, the World Summit on Sustainable Development in Johannesburg called for the promotion of sustainable tourism development, including non-consumptive and eco-tourism, in Chapter IV, paragraph 43 of the Johannesburg Plan of Implementation.

At the Johannesburg Summit, the launch of the “Sustainable Tourism – Eliminating Poverty (ST-EP) initiative was announced. The initiative was inaugurated by the World Tourism Organization, in collaboration with UNCTAD, in order to develop sustainable tourism as a force for poverty alleviation.

The UN Commission on Sustainable Development (CSD) last reviewed the issue of sustainable tourism in 2001, when it was acting as the Preparatory Committee for the Johannesburg Summit.

The importance of sustainable tourism was also mentioned in Agenda 21.

For more information and documents on this topic,  please visit this link

UNWTO Annual Report 2015

2015 was a landmark year for the global community. In September, the 70th Session of the United Nations General Assembly adopted the Sustainable Development Goals (SDGs), a universal agenda for planet and people. Among the 17 SDGs and 169 associated targets, tourism is explicitly featured in Goa...

UNWTO Annual Report 2016

In December 2015, the United Nations General Assembly declared 2017 as the International Year of Sustainable Tourism for Development. This is a unique opportunity to devote a year to activities that promote the transformational power of tourism to help us reach a better future. This important cele...

Emerging Issues for Small Island Developing States

The 2012 UNEP Foresight Process on Emerging Global Environmental Issues primarily identified emerging environmental issues and possible solutions on a global scale and perspective. In 2013, UNEP carried out a similar exercise to identify priority emerging environmental issues that are of concern to ...

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This Agenda is a plan of action for people, planet and prosperity. It also seeks to strengthen universal peace in larger freedom, We recognize that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for su...

15 Years of the UNWTO World Tourism Network on Child Protection: A Compilation of Good Practices

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Towards Measuring the Economic Value of Wildlife Watching Tourism in Africa

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Status and Trends of Caribbean Coral Reefs: 1970-2012

Previous Caribbean assessments lumped data together into a single database regardless of geographic location, reef environment, depth, oceanographic conditions, etc. Data from shallow lagoons and back reef environments were combined with data from deep fore-reef environments and atolls. Geographic c...

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This publication is the product of an international study led by the Division for Sustainable Development (DSD) of the United Nations Department of Economic and Social Affairs (UNDESA) in cooperation with the Ministry of Carriacou and Petite Martinique Affairs and the Ministry of Environment, Foreig...

Natural Resources Forum, a United Nations Sustainable Development Journal (NRF)

  Natural Resources Forum, a United Nations Sustainable Development Journal, seeks to address gaps in current knowledge and stimulate relevant policy discussions, leading to the implementation of the sustainable development agenda and the achievement of the Sustainable...

UN Ocean Conference 2025

Our Ocean, Our Future, Our Responsibility “The ocean is fundamental to life on our planet and to our future. The ocean is an important source of the planet’s biodiversity and plays a vital role in the climate system and water cycle. The ocean provides a range of ecosystem services, supplies us with

UN Ocean Conference 2022

The UN Ocean Conference 2022, co-hosted by the Governments of Kenya and Portugal, came at a critical time as the world was strengthening its efforts to mobilize, create and drive solutions to realize the 17 Sustainable Development Goals by 2030.

58th Session of the Commission for Social Development – CSocD58

22nd general assembly of the united nations world tourism organization, world tourism day 2017 official celebration.

This year’s World Tourism Day, held on 27 September, will be focused on Sustainable Tourism – a Tool for Development. Celebrated in line with the 2017 International Year of Sustainable Tourism for Development, the Day will be dedicated to exploring the contribution of tourism to the Sustainable Deve

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Accessible Tourism for all is about the creation of environments that can cater for the needs of all of us, whether we are traveling or staying at home. May that be due to a disability, even temporary, families with small children, or the ageing population, at some point in our lives, sooner or late

4th Global Summit on City Tourism

The World Tourism Organisation (UNWTO) and the Regional Council for Tourism of Marrakesh with support of the Government of Morroco are organizing the 4th Global Summit on City Tourism in Marrakesh, Morroco (9-10 December 2015). International experts in city tourism, representatives of city DMOs, of

2nd Euro-Asian Mountain Resorts Conference

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21st General Assembly of the United Nations World Tourism Organization

Unwto regional conference enhancing brand africa - fostering tourism development.

Tourism is one of the Africa’s most promising sectors in terms of development, and represents a major opportunity to foster inclusive development, increase the region’s participation in the global economy and generate revenues for investment in other activities, including environmental preservation.

• January 2017 International Year of Tourism In the context of the universal 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), the International Year aims to support a change in policies, business practices and consumer behavior towards a more sustainable tourism sector that can contribute to the SDGs.
• January 2015 Targets 8.9, 12 b,14.7 The 2030 Agenda for Sustainable Development commits Member States, through Sustainable Development Goal Target 8.9 to “devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products”. The importance of sustainable tourism, as a driver for jobs creation and the promotion of local culture and products, is also highlighted in Sustainable Development Goal target 12.b. Tourism is also identified as one of the tools to “increase [by 2030] the economic benefits to Small Island developing States and least developed countries”, through Sustainable Development Goals Target 14.7.
• January 2012 Future We Want (Para 130-131) Sustainable tourism is defined as a significant contributor “to the three dimensions of sustainable development” thanks to its close linkages to other sectors and its ability to create decent jobs and generate trade opportunities. Therefore, Member States recognize “the need to support sustainable tourism activities and relevant capacity-building that promote environmental awareness, conserve and protect the environment, respect wildlife, flora, biodiversity, ecosystems and cultural diversity, and improve the welfare and livelihoods of local communities” as well as to “encourage the promotion of investment in sustainable tourism, including eco-tourism and cultural tourism, which may include creating small and medium sized enterprises and facilitating access to finance, including through microcredit initiatives for the poor, indigenous peoples and local communities in areas with high eco-tourism potential”.
• January 2009 Roadmap for Recovery UNWTO announced in March 2009 the elaboration of a Roadmap for Recovery to be finalized by UNWTO’s General Assembly, based on seven action points. The Roadmap includes a set of 15 recommendations based on three interlocking action areas: resilience, stimulus, green economy aimed at supporting the tourism sector and the global economy.
• January 2008 Global Sustainable Tourism Criteria The Global Sustainable Tourism Criteria represent the minimum requirements any tourism business should observe in order to ensure preservation and respect of the natural and cultural resources and make sure at the same time that tourism potential as tool for poverty alleviation is enforced. The Criteria are 41 and distributed into four different categories: 1) sustainability management, 2) social and economic 3) cultural 4) environmental.
• January 2003 WTO becomes a UN specialized body By Resolution 453 (XV), the Assembly agreed on the transformation of the WTO into a United Nations specialized body. Such transformation was later ratified by the United Nations General Assembly with the adoption of Resolution A/RES/58/232.
• January 2003 1st Int. Conf. on Climate Change and Tourism The conference was organized in order to gather tourism authorities, organizations, businesses and scientists to discuss on the impact that climate change can have on the tourist sector. The event took place from 9 till 11 April 2003 in Djerba, Tunisia.
• January 2002 World Ecotourism Summit Held in May 2002, in Quebec City, Canada, the Summit represented the most important event in the framework of the International Year of Ecosystem. The Summit identified as main themes: ecotourism policy and planning, regulation of ecotourism, product development, marketing and promotion of ecotourism and monitoring costs and benefits of ecotourism.
• January 1985 Tourism Bill of Rights and Tourist Code At the World Tourism Organization Sixth Assembly held in Sofia in 1985, the Tourism Bill of Rights and Tourist Code were adopted, setting out the rights and duties of tourists and host populations and formulating policies and action for implementation by states and the tourist industry.
• January 1982 Acapulco Document Adopted in 1982, the Acapulco Document acknowledges the new dimension and role of tourism as a positive instrument towards the improvement of the quality of life for all peoples, as well as a significant force for peace and international understanding. The Acapulco Document also urges Member States to elaborate their policies, plans and programmes on tourism, in accordance with their national priorities and within the framework of the programme of work of the World Tourism Organization.

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The Contribution of Sustainable Tourism to Economic Growth and Employment in Pakistan

Faiza manzoor.

1 Department of Agricultural Economics and Management, School of Management, Zhejiang University, Hangzhou 310029, China; moc.oohay@5881aziaf or

Longbao Wei

Muhammad asif.

