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I.
THE IMPORTANCE OF TOURISM

A. International tourism development
1.
Tourism has become one of the world’s largest and fastest growing industries. Over the period
1995-2005, international tourist arrivals grew at an average annual rate of 4.1 per cent, exceeding the
800 million mark in 2005. This outstanding performance can be attributed to several factors,
including the following: rising levels of disposable income; improvements in transportation and the
introduction of low-cost airline services; easier access to destinations by tourists from traditional
source markets and the emergence of new source markets such as China and India; and the
diversification of the industry with new market niches, such as cultural tourism, ecotourism and
adventure tourism.
2.
During the 10-year period, the Asian and Pacific region outperformed the rest of the world, with
increases in arrivals averaging 6.5 per cent annually, raising its global share of the tourist market from
15.3 per cent in 1995 to 19.2 per cent in 2005. By contrast, the two more mature regions, Europe and
the Americas, saw their global shares decrease from 58.3 per cent to 54.8 per cent and from 20.2 per
cent to 16.6 per cent respectively.
II. THE ECONOMIC IMPACT OF TOURISM
1.
The economic impact of the tourism industry can be seen in its contribution to a country’s GDP
and exports. The largest contributions to GDP are seen in the island States of Fiji, Tonga and Vanuatu.
Indeed, many small island economies are highly dependent on tourism, as evidenced by the
significant share of tourism in their total export earnings. In 2006, tourism alone contributed 43.5 per
cent of the total export earnings of Fiji and one third of its GDP. Other small islands, such as Tonga
and Vanuatu, are dependent on tourism for half or more of their export earnings.
2.
Tourism in China has also provided a substantial contribution to its GDP, amounting to 13.7 per
cent in 2006. Taking full advantage of the potential of their natural and cultural tourism resources,
countries in the Greater Mekong Subregion are benefiting from the tourism industry. In 2006,
tourism in Cambodia and the Lao People’s Democratic Republic accounted respectively for 22.3 and
21.4 per cent of their total export earnings and contributed 19.6 and 9.3 per cent respectively of their
GDP.
3.
In the other countries of the region, the contribution of tourism to GDP and to total exports
averaged between 7 and 10 per cent, mainly because their economies are much more diversified.
However, in the light of the expected continuing growth of the tourism industry in the foreseeable
future, it can be assumed that the share of tourism in the region’s economy will become more
significant.
III. THE SOCIAL IMPACT OF TOURISM
4.
While there are various definitions of social development, most of them converge around the
concepts of improving the well-being of a country’s citizens, promoting higher standards of living,
employment and conditions of economic and social progress. Therefore, in the absence of better
indicators to measure the social impact of tourism, its importance for employment has been used in
the present document.
5.
The tourism industry contributes significantly to the creation of employment, both directly and
indirectly. In 2006, the industry in the Asian and Pacific region provided jobs for about 140 million
people, representing an average of 8.9 per cent of total employment. Tourism employment in
North-East Asia is estimated at 86 million jobs, or 10.1 per cent of total employment. This situation is
attributed mainly to China, where 1 out of 10 persons works in a tourism-related industry. In Oceania,
the workforce in the tourism sector accounted for 14.5 per cent of total employment, or 1 in every 6.9
jobs. The importance of tourism becomes more significant when the structure of the workforce in
selected Pacific island economies is analysed. For instance in 2006, 1 in every 3.2 persons was
employed in the tourism sector, while in Vanuatu the ratio was 1 in every 2.4 jobs.
6.
A comparison with countries in other subregions indicated that the share of total employment in
the tourism sector in 2006 varied from 5.4 per cent in India to more than 10 per cent in both the
Philippines and Thailand.
7.
Fueled by sustained growth, the tourism industry has managed to become a significant provider
of employment in countries of the Asian and Pacific region, thereby improving the economic situation
of the people of those countries. In addition, revenue generated from tourism has enabled
Governments
to allocate financial resources for improving education and health conditions. For example, in
Maldives, where tourism activity is the economic mainstay, almost 100 per cent of the population is
now literate. The infant mortality rate has improved from 121 per 1,000 in 1977 to 38 per 1,000 in
2004.
Over the same period, the average life expectancy at birth increased from 47 years to 67 years.
IV. ASSESSING THE SOCIO-ECONOMIC IMPACTS OF TOURISM
18.
A full assessment of the socio-economic impacts of tourism requires that the linkages between
tourism and socio-economic development be clearly identified. Having established the linkages,
policymakers are then in a better position to consider specific interventions that can raise standards of
living and reduce poverty.
19.
