Tourism and

Globalization
Table of Contents
1.0 Introduction .......................................................................................................................... 2

2.0 The first age of globalization in International Trade ........................................................... 3

3.0 2nd Age of the globalization of International Trade ............................................................. 7

3.1 Industrial revolution ......................................................................................................... 8

4.0 Impact of globalization on International Trade ................................................................... 9

5.0 Summary ............................................................................................................................ 11

6.0 International World Trade.................................................................................................. 11

7.0 Globalization and International Tourism ........................................................................... 17

 Positive Impacts: ................................................................................................................ 19

 Negative Impacts: .............................................................................................................. 20

8.0 A View on the Impact of Globalization on Tourism ......................................................... 23

 Mass Tourism and Sustainable development ..................................................................... 24

 Sustainable tourism ............................................................................................................ 25

9.0 Conclusion ......................................................................................................................... 26

Reference ...................................................................................................................................... 28

Table 1: World International Trade (1995-2014) 12

Table 2: World International Tourism Receipts between 1995 to 2014 ....................................... 13

1
Table 3:Tourism receipts and International trade ......................................................................... 16

Globalization has been more significant for overall

international trade than for international tourism.
1.0 Introduction

The rise of a world economy, the spread of investment and technology, the growth of international
specialization, the ascent of new economic powers, the dramatic surge in growth and population
none of this in turn would have been possible without a massive expansion of global trade over
the past 200 years. At the same time, the spread of industrialization first to Europe, next to the
Americas, and then to Asia, Africa and elsewhere fueled a further expansion of international trade
and economic integration. Since the mid-1800s, the world’s population has grown roughly six-
fold, world output has grown 60-fold, and world trade has grown over 140-fold. This virtuous
circle of deepening integration and expanding growth is what we now refer to as globalization.

There are not many expressions as controversial as globalization, as it combines many

contradictory issues under a single concept. It can be “good” and “bad” at the same time. It stands
for growing power of multinationals in every corner of the world as well as for the worldwide
spreading of knowledge and human rights. With the many faces it has, it affects every sphere of
life wealth, freedom, cultural habits, health… All around the world, it changes tastes of food,
influences art, puts new products on market shelves.

It is difficult to imagine the rise of globalization during the 19th century without the gold standard,
the dense web of bilateral trade agreements, and Great Britain’s economic dominance, just as it is
difficult to imagine the post-1945 resumption of globalization without the advent of the new
multilateral economic institutions, more activist economic and social policies at the domestic level,
and America’s assumption of the global leadership mantle. Indeed, the evolution of globalization
over the past 200 years has generally been accompanied not by a contraction of government but
by its steady expansion at both the national and international level.

2
Within the field of tourism, many have discussed globalization and its impact upon tourism but there
is far from a consensus as to whether globalization is good for host societies. Conventional wisdom is
that globalization leads to travel, which is in and of itself a boost to the tourism industry. While tourism
has long been recognized as a source of economic growth globalization has been seldom incorporated
in econometric studies of tourism’s impact.

The World Travel and Tourism Council (WTTC) encourages countries to adopt policies that
promote travel and accessibility to enable economic growth through tourism. Additionally, the
general agreement on trade in services (GATS) by the World Trade Organization (WTO) has had
significant impacts on the tourism industry's operations and businesses. The GATS has enabled
international development by removing barriers of overseas investments, contributing to the
foreign ownerships of tourism businesses.

2.0 The first age of globalization in International Trade

Caselli (2006) defines Globalization is a process of growing interaction and interdependence

between economies, societies and nations across large distances. Globalization is not a new
concept. In past people use to travel to other places for gaining control on others lands, for finding
out the better living style, for finding out the new places and to earn profits by selling in different
regions. These activities were carried out even thousands of years before. Statistics indicates that
Globalization is expanding very rapidly World Wide. Data gathered from International Monetary
Fund (IMF) shows that economy of the world was expanding since 1950. Till 2004, the volume of
merchandise traded has expanded about 7.5 times (Farrell, 2007). According to Farrell (2007)
Globalization refers to the Political, Economic, Social and Technological links in different
countries (Hamilton & Webster, 2009). Globalization is a contested concept that refers to
shrinkage of time and space (Steger, 2009). According to another definition “globalization is the
diminution or elimination of state-enforced restrictions on exchanges across borders and the
increasingly integrated and complex global system of production and exchange that has emerged
as a result (Palmer, 2002)." One most common definition of globalization states that Globalization is a
process of integrating different world economies. Globalization is integration among the people,
government and companies of different countries (Rothenberg, 2003).

3
The early 19th century marked a major turning point for world trade. Although the outlines of a
world economy were already evident in the 17th and 18th centuries as advances in ship design and
navigation led to Europe’s discovery of the Americas, the opening up of new routes to Asia around
Africa, and Magellan’s circumnavigation of the globe (WTR, 2013) it was the arrival of the
industrial revolution in the early 1800s which triggered the massive expansion of trade, capital and
technology flows, the explosion of migration and communications, and the “shrinking” of the
world economy, that is now referred to as “the first age of globalization” (Ikenberry, 2000). In
particular, breakthroughs in transport technologies opened up national economies to trade and
investment in ways that differed radically from what had gone before, relentlessly eroding what
economic historian Geoffrey Blainey has termed “the tyranny of distance” (Blainey, 1968).

Steam power was the first revolutionary technology to transform transportation, starting with
steamships. Although early vessels were initially limited to inland rivers and canals, by the late
1830s steamships were regularly crossing the Atlantic and by the 1850s a service to South and
West Africa had begun. At first, steamships carried only high-value commodities, such as mail,
but a series of incremental technological improvements over subsequent decades’ screw
propellers, the compound and turbine engine, improved hull design, more efficient ports – resulted
in faster, bigger, and more fuel-efficient steamships, further driving down transport costs, and
opening up transoceanic steamship trade to bulk commodities, as well as luxury goods (Landes,
1969).