2 School of Public Affairs, Zijingang Campus, Zhejiang University, Hangzhou 310058, China; [email protected] or

Muhammad Zia ul Haq

3 School of Management, Zhejiang University, Hangzhou 310029, China; moc.oohay@111msaiz

Hafiz ur Rehman

4 Department of Economics, Hazara University, Mansehra 21120, Pakistan; moc.liamg@kattahkzifah

In the global economy, tourism is one of the most noticeable and growing sectors. This sector plays an important role in boosting a nation’s economy. An increase in tourism flow can bring positive economic outcomes to the nations, especially in gross domestic product (GDP) and employment opportunities. In South Asian countries, the tourism industry is an engine of economic development and GDP growth. This study investigates the impact of tourism on Pakistan’s economic growth and employment. The period under study was from 1990 to 2015. To check whether the variables under study were stationary, augmented Dickey–Fuller and Phillips–Perron unit root tests were applied. A regression technique and Johansen cointegration approach were employed for the analysis of data. The key finding of this study shows that there is a positive and significant impact of tourism on Pakistan’s economic growth as well as employment sector and there is also a long-run relationship among the variables under study. This study suggests that legislators should focus on the policies with special emphasis on the promotion of tourism due to its great potential throughout the country. Policy implications of this recent study and future research suggestions are also mentioned.

1. Introduction

The tourism industry has emerged as a key force for sustainable socioeconomic development globally [ 1 , 2 ]. The idea behind sustainable tourism is to visit the locations without harming the local community and nature and also having some constructive impact on the environment, society, as well as the economy of the country [ 3 ]. Tourism can include transportation to the general place, local transportation, accommodations, leisure, entertainment, shopping, and nourishment. It can be linked to travel for recreation, business, family, and/or friends [ 4 , 5 ]. Currently, there is a widespread consensus that tourism growth should be sustainable, although the question of how to achieve this is a subject of debate [ 6 ].

Tourism and the travel sector are important economic activities all over the world [ 7 ]. In many countries, the tourism industry remains an important source for the generation of employment and income in formal and informal sectors [ 8 ]. For instance, Hwang and Lee [ 9 ] claimed that economic growth and development is rapidly increasing in Korea due to the increase in elderly tourism. This increase shows that tourists feel inner satisfaction, which positively affects their future behavioral intentions [ 10 ]. Similarly, developing countries can engender a huge amount of foreign exchange from tourism that could also boost their sustainable growth and development [ 11 ]. In developing countries, it is the main source and a foundation for a country’s economic development and growth [ 12 ]. Tourism revenue complements the exchange derived from the overseas trade of goods and services. This sector also finances capital good imports in the development of the economy’s industrial sector. Alternatively, economic expansion in the developed nations influences business travel (overseas visits), which can lead to a rise in the nation’s overseas reserves [ 13 ].

International tourism has become increasingly important in several nations around the globe [ 14 ]. As per the report of the WTO (World Tourism Organization) in 2018, international tourists spent $1.3 billion per day and in total $462 billion in the year 2001 only. In most of the countries, the revenue from tourism is considered as a substitute for export earnings and contributes a lot to their balance of payment [ 15 ]. The government can generate revenue and also enhance household income through development of this sector and easing austere visa policies for international visitors/tourists. There are a lot of examples where tourism has a very positive impact on the economy of any country [ 16 ].

In the globalization era, third world nations started tourism to advance their economy, promote peace, develop human resources, and reduce the poverty level [ 17 ]. Tourism helps to “enhance employment opportunities and earnings, which can be of major economic significance to the local population” [ 18 ]. In terms of employment, the local community could expand their earnings and socio-economic condition, which could lead to an improved standard of living. Tourism improves local community development and helps to reduce poverty [ 19 ].

Tourism in South Asia

South Asia is recognized as a distinctive region with a substantial contiguous landmass, and diverse physical features from grasslands to forests, and swamplands to deserts. It has a large variety of natural resources, coastal areas, mountains, scenic beauty, and rivers, and assorted climatic conditions, which makes this region even more attractive [ 20 ]. In South Asia, there are eight counties, namely: Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives, India, Afghanistan, and Bhutan. In these countries, the economic base is still weak despite such great potential for tourism. The tourism industry is also a tool of economic development in South Asia like other developing countries.

In the South Asian region, the share of the tourism sector in GDP was 8.9% ($281.6 billion) in 2017 with the speculation of further growth of 7.2% in 2018. It will be 9.0% of GDP ($301.8 billion) with auxiliary income of 6.2% by the year 2028 to reach 9.4% of GDP ($579.6 billion), as presented in Figure 1 . In 2017, tourism contributed 7.5% of jobs to the employment sector (49,931,500 jobs) and a speculated increase of 3.0% or a total share of 7.6% of the job market in 2018 (51,436,500 jobs). By the year 2028, the share of tourism in the job market is expected to touch 7.8% of the job market (63,006,000 jobs), as presented in Figure 2 [ 5 ].

Source: World travel and tourism council, 2018. SOUTH ASIA: Total contribution of travel and tourism to GDP.

Source: World travel and tourism council, 2018. SOUTH ASIA: Total contribution of travel and tourism to employment.

In the South Asia region, Pakistan is well known for its tourism. Pakistan is a very beautiful country, and the tourism industry is growing [ 21 ]. Pakistan offers much allure in the developing world. The cultural and historical inheritance is very evident in this ancient region. The country receives much tourist attraction at Jaba, Kalam, Swat, Balakot, Malam, Shangla, Murri, Ayubia, Gilgit, Chitral, Paras, Sharan, Shinu, Lulusar, Dudupatsar, Naran, Shogran, and Kaghan valleys, Lake Saif ul muluk, Malika Parbat (highest mountain of Kaghan valley and also called Queen of the Mountains), Supat valley, and other historical mountain ranges in the country [ 22 ]. In the Northern Area of Pakistan, there are a lot of places that are comprised of majesty and grandeur. These areas have relics of distinct lands exclusive to its heritage and it is hallowed as a top destination with an astonishing collection of many attractive rivers, mountains, lakes, and valleys [ 23 ]. The Karakoram, Hindukush, Himalaya, and Pamir mountain ranges create formidable areas in the northern regions. They bring trekkers, climbers, hikers, and mountaineers. They also contain numerous unheeded rocks and flowing streams that bring hundreds of thousands of tourists every year. Only a few regions in the world can present a high-class combination of magnificent natural attraction, a rich variety of socio–economic systems, and history as offered by Himalayan and Hindukush regions of Pakistan [ 20 ].

International tourism in Pakistan has achieved record growth. The number of tourists has reached 808,000 from all tourist producing market places. This figure is a 24.4% rise from the previous two years. According to the report, in 2017, 1.75 million visitors traveled to Pakistan. The Pakistan Tourism Development Corporation (PTDC) confirmed that 30% of tourists were national (domestic) and almost 90% of the tourists preferred to journey by road; only 8.5% and 1.8% traveled by train and air, respectively. In 2017, the WTTC (World Travel and Tourism Council) mentioned that Pakistan’s tourism revenue was 19.4 billion US dollars and made up 6.9% of the GDP. The WTTC expects that amount to rise to 36.1 billion dollars by 2030. In 2016, tourism contributed 6.0% to total employment and in 2017 it increased to 6.3%. This total is expected to rise in 2018. The success of tourism in Pakistan hopes to contribute to the reduction of its poverty level. Tourism has an encouraging influence on Pakistan’s economic growth and still continues to grow [ 24 , 25 ].

The current study observed how the tourism industry supported the economy and also increased employment in South Asia. In South Asia, there are eight countries, but we have chosen Pakistan only for this study. In other countries, many studies have been conducted by other scholars [ 26 , 27 , 28 , 29 ]. However, in South Asia, less research attention has been paid towards the tourism sector and the growth of the economy. Therefore, the present study examines the relationship of sustainable tourism to economic growth and employment in Pakistan. The data was available for Pakistan but missing for other Asian countries.

This article contains six sections. The first section is the introduction of the study. The second section contains theories and hypotheses development. The third section provided the research methodology of the study. The fourth is the results section. The fifth section comprises the conclusions and discussions. The final section includes policy implications, limitations, and future research directions.

2. Development Theories

Since the 1960s, the tourism sector has been considered an effective developmental growth pole, and many countries have enhanced their tourism sector to improve their economic development [ 30 ].

Todaro and Smith (2011) proposed in their study that it is a multidimensional process as far as development is concerned, and it comprises positive changes not only in economic growth and national institutions but also in poverty reduction. Modernization theory (MT) is one of the most popular developmental paradigms to have gained admiration from the late 19th till the mid-20th century. This theory is thought to be an extension of another theory called growth theory, which is grounded in Keynesian economics [ 31 ]. For justification of MT, the theorists used it as a key social indicator for economic development, which trickles down to the grassroots level of society in the form of plentiful economic and employment prospects. Wealthy and powerful modernized economies usually provide a high-quality of life and modern technology to their citizens. Modernization becomes more favored due to its bold and effectual production methods. Moreover, from the tourism perspective, the modernization strategies of development not only engender foreign capital but also smooth the way for the transfer of technology and create greater employment opportunities than before. The main focus of tourism development is these economic paybacks, and whenever other economic resources trickle down, the tourism multiplier acted as a growth-pole [ 26 ].