Techniques to assess such impacts fall into two broad categories: “top-down”, aggregate or
macrolevel approaches; and “bottom-up”, project or microlevel approaches.
20.
Aggregate approaches include the related tourism satellite accounts, input-output tables,1 social
accounting matrices and computable general equilibrium models, as well as econometric and
regression
analysis.
21.
Among the aggregate approaches, satellite accounts were used in the previous section to
describe the importance of the tourism sector. The leading organization in generating the relevant
data
is the World Travel and Tourism Council, which produces annual data on the sector’s contribution to
GDP, employment and exports. Since 1998, the Council has developed tourism satellite accounts for
173 countries; of that number, 31 are members or associate members of ESCAP. In addition to the
activities of the Council, countries are producing their own satellite accounts (for example, India, the
Philippines and Thailand). These accounts distinguish between the “travel and tourism industry” and
1 During the first half of the 1990s, ESCAP undertook separate studies on the economic impact of tourism in 11 member
countries using input-output table methodologies. Publications relating to these studies can be found at <www.unescap.org/
ttdw/index.asp?menuname=PublicationArchives>.
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the “travel and tourism economy”. Essentially, the term “industry” includes all activities in direct
contact with visitors, whereas the term “economy” refers to the suppliers of goods and services to the
industry. Once constructed, the accounts can be used to answer questions such as the following: What
are the direct (industry) and indirect (economy) impacts of tourism on GDP and employment? How
strong are the linkages between tourism and other sectors of the economy? What are the multipliers
(the
change in income and employment resulting from a change in expenditure) and the leakages (the
proportion of tourist expenditure that does not remain in the economy)?
22.
One example of a computable general equilibrium model was developed by Adam Blake for
Brazil. He and his co-authors concluded:
The results also show that tourism benefits the lowest income sections of (the) Brazilian
population and has the potential to reduce income inequality. The lowest income households
are not, however, the main beneficiaries of tourism and we have also shown that alternative
revenue distribution by the government could double the benefits for the poorest households
and give them around one-third of all the benefits from tourism.2
23.
Among the project-level approaches to assessing the impacts of tourism are traditional
cost-benefit analyses, including their extensions to social impact analysis and environmental impact
analysis, livelihood analysis, accountancy-based lodging and enterprise assessments, local economic
mapping, tourism value chain analyses and ex-post documentation of specific case studies. Because
these types of analyses are done at the micro level, it is often easier to hypothesize and test linkages
between particular interventions and improved standards of living.
24.
These analytical techniques are all ways of identifying those who benefit from tourism
interventions and of evaluating the level of their benefits. For example, interventions that provide
infrastructure for tourists (roads, communications, electricity, water, waste treatment and disposal, and
medical services, including clinics and hospitals) can also be designed to benefit local communities. In
a longer causal chain, investment in physical access for tourists also makes the provision of health,
education and extension services easier for the organizations and employees providing such services.
Some of these analyses are obligatory when projects are financed by international financial institutions
and bilateral donors.
25.
One technique that has become increasingly popular in the current era of globalization is value
chain analyses. In essence, this type of analysis can enable policymakers to consider each of the
elements of a touristic experience and look at how the product is produced, distributed and sold, that
is,
the value added by each element. By analysing the value chain and working to retain value in the local
economy, the positive impact of tourism on local economic development and poverty reduction can
be
enhanced. In 2006, the technique was used in the city of Luang Prabang, Lao People’s Democratic
Republic, where opportunities to increase earnings were identified by assessing value chains for
accommodations, handicrafts, excursions and
Contribution of tourism
1. Eradicate extreme poverty
and hunger
(a) Tourism stimulates economic growth both at the national and
local levels and promotes the growth of the agricultural,
industrial and service sectors;
(b) Tourism provides a wide range of employment opportunities
easily accessible by the poor. Tourism businesses and tourists
purchase goods and services directly from the poor or
enterprises employing the poor. This creates opportunities for
micro, small and medium-sized enterprises in which the poor
can participate;
(c) International and domestic tourism spreads development to
poor regions and remote rural areas of a country that may not
have benefited from other types of economic development;
(d) The development of tourism infrastructure can benefit the
livelihood of the poor through improvement in tourism-linked
service sectors, including transport and communications,
water supply, energy and health services.
2. Achieve universal primary
education
(a) The construction of roads and tracks to remote areas for
tourists also improves access for school-age children and for
teachers;
(b) Tourism can help local resource mobilization, part of which
can be spent on improvement of education facilities.
3. Promote gender equality and
empower women
(a) The tourism industry employs a high proportion of women
and creates microenterprise opportunities for them. It
promotes women’s mobility and provides opportunities for
social networking.