The opening of the Suez Canal in 1869 marked a further breakthrough in trans-oceanic steam
shipping. Until then, steamships could not carry enough coal to circumnavigate Africa leaving
sailing ships still dominant on Far Eastern trade routes. By creating a major shortcut to Asia from
Europe, the Suez Canal suddenly made steamships viable, and most cost efficient on these routes
as well, completing their conquest of transoceanic shipping by the end of the 1800s.

Railways were the other major steam-related transport innovation of the industrial revolution.
Inland transportation costs had already started to fall in the late 18th century as a result of road and
especially canal construction. The length of navigable waterways in Britain quadrupled between

4
1750 and 1820; canal construction in France also soared while in the United States the massive
Erie Canal, constructed between 1817 and 1825, reduced the transportation costs between Buffalo
and New York by 85% and cut the journey time from 21 to eight days (O’Rourke and Williamson,
1999). The importance of inland waterways was soon eclipsed by the railway boom. The world’s
first rail line, the Stockton and Darlington Railway, opened in 1825, and was soon copied, not just
throughout Britain, but in Belgium, France, Germany and the rest of Western Europe. The
explosion of railways was particularly notable in the United States during the second half of the
19th century, where new trans-continental networks would play a major role, not just in the
settlement of the West and in forging a national economy but in linking the vast American
hinterland to global markets (O’Rourke and Williamson, 2005). A transcontinental line linked the
East and West coasts of the United States by 1869; the Canadian-Pacific railroad was completed
by 1885 and the trans-Siberian railway by 1903. The decade prior to the First World War also saw
an explosion of railway building in Argentina, India, Australia, China and elsewhere, largely
financed by British capital. From virtually nothing in 1826, almost a million kilometers of rail had
been built by 1913 (WTR, 2013).

If steam power revolutionized trade in the first half of the 19th century, a wave of even newer
technologies such as refrigerated ships and submarine telegraph cables contributed to a further
lowering of trade and communications costs and a deepening of global integration in the second
half of the 19th century. Refrigeration had major trade implications. Developed in the 1830s and
refined over the following two decades, mechanical refrigeration meant that chilled beef could be
exported from the United States to Europe as early as 1870; by the 1880s, South American meat,
Australian meat and New Zealand butter were all being exported in large quantities to Europe
(WTR, 2013).

The arrival of the electronic telegraph in the 1840s was another transformative event, ushering in
the modern era of near instantaneous global communications. The first successful transatlantic
telegraph message was sent in August 1858, reducing the communication time between Europe
and North America from ten days the time it took to deliver a message by ship to a matter of
minutes. By the end of the 19th century, British French, German and US owned cables linked
Europe and North America in a sophisticated web of telegraphic communications.

5
International trade increased rapidly after 1820, underpinned by falling transport and
communications costs. Inland transport costs fell by over 90% between 1800 and 1910;
transatlantic transport costs fell roughly 60% in just three decades between 1870 and 1900
(Lundgren, 1996). Meanwhile, world exports expanded by an average of 3.4% annually,
substantially above the 2.1% annual increase in world GDP (WTR, 2013). As a result, the share
of trade in output (or openness) rose steadily, reaching a high point in 1913 just before the First
World War, which was not surpassed until the 1960s (WTR, 2013).

The spectacular growth in international economic integration in the 19th century rested on
relatively simple but in many ways fragile international political foundations. The central pillar of
the 19th-century global economy was the international gold standard. Following Britain’s example
since the early 1820s, Germany guaranteed gold parity for its exchange rate in 1872 as part of its
efforts to consolidate its newly unified empire around a single currency and a common monetary
policy. Denmark, Norway and Sweden followed Germany in 1873, the Netherlands in 1875,
Belgium, France and Switzerland in 1876 and the United States in 1879. By the end of the 1880s,
virtually the whole world had joined Britain on the gold standard, effectively creating a single
world financial system (Frieden, 2006). Since every country fixed the value of its national currency
in terms of gold, each currency had a fixed exchange rate against every other – thus virtually
eliminating foreign exchange risk and barriers to international payments.

The period between the 1870s and 1914 was one of remarkable stability and predictability in
international trade and capital flows. European countries also negotiated a dense network of
bilateral trade agreements with one another during this period, triggered by the conclusion of the
Cobden- Chevalier Treaty between Britain and France in 1860. The treaty not only reduced tariff
barriers between Europe’s two largest economies, but included an unconditional most-favored-
nation (MFN) clause which guaranteed equal, non-discriminatory access if either France or Britain
lowered tariffs with third countries. This MFN clause provided the “cornerstone” of the19th
century commercial treaty network (Bairoch, 1982).

6
3.0 2nd Age of the globalization of International Trade

In many ways, the world economy has undergone a process of “re-globalization” since the Second
World War to use the term coined by Ronald Findlay and Kevin O’Rourke, resuming and
dramatically accelerating the integration path that was abruptly derailed by the First World War
and the economic and political chaos that followed (O’Rourke and Findlay, 2007). Indeed, the
world economy grew far faster between 1950 and 1973 than it had done before 1914, and its
geographical scope was far wider ushering in a “golden age” of unprecedented prosperity
(Maddison, 2001). World per capita GDP rose by nearly 3%, and world trade by nearly 8% a year.

However, there is one important difference between the first and the second age of globalization.
Whereas the 19th-century version was accompanied by only rudimentary efforts at international
economic cooperation, the 20th-century version, by explicit design, was built on a foundation of
new multilateral economic institutions known collectively as the Bretton Woods system: The
International Monetary Fund (IMF), the World Bank and the General Agreement on Tariffs and
Trade (GATT).

The key lesson drawn from the inter-war experience was that international political cooperation
and an enduring peace depended fundamentally on international economic cooperation. No
country absorbed this lesson more than the United States. Conscious of how its failure to assume
leadership after 1918 and drift towards economic protectionism and nationalism after 1930 had
contributed to the inter-war economic disasters, it resolved to use its post-war global dominance
to construct a new liberal economic order based on open trade, financial stability and economic
integration.