Dependency theory (DT) became popular in the 1960s and 1970s. It is a composite of numerous interrelated theories and mainly focuses on the inequalities of core capitalist and southern developing countries [ 32 ]. According to this theory, historically poor countries are kept deprived of development by developed and rich countries. The economic reliance of developing countries on development projects is based on: (1) transfer of advanced technology from industrialized countries; (2) creation of massive debts and dependency on foreign investment; and (3) interest on debts transmitted back to the developed countries [ 33 ].

In response to the huge criticism of this theory in the 1970s and 1980s, neoliberalism theory (NL) was formed. NL is a theory of free global markets without any economic and political influence. The dogma behind this theory is to remove all barriers constructed by developed countries. There should be a free flow of capital and trade globally and slight consideration should be given to the market traits like privatization, market development, de-regularization, self-determination, and self-sufficiency [ 34 ]. In the above-mentioned era, it was widespread that governments had the capabilities to earn foreign capital. As far as neoliberal tourism is concerned, hotel chains could play a primary role to magnetize foreign capital. By developing infrastructure in tourist attraction areas, the local and national economies could get a boost, although the decrease in state participation in social welfare programs and limiting trade unions, the spending on education, health, environment, and other welfare also decreased. In Neoliberal, tourism not only pauses the development of the state but also humiliates and exploits the labor to set off its own self-interest. Due to the many consequences, state representatives hesitate to start projects of human development as well as programs for the local community’s well-being [ 30 ].

Eventually, in the decades of the 1970s and 1980s, it was realized that rather than benefiting the poorest of the world, policies were tilted, i.e., global top-down approaches were in favor of the west only. To enrich and uplift the standard of living of the poorest, aid and development organizations started searching for causes of poverty [ 35 ]. Instead of getting rid of the root causes of poverty, the new alternative development (AD) or bottom-up style was launched only to minimize the symptoms. A basic needs approach (BNA) only concentrated on basic needs and did not focus on economic development.

According to neoliberal development and general modernization theories, the standard of living is measured by economic growth. However, DT and AD theories of economic development interrogated this approach. The DT approach demonstrated the negative effects of Western development on the poorest communities of the south and AD theory swung development to bottom-up from the top-down approach.

Sustainable development (SD) is the combination of two different objectives of sustainability and development. In simple words, this theory is a mixture of development and sustainability theories [ 36 ]. Until the end of the 20th century, ecologists were concentrating on the ideas of the conservation movement of the 19th century [ 37 ]. Tourists with environmental knowledge loathe ecological and social damage. The sustainability factor has been appropriated irrespective of the fact that the tour operating companies were motivated by promoting ecological vacations. Ioannides [ 38 ] was of the opinion that the International Federation of Tour Operators (IFTO) used sustainability as a marketing tool with the intention to maximize profit. Currently, efforts are being made for a reduction in poverty through pro-poor tourism. In attaining the UN Millennium Development Goals, the UN WTO (2005) report blatantly supports the role of community tourism through the local private sector.

Empirical Literature Review and Hypotheses

Researchers have a variety of views concerning how tourism contributes to economic expansion and employment in many developed and underdeveloped countries. A number of scholars have the same opinion on the significant role of tourism and how it relates to the growth of the economy. According to the World Tourism Organization, tourism is an activity of traveling for the purpose of leisure outside the day to day environs. The benefits received by local and national economies should be analyzed accordingly [ 39 ]. For economic development, tourism has been considered one of the driving forces. It has a positive impact in creating a foreign exchange and generating employment opportunities and local revenue [ 40 , 41 , 42 ]. Numerous studies in different less-developed nations around the world have found a significant correlation between tourism and economic expansion [ 41 , 43 , 44 ].

Ayeni et al. [ 39 ] explored the growth of sustainable tourism in Nigeria. According to the authors, tourism has become an instrument for diversifying the economy for several countries. This has supported the service sector and has created a major connection with Nigeria’s economy, by promoting new employment opportunities and creating new sources for revenue generation. However, the developed nations have a higher ratio of world tourism in comparison to less-developed nations; but still, there are a lot of opportunities for less developed countries to get maximum benefits from this industry. The researchers analyzed through the qualitative technique of research the potential of Nigeria’s tourism on its economy and found that the industry has great potential but is yet to be explored. They were of the opinion that given the endeavors of the government to eradicate poverty and diversify the economy, tourism could contribute a lot.

Manwa [ 45 ] posited that in order for tourism to be sustainable for society they must gain economically from it. This would allow them to protect and maintain the popular tourist areas. This is also highlighted by Smith [ 46 ]: that the economic benefits of tourism depend on the country’s aptitude to offer appropriate and adequate amenities.

Brida [ 47 ] emphasized the impact that tourism had on economic expansion in Chile. The purpose was to examine a probable causal association between exchange rate, tourism expenditure, and economic expansion for the period 1986 to 2007. The hypotheses were empirically analyzed by employing the Johansen Cointegration Test. The author found that tourism and economic expansion had a positive correlation and that tourism was the main contributing factor to economic expansion. Pavlic et al. [ 48 ] revealed the impact of tourism on employment in Croatia. According to the authors, the tourism sector contributed to the promotion of employment after examining quarterly data from 2000−2012 through Johansen Co-integration Test and Granger Causality Test. The researchers also found a positive impact of tourism on employment and co-integration showed a long-term correlation amongst the variable.

Wang et al. [ 49 ] investigated the correlation between GDP and tourism revenues in Guizhou, China. Findings of their study showed a significant and positive correlation between tourism and GDP. Akan et al. [ 50 ] demonstrated causal relationships among the tourism sector and economic development of Turkey. The researchers used the Granger Causality test, Phillips–Perron test, the co-integration approach, and a Vector Autoregression (VAR) model for the time period 1985–2007. Findings of the test revealed that the tourism industry in Turkey was positively affected by economic development. The analysis indicated that a long-term steady correlation among economic development and tourism growth exists.

Kreishan [ 51 ] analyzed the causality association among tourism revenues and economic development (GDP) for Jordan. The author covered the annual time series data of 1970–2009 for analysis. To check the causal association, the researcher used the Augmented Dickey–Fuller (ADF), Johansen Co-Integration, and Granger Causality tests. The results showed that there was a positive relationship in the long term among economic expansion and tourism growth. The existence of a direct connection among tourism revenue and economic growth was also observed through the Granger Causality test.

Adnan et al. [ 23 ] estimated the long-run relationship amongst tourism revenue and economic development in Pakistan. The authors used the annual data from 1971 to 2008 for analyses. The findings confirmed the long-term relationship among revenue from tourism and economic development, and in their study, they explained that revenue from tourism led to increasing economic growth in Pakistan, except between 2006 and 2008.

Sr et al. [ 52 ] explained the connection among eradication of poverty, tourism growth, and economic development in Nicaragua. The researchers found a direct relationship between tourism growth and poverty eradication. The authors characterized the association amongst the variables under study as they related to “democratization of the dollar”. They highlighted the employment and income opportunities that are derived from a transfer of income and wealth from the inhabitants of developed countries compared to less-developed countries. According to the Shan et al. [ 53 ] and Kulendran et al. [ 43 ] in their analyses of China and Australia, they observed that there is a strong association between international travel and trade. A Korean case suggests that economic development can attract many business tourists. The case also suggests that economic growth can lead to tourism expansion.

Several studies have shown the direct connection between international trade (particularly export expansion) and economic growth [ 54 , 55 , 56 ]. The authors have seen a robust relationship between international trade and economic development and also a strong correlation between exports and economic growth. Moreover, tourism extensions are connected to economic development. However, export-oriented economic development caused tourism income to drop. Lastly, the strategies of continuous promotion of tourism may not be as effective as perceived by decision makers, if no direct relation was found between tourism development and economic growth, because it generally happens when tourism development has a positive impact on the economy [ 45 ]. In the South Asian region, especially in Pakistan, studies of tourism’s effects on economic growth have been less evident in tourism related literature. Therefore, we examined the relationship between growth of tourism, economic development, and employment in the context of Pakistan. Hence, our research is based on the following hypotheses:

There is a positive association between annual tourism growth and GDP.

There is a positive association between annual tourism growth and an increase in the employment rate.

3. Research Methods

Data and variables.