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria
and other diseases
(a) The construction of roads and tracks to remote areas for
tourists also improves access to health services;
(b) Revenues accruing to national and local governments through
taxes on the tourism industry can be used to improve health
services and nutrition for young children and their mothers;
(c) Tourism raises awareness about HIV/AIDS issues and
supports HIV/AIDS-prevention campaigns;
Goal
Contribution of tourism
(d) Tourism aggravates the spread of HIV/AIDS (negative effect).
7. Ensure environmental
sustainability
(a) Tourism can generate financial resources for conservation of
the natural environment;
(b) Tourism raises awareness about environmental conservation
and promotes waste management, recycling and biodiversity
conservation;
(c) Uncontrolled tourism may generate negative externalities as a
result of pollution, congestion and depletion of natural
resources (negative effect).
8. Develop a global partnership
for development
(a) Tourism contributes to the socio-economic development of
least developed countries, landlocked countries and island
developing countries through foreign exchange earnings and
the creation of job opportunities;
(b) Tourism stimulates the development of the transport
infrastructure, which facilitates access to and from the least
developed countries, landlocked countries and island
developing countries;
(c) Tourism stimulates internal and external trade and strengthens
supply chains;
(d) Tourism promotes the integration of isolated economies with
regional and global flows of trade and investment;
(e) Tourism reduces the burden on the public exchequer through
implementation of public-private initiatives;
(f) Tourism creates decent and productive work for youth;
(g) Tourism provides opportunities for bilateral, multilateral and
subregional cooperation among countries;
(h) Information technologies play an important role in integrating
tourism enterprises into global tourism markets.
VI. THE ROLE OF GOVERNMENT

31.
Government intervention may be necessary to enhance the contribution of tourism to
socio-economic development and poverty reduction. One of the principal roles of Governments is to
set
policy and legislative frameworks for tourism. For instance, several articles of the 2006 law on
tourism
of Viet Nam have been designed to facilitate pro-poor tourism.
32.
Real progress can be facilitated by using a wide range of instruments. A number of these have
been identified by the World Tourism Organization and the United Nations Environment Programme
and are categorized into measurement instruments (sustainability indicators and monitoring;
identification of limits), command and control instruments (legislation, regulation, rules and licensing;
land-use planning and development control), economic instruments (pricing, charges and taxation;
property rights and trading; financial incentives; and voluntary contributions), voluntary instruments
(guidelines and codes of conduct, reporting and auditing, and voluntary certification), and supporting
instruments (infrastructure provision and management, capacity-building, and marketing and
information services). The precise mix of policies and instruments will vary depending on the
situation, objectives and government structures.
A. Tourism ministries
33.
As tourism moves up the national agenda, the government departments dealing with tourism
may be upgraded and strengthened. However, to manage tourism sustainably, ministry staff need the
support of their colleagues in other ministries and in a range of subnational administrations. This
arises
because the administration and governance of tourism takes places in the localities where tourists and
host communities interact, while regulations and incentives are applied within a framework laid down
by the national Government.
B. Tourism plans
34.
Tourism master plans are useful tools for identifying areas with tourism potential, determining
tourism strategy and structuring the provision of infrastructure, investment promotion and financial
and
other incentives. Governments need to ensure that master plans and tourism development strategies
address local economic development, the distribution of tourism and poverty reduction.
C. Empowerment of poor communities, property rights
and development control
35.
Government agencies can promote the empowerment of communities in planning and
managing tourism assets by initiating partnership approaches that include poor people. Engaging the
poor is particularly important in order to identify opportunities that fit their livelihood strategies and
the
barriers to employment and enterprise.
36.
In Viet Nam, provincial and district-level governments have been allocated greater
responsibility for tourism planning and development in line with the overall decentralization of
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governance. Provincial and district governments have the statutory duty to consult and collaborate
with
other government agencies, as well as with other tourism stakeholders, such as businesses and local
communities. Overall, this decentralized and more integrated approach to tourism planning is a
significant step towards enhancing opportunities for incorporating poverty reduction and other local
development priorities into tourism development.
D. Legislation and regulations
37.
Several areas of legislation have an impact on the capacity of small-scale producers to develop
tourism-related enterprises. These include access to credit, business licensing, employment
legislation,
environmental health, and health and safety regulations as well as the regulation of micro, small and
medium-sized enterprises. Governments need to ensure that people engaged in tourism are
remunerated
fairly and receive adequate social protection in areas such as the minimum wage, policies on equal
opportunities, holiday entitlement and security of employment.