This new system was both similar to the 19th century order and very different. The aim of the IMF
was to reestablish the exchange-rate stability of the gold standard era while at the same time
preserving countries’ freedom to promote full employment and economic growth. Under the new
Bretton Woods system, exchange rates were fixed, but adjustable, and international stabilization
funds were made available to countries facing balance-of-payments difficulties.

7
Meanwhile, the World Bank was established to provide soft loans for both economic
reconstruction and industrial development. There were also intensive negotiations for a new
International Trade Organization (ITO), intended as the third pillar of the new multilateral
economic system.

However, when the US Congress failed to ratify the ITO charter in the late 1940s, countries were
forced to rely on the GATT, designed as a temporary tariff cutting agreement until the ITO was
formally established, but embodying most of the ITO’s key commercial policy rules. Although the
GATT was never intended as an international organization, it gradually came to play that role –
both lowering tariffs and strengthening trade rules through eight successive “rounds” of
negotiations until its replacement by the World Trade Organization on 1 January 1995. This new
post-war commitment to international economic cooperation and the multilateral institutions
needed to sustain it – also found expression in a series of bold steps to integrate European
economies. The 1948 Marshall Plan, for example, stipulated that European countries should decide
among themselves not only how to distribute the US$ 12 billion in Marshall Aid provided by the
United States but how to begin dismantling internal barriers to intra-European trade and
investment.11 In the 1950s, the United States also supported European plans to pool production in
areas of heavy industry, to establish international authorities with the power to oversee this
common production and to establish huge free trade areas which later came to fruition in the
formation of the European Economic Community (EEC) and ultimately the present-day European
Union (EU) (Maddison, 2001).

3.1 Industrial revolution

The industrial revolution marked a major turning point for the world economy from the pre-
globalization age to the age of globalization. Indeed, the current rise of the developing world is in
many ways merely a reflection of the on-going spread of the industrial revolution two centuries
after it first swept through Britain but on a scale and at a pace that easily dwarfs the “great
transformation” of Europe and North America. It is also a process that, in many ways, is still
unfolding. Real per capita income in the West increased 20-fold between 1820 and 2003, but only
seven-fold in the rest of the world economic catch up has a long way to go (Maddison, 2005).
Central to this development and its continuation is the unfolding “death of distance” and the on-

8
going transport and communications revolution that lies behind it. China could not have become
the new “workshop of the world” without the transpacific “conveyer belt” provided by
breakthroughs in containerization after the 1970s. India could not be a new global services hub
without the invention of fibre optics and broadband. It is because of these technological forces that
the nature of the global economy is profoundly changing, and with it the political, social and
institutional structures needed to sustain and legitimize it. The unprecedented integration and
expansion of the world economy in the decades after 1945 is a testament not just to the enduring
power of underlying technological and market forces but to the success of the post-war political
order that has been so critical to harnessing and managing these forces.

Two broad questions emerge from this discussion. First, will the same shaping factors that have
given rise to today’s global trade system likely continue in the immediate and longer-term future?
In particular, will transport and communication costs continue their dramatic, linear decline as a
result of continued incremental technological improvement or even the introduction of entirely
new technologies? Or will marginal improvements begin to diminish in the future, making
declining transport and communications costs a less salient shaping factor for world trade – even
leading to a slowing of trade growth?

Secondly, to what extent can we expect future political shocks to the trading system? And can
these shocks be anticipated and hopefully avoided? One of the lessons from the last two centuries
is that geopolitics has a decisive impact for good or ill on underlying technological and structural
trends. The current globalization phase began in 1945 with the rise of US hegemony and the advent
of the Bretton Woods system, and then accelerated with China opening up to the world in 1979
and with the end of the Cold War in 1989. What kind of international political accommodation or
system is needed for the future?

4.0 Impact of globalization on International Trade

There are countless indicators that illustrate how goods, capital, and people, have become more
globalized, some examples are:

9
  The value of trade (goods and services) as a percentage of world GDP increased from
42.1% in 1980 to 62.1% 2007.
 Foreign direct investment increased from 6.5% of world GDP in 1980 to 31.8%in 2006.
 The stock of international claims (primarily bank loans), as a percentage of world GDP,
increased from roughly 10 percent in 1980 to 48 percent in 2006.
 The number of minutes spent on cross-border telephone calls, on a per-capita basis,
increased from 7.3 in 1991 to 28.8 in 2006.
 The number of foreign workers has increased from78 million people (2.4 percent of the
world population) in 1965 to 191 million people (3.0 percent of the world population) in
2005. (IMF Outlook, 2008)

The growth in global markets has helped to promote efficiency through competition and the
division of labor—the specialization that allows people and economies to focus on what they do
best. Global markets also offer greater opportunity for people to tap into more diversified and
larger markets around the world. It means that they can have access to more capital, technology,
cheaper imports, and larger export markets. But markets do not necessarily ensure that the benefits
of increased efficiency are shared by all. Countries must be prepared to embrace the policies
needed, and, in the case of the poorest countries, may need the support of the international
community as they do so. (IMF Outlook, 2008)

The broad reach of globalization easily extends to daily choices of personal, economic, and
political life. For example, greater access to modern technologies, in the world of health care, could
make the difference between life and death. In the world of communications, it would facilitate
commerce and education, and allow access to independent media. Globalization can also create a
framework for cooperation among nations on a range of non-economic issues that have cross-
border implications, such as immigration, the environment, and legal issues. At the same time, the
influx of foreign goods, services, and capital into a country can create incentives and demands for
strengthening the education system, as a country’s citizens recognize the competitive challenge
before them. (IMF Outlook, 2008)

10
5.0 Summary

A core element of globalization is the expansion of world trade through the elimination or
reduction of trade barriers, such as import tariffs. Greater imports offer consumers a wider variety
of goods at lower prices, while providing strong incentives for domestic industries to remain
competitive. Exports, often a source of economic growth for developing nations, stimulate job
creation as industries sell beyond their borders. More generally, trade enhances national
competitiveness by driving workers to focus on those vocations where they, and their country,
have a competitive advantage. Trade promotes economic resilience and flexibility; as higher
imports help to offset adverse domestic supply shocks. Greater openness can also stimulate foreign
investment, which would be a source of employment for the local workforce and could bring along
new technologies thus promoting higher productivity.