To study the contribution of sustainable tourism to economic growth and employment in Pakistan, the annual time series data from 1990 to 2015 was taken for analysis. In this study, the annual growth of tourism was taken as an independent variable and both employment and GDP were used as dependent variables. Due to the time series data, this study may exhibit some stationary or non-stationary variables. In this study before determining that all the series were integrated, a unit root test (i.e., ADF) was applied.

Firstly, the bivariate regression model was used for quantitative analysis to investigate the empirical relationship between two variables and hypothesis testing [ 57 ]. Secondly, to find a long-run relationship between variables, we used co-integration analysis. For statistical analysis and also for econometrics model estimation, E-view 9 was used. For data collection, different sources were used, i.e., Tourism Year Book, Economic Survey of Pakistan, Ministry of Tourism Government of Pakistan, World Travel and Tourism Council, and Tourism Economic Impact annual reports.

4.1. Descriptive Statistics and Correlation Matrix

The variables’ descriptive statistics and correlation matrix are presented in Table 1 . Means, standard deviation, and correlations are revealed in the table. These results of the correlation matrix aligned with the previous study [ 58 , 59 ]. Generally, multicollinearity was very low and did not present a serious concern [ 60 ].

Variable descriptive statistics and correlation matrix.

Note: EMP: Employment rate; GDP: Gross Domestic Product; Tour_g: Tourism growth; * Correlation is significant at the 0.05 level(2-tailed); ** Correlation is significant at the 0.01 level (2-tailed).

4.2. Unit Root Test Results

Testing for a unit root of the variables was necessary in order to rule out the possibility of non-stationarity of the data. Therefore, the commonly accepted ADF and Dickey and Fuller unit root test was adopted to check the stationarity of the GDP, employment, and annual tourism growth (Tour_g) series. The test was based on an estimate of the following regression:

where Δ is the first difference, Y is the time series, t symbolizes linear time trend, α denote a constant, n is the number of lags on predicted variables, and e represents the error term.

In Table 2 , the results show that the level value of all three sequences was non-stationary and further tested signposted that GDP, EMP, and Tour_g were stationary at the first-order difference. The first-order difference was made on three sequences to reduce fluctuations of the data. Then three new series, ∆GDP, ∆EMP, and ∆Tour_g, were obtained and their unit root test results are shown in Table 3 .

Root test results of sequence level values.

ADF: augmented Dickey–Fuller test; PP: Phillips–Perron test.

Root test results of the sequence first-order difference.

Note: null hypothesis rejected at 5% significance level.

In Table 2 and Table 3 the results of ADF and PP both indicated that GDP, employment, and annual tourism growth were not stationary in their level form but stationary at first level. Thus, both test variables were integrated of the same order1 (1).

4.3. Regression Analysis Technique

To examine the contribution of tourism to economic growth and employment, a regression analysis technique was used and the same technique was employed as in [ 61 ].

The model can be expressed as:

where Y i = dependent variable, X i = independent variable, β 0 = intercept, β i = coefficient to be estimated.

The proposed modified regression model is represented by the following equation:

Model Specification

where Δ = first difference, GDP = gross domestic product, Emp = employment rate, Tou_g = annual tourism growth, β 0 = intercept, β S = coefficient to be estimated, and ε = error term.

From Table 4 the results show that the p -value was 0.000, which is less than 0.05 ( p < 0.05), which indicates that there was a significant contribution to the annual growth of tourism to the GDP. Moreover, the values of t -statistics were also above the cutoff value of 1.96 [ 62 , 63 ]. The R-squared value meant that there was a 5% variation in GDP due to annual tourism growth. There was also a significant and positive relationship between explanatory variables and the predicted variables because the T -values were greater than 1.96. These results also aligned with the study of Kim et al. [ 56 ].

Regression analysis of tourism growth and GDP.

Table 5 shows that the dependent variable was employment rate and annual tourism growth was the independent variable. According to the analysis, the p -value (0.04) was less than 0.05. The findings demonstrate that annual tourism growth contributed significantly to the employment rate. The R 2 value implies that 15 percent variation in employment rate was due to tourism growth. The beta coefficient was positive, which entailed that annual tourism growth and employment rate had a significant and positive relationship; consequently, we accepted the alternative hypothesis and rejected the null. Richardson [ 64 ] confirmed the same patterns results in his study.

Regression analysis of tourism growth and employment.

4.4. Findings of Cointegration Test

To investigate the stable long-run relationship between annual GDP, employment, and annual growth of tourism, Johansen’s Cointegration test was selected amongst several other techniques available for time series data. The main objective of the variables under study was to estimate the stationary linear combination.

Johansen and Johansen and Juselius used maximum eigenvalue and trace statistics to test whether there was a long-term relationship between the variables. There are numerous methods for the determination of the lagging length and the most commonly used is the Schwarz criterion. This is because Schwarz criterion has been scientifically proven [ 65 ], and the critical values are more unbiased relative to other criteria. Therefore, this study determined the lagging length based on Schwarz critical values.

For the Johansen test of cointegration, the precondition was that variables must be non-stationary at level, but our three variables were integrated of the same order.

Table 6 shows that the result of the trace test indicated a solid cointegrating relationship between the variables. The value was less than 5% so we could not reject the null hypothesis, which meant that there was cointegration amongst variables; these variables had long-run associations and in the long run, they moved together. Furthermore, the maximum eigenvalue test demonstrated all the variables co-integrated and in the long run they had an association.

Johansen cointegration. Series: EMP, GDP, Tour_g Lags interval (in first differences): 1 to 4.

Source: Author’s calculation by using E-view 9. Eqn (equation), CE (cointegrating equation).

Both test trace and max-eigenvalues indicated the same thing: that variables (GDP, EMP, Tour_g) were co-integrated. They had a long-run association, and for the long run, they could move together.

5. Discussion

Tourism is one of the fastest growing industries and also a driving force for so many developed as well as developing economies. It is the largest source of employment opportunities and a huge wealth originator and a greater contributor to the diversified economy. Weaker regions or regions in decay could be developed through the tourism sector easily. For the tantalizing economies of the South Asian countries, tourism is professed as a dynamic tool to get rid of the scarcity of development resources, such as finance and expertise.

The goal of the current study is to examine the relationship between tourism, employment, and economic development in Pakistan. We explored the positive connection between the annual tourism growth and employment and economic growth. Tourism growth can improve the employment rate as well as GDP. Kim et al. [ 66 ] demonstrated causal associations among tourism growth and economic expansion in Taiwan. The findings of their study showed a long-term equilibrium association. Sanchez et al. [ 67 ] revealed that tourism expenses primarily had caused the economic deficit, but that a positive and significant economic impact on economic expansion was found. The empirical studies highlighted the impact of the tourism demand on employment pointed out that tourism had a significant effect on employment rate [ 68 , 69 ]. According to Archer [ 70 ] and Mathieson [ 71 ], tourism creates direct and indirect employment opportunities. However, studies in this context are inadequate in Pakistan. As a result, we investigated this gap and found a positive impact that tourism had on employment and economic development. Findings of our study showed that tourism growth has a positive correlation to employment and GDP. Our results are compatible with the previous research findings of Khalil and Pavlic [ 48 , 72 ]. Moreover, the main outcomes of the present study are in line with previous research outcomes [ 67 , 70 ]. The result of the cointegration analysis suggests the existence of a relationship between annual tourism growth and GDP, a finding that aligns with the prior study of Pedak [ 73 ]. Additionally, the results of the cointegration analysis show the long-run relationship between the annual tourism growth and employment; these results are in line with the previous study of Dimoska [ 74 ]. These findings suggest that growth in tourism has a major role in the economic growth as well as in creating employment opportunities. Findings supported the hypotheses.

Empirical and theoretical studies have discovered that the growth of the tourism sector has a positive impact on employment. In addition, its direct effect on travel and tourism can produce additional employment opportunities through its stimulating influence in many tourism sectors. The total economic impact of tourism is healthier when the tourism sector is encouraged to acquire domestic services and goods.

6. Policy Implications, Limitations, and Future Research Direction

For the Pakistani economy, tourism is a motivating force. The growing tourism sector can bring much optimism to the economy, mainly in terms of income, GDP, generation of employment, and economic growth. Pakistan is a popular tourist destination. Its array of natural beauty, as well as its traditional and cultural inheritance, will play an important role in Pakistan’s future if the tourism industry develops systematically and is supported well.

The tourism sector requires creative and talented people and well-developed infrastructure in place. Policies drawn from this study are that the government should create employment opportunities, income sources, and revenue for the local inhabitants as well as economic activities in the country through the development of tourism. The government can develop the tourism industry by providing the incentive to the tourism sector in the form of basic infrastructures such as a high-quality transportation system, roads, immense airports, and tax incentives to the tourism-related industries (i.e., hotels). Political stability must be established to improve Pakistan’s image to the world. The government should also ensure the security of all tourists and formulate sustainable tourism policies. This ensures a stable, secure, and steady tourism demand for the country.