E. Training, capacity-building and certification
38.
The needs and existing capacity of local people have to be assessed to ascertain where training
interventions will be most useful. There is a need to strengthen informal learning methods and in place
on-the-job training. The certification of guides has been used in several places to control quality and
supply, and to ensure minimum standards of service and knowledge. In Viet Nam, a new category of
“narrator guide” has been introduced, which enables people without a formal education to work as
local
guides, and at Keoladeo National Park, in India, local rickshaw drivers are registered with the park to
take tourists around the site.
F. Taxes and levies
39
Taxes on goods, services and transactions, which provide funds for local or national
governments can be used specifically to support either poor communities or the environments that
provide their livelihood. For instance, Bhutan levies a high daily royalty on tourists, which is used to
fund education and health programmes in remote rural areas.
G. Microfinancing and facilitating market access and linkages
40.
The poor have limited access to the tourism market for several reasons, including lack of
business skills, low educational levels, demanding regulations, incapacity to exit deep poverty, poor
health and social exclusion. Governments can reduce the bureaucracy that small enterprises face, and
create advisory services on business development, provide seed-funding for entrepreneurs, develop
business linkages with established operators, assist micro, small and medium-sized enterprises to form
production or marketing cooperatives and provide educational, technical and professional training
programmes to improve quality and business standards. The cluster mechanisms outlined below can
assist in these respects.
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Box 3. Creating microenterprise opportunities for the poor: two examples from Nepal
The Explore Nepal Group
The Explore Nepal Group spent approximately US$ 57,000 on constructing and furnishing the
Koshi Tapu Wildlife Camp. All materials except the toilet were sourced from local entrepreneurs of
the
Koshi Tapu area. For Bhojan Griha Restaurant in Kathmandu, another business of the Explore Nepal
Group, each year the group expends approximately US$ 5,700 in renovating or replacing the “soft
furniture” of the restaurant, items such as candles, arts and crafts, tables and mats. This furniture is
acquired only from women’s handicraft associations such as Dhukuti and Sano Hastakala.
The Tiger Mountain Group
In order to support local entrepreneurs while minimizing distortions in the local market, such as
price rises that would have an adverse impact on local people, the Temple Tiger Jungle Lodges and
Wildlife Camp in Pokhara buys its supplies from local markets but at established retail prices. Buying
locally has the added benefit of significantly reducing the company’s transport costs.
Ensuring that the sources of supply are diverse and the benefits within the community widespread
also proved to be a challenge because of the tendency of lodge employees to favour local businesses
with connections to their relatives. To overcome this tendency, the lodge identifies the services and
supplies that it needs in an open, accountable and transparent manner. It develops clear criteria for the
supplies and services sought and ensures that the criteria are widely disseminated among community
members.
Source: The Netherlands Development Organization (SNV) Nepal, 2006.
H. Marketing
41.
Destination marketing is increasingly the remit of the private sector, private-public sector
partnerships or clusters (see below). This means that micro, small and medium-sized enterprises and
poorer producers may be excluded from the formal marketing processes and distribution channels. To
address this problem, Governments can encourage discussions between national and regional tourist
boards and the institutions involved in local economic development and resource conservation. They
can also encourage the organization of marketing campaigns to promote responsible tourism practices
and suppliers, and give preferential marketing terms to suppliers that adopt sustainable, responsible,
poverty alleviation practices.
42.
Much can be done through careful marketing to alleviate the uneven geographic distribution of
tourists and to spread the benefits of the industry. For instance, the Nepal Tourism Board has given
particular promotional emphasis to areas of the country that traditionally receive fewer visitors, such
as
the Chitwan hills. Promotion builds on extensive product development, which has improved facilities
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and enhanced the visitors’ experience, and has succeeded in extending the range of tourism products
and the tourism season in Nepal.
VII. THE ROLE OF THE PRIVATE SECTOR

43.
A climate characterized by increasing levels of corporate social responsibility has resulted in
awareness that economic instruments can be manipulated for altruistic ends as well as commercial
gain,
and that the private sector can contribute to local economic development and poverty reduction by
changing the way that it does business and through philanthropic activity.
44.
There are strong commercial motivations for private sector engagement in local economic
development and poverty reduction, principally the creation of an enhanced product range, which
adds
market advantage, and of a better business environment, which fosters favourable staff attitudes and
morale. These factors will, in turn, help to enhance the tourist’s experience.
45.
