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Economic Impacts - Coggle Diagram
Economic Impacts
Positive Impacts
Employment opportunities in formal and informal tourism sectors
Tourism industry is labour intensive.
Thus, there will be a wide variety of job opportunities for people of varying skills in both tourist generating and destination regions.
formal employment refer to employees with
Fixed working hours
Stable monthly wage
Contribute income tax
Sign a written contract of their work
informal employment refer to employees with
Irregular working hours
Fluctuating wages
Do not contribute income tax
Do not sign a written contract
Income generation from tourists' spending on consumer goods and services
Tourism generates income for locals and governments in tourist destination regions:
=>Tourists spending money on consumer goods and services
=>Taxes on tourism spending
These money can be used to invest in improving infrastructure and pay for education and health services, increasing country's standard of living as well as alleviate poverty
Negative Impacts
Overdependence on tourism, which increase vulnerability to a sudden fall in tourists numbers
occurs due to unexpected events
Natural disasters
can cause damage to tourism infrastructure in destination and generating countries
tourists numbers drop as people fear for their safety
Unfavourable political situations
riots and protest can occur in a country, leading to closure of hotels and tourist attractions.
tourists will fear for their safety and postpone/cancel their travel plans.
governments also issue a travel advisory discouraging tourists to travel to the affected areas to ensure safety.
this reduces tourist arrivals.
Economic downturn
economies of countries are negatively affected, thus companies attempt to cut costs.
people may lose their jobs or experience pay cuts, leading to reduction of disposable incomes.
they would not choose to travel to reduce spending.
Outbreak of diseases
tourists will feel that there is a threat to their safety, thus they postpone/cancel their travel plans.
government close off affected areas or issue travel advisory to discourage travelling to the affected areas to ensure safety.
this reduces tourists arrivals.
Economic leakages resulting in less tourism revenue
Economic leakage refers to generating of revenue by tourism in the destination regions being lost to the economies of other countries.
E.g. Tourist businesses in the destination regions pay for the imports of goods and services to support the tourism industry.
Reduces revenue, which minimises income earned, which limits the improvement of the country's standard of living.
Developing countries may be the most vulnerable to this