The main emphasis of the state legislators should be on a law and order situation and a quality education. Terrorist attacks not only destroy the tourism sector but also abolish the soft image of Pakistan. Globally, the country was declared as insecure for traveling. Irrespective of the poverty, unemployment, inflation, and infrastructure development, still northern areas have attracted the maximum share of tourists as compared to other areas of Pakistan. Hence, to alleviate poverty and enrich the standard of life, an international level promotion of tourism in the northern areas is needed.

There are some limitations to this study. These limitations can lead to further research. First, the recent study applied secondary data. So, future studies may focus on primary data for investigating the effect of the tourism sector on economic growth. Secondly, the present study is conducted in the context of Pakistan; future research studies should be carried out in other developing countries in terms of generalizability of the findings. Further research could also be based on a sector-driven approach in order to distinguish the direct and indirect impacts of tourism on employment. Finally, future research should encourage examining other dependent variables, specifically revenue and foreign exchange earnings, etc. Furthermore, future research is needed to additionally recognize the short-term relationship between the variables through the Johansen Cointegration and Vector Error Correction Model (VECM).

7. Conclusions

The main purpose of the current study is to examine the relationship between tourism to employment and economic development in Pakistan. For this study we have used time series data from the year 1990 to 2015. The annual growth of tourism was used as an explanatory variable and both employment and GDP were taken as outcome variables. Bivariate regression and Johansen cointegration technique employed for the analysis. We have investigated the positive connection between the annual tourism growth, employment and economic growth. Findings of the study showed that tourism growth plays important role in the economic development of the country.

Acknowledgments

F.M. would like to express special gratitude to my academic supervisor Longbao Wei for his guidance, constant support, and orientation. His important guidance, advice, and suggestions are invaluable.

Author Contributions

F.M. and L.W. have equal contribution to writing the original draft; M.A. reviewed and revises the paper. M.Z.u.H. and H.u.R. contributed to the methodology part.

This research received no external funding.

Conflicts of Interest

The author(s) declare that there is no conflict of interest regarding the publication of this article.

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A Lot of Places in the World Rely on Tourism as a Main Source of Income – IELTS Writing Task 2

Updated On Dec 07, 2023

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This article contains A lot of places in the world rely on tourism sample essays.

Given below is a real IELTS Writing Part 2 Essay question. We have provided sample essays as well as an essay outline so that you can practice writing your own!

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Learn how to write the perfect IELTS Advantages/Disadvantages essay for a Band 9 score with the guide below!

Read the sample essay for A lot of places in the world rely on tourism as a main source of income. Unfortunately, tourism can also be a source of problems if it is not managed correctly. Describe the advantages and disadvantages of tourism in the modern world. Do you think that benefits of tourism outweigh its drawbacks?

In IELTS advantages and disadvantages essays, you will be asked to write the benefits and drawbacks of the topic given. You have to be careful that you write the advantages and disadvantages of the topic given and not your opinion about the topic. While explaining these kinds of essays, you can divide the content into 2 paragraphs.

To help you to understand this type of essay better, given below are some tips and a sample essay with a detailed outline. 

Advantages and Disadvantages Essay

Introduction

Sentence 1: Introduction of the given topic “Tourism as a main source of income”.

Sentence 2: State advantages and disadvantages of tourism in the modern world and give your own opinion.

Paragraph 1: Tourism has become one of the major contributors to the economy of several nations. The tourism industry has been growing enormously.

Paragraph 2: Tourism also has some drawbacks affecting the environment and state of cleanliness of popular tourist places.

Conclusions

Stating whether the advantages outweigh disadvantages or vice versa.

Sample Essay

Over the last few years, tourism has become one of the major contributors to the economy of several nations. The tourism industry has been growing enormously. Although the tourism industry in the modern world has been generating an abundance of revenue, there are a few drawbacks too. However, in my personal perspective, the advantages of tourism outweigh the disadvantages.

Over the years, the tourism industry has been expanding, contributing to the economic development and growth of countries. Moreover, the tourism industry has been creating a lot of employment opportunities for the local public. In other words, tourism boosts a country’s economy by creating many new job openings for the local people. Tourists spend money on a wide range of services such as hotels, amusement parks, transportation, food and medical services. This way, tourism yields an additional income supporting the country’s economy. Indirectly or directly, the tourism industry boosts the travel industry and helps in the improvement of infrastructure. For instance, the tourists’ crowd results in more demand for hotels, tourist guides and many more, encouraging local businesses to employ more people to fulfill their requirements.

However, tourism affects the environment and cleanliness of popular tourist places. If the tourist location is not managed properly, it can cause deleterious effects on the ecology of that place. The demand for the increased accommodation can lead to the construction of more hotels. This often leads to the destruction of forests and over-exploitation of natural resources, disturbing the world’s natural ecology.

To recapitulate, the tourism industry has some downsides like disastrous impacts on forests, but it does not overshadow the positive impact on the country’s economy. I believe that the benefits of tourism totally outweighs its drawbacks.

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Band 9 Sample Essay

Tourism industry is one of the most booming sectors in the world, which connects people from one end of the world to the other. It is a wide-ranging business that encompasses accomodation, transport, food, entertainment and other related industries. Sadly, tourism also has some pitfalls that can become detrimental to the country if not handled properly. In this essay, both sides of the argument, that is, the advantages and disadvantages, will be elaborated to reach a conclusion.

Moving on to the conveniences provided by the tourism industry, there are three major ones. Firstly, it augments the economy of the country and provides a boost by the inflow of foreign exchange. This money is utilized for the development of infrastructure for both the citizens and the upcoming tourists as well as preservation of the heritage constructions. Secondly, as previously hinted, tourism contributes to the livelihood of a large section of the population through hotels, restaurants, travel agents, various fun activities and shops selling local crafts. Many people are engaged in the diverse sections of this industry, and tourism aids in solving the unemployment and poverty issues, especially in the developing countries. Moreover, international visitors act as the medium of cultural exchange between two countries. For example, when an American visits India, they are enticed by the colourful cities and savoury food items of the country, and this accelerates the incoming of more Americans. This is true for any country that the travellers visit.

Though the profitability of this industry makes it one of the most alluring enterprises of a country, an attempt to tempt more explorers to sojourn there may spin out of control due to mismanagement. If the administration does not set proper rules and regulations for visitation and stay for the tourists, it may lead to the destruction of historical buildings and public places. Excess inturn of excursionists may also have a detrimental effect on the natural habitat of the place due to littering and not following certain ordinances. Apart from this, negligence on the part of the management can aggrandize illegal activities like trafficking and unauthorized business of antiques and valuables. Local people also get the opportunity to cheat the guests as they are unaware of the customs and the statutes of the alien country.

In conclusion, it can be noted that the expediencies of the tourism industry eclipse the imperfections by a long stretch. Although the flaws can be handled by the proper manoevure by the government and the common people, the boons have already been contributing to the country’s economy and welfare of the inhabitants.

• Contributor

Meaning: a person or thing that contributes something. Eg: Jack was the highest contributor in the charity event.

Meaning: very large in size, quantity, or extent. Eg: An enormous amount of books are available in the library.

Meaning: help or encourage (something) to increase or improve. Eg: Rose’s mother boosted her confidence.

• Destruction

Meaning: the action or process of causing so much damage to something that it no longer exists or cannot be repaired. Eg: Construction of skyscrapers have led to the destruction of small villages.

• Deleterious

Meaning: causing harm or effects Eg: Release of toxic gases have deleterious effects.

• Accomodation

Meaning: a room, group of rooms, or building in which someone may live or stay. Eg: Mary was impressed by the resort’s accommodation services.

• Consequences

Meaning: a result or effect, typically one that is unwelcome or unpleasant. Eg : John had to bear the consequences of being jobless.

Meaning: income, especially when of an organization and of a substantial nature Eg: The new startup company generated a huge amount of revenue.

Meaning: produce or provide (a natural, agricultural, or industrial product). Eg: The crop yields were in surplus.

Meaning: completely remove or to get rid of Eg: The yellow team was eliminated from the competition.

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Janice Thompson

Soon after graduating with a Master’s in Literature from Southern Arkansas University, she joined an institute as an English language trainer. She has had innumerous student interactions and has produced a couple of research papers on English language teaching. She soon found that non-native speakers struggled to meet the English language requirements set by foreign universities. It was when she decided to jump ship into IELTS training. From then on, she has been mentoring IELTS aspirants. She joined IELTSMaterial about a year ago, and her contributions have been exceptional. Her essay ideas and vocabulary have taken many students to a band 9.