Particular areas where the private sector can foster local socio-economic development are in
recruiting and training local people, procuring goods and services locally and shaping local
infrastructure development to include benefits for the poor. The private sector can also encourage
tourists to purchase products that are complementary to the core holiday, such as handicrafts, art and
local food and beverages, and services such as guide services, music and dance. These add to the
holiday experience and provide economic opportunities for local providers. Complementary products
often draw on local culture, including the way that the people’s way of life has evolved in relation to
their history and environment.
VIII. ALLIANCES AND PARTNERSHIPS
A. Regional and subregional marketing alliances
46.
Subregional touristic cooperation at the government level is now being pursued between
countries in several subregions. The ASEAN Tourism Agreement (concluded in Phnom Penh on
4 November 2002) committed the members of the Association of Southeast Asian Nations to work
together to facilitate travel into and within ASEAN countries, to undertake joint marketing and
promotion, to liberalize trade in travel and tourism, to enhance cooperation in raising the quality and
sustainability of tourism in the region and to ensure tourist safety and security and human resources
development. In the Pacific subregion, the South Pacific Tourism Organisation is charged with
facilitating the sustainable development of tourism, strengthening regional capacity, and planning,
marketing and managing the tourism sector on a sustainable basis. In January 2007 Brunei
Darussalam,
Indonesia and Malaysia agreed to conserve areas of high biodiversity along common frontiers on the
island of Borneo; that tripartite agreement has a focus on ecotourism. Other economic groupings
actively engaged in cooperative tourism development include the Working Group on the Greater
Mekong Subregion Tourism Sector, the Ayeyarwady-Chao Phraya-Mekong Economic Cooperation
Strategy, the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation, the
South
Asian Association for Regional Cooperation and the South Asia Subregional Economic Cooperation.
Subregional cooperation can achieve efficiencies in marketing, information-sharing, destination
access,
human resources development and capacity-building, and synergistic product development.
B. Networks, clusters and ICT
The “story” of globalization is essentially one of technological change coupled with the
development and organization of interacting physical and non-physical networks designed to take
advantage of the change.3
47.
Networks clusters and ICT provide mechanisms by which the role of tourism in socio-economic
development can be enhanced.
The interrelationship between tourism networks and technology [ICT] is not a recent
phenomenon. … Computerised Reservation Systems (CRS), developed and operated by
airline companies in the 1960s to manage their increasing volume of passengers and
related logistics, were among the first integrated global information technology
networks. In due course, proprietary CRS were made accessible to travel agents and
subsequently expanded to include hotels and car rental companies…. In the 1980s, CRS
3 ESCAPand Asian Institute of Transport Development, Towards an Asian Integrated Transport Network
(ST/ESCAP/2399), accessed from <www.unescap.org/ttdw/PubsDetail.asp?IDNO=182>, on 28 February 2007.
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started to integrate with other technology networks to form Global Distribution Systems
(GDS), examples of which are Amadeus, Galileo, Sabre, Worldspan and the Australian
ETAS system.4
48.
Advances in information technology are giving micro, small and medium-sized enterprises
unprecedented access to markets, and the Internet is being used to facilitate information exchange and
the booking process. An example is Worldhotel-linkcom Limited, an e-marketplace which acts as the
interface between accommodation providers in several Asian countries (initially Cambodia, the Lao
People’s Democratic Republic and Viet Nam) and independent travellers.
49.
A cluster, as popularized by Michael Porter,5 is broadly defined as a geographic concentration
of competing and cooperating companies; suppliers; service providers; government, education and
training institutions; and other associated organizations. One of the central propositions underlying the
formation of clusters is that, while a sound macroeconomic, political, legal and social environment
creates the conditions for increased competitiveness, competitiveness itself ultimately depends on
improving the microeconomic capability of the economy and the sophistication of local companies
and
local competition.
50.
The cluster concept is being used widely in the tourism sector in both developed and developing
countries. For example, in Sri Lanka, there are eight clusters in that country’s “competitiveness
programme” (ceramics, coir, ICT, jewellery, rubber, spices, tea and tourism), while in Thailand there
are five clusters (automotive industry, fashion, food, tourism and software). An example of the work
of a cluster is, in the jargon of the tourism industry, “destination marketing” whereby the various
stakeholders in the cluster work together to generate a “total tourism experience”. Subject to the
consensus of the members of a cluster, special emphasis can be placed not only on supporting and
promoting micro, small and medium-sized enterprises but also on the special needs of poorer sectors
of
the community in providing tourism services.
51.
In addition to facilitating the marketing of the tourism product, ICT has an important role to
play in capacity-building through distance learning, the sharing of experiences and virtual networking.
52.
