The Positive and Negative Effects of Tourism

The Negative and Positive Effects of Tourism

Submitted by

DeVry University

Tourism Management, Warren John Fall 2011

Abstract

The current research paper covers the main effects of global tourism, both positive and negative. International tourism is a significant sector of business. For some countries it is one of the main sources of national income. The most important positive economic effects of tourism are as follows: increase in budget revenues, production expansion, stimulation of investments, and improvement in the population's welfare. Tourism influences social and cultural lives of people in a positive way by stimulating the development and revival of local cultures and encouraging intercultural exchange. Tourism has both positive and negative effects on the environment. Among the negative effects of tourism, the most important ones are inflation, financial leakage, infrastructure costs, and economic dependence. Political issues can also arise because of tourism. The countries should be aware of the negative effects of tourism in order to avoid them.

Keywords: international tourism, environment, economic effect, leakage, tourist infrastructure.

Table of Contents

Introduction 2

The Negative and Positive Effects of Tourism 2

Positive Effects 2

Economic effects. 2

Environmental effects. 6

Cultural effects. 6

Social effects. 8

Negative Effects of Tourism 10

Political effects. 10

Inflation. 11

Financial leakage. 12

Increase in infrastructure and incidental costs. 14

Economic dependence. 15

Negative impact on the environment. 16

Conclusion 17

The Negative and Positive Effects of Tourism

Introduction

Nowadays tourism is widespread throughout the world. Millions of people travel to different countries all year round seeking rest, new experience, and impressions. Lately tourism has become quite a profitable business, which also brings benefits to a country's economy and thus the well-being of the population. That is why governments of countries with various natural, architectural, entertainment, and recreational attractions support the development of this industry. For some small countries, tourism is a major source of filling the budget. However, international tourism is not all positive. There are some aspects, which create problems for the countries that specialize on tourism. Inflation, leakage, and economic dependence are only few of them, not speaking about the environmental issues caused by this activity. For the countries with intensive tourism, it is very important to consider all the negative effects that tourism can have and develop policies that will minimize these effects. On the other hand, countries that have some attractions should consider the benefits of tourism and support the development of this industry. In my research paper, I am going to identify and analyze all the positive and negative impacts of tourism.

The Negative and Positive Effects of Tourism

Positive Effects

Since positive effects of international tourism are more evident, I am going to research into them first. Among them, I would like to point out economic effects, environmental effects, social effects, and cultural effects.

Economic effects.

We are going to start with the discussion of economic effects, since they are the most important ones. First of all, tourism is a source of filling the country's budget. Private owners of hotels, recreation centers, tour operators, amusement parks, souvenir shops, and airline companies earn large profits from providing services to tourists. Therefore, they pay large sums of taxes to the budget. In the countries, where this industry is well developed, almost all of the touristic destinations are privately owned, of course except for the sites of historical and natural value. The industry does not require a lot of government subsidies, which makes them profitable for the government. The money paid to the budget can be spent on different social programs, financing of other industries, which are not so well developed, creating reserves, investing, and so on. In this way, the government is able to maintain the balance of the budget, which is one of the factors of economic stability.

International tourism contributes to foreign exchange earnings. Tourists usually come to the country of destination with strong, stable, and expensive currency, such as dollar or euro. Then, they exchange it according to the internal rate of the country they stay in. Considering the number of tourists that travel to the same destination, which in some countries can be very large, we can estimate that the amount of foreign currency they leave there is hundreds times larger. Therefore, a host economy benefits from the inflow of foreign currency.

Another aspect of impact of tourism on a country's economy is that it facilitates the expansion of the market of goods and services. Foreigners come to a country willing to spend money on different goods and services, thus increasing the amounts of sales. This is a great chance for producers and service providers to receive larger profits. This concerns not only hoteliers, tour operators, and souvenir shops owners. Public transportation, retail stores of different kind, restaurants, and cafes benefit from international tourism. Obviously, if these industries are in demand, businesses will be expanding. On the one hand, it means that more money is paid to the budget. On the other hand, profits generated by the owners are spent inside the country, affecting almost all the fields of the national economy. Moreover, if the businesses prosper, they are able to hire more workers, thus improving the rate of employment in the country. As the result, the purchasing power of the population increases, and this leads to the general expansion of production.

The economists call this situation a "multiplier effect". It means that every monetary