Restricting international trade that is, engaging in protectionism generates adverse consequences
for a country that undertakes such a policy. For example, tariffs raise the prices of imported goods,
harming consumers, many of which may be poor.

Protectionism also tends to reward concentrated, well-organized and politically-connected groups,

at the expense of those whose interests may be more diffuse (such as consumers). It also reduces
the variety of goods available and generates inefficiency by reducing competition and encouraging
resources to flow into protected sectors.

In nut shell we can say globalization can be applied is a movement, a phenomenon and a force.
And the scope of the globalization is increasing as the time is passing. One most common
definition of globalization states that Globalization is a process of integrating different world
economies. Globalization is integration among the people, government and companies of different
countries (Rothenberg, 2003).

6.0 International World Trade

Up to the late 1990s, trade flows rose gradually. This was followed by a strong rise in the early
2000s and a sharp fall after the economic crisis in 2008. Recent years have seen a moderate
11
recovery. Trade experienced fairly strong growth from 1995 to 2001, followed by a boom from
2002 to 2008 accompanied by rising commodity prices. Following the financial crisis in 2008,
trade fell steeply in 2009 before rebounding strongly in 2010 and 2011. However, trade growth
since then has been unusually weak. Various crises had an impact on trade from 1995 to 2001.
These included Mexico’s monetary crisis (1995-2001), the Asian financial crisis of 1997, and the
bursting of the dotcom bubble in 2001 which resulted in negative growth for international trade in
1998 and 2001.

China’s accession to the WTO in December 2001 paved the way for its economic rise and
significantly contributed to increasing world trade from 2002 to 2008. Another noteworthy event
in the early 2000s was the introduction of euro coins and notes in 2002. Strong Chinese demand
for natural resources contributed to rising prices for crude oil and other primary commodities
between 2002 and 2008. The 2008 financial crisis, triggered by the subprime lending crisis in the
United States, led to a global recession between 2008 and 2011. The volume of world exports
plunged 12 per cent in 2009 while world gross domestic product (GDP) dropped 2 per cent.
Exports of goods rebounded in 2010, with a growth rate of 14 per cent in volume terms. However,
the recovery was hampered by an increase in oil prices in 2010, partly as a consequence of political
instability in oil-producing countries (the so-called Arab Spring). From 2011 onwards, the
European debt crisis weighed heavily on world trade growth. Debt crises and geo-political
tensions intensified in 2014, causing world trade to slow to a crawl over the last few years. In value
terms, world merchandise trade growth averaged just 1 per cent per year from 2012 to 2014.

Table 1: World International Trade (1995-2014)

12
 World International Trade between 1995
to 2014
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
US $ Billions
2001
2000
1999
1998
1997
1996
1995
0 5000 10000 15000 20000

Table 1 summarizes International trade between 1995 to 2014. Over the last two decades,
International trade has recorded negative annual growth only once (-9 per cent in 2009), in the
wake of the global financial crisis. In 2010, services trade resumed its pre-crisis level and has
continued to expand steadily despite sluggish economic growth. Global services trade, as measured
by balance-of-payments statistics, represents only about a fifth of total trade in goods and services
combined.

Table 2: World International Tourism Receipts between 1995 to 2014

13
 World International Tourism Receipts between
1995 to 2014
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996 US $ Billions
1995

0 200 400 600 800 1000 1200 1400 1600

From the table 2, it can be seen that from the year 1955 to year 2003 there were not considerable
change in world international tourism receipts varying between 485 US billions to 648 US billions.
In fact, worldwide tourism earnings grew by an extraordinary 11.9 % by the year 2004 from 648
US billions to 771 US billions which this is flattered by the rather generalized depreciation of the
US dollar in 2004, causing receipts earned in currencies such as the euro, the Canadian dollar, the
Japanese yen or the Australian dollar exchange into larger amounts of US dollars. This reflects the
rather general trend towards a higher frequency of trips, but shorter stays. It is a long-term process,
driven by pressure on time and enabled by the development of a well-ramified and varied transport
infrastructure with several good-price transport options. In the past few years the boom of low-
cost airlines has been instrumental in this process, opening up new routes and offering not only
lower prices, but also lesser restrictions with respect to length of stay or weekend stay over.
Worldwide receipts from international tourism reached US$ 733 billion (584 billion euros) in 2006
which means that in absolute terms, international tourism receipts increased by US$ 57 billion (40
14
billion euros) in 2006 an amount well above the receipts of the world’s second biggest tourism
earner, Spain, or the combined receipts of the Middle East and Africa.

Over the past five decades, international tourism activity emerged as one of the most promising
industries with international tourist arrivals were increasing by an average annual rate of 6.4 %
during the period 1995-2008. However, these trends have been recently reversed, affected by the
negative impacts of one of the worst financial crisis which hit the world economy during the 2008-
2009 which has led to this sudden decline in tourism receipts from 1120 US billions to 1009 US
billions. This can be explained by households and business cutting their spending on trips for
holidays, leisure and business during economic crises. On the other hand, a decrease in income
and earning of households in the developed economies like America and Europe which are the
origin of the global financial crisis have been automatically translated into a decline in tourism
receipts.

In the year 2010 after the global financial crisis, tourism receipts generated 1099 US billion almost
90 US billion more than previous year. Slightly over half of all travelers arrived at their destination
by air with France maintaining its position as the world’s number one tourism destination. On the
other hand, China became the world’s third biggest tourism spender.

From year 2011 to year 2014, tourism has been witnessing considerable growth by an average of
3.8 % to 4 % during the years. It is encouraging to see that the growth in international tourist
arrivals was equalled by a comparable increase in spending in spite of continued economic
challenge. With an estimated 1500 US billions tourism receipts in year 2014, it is expected that
there is an increase of 3.3 % per year till year 2030.