In drawing upon the lessons and experiences in other sectors, ICT may provide the opportunity
for “scaling-up” or at least “replicating” (with modifications to reflect local circumstances) the
successful elements of particular interventions or pilot projects. The principal area of difficulty in such
“replication” relates to governance, standardization and the transfer of implicit and tacit knowledge. In
this respect, ICT may offer a way forward. One example from a different sector is the Prime
Minister’s
Rural Road Project in India. The project is a very large one that is aimed at providing all-weather
access
for villages of more than 1,000 people (500 people in some tribal areas) to the main road network. The
4 PatriceBraun, “Creating value to tourism products through tourism networks and clusters: Uncovering destination
value chains”, paper presented at the Conference on Global Tourism Growth: A Challenge for Small and Medium-sized
Enterprises, in Gwangju, Republic of Korea, 6-7 September 2005.
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project is being financed from the proceeds of a federal tax on diesel sales and it is being implemented
by individual states. ICT has played a major role in a number of aspects of the project: engineering,
administration, monitoring of project implementation and other governance matters. One of the key
elements in this application would appear to have been the ability to “standardize” many of the
project’s
activities.
53.
Another concept that has close tourism connections is the “one village, one product”
programme, which was started in Japan in 1979, and later introduced in other countries, for example
the
“1K1P” programme in Malaysia and the “one tambon (subdistrict), one product” (OTOP) programme
in Thailand. The latter programme was started in 1999 to promote entrepreneurs at the village level
through the manufacture of local specialty products based on the abundant native culture, tradition and
nature.6 The OTOP type of programme has considerable potential for developing the local economy
and can also promote tourism. However, any successful large-scale replication and upscaling of local
initiatives requires that the local entrepreneurs be assisted in product development, guidance and
support (concept, design, prototype-making, finance, manufacturing and business operations);
standardization (including branding, product rating and classification); and marketing.
54.
ICT can be an appropriate tool for providing these support services to entrepreneurs and for the
management of the programme, in a manner similar to that of the Prime Minister’s Rural Road project
in India. Through the use of standardization and Internet technology, the government agencies
concerned, with helping private organizations, can provide the services and manage the programme,
thereby achieving the economies of scale enjoyed by larger organizations. An Internet site can be a
resource and e-business centre for the local producers, and can also help in fostering local tourism by
providing tourists with the necessary information. Currently, an Internet site <ThaiTambon.com> is
helping in the marketing of OTOP products and the networking of entrepreneurs. It also provides
information on local tourism. Such efforts could be further extended to include other services and
could
be used as a tool for management of the programme by the Government.
IX. IMPLEMENTATION AND MONITORING OF THE PLAN OF ACTION
55.
As requested by the Commission in paragraph 3 (c) of resolution 62/3 of 12 April 2006 on the
implementation of the Plan of Action for Sustainable Tourism Development in Asia and the Pacific,
phase II (2006-2012) and the Regional Action Programme for Sustainable Tourism Development, the
secretariat has developed a common approach to monitoring their implementation.
56.
The proposed analytical framework is based on a widely applied analytic hierarchy process that
allows consideration of both qualitative and quantitative assessment of the extent to which an element
of a plan is completed. In order to operationalize the monitoring system, some rearrangement and
5 Michael Porter, The Competitive Advantages of Nations (New York, Free Press, 1990).
6 The programme has been recently renamed “local and community product”, but the OTOP brand name has been
retained.
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reformulation of the objectives and actions under each theme of the previously mentioned Plan of
Action have been proposed. However, a direct correspondence between the items in the monitoring
system and the Plan of Action has been fully retained. In addition, a fourth element labelled “activity”
has been introduced into the monitoring system. Consequently, the proposed monitoring system has
four hierarchical levels, namely the five themes of the Plan of Action; a number of objectives that
contribute collectively to the overall objective of the theme; a set of actions that broadly correspond to
the actions in the Plan of Action and contribute to the achievement of the objective; and a set of
activities that are required to be carried out in order to complete the action.
57.
In assessing the extent to which the Plan of Action has been completed, the analyst is required
only to assess either quantitatively or qualitatively the extent to which each of the activities is
completed. A set of weights, reflecting the level of importance of the activity, action, objective and
theme at the country level, are then applied to ascertain the degree (in percentage terms) to which the
Plan of Action is completed at each of the hierarchical levels.
58.
The monitoring system can be implemented with readily available spreadsheet software.
Outputs include time-series graphs of planned versus actual completion for each of the activities,
actions, objectives and themes as well as radar (or spider) diagrams for each action, objective and
theme. Presentation of information in these forms enables policymakers to readily visualize the
progress being made in implementing the Plan of Action.
