Making tourism work

Tourism cannot aid economy unless some things are done right

Kampala,Uganda | SUSANNE BECKEN | Would it not be great if something as simple and pleasurable as international travel could help end something as grinding and enduring as poverty? After all, the industry is booming, globally growing at least 4% a year since the 1960s (with a brief slowdown in 2009), according to the United Nations World Tourism Organisation (UNWTO).

In 2016, over 1.3 billion international tourists spent an estimated US$1.4 trillion. That’s the equivalent of Australia’s gross domestic product, dispersed around the world.

The UN even declared 2017 the International Year of Sustainable Tourism for Development, heralding the role of international travel in reducing poverty. But how much global tourism money really makes its way to poor countries?

Researchers from Griffith University and University of Surrey provide a mechanism to get find out – Global Sustainable Tourism Dashboard. And, spoiler alert, it’s not inspiring.

The dashboard was launched in January 2017 to measure tourism’s impacts and contribution to the UN’s 2015-2030 Sustainable Development Goals. Among other sustainability-related indicators, it can determine whether tourism is really redistributing wealth by tracking how much travel money arrives in the world’s least developed countries (LDCs) and small island developing states (SIDS).

Some 14% of the global population lives in LDCs (which includes Cambodia and Senegal, among others) and SIDS, like Vanuatu and the Dominican Republic.

Yet in 2016 these countries saw just 5.6% of global international tourism expenditure. If we take Singapore (a small island developing state in name only) out of the mix, it falls to 4.4% – just US$62 billion out of the US$1.4 trillion spent worldwide on travel in 2016.

Mainly, the dashboard shows, global tourism is an economic exchange between rich countries. Citizens of ten nations, most of them in Europe and North America, make about half of all international travel. China, which in 1995 was not a member of this frequent flyer club, broke into the top ten in 2000.

Money can’t buy everything

If the share isn’t great, the total amount of traveller money spent in these countries is still substantial – US$79 billion in 2016 alone. This is as much as the foreign aid budget of the U.S., Germany, UK, and France combined, based on figures from the World Economic Forum.

But money alone doesn’t reduce poverty. If it did, Thailand, the world’s fourth most popular tourism destination, would be rich (it earned US$54 billion from international tourism in 2016).

Whether a cash injection turns into development depends on many well-studied factors. For example, less developed countries lack the critical goods and services that tourists require, including airports, accommodation, key attractions, tour guides and telecommunications, to name just a few.

This leads to what economists call “leakage”. When a country must import everything from generators and solar panels to certain kinds of food, it spends a considerable proportion of tourist dollars before they can multiply in the local economy.

In developing countries, leakage ranges from 40% in India to 80% in Mauritius, according to researcher Lea Lange who wrote a 2011 paper for the German development agency GIZ, depending also on the factors that are included in the analysis.

Part of the broader leakage problem is that tourism investors are often foreign, so the profits are expatriated. Cruise lines are notorious for this. Ships may well visit a dozen small island developing states on any given marine jaunt, but most of the profit goes back to headquarters, which are typically located in Western countries.