15
 Table 3:Tourism receipts and International trade

From table 3 above shows figures of the International World Trade along with World Tourism
1600 20000

18000
1400
16000
1200
14000

International Trade
Tourism Receipts

1000
12000

800 10000

8000
600
6000
400
4000
200 Tourism
2000
Receipts
0 0 International
Trade

2014
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Year

receipts from 1995 to 2014. International tourism receipts are expenditures by international
inbound visitors, including payments to national carriers for international transport. These receipts
include any other prepayment made for goods or services received in the destination country. They
also may include receipts from same-day visitors, except when these are important enough to
justify separate classification. Due to the increase in trade in the late 1990’s up to 2000’s , it also
impacted on tourism industry with an almost equal increase thus meaning more and more people
were travelling to destinations. On the other hand, the fallout from the 2008 global economic crisis
redefined international trade and international receipts which explains the drastic decline in both.
Due to this crisis people tend more to save than to spend and thus the world of exports declined up
to 12 % in 2009 as well a decline in GDP by 2%. The financial crisis and economic recession
brought about tighter credit conditions, high consumer debt, decreased housing wealth, stagnant
wages, and rising unemployment, all of which led to a contraction in travel demand, particularly
business travel.

16
Finally it can be deduced that for the last four years, international trade was almost stagnant due
to the after-effect of the recession, on the other hand world tourism receipts kept on increasing due
to the fact are travelling more and more to destinations and also spending. Nonetheless there are
countries which are still suffering from the recession like for example Greece.

7.0 Globalization and International Tourism

The pressure of globalization is having a major impact on tourism destinations throughout the
world. The implications for destination marketers are profound and the response will require a new
strategic focus and approach.

All indications are that in the first decades of this century there have been certain predominant
global drivers of change. Whereas in the mid-nineteenth century and the early decades of the
twentieth century transport developments were key drivers of tourism change, major technological
advances and the maturing of the tourism marketplace have characterized changes in the tourism
industry since the mid-nineties.

As the concept of a "Global Village" increasingly becomes a reality, mainly as a result of

technological advancement in transportation and communications, the world faces several
questions of sustenance, peace, economy, stability and survival.

Globalization of tourism is indeed one of the many factors responsible for the above. It has been
described as a "megatrend", which is associated with different dimensions and consequences - both
positive and negative (Adejuwon, 1996).

In a generic tourism sense, globalization comprises three basic elements. First, there is the
geographical side. The term covers intraregional and interregional travel, and the extension of
tourism to a worldwide scale. Second, globalization can be seen in terms of convergence in world
tastes, product preferences, and life styles, which leads to growing standardization and market
homogenization (a trend towards similar customer preferences worldwide). A third basic element
is the existence of internationally similar practices around the world, such as distribution systems,

17
marketing practices, product development, etc. The first and second characteristic is more demand
orientated, while the third is supply orientated (Vanhove, 1996).

The globalization of the tourism industry has several significant strategic implications. It increases
competitive pressures by bringing more entrants into the market. It increases the complexity of
doing business, from learning to find and manage employees with a diverse background in the
different countries to designing and delivering products uniquely suited for special interest travel
markets. It also requires a new knowledge base. For example, with economic and business activity
becoming increasingly internationalized, there is a great need for managers of both private and
public tourism organizations to interact with the complex global environment. In the next decade
tourism managers will require a global perspective in order to respond positively to a myriad of
crises, such as overcrowding of tourist attractions, overuse and destruction of natural resources,
resident-host conflicts, loss of cultural heritage, increased crime and prostitution, inflation and
escalating land costs, and a host of other political, socio-cultural, economic and environmental
problems that may be brought about or exacerbated by tourism development (Moutinho, 2000).

Globalization has changed the nature of international tourism. Growing prosperity in the emerging
nations, and the increasing international division of labor will make tourism the most important
economic sector on a worldwide scale in this millennium. The market has undergone a significant
expansion in recent years. New destinations have sprung up. Large tourism companies have been
created, that are not dependent on any particular nation and have branches all over the world. They
took advantage of the new technologies and offer increasingly professional, industrially
standardized, uniform products (Kellar, 1996).

According to Carnoy (2000) globalization is not just about trade, business, capital and revenues,
but a novel attitude at speculating social space and time. Blackmore (2000) described the
phenomenon of globalization as an increased interdependency in social, cultural, economic and
environmental spheres. According to him, it includes formation of relations across borders,
including financial and political areas, by way of flow of labor, capital and information (Kerby,
2005)

18
Communication and international trade are the two main instruments of globalization.
Globalization has been a factor of increased interdependence of various markets and production
and this is possible through trade, capital flow across border and international strategic
acquaintances, cooperation and technology exchange and sharing. Globalization has also aided in
dividing labor among countries by production in various places rather than one country (Kerby,
2005).

The very nature of globalization is affecting and influencing one and all. And tourism, being just
a part of the picture, globalization also influences the hospitality industry and other components
of the sector. Globalization has influenced the tourism industry in positive and negative aspects.
Some major points relevant under that are as follows:

 Positive Impacts:

 Large market: Travel purposes have increased now, including business, holidays, health related
matters etc. This has added to the market of the hospitality industry which reaps from foreign
visitors mostly.

 Exposure to Foreign Cultures: This lets the hospitality industry managers learn from various
types of cultures and people, to increase their knowledge and enrich their skills and experiences
(Theuns, 2008).

 Foreign Exchange Hike: Globalization undoubtedly brings money to the country and boosts the
economy.

 Constant upgrading of technologies and services: This comes as an attraction to visitors

 Increased job opportunities: More visitors and tourists need more services and this in turn needs
more employees. Hospitality industry is thus constantly in need of new skills with globalization
on the run.

 Creativity promotion: Companies and industries in hospitality sector always welcome new and
different ideas.

19
 Travel Industry development: Hospitality industry deals with guests who move around. This is
way to go for travel department, too.

 Varied international cuisines and services.

 Negative Impacts:

 Limitations in communication and cultural compatibility (Theuns, 2008).