59.
In order to further support the monitoring of the Plan of Action, a separate reporting form has
been developed for each action. A copy of the suggested form is contained in the annex to the present
document.
X. CONCLUSIONS AND RECOMMENDATIONS
A. Summary and conclusions
60.
The results of the foregoing study have clearly demonstrated that tourism is playing a major role
in socio-economic development. Among other observations, it has shown that, for many countries of
the region, the economic significance of tourism is very large when measured against GDP and
exports.
For many countries in general and the least developed countries in particular, tourism is a sector in
which they have comparative, if not competitive, advantages for which they can efficiently convert
domestic resources into foreign exchange. If appropriately used, such foreign exchange can purchase
the investment goods necessary to support more broadly based economic development policies.
61.
The study has demonstrated that the social significance of tourism, measured in terms of
employment (especially unskilled labour), is very large. It has also illustrated that appropriate
tourism-related interventions can play a role in raising the standard of living and in reducing poverty
in
local communities.
62.
It is often necessary, however, to develop and implement policies that take advantage of the
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potential benefits of tourism in socio-economic development. In some cases, this is simply a matter of
increasing awareness so that the joint benefits to tourists and local communities can be “factored-in”
at
the planning stage. In other cases it may involve reducing leakages (or retaining tourist spending). In
yet other cases “affirmative action” may need to be taken to capture the benefits.
63.
In any event, there is a strong case for considering tourism as an important sector in
socio-economic development. Towards this end, the following recommendations have been prepared
for the consideration of the Commission.
B. Recommendations for consideration
1. Planning
64.
National tourism master plans need to be prepared, with specific objectives to be integrated
within a country’s overall economic and social development objectives. The plans need to include
comprehensive strategies, implementation plans and priorities to enhance the role of tourism in
socio-economic development and poverty reduction. In developing a master plan, countries may wish
to consider incorporating the recommendations below as well as those contained in Commission
resolution 62/3.
2. Information for decision-making
65.
Governments should consider stepping up their efforts to assess the socio-economic impact of
tourism. The formulation of national tourism development policies is often hindered by a lack of data
on the scope and extent of tourism’s economic impact. In the absence of such data, tourism has often
been given an unduly low priority in the allocation of domestic resources and foreign assistance.
Tourism satellite accounts and other quantitative and qualitative analytical techniques help to remedy
this situation, enabling tourism to be compared with other economic activities measured in national
accounts.
3. Coordination and monitoring
66.
Governments should consider establishing inter-ministerial committees that include
representatives of the tourism industry in order to coordinate and monitor the implementation of the
Plan of Action, including the development of tourism-related infrastructure and the facilitation of
international travel, through improvements in procedures for visa issuance, border formalities and
customs regulations. Governments may also wish to consider the common approach to the monitoring
of the implementation of the Plan of Action, as outlined above.
4. Private sector participation
(a) Public-private partnerships
67.
Private sector participation and public-private partnerships should be strengthened in a number
of areas: (a) tourism development planning, policy formulation and implementation, monitoring and
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E/ESCAP/63/14
Page 21
evaluation; (b) infrastructure development and investment for the tourism sector; (c) tourism
promotion, marketing and product development; (d) environmental management of tourism and the
preservation of the cultural heritage; (e) human resources development; (f) facilitation of travel; (g)
risk
management in tourism; (h) pro-poor tourism initiatives; and (i) awareness creation about the role of
tourism in socio-economic development.
(b) Development of micro, small and medium-sized enterprises and employment generation
68.
Special efforts should be made to foster micro, small and medium-sized enterprises to ensure
locally based opportunities for engagement in tourism.
(c) Mainstream tourism and corporate social responsibility
69.
The contribution of mainstream tourism to local economic development needs to be better
understood and its role further expanded. There is also a need to foster a climate characterized by
corporate social responsibility in the tourism industry.
5. Networking, clusters and ICT
70.
Governments should consider fostering tourism networks and clusters as part of a bottom-up,
business-oriented approach to developing the sector.
71.
Advances in information technologies can contribute significantly to the expansion of tourism.
The public and private sectors should build up ICT infrastructure and services as well as strengthen
capabilities to utilize ICT in tourism.
6. Improving living standards and poverty reduction
72.
The role of tourism in socio-economic development and in achieving the Millennium
Development Goals should be clearly identified. To increase the positive impact on local economic
development and poverty reduction, linkages to poor communities need to be strengthened through,
among others, the above-mentioned initiatives.
7. Domestic tourism
73.