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Posted on Nov 21, 2023

In this modern era, tourism is the main source of income in many nations. While it contributes to the economy of the country, it may cause serious consequences if it is not managed properly. This essay will discuss how tourism plays a role in the economic growth of the countries and detrimental effects of this trend in many nations. In my perspective, I believe that the benefits outweigh its drawbacks.

Globalization has made people easy to travel one country to another. As a result, people showed interest in exploring cultures around the world. In many countries, tourism contributes more to its economy because its provide numerous employment opportunities for local population. Foreign people are the significant source of income for local hotels, and resorts. In addition, the ticket fee for historical places, cultural heritages and parks is at least triple the amount compared to the local habitants. Moreover, tourists are tend to purchase handicraft products from different cultural people that will result in economic growth and the cultural preservation of countries.

On the other hand, while it plays a crucial role in the country’s economy, it leads to detrimental impact on the country’s ecology and the culture. Local people may tend to adopt foreign culture while forgetting their own culture, in-terms of language, dress and traditions. Consequently, loss of cultural diversity may happen. Furthermore, it increases the chances for crimes because local habitants think that foreign people are carrying valuable things and lots of money while they travel. Environmental pollution is another serious issue because foreigners tend to drop litters on the tourist areas without any care which may lead to water and soil pollution. As the number of tourists rises, transportation also increased which incorporates more green house gases in the atmosphere, resulting in air pollution. Ultimate it leads to global warming and climate changes. To conclude, although tourism had some detrimental effects on the country’s cultural heritage and environment, I believe that it has more benefits as it plays a significant role in the economy of the nations in many ways, if it is well managed.

IELTS Expert

Posted on Nov 22, 2023

Overall Band : 5 A very limited range of grammatical structures is used. Grammatical errors are frequent and cause some difficulty for the reader. The meaning is generally clear in spite of a rather restricted range of vocabulary. Thus the user needs to enhance the range of vocabulary to boost the band scores. For more tips and tricks on IELTS Writing, Get a FREE DEMO with our BAND 9 Expert Trainer here.

Hasnain Malik

Posted on Apr 25, 2022

There are so many countries in the World which rely solely on tourism to boost up their economy. Maldives, Switzerland and UAE, etc. are among such countries. Similarly, some countries have faced serious problems due to mismanagemet and maladministration in the field of tourism. North Korea, Pakistan and Afghanistan are among such countries. Tourism can affect substatially on country’s economy and if it is being handled with effective planning and management; it can be an economic boom.

Maldives, Switzerland, UAE, Greenland and many other are among those, whose largest source of income is tourism. Some other places like USA, Canada and almost whole Europe earn more than 30% of their GDP from tourism department. In addition to income, it also play a pivotal role in connecting different nations, traditions, customs, wearing styles, costumes and what not as these places are being used as the connectors of different peoples all over the World.

There are some disadvantages of tourism too. It costs much on ensuring safety and security of tourists. Particular Government has to bear the burden of the cost of safety of foreign tourists and it will ultimately put pressure on taxpayers. Provision of seasonal and particular food for particular nationals, living places and proper management of transportation channels are other serious problems of the Government.

In my opinion, benefits of tourism can easily be outweighted if tourism is being taken into serious considerations faithfully and religiously with marvellous planning and management.

Posted on Apr 26, 2022

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List of Countries by Tourism Income

Below you can find a list of countries by total tourism income and ratio of tourism income by total GDP. You can also find an interactive map below where each country is colored by its tourism income. The ratio of tourism income to the total GDP gives a rough figure which economies are most dependent on tourism income.

• United States of America has the highest total tourism income with over 210 billion $ yearly. This huge figure however is only 1.1% of the country's total GDP
• Spain has the second largest tourism income in the World with almost 68 billion $ yearly, making up tourism 5.2% of the total economy.
• Another Mediterranean country, France, is the third on the list with over 60 billion yearly tourism income.
• It is no wonder that the popular holiday destination Maldives is the leader when it comes to share of tourism in the total GDP. 2.7 billion $ tourism income of Maldives makes up 60% of the country's total GDP.
• Palau and Grenada, two island countries of Caribbeans, come second and third after Maldives. Palau with 141 million $ and Granada with 448 million $ obtain respectively 48% and 40% of their GDP by tourism.

Similar Data

Countries by Number of Incoming Tourists

External Links

• UNWTO - World Tourism Organization

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Tourism in the 2030 Agenda

The year 2015 has been a milestone for global development as governments have adopted the 2030 Agenda for Sustainable Development, along with the Sustainable Development Goals (SDGs). The bold agenda sets out a global framework to end extreme poverty, fight inequality and injustice, and fix climate change until 2030. Building on the historic Millennium Development Goals (MDGs), the ambitious set of 17 Sustainable Development Goals and 169 associated targets is people-centred, transformative, universal and integrated.

Harnessing tourism's benefits will be critical to achieving the sustainable development goals and implementing the post-2015 development agenda

Tourism has the potential to contribute, directly or indirectly, to all of the goals. In particular, it has been included as targets in Goals 8, 12 and 14 on inclusive and sustainable economic growth, sustainable consumption and production (SCP) and the sustainable use of oceans and marine resources, respectively.

Sustainable tourism is firmly positioned in the 2030 Agenda. Achieving this agenda, however, requires a clear implementation framework, adequate financing and investment in technology, infrastructure and human resources.

GOAL 1: NO POVERTY

GOAL 2: ZERO HUNGER

GOAL 3: GOOD HEALTH AND WELL-BEING

GOAL 4: QUALITY EDUCATION

GOAL 5: GENDER EQUALITY

GOAL 6: CLEAN WATER AND SANITATION

GOAL 7: AFFORDABLE AND CLEAN ENERGY

GOAL 8: DECENT WORK AND ECONOMIC GROWTH

GOAL 9: INDUSTRY, INNOVATION AND INFRASTRUCTURE

GOAL 10: REDUCED INEQUALITIES

GOAL 11: SUSTAINABLE CITIES AND COMMUNITIES

GOAL 12: RESPONSIBLE CONSUMPTION AND PRODUCTION

GOAL 13: CLIMATE ACTION

GOAL 14: LIFE BELOW WATER

GOAL 15: LIFE ON LAND

GOAL 16: PEACE AND JUSTICE

GOAL 17: PARTNERSHIPS FOR THE GOALS

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Tourism as a secondary source of income

It is a fact that tourism is an efficient engine for the prosperity of any economy. Regions that have assets such as natural resources, sites of cultural and heritages interests, modern infrastructure, etc. have huge opportunity to make economic and social progress. Not only tourism companies, but the destination and the communities together start seeing the effects of tourism. These effects of tourism are categorized in direct and indirect effects. The people and organisations involved in the tourism businesses such as –tour operators, guides, transportation, food and accommodation providers come under the first round that shows effects of tourism instantly. If tourism flourishes, the components involved in first round get improved profits and employment opportunities. This is the direct effect of tourism that generates primary income for tourism businesses.

Secondary income through tourism

The components of first round of providers require sufficient supply of resources to cater to increasing demand of tourism. These supplies are in the form of food, water, sanitation, fuel, electricity, equipment, furniture, communication networks, local art and handicrafts, local artists, modes of transportation, flora and fauna, land, etc. These are the types of supplies that are not necessarily only for tourism but also are part of local system. With the increase in tourism, the suppliers and creators of these components also gets an opportunity to grow.

When we compare the scope of first round of supply for tourism with the supply of goods and services associated with it, we can see that the later one is broader than the first round. Therefore, there are many businesses, vendors and professional that are not dependent on tourism but can benefit substantially with an increase in tourism.

Lets consider the example of supply of food provisions. Agricultural activities in the region makes provision for food for most consumption. The destination might also have agriculture as its main source of income. But with increase in tourism, there is an increase in demand for agricultural produce. The demand can be to cater for food for tourists and those employed in tourism, or for making other items sourced from agricultural produce. There is also the opportunity to showcase the agricultural activities and culture for tourists seeking authentic and local experiences. This can result in an additional source of income for the agricultural industry where traditionally the income is seasonal and unpredictable. Tourism, thus can be treated as a secondary source of income.

#experientialtourism #tourismincome #tourismbenefits #agrotourism #sustainabletourism #tourismbusiness #sustainablesupplychain #supplychain #foodandbeverage #Resources

Money blog: 'Extremely worrying' mortgage trend revealed in new report; a third of people make this mistake when booking their holiday - and how to avoid it

A third of travellers are making the same mistake when going on holiday, figures show. Read about this and all the latest consumer and personal finance news in the Money blog - and leave a comment or your money problem in the box below.