 Disastrous events in foreign countries adversely affect the hospitality industry as a result of
globalization of the business.

 Seasonal variations in Employment: Peak seasons give good jobs but after that, workers have to
face unemployment.

 Declining human touch due to increased use of technology for communication due to language
barriers worldwide.

 Developing countries fall back in the race due to poor technological advancements.

 Increase in crimes and hassles and antisocial behaviors (Theuns, 2008

 Environmental and cultural depletion.

Globalization and tourism are inseparable now. The only matter of concern is to what degree it
influences tourism industry and how much of it is favorable economy-wise and service-wise.
Globalization makes way for partition of the incomes between labor and capital within economies
(Theuns, 2008). The demand for labor is on a downhill in the industrialized countries as more
affordable holidays are sought. Meanwhile, the opposite is to be expected in developing countries.
In developing countries, outsourcing of works and other services in various fields creates an
increased demand for tourism among workers.

Globalization is infiltrating every nation and every industry and trade. Even those who claimed to
be immune have proved to fail. Economies that are sizable can stay immune to the pressure of

20
globalization, with the aid of potent government interference, the examples being Russia and China
(Theuns, 2008). Sustainable development is another area that globalization influences in the
tourism industry. Sustainable tourism and ecotourism are rapidly advancing parts of tourism and
are proof that natural amenities are of utmost importance in the future of tourism in a national
economy. Sustainable tourism addresses the issues related to environmental, social and cultural
problems that tourism has created in the world. It includes the problems like pollution of natural
resources and even violation of human rights which make tourism a threat to the world
(Globalization 101, 2009). The challenges faced by the tourism industry through globalization are
better managed and resolved with proper intervention by government or administrative authorities.
However, globalization, as much as it is inevitable and crucial for the expansion of the industry, is
like a plague now and has become practically unavoidable. It is essential to realize that it has its
disadvantages and they need to be recognized.

The Impact of Globalization on Tourism Globalization in tourism affects all parts of the industry
and the countries concerned. The important areas affected or changed are found to be:

 The Economy:

Globalization has a positive impact on the economy as it has proved to enhance the profits and
revenue and also expansion of marketplace. In tourism, globalization has contributed to the
national income as much as 10% of the whole world’s GDP (Globlization 101, 2009).

 The Organizations:

The companies and firms involved in the industry have undergone a developmental change due to
the interdependence and advanced communication and business strategies. As said before, the
increased functional interactions stemming from globalization has paved the path for
organizational developments.

 Employment and Workforce:

This is another positive and expanding area that globalization has contributed to. Tourism industry
is one of the largest industries in the world and a significant part of the gross domestic product of

21
the world economy arrives from this. As a large industry under expansion through globalization,
it offers a huge opportunity vista for new talents and workforce. This can be a significant
development in the employment sector and human resource (Nkurayija, 2011).

 Customer Preferences and Activities:

The preferences of tourists in terms of destination and activities involved have also been greatly
affected by globalization. The factors that affect the tourist preferences have been researched and
found to include age, physical fitness, socio-economic variations etc. According to Hołowiecka et
al. (2011), the majority of tourists seem to opt for recreational tourism, especially the economically
active, but age hasn’t been an issue here. As for heritage tourism, the next in the list, eldest people
backed off from choosing it. It is in trend for mobile working groups and students, apart from
economically active groups.

 Human Resource Management:

Globalization is exerting an increased demand of response from Human Resource Management.

For surviving in a highly competitive environment following globalization, it has been stressed
upon the Human Resource Management sector to change to suit the fast paced globalization and
resulting events. As expected, this is more about dealing with employee and employment issues
and to monitor the supply and demand sides (Becherel et al., 2002). The supply-side comprises
technology and the internet, computerized systems and facilities for everything. The advent of
information technology calls for specialized skills in the workforce and this also affects the
educational needs and training requirements. Meanwhile on the demand-side, the new tourist or
customer to be looked out for is the experienced, knowledgeable and most probably highly
expecting one. This places a big responsibility on the Human Resource Management with regard
to excelling in the services through adequate training and proper recruitment and employment of
promising skills and talents.

 Tourism in Third World Countries/Underdeveloped Nations:

Globalization has brought a revolutionary aspect in tourism worldwide. And underdeveloped

nations as in African continent and others have been involved interestingly. International tourism
22
firms that invest in these destinations are an intriguing aspect of tourism offered from those
companies. On the other hand, it is a promising investment for the destination country which can
be the route to economic development to the country (Nkurayija, 2011).

 Environment and Natural Resources of Destination Location:

Tourism and Globalization has proved to cause adverse effects on the environment and natural
resources of the destination place. Pollution and unacceptable activities and behaviors that are not
harmonious with the place have destroyed the balance between human needs and nature.
Sustainable tourism and development has been a solution proposed to rectify this impact
(Globalization 101, 2009). However, it takes much dedication and cooperation from the industry
and intervention of the Government. Mass tourism is another cause of environment danger from
globalization.

8.0 A View on the Impact of Globalization on Tourism

Though with all these impacts of globalization on tourism well known through researches and
observations of the changes, there is one fact that the giant termed globalization cannot change or
obscure. It has been argued by Cooper (1989) in the very definition of tourism. According to him,
Tourism is explained as follows: “Produced where it is consumed, tourism is an activity that is
delivered at the local destination, hopefully by local residents and drawing upon local culture,
cuisine and attractions, yet it is impacted upon by global processes, creating the dilemma of
global/local nexus.” This explanation gives a fair view of the industry of tourism. Globalization is
only a process that expands it or in other ways, globalization could be the result of tourism getting
popular. Yet, he gives globalization the credit of impacting. As he puts it, tourism is an event
rooted locally, but spread and pollinated through impacts of globalization. Another way
globalization seems to have an impact on tourism is through the changes and reformations
globalization brings to countries, cities and communities. Any change to a place or nation is of
significance to the tourism industry, be it in lifestyle, quality of living or cultural traits (Maitland
et al., 2009b). Tourism is an industry on the move. Globalization enhances it by getting it across
borders.