Thursday 16 May 2024 20:00, UK

• 'Extremely worrying' mortgage trend revealed by new government data
• Almost a third of travellers make this insurance mistake - here's what you need to know
• How much the price of packed lunches has soared - and the cheapest supermarkets to buy a healthy one
• Major firms release financial updates
• UK economy in safe hands 'whoever wins' election, top bank chief tells Sky News

Essential reads

• How much do buskers actually make - and what's it like?
• The best bank accounts for your kids
• Basically...  What is PIP - and what could government changes mean?
• How to make sure your car passes its MOT
• Cheap Eats:  Michelin-star chef reveals his top steals in London - including an unbeatable sub sandwich
• Money Problem: My workplace wants to pay us by the minute - what can I do?
• Best of the Money blog - an archive

Ask a question or make a comment

Landlords selling properties "represent the single biggest threat to renters", according to the UK's landlord association.

Government data shows 5,790 households were threatened with homelessness between October to December last year due to receiving a notice to end an assured shorthold tenancy (this ends a person's tenancy).

And the National Residential Landlords Association (NRLA) has said 45% have been left needing help because their landlord planned to sell the property in the second half of 2023.

Separately, data from Rightmove found that 50,000 rental properties were needed to bring the supply of rental homes back to pre-pandemic levels.

Ben Beadle, chief executive of the NRLA, said the only answer was to "ensure responsible landlords have the confidence to stay in the market and sustain tenancies".

He said it was "vital" the Renters Reform Bill, which is currently being debated in the House of Lords, "worked for landlords as well as tenants".

"Landlords selling up is the single biggest challenge renters face," Mr Beadle said.

Around 16% of high net worth shoppers have cut spending on luxury goods, research shows - with Burberry among the companies seemingly taking a hit.

Data from wealth management firm Saltus , which surveyed 2,000 Britons who had assets of more than £250,000, found 16.29% of respondents had cut down on their personal spending in response to the current high interest rate environment and/or the impact of the rising cost of living.

And 15.78%, said they had cut down on luxury items and designer clothes. 

Meanwhile, just 9.42% of respondents said the current environment had not impacted their lifestyle.

The figures follow data this week from designer store Burberry - which reported a 34% drop in annual operating profit.

Mike Stimpson, partner at Saltus, said high net worth individuals were having to "prioritise spending on essential costs including mortgages and supporting their families". 

"While this reduction is not limited entirely to personal spending on luxury items, it is inevitable that brands like Burberry feel the impact, although different businesses will clearly respond differently to these pressures," he said.

The Department for Work and Pensions (DWP) is hiring 2,500 "external agents" to crackdown on "benefit cheats".

The extra staff will check millions of Universal Credit claims for accuracy as part of the government's new fraud plan.

Combined with the DWP's own internal agents tackling fraud, this will take the headcount to nearly 6,000 people.

In addition to this, the DWP is introducing a new civil penalty to punish fraudsters, and investing £70m into advanced data analytics to catch those who "exploit the natural compassion and generosity of the British people".

Work and pensions secretary Mel Stride, said: "We are scaling up the fight against those stealing from the taxpayer, building on our success in stopping £18bn going into the wrong hands in 2022-23.

"With new legal powers, better data and thousands of additional staff, our comprehensive plan ensures we have the necessary tools to tackle the scourge of benefit fraud."

With the new 15 hours a week free childcare funding coming into effect this week for children aged between 9-23 months, research shows grandparents still play a key role in helping with costs.

In April, all two-year-olds from eligible working families became entitled to 15 hours free childcare each week. 

And as of this week, eligible working parents of children aged between 9-23 months are also able to apply to claim the same from September.

The government plans to increase this to 30 hours a week from September 2025.

However, grandparents still play a key role and therefore are still likely to be called upon for help from parents, according to data from the finance firm SunLife .

Data shows that half of the UK's 14 million grandparents provide childcare for their grandchildren during the working week and this rises to 55% of those with grandchildren under the age of one.

On average, the UK's grandparents spend between 22-24 hours a week providing free childcare for grandchildren under three-years-old.

So how much are grandparents saving their families and what if they were paid?

Research suggests grandparents are saving parents around £250 a week in childcare costs on average - this means that collectively, grandparents are saving their families £96bn in equivalent childcare costs every year. 

SunLife's grandparent salary calculator, which uses the average pay for the many roles grandparents are taking to calculate what their "grandparent salary" would be, has also found that if grandparents were paid for the 22 hours a week they would receive an annual salary of £13,188.

Victoria Heath, chief marketing officer at SunLife, said it was   "no wonder" one in five grandparents felt their children would struggle financially without their help.

She said research showed that 13% of grandparents felt they were relied on too much for childcare, and 14% loved doing it but felt it was too much at their age.

"Having said that, most (59%) grandparents who do provide childcare say they love helping out, so it is likely they will still play a key role, because whether they are still 'needed' or not, they are certainly still wanted, and most are more than happy to do it," Ms Heath added.

How can you apply for the 15 hours free childcare?

To apply for the funding you'll need the following: 

• National Insurance number;
• Unique Taxpayer Reference (UTR), if you're self-employed;
• the UK birth certificate reference number of any children you're applying for;
• the date you started or are due to start work.

Then, you'll need to go onto the gov.uk website and start an application.

It usually takes 20 minutes to apply and once your application has been approved, you'll get a code for free childcare to give to your childcare provider.

Mortgage possession actions have continued to rise and are currently above the previous year's levels, according to data from the Ministry of Justice .

The latest data shows mortgage claims, orders, warrants and repossessions have continued their gradual upward trend and claims are at their highest since 2019.

When compared to the same quarter in 2023, mortgage possession claims increased from 4,035 to 5,182 - this is a rise of 28%.

Meanwhile, mortgage orders increased from 2,532 to 3,019, warrants from 2,636 to 2,881 and repossessions by county court bailiffs from 729 to 759.

Landlord possession claims also increased from 23,389 to 24,874 when compared to the same quarter last year.

Craig Fish, director at Lodestone mortgages and protection, told Newspage things "need to change and quickly before it's too late".

"Though this data makes hard reading and is extremely worrying, it's not unexpected due to the significantly higher interest rate environment in which borrowers now find themselves," he said.

And Ben Perks, managing director at Orchard Financial Advisers, said he was "concerned these figures will continue to rise". 

He told Newspage: "The Bank of England seems totally oblivious to the plight of the average mortgage borrower, but hopefully this data will kick their hesitancy to drop the base rate firmly into touch. The time to act is now."

Tesco has recalled its sandwich pickle over fears it may contain glass.

The supermarket has pulled its 295g jars of Tesco Sandwich Pickle with the batch code 3254 and best before date of 11 September 2025 due to the concerns of glass traces.

The Food Standards Agency has said on its website: "This product may contain pieces of glass which makes it unsafe to eat."

Last year, the supermarket chain had to recall pastry products, including sausage rolls and steak and ale pies, over fears they contained pieces of metal and plastic.

A Tesco spokesperson told Sky News: "We've been made aware that a specific date/batch code of Tesco Sandwich Pickle may contain small pieces of glass. Therefore, this product could pose a safety risk if consumed.

"Please do not consume this product and instead return any affected product to store where a full refund will be given. No receipt is required.

"Tesco apologises to our customers for any inconvenience caused."

By Ed Clowes, news reporter

The FTSE 100 has remained stable out of the gate this morning after hitting a record high on Wednesday as better-than-expected inflation data in the US raised hopes of an interest rate cut in September.

It's been a busy start to the day with financial updates from BT Group, Premier Foods, Sage Group, and easyJet.

We'll start with easyJet, after the airline announced that its chief executive officer, Johan Lundgren, would step down in January 2025.

Mr Lundgren, who has served as CEO since 2017, will be replaced by the carrier's finance boss Kenton Jarvis.

In a financial update on its performance throughout the first half of the year, easyJet reported slightly higher revenues than anticipated, while cutting its losses compared to the same period last year.

The airline's share price fell by 6% in early trading this morning.

Elsewhere, telecoms giant BT said it had completed a £3bn cost-cutting programme ahead of schedule, and announced a further £3bn in planned savings by 2029.

The company told Sky News that the planned reductions in spending would not lead to more job losses, after BT announced last year that it would eliminate 55,000 roles.

Incoming boss Allison Kirkby said she wanted the business to prioritise the UK, with some analysts expecting BT to look at the futures of its Italian, Irish, and American divisions.

And last but not least, one of Europe's largest sellers of Rolex watches has said that sales in the UK are still down because some tourists don't want to buy here "due to the lack of VAT free shopping".

Nice for some.

The price of a healthy packed lunch has soared by around 45%, according to new research.