23
  Mass Tourism and Sustainable development

Mass tourism and sustainable development have a problem-solution correlation, linked by

globalization in the present scenario. Continuing this state can lead to long term damages to the
place, despite its advantages. Mass tourism has advantages socially, economically and
environmentally if promoted with awareness. Leisure facilities, new infrastructures and
telecommunication facilities leading to development of the area and income that be invested for
the community development are few merits at the social level. Economically, it benefits in the
form of employment and job opportunities and great foreign exchange and domestic economical
development. If provided the proper directions, mass tourism can awaken awareness among the
tourist with regard to the need and importance of conserving the environment. The income can
also be used to repair or manage the conservation programmes (slideshare.net, 2011). But on the
contrary, disadvantages outweigh the merits of mass tourism as a result of poor awareness and
timeless globalization. Socially, the lifestyle and cultures are affected by mass tourism. There may
be issues like offending behaviors or overcrowding and loss of peace and quiet in case of rural
destinations. Economy-wise, the major disadvantage is in the largest opportunity in the tourism
department itself. That is, with the employment. Jobs in tourism industry can be unstable and
unreliable as there will be seasonal variations and differences in popularity. The locals get only
low paid jobs in case of mass tourism as the tour is mostly by large international companies that
offer packages. Further, the target market is often devoid of higher income group which doesn’t
yield much capital. Another discerning fact is that though the destinations are placed in less
developed countries; the profit often goes to foreign companies. This can be dangerous to the host
country’s economy. Some minor issues may be in matters of food production, demand for
importing foods to meet tourist needs and in the affordability of the facilities put up for tourist
among the locals (slideshare.net, 2011).

It is here sustainable development comes relevant or even as a solution. Anna Pollock (2012)
argues that global tourism is running the cultural identities along with the environment and that it
doesn’t make much sense in business. According to Pollock (2012), there are some reasons as to
why mass tourism is unsustainable. She argues that:

24
 Products in mass tourism industry can be substituted as it is based on the gathering, production
and using of packaged products. The entire business is more commodity-like rather than real tour
and quite spoiled by strategies for cost reduction.

 Most new destinations are subject to fast growth and contemplation and this can be of benefit to
the regional politicians and investors from outside but when the capacity is crossed, it poses some
risks. But these benefactors are likely to evade them.

 Mass tourism businesses are often expected to provide discounts and low cost packages like
rights rather than privileges, out of habit and customer expectations from previous repeated
reductions. This brings down profit naturally.

 Increasing capacity and declining demand of a tourism product or destination takes place, often
the only choice adaptable is discounting.

 Eventually the cheap travel will lose appeal to the local host people as everything else facilitated
there goes up in cost. It is then realized that they get no benefits from these mass tourism packages
invading their community.

 Sustainable tourism

To reduce the negative effects of mass tourism on the environment, society and community of the
destination place and better everyone’s experience, it has become necessary to develop the need
for conscious tourism. Both the hosts and travelers have to be enlightened and motivated. The
place has to be considered as one to be conserved and preserved rather than as a exploitable
resource. The attitude towards tourism needs to be changed into something gentler and conscious
rather than what globalization has made it now (Pollock, 2012).

25
9.0 Conclusion

The impacts of globalization on tourism has been researched and studied from various literary and
electronic sources to critically evaluate the subject. It has been found that globalization, in the
process of expanding the industry, is not without nuances and issues. The cons of globalization are
not many but are severe enough to neutralize the long list of its advantages in the matter of
development and growth of industries. Fast-paced tourism industry growth induced by
globalization endangers the environment. It also poses as a threat to relations at social and
international level ((Klančnik, 2003). Sustainable development has to be opted unanimously by
the departments and authorities involved in the tourism development. This will ensure
environmental harmony and safety and lessen the risks attributed to globalization in tourism.

Sustainable tourism development is about respect, responsibility, balance and awareness

(Travelmole, 2013). And sustainable development thus requests for limitations in mass tourism.
Mass tourism, if responsible and respectful, can pose no disadvantages as such. But such a unity
is farfetched. Globalization calls for standardization in tourism. And this results in disappearance
of the regional and local culture, lifestyles, qualities and character of the place. This is an
unfavorable impact which is so prevalent but in a way, it can lead to branding of tourism industry
as well. Without this, tourism industry might go unrecognized (Peric, 2005).

To conclude this critical evaluation, we can say that globalization is highly impactful on such a
broad industry like tourism. The impacts are visible in the economic and business sectors, but often
these developments are at the cost of the natural course of the environment and life, largely
affecting local cultures and behaviors. However, with regard to employment and productivity, this
has much to contributed. With cooperation and intervention from the government at the right time
and need, the positive parts of the impact of globalization can outweigh the negatives.

As globalization has progressed, living conditions (particularly when measured by broader

indicators of wellbeing) have improved significantly in virtually all countries. However, the
strongest gains have been made by the advanced countries and only some of the developing
countries.

26
That the income gap between high-income and low-income countries has grown wider is a matter
for concern. And the number of the world’s citizens in abject poverty is deeply disturbing. But it
is wrong to jump to the conclusion that globalization has caused the divergence, or that nothing
can be done to improve the situation. To the contrary: low-income countries have not been able to
integrate with the global economy as quickly as others, partly because of their chosen policies and
partly because of factors outside their control. No country, least of all the poorest, can afford to
remain isolated from the world economy. Every country should seek to reduce poverty. The
international community should endeavor by strengthening the international financial system,
through trade, and through aid to help the poorest countries integrate into the world economy, grow
more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access
to the benefits of globalization.

27
Reference

Adejuwon. F. (1996), Globalization of Tourism and its Effects on Africa with Special Regard to
Nigeria, in: Keller, P. (ed.), Globalization and Tourism, AIEST, St. Gallen.

Bairoch, P. (1982), International Industrialization Levels from 1750 to 1980, Journal of European
Economic History. 11 (Fall): 269-333.

Blainey, G. (1968), The Tyranny of Distance: How Distance Shaped Australia's History.
Melbourne: Macmillan; St. Martin's Press, New York.

Becherel, L. and Cooper, C. (2002). The Impact of Globalization on HR Management in the

Tourism Sector. Abstract of Articles of TRR 27(1), 2002.
http://www.trrworld.org/the_impact_of.html. [ Accessed on 5th March].

Carnoy, M. (2000), Sustaining Flexibility: Work, Family, and Community in the Information Age.
Cambridge, MA: Harvard University Press and New York: Russell Sage.

Caselli, M. (2006), On the Nature of Globalization and its Measurement. A.T. Kearney/Foreign
Policy Magazine Globalization Index and the CSGR. Globalization Index. UNU-CRIS
OCCASIONAL PAPERS. Universita Cattolica del Sacro Cuore, Milano.

Cooper, C. P. (1989), Tourist product life cycle. In: S.F. Witt and L. Moutinho (eds): Tourism
Marketing and Management Handbook. New York: Longman, pp.577-581.

Farrell, R. R. (2007), The Future of Globalization. The Real Truth, Magazine:

http://www.realtruth.org/articles/070223-001-globalization.html. [ Retrieved 28th February 2017].

Frieden, J. (2006), Global Capitalism. It Fall and Rise in the Twentieth Century, New York: W.W.
Norton.

Hamilton, L., & Webster, P. (2009). The International Business Enviroment. New York: Oxford
Univeristy Press.

28
Hołowiecka, B., Grzelak-Kostulska, E. and Kwiatkowski, G. (2011), “Impacts of Globalization on
Tourist Preferences and Activity.” In The Scale of Globalization. Think Globally, Act Locally,
Change Individually in the 21st Century, 55-62. Ostrava: University of Ostrava, 2011.

Ikenberry, J. (1998), Globalization and The Stability of World Order. Asia-Pacific Review. 5(3) 1-
13.

International Monetary Fund (IMF). (2008). Glossary of Foreign Direct Investment Terms.
Geneva: IMF World Economic Outlook (2008), Financial Stress, Downturns, and Recoveries.
[Accessed on 04 March 2017.] https://www.imf.org/external/pubs/ft/weo/2008/02/

Keller, P. (1996), Globalization of Tourism, AIEST, St Gallen.

Kerby, S. (2005), Globalization, GATS and Cross-Border Education: A Research Project for
OMDE 626, University of Maryland University College.
http://stevekerby.com/omde_626/globalization.htm. [ Accessed on 4th March 2017].

Landes, D. S. (1969). The unbound Prometheus: Technological change and industrial development
in Western Europe from 1750 to the present. London: Cambridge U.P.

Lundgren, N.-G. (1996), ‘‘Bulk Trade and Maritime Transport Costs: The Evolution of Global
Markets,’’ Resources Policy, vol. 22, nos. 1–2

Maddison, A. (2001), The World Economy: A Millennial Perspective, Development Centre

Studies, OECD, Paris.

Maddison, A. (2005), Growth and Interaction in the World Economy: The Roots of Modernity,
Wendt Lecture, American Enterprise Institute, Washington DC.

Maitland R., and Newman P. (2009b), Conclusions, [in:] R. Maitland, P. Newman (eds.), World
Tourism Cities: Developing Tourism off the Beaten Track, Routledge, Oxon

Moutinho, L. (2000), Strategic Management in Tourism, New York: CAB I Publishing.

29
Nkurayija, J. C. (2011), The Impact of Globalization on Africa's Development: "Rwandan Tourism
as Key to Mobilize Revenue and Investment". National University of Rwanda (NUR).

O'Rourke, H. K. Williamson, J. G. (1999), Globalization and History: The Evolution of a

Nineteenth-century Atlantic Economy. The MIT Press. Cambridge. London

O’Rourke, H. K. and Williamson. J. G. (2005), From Malthus to Ohlin: Trade, Industrialization

and Distribution Since 1500. Journal of Economic Growth. 10: 5-34.

O’Rourke, H. K and Findlay, R (2007), Power and Plenty: Trade, War, and the World Economy
in the Second Millennium, Journal of International Economics, Elsevier, vol. 75(2), pages 386-
388

Palmer, T. G. (2002). Globalization is Great! Washington: Cato's Letter.

Pollock, A. (2012), Six reasons why mass tourism is unsustainable.

http://www.theguardian.com/sustainable-business/six-reasons-mass-tourism-unsustainable.
[Accessed on 7th March, 2017.]

Rothenberg, L. E. (2003). Globalization 101 The Three Tensions of Globalization. New York: The
American Forum of Global Education.

Slideshare.net (2011), Mass Tourism – Good or Bad? [online] PowerPoint presentation slide available
at http://www.slideshare.net/tudorgeog/mass-tourism-good-or-bad. [Accessed on 7th March, 201.]

Steger, M. B. (2009). Globalization: A Very Short Introduction. Hampshire: Oxford Univeristy

Press.

Theuns H.L. (2008), Globalization and Tourism: Pros and Cons, Tourism Recreation Research
(Lucknow).

TravelMole (2013), Mass tourism is both a force for good and a potential for harm – Travel with
a Difference. http://www.travelmole.com/news_feature.php? id=1122001. [Accessed on 7th
March, 2017]

30
Vanhove, N. (1996), Globalization of Tourism Demand: The Underlying Factors and the Impact
on Marketing Strategy, in: Keller, P. (ed.) Globalization and Tourism, AIEST, St. Gallen.

World Trade Report (2013), Trends in international trade. [ Retrieved 03rd March 2017]

URL:

https://www.wto.org/english/res_e/statis_e/its2015_e/its15_toc_e.htm. [Accessed on 12th April

2017]

http://data.worldbank.org/indicator/ST.INT.RCPT.CD [Accessed on 12th April 2017]

http://www.e-unwto.org/doi/pdf/10.18111/9789284416899. [Accessed on 12th April 2017]

http://media.unwto.org/sites/all/files/pdf/finalannualreportpdf.pdf [Accessed on 12th April 2017]

31