A lunch of wholemeal bread and fruit is more expensive for parents to put together than less nutritious versions with chocolate spread and crisps, The Food Foundation charity has found.

Unhealthy lunches for the research were made up of white bread with chocolate spread instead of wholemeal with cheese, flavoured yoghurt rather than a plain, unsweetened version and snacks such as crisps as opposed to the four portions of fruit and vegetables incorporated into the healthy lunch.

And when it came to the cheapest supermarket to buy a healthy packed lunch, Tesco topped the list with a weekly cost of £8.56 as of this month.

Morrisons was the most expensive retailer, with the price of a healthy packed lunch per week coming in at £11.72, although this was down slightly from £11.80 in October.

The equivalent cost at Sainsbury's was £10.47, Aldi was £10.08 and Asda was £9.18.

Research also showed the largest price rise in recent months was at Sainsbury's, where customers have to spend 9% more than they did at the start of the academic year in September (£9.61) for the same packed lunch.

Shona Goudie, policy and advocacy manager at The Food Foundation, said, the government's stringent eligibility criteria to qualify for free school meals was "leaving hundreds of thousands of children" who are living in poverty "at risk of malnutrition".

"No one should be priced out of being able to provide healthy food for their children and retailers need to do more to support families to afford the food they need," she said.

By Bhvishya Patel , Money team

We spoke to three buskers to find out what it's like performing on the street in the UK.

Amir, 29, came to UK from Pakistan with passion for music

Amir Hashmi moved to the UK in 2022 to study, said he began busking in central London 10 months ago because "music was his passion".

"In Pakistan there are many problems so I decided to leave and move to London. I feel I can do better in London than my country," he said.

He said busking was now his primary income but at times he did jobs at warehouses to get by.

"I never started this for money, I started because it is my passion but now this is my main job as well," he said.

Amir, who often performs in the capital's Piccadilly Circus or along Oxford Street, said often he returned home with just £10-15 in his pocket after a day's busking.

He said: "Many times I sleep without food and sometimes I sleep on the floor of the road when I have no shelter.

"I don't have my own place to live but I have friends who often let me stay with them. They don't charge me any rent - they look after me.

"Sometimes I do private shows for income but it's very hard because the cost of living is increasing. If I go somewhere then most of the time I prefer to walk. I walk with my speakers and carry my gear."

Despite his financial struggles, Amir said he wanted to continue performing on the street as his "goal was to make people happy".

He said: "With busking, there is no stage and you can just start performing. Whenever I am performing, I connect with the people who have come to listen. If I feel people are not enjoying it, I change the song and try and make them happy."

Earlier this year, Amir recorded a song with Neha Nazneen Shakil, a Malayalam actress from India, who approached the singer three months ago in Oxford Street.

"I wrote that song 12 years ago and after all these years my song has been recorded now in London," he added.

Jade, 24, quit retail to busk

Jade Thornton, from Amersham, started busking in 2017 with a friend after leaving college at the age of 17 and quickly realised it was something she enjoyed doing and could make a living from.

She began doing it full-time at the end of 2018 but when the pandemic hit she described becoming "unemployed overnight" and having to take up retail jobs to support herself.

"I chose not to go to university - I just thought it wasn't for me so I went straight into some part-time retail jobs," she said.

"I take my cap off to anyone who does retail - it is one of the most gruelling jobs. People who do retail don't get nearly as much respect as they deserve. 

"Some of the customers I was facing were not that kind and I thought this is making me miserable, so I just thought 'if I don't leave now then when?'"

As the global economy slowly began to recover, she decided to leave retail and pursue music full-time in 2022.

"It is hard to switch off - I do busking but I am constantly messaging clients, writing set lists and learning songs," she said.

When it came to finances, Jade said there was no average to how much she could earn but it could fluctuate from £15-100 day-to-day depending on a number of factors.

"It relies on the time of month, whether the sun is out, if people have been paid, if Christmas is on the way or if Christmas has just passed," she explained.

The musician said she did struggle initially when she began busking but her parents were always supportive.

She said: "You obviously get a few questions from people asking 'are you sure you want to quit your job and sing on the street?'

"I lived at home for a long time and I'm grateful my parents could support me in that way because I know not everyone has that opportunity."

While performing outdoors is now Jade's full-time job, she said some months were more difficult to make money than others.

"If I'm being brutally honest in months like January and February it would be super difficult. This year I had enough gigs in December to cover me for January," she said.

"Last year from June-July and December I did not have to go busking because I got so many gigs through busking. I'm part of a lot of online agencies and I also do lots of pub gigs, weddings, birthdays and other events."

Jade noted though that the cost of living crisis had made things harder.

She said: "A few pub gigs I've had have been cancelled because they've had to rethink their strategies but if somebody cancels then I can just go out busking. There has been a slight dent when it comes to finances but that's from COVID as well - with COVID I was unemployed overnight."

The young musician went on to say she was "very grateful" when somebody did tip her and even small gestures like sitting, listening or just a smile were "currencies in themselves".

"It's escapism for me as a singer and then it's escapism for the audience as well," she added.

"Children also have such a great time listening to buskers and some may not have an opportunity for many reasons to go and see live music so if they can come across it in the street and that can spark something that's a wonderful thing to think I'm a little part of that."

Charlotte, 34, long-time busker

Charlotte Campbell, 34, who usually busks along the Southbank or in the London Underground, said she started busking during the 2012 London Olympics and while "busking used to be enough", more recently she has had to take on more gigs in the evening.

"A typical day is usually busking until around 6pm and then a gig in the evening - 8pm onwards," she said.

"I could still probably make a living from busking but I've taken on more paid gigs since the pandemic because everything became so uncertain. I think that uncertainty has just carried through now - that seems to be the way of life now."

The musician said tips for her CDs, which she puts on display during her performances, ranged between £5-10 and in the current cashless climate a card reader was "essential".

She said she pre-sets her card reader to £3 when playing on the Southbank and £2 when busking inside the London Underground "because people are rushing".

While she described her earnings as a "trade secret", she said the busker income had "definitely gone down" but this was due to a few factors - the pandemic, people carrying less cash and the cost of living crisis.

"Also, a lots of pitches have closed which means there are a lot more buskers trying to compete for one spot so all of those things have impacted my living as a busker," she said.

"I would say even though my income is primarily from busking I have had to subsidise it with more paid gigs than before. I just haven't felt as secure in my living from busking in the last couple of years.

"Most of the gigs I have are booked by people who have seen me busking so indirectly busking is my entire career- if I don't busk I wouldn't get the gigs I play in the evening. So directly and indirectly busking is my entire income."

In spite of uncertainty, she said it was freeing to be able to go out and perform for people in an intimate way.

"You are not up on a stage and there is no separation between you and them.  It's a really great connection you can make - I want to be able to hold onto that," she added.

Every Thursday  Savings Champion founder Anna Bowes  gives us an insight into the savings market and how to make the most of your money. Today she's focusing on children's accounts...

While the rates on adult savings accounts have risen and fallen over the course of 2024, the top rates on accounts for children have remained stable - but are pretty competitive once again, as other account rates have started to fall. 

And there are plenty of different types of savings accounts to choose from, from the tax free Junior ISA, to children's regular savings accounts, fixed term bonds and easy access accounts.

Those who are able to start saving for their children early, could significantly improve their financial health in the future – especially when taking compounding interest into consideration.

If you were to save £50 a month from birth, you could give them a gift of more than £17,250 at age 18, assuming a tax-free interest rate of 4.95% - which is currently the top Junior ISA rate available.

If you, your friends and family were able to gift a total of £9,000 a year to a child (the current Junior ISA allowance), at the same rate, you could give them almost £265,000 when they reach 18. 

Now that's a gift worth having!

Children have their own personal allowance, so for the majority there will be no tax to pay on their savings interest. 

However, parents should be aware that there may be a tax liability to themselves on the interest earned on any money they gift to their children, until they reach the age of 18. 

If the gross interest earned is less than £100 for each parent's gift, it will be treated as the child’s under a 'de minimis' rule. 

This means that provided the interest earned does not make the child a taxpayer, they will be able to offset this against their personal tax allowance, so it will often be free of tax. 

But if the interest is more than £100 for each parent's gift, then it will be treated as that parent’s interest for tax purposes and therefore they may need to pay tax at their marginal rate - if it takes them above their Personal Allowance and/or Personal Savings Allowance.

Gifts from any other family members or friends will not be viewed in the same way. Instead, any interest earned will be treated as belonging to the child themselves and therefore can be earned tax free if they are non-taxpayers.

The exception to this rule is on funds deposited into a JISA, Child Trust Fund or NS&I Premium Bonds.  The returns from these are tax free for all.

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