Governments should consider making special efforts to promote domestic tourism in view of its
potential size, spatial density, cultural affinity, language commonality or similarity, and role in a
risk-management strategy.
8. Environmental and sociocultural considerations
74.
Environmental and sociocultural considerations should be integrated into policies and plans for
tourism development. Collaborative approaches that include the public sector, the private sector and
stakeholders can internalize some of the external costs of tourism, thereby preserving the cultural
heritage and protecting the environment.
9. Human resources development
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E/ESCAP/63/14
Page 22
75.
Countries should consider undertaking surveys to assess workforce requirements by required
skill level and current and future training requirements in the tourism sector, and develop a national
tourism training plan. Governments may also wish to consider establishing national tourism-training
committees, consisting of representatives of the Government, training institutions and the tourism
industry. At the regional level, the Network of Asia-Pacific Education and Training Institutes in
Tourism provides a useful mechanism for cooperation in tourism education and training.
10. Regional economic cooperation
76.
Bilateral, multilateral and subregional cooperation in tourism development should be further
strengthened. In particular, countries in Central Asia and South-West Asia should step up their efforts
to strengthen subregional cooperation in tourism. Overland travel has great potential for expanding in
the region and can contribute to local economic development. Countries linked by the Asian Highway
and the Trans-Asian Railway share a wealth of historical and cultural heritage as well as unspoiled
natural beauty. These countries could jointly promote tourism along the Asian Highway and the
Trans-Asian Railway.
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The Role of Tourism in India

Among the various service industries, tourism in India is the largest and fastest-growing
in the country. It has a vast impact on the national economy and plays a major role in
other aspects of the country's growth and development, especially the creation of jobs.
National Economy
o The Ministry of Tourism in India reported in 2007 that tourism contributed
6.23 percent of the country's gross domestic product (GDP). Tourism was also
responsible for 8.78 percent of the country's total employment. This translated to
roughly 53 million jobs and recorded earnings of approximately $10.73 billion. These
positive numbers contributed to a growth rate of 24.3 percent compared to previous
years.
Sector Development
o India's booming tourism industry benefits specific sectors. Traditional crafts
are being developed and promoted by the government because crafts are a key
component of India's tourism. Artisans, who usually are from rural areas, get to
distribute their crafts to a bigger market, hopefully fueling growth in the rural
communities to which they belong. Another aspect of tourism is India's flora and
fauna. The aim is better organization and administration of India's nature and wildlife
sanctuaries. This bodes well for the country's efforts at sustainable development of
ecological resources.
Medical Tourism
o The country's medical and health care community is another beneficiary of
tourism. People from all over the world have discovered they can get the same
quality of medical services in India at a lower cost than in other countries. Medical
care in India costs 1/10 of what it is in the U.S. or UK, and the quality of service is
similar. Tourists also go to India to learn about or benefit from alternative medicine.
Non-Western healing techniques are still actively practiced in the country.
Campaign
o The catch phrase of India's tourism campaign is 'Incredible India." Besides
the typical heritage sites from India's past, the campaign defines other niche
markets. Rural tourism focuses on the rich culture to be found in the villages. Nature
tourism centers on the country's wildlife and nature preserves. Wellness tourism
promotes the various medical and healing systems that are practiced in the country.
Adventure tourism pushes for development of outdoor recreational activities.
Future Improvements
o As the industry grows, the Ministry of Tourism and its partners plan to explore
other niche markets that can be developed. Efforts also are focusing on infrastructure
development. Investments are funneled to road, airport and seaport construction and
improvement. The hospitality sector and manpower training are also key targets for
development.
Economic Importance of Tourism in
India
updated: May 28, 2010
Tourism is an increasingly vital part of the Indian economy.

Throughout the world, tourism brings money to cities and countries. Tourism also provides
jobs for the local residents, further benefiting the destination. India has realized the profits
available from this sector. Thanks to its growing economy and promoting itself as a culturally
rich and diverse nation, India's tourism industry now brings billions of dollars into the
economy each year.
About India
o New Delhi is India's capital.
More than 60 years into its independence from British colonial rule, India has
developed into a strong player on the world economic stage. As of 2010, more than
1.1 billion people live in India, making it the second most populated country after
China. New Delhi is the political capital of India, although Mumbai is the country's the
financial center.
India's Economy
o Tourism is becoming more and more a vital part of

the Indian economy.
Even though most of the population is rural and still works in agriculture, India's
service-based economy has rapidly brought about a thriving development, especially
in the last 20 years when India liberalized its markets. The services sector employs
about 30 percent of India's workforce, yet provides about half of its output. India
depended on its large English-speaking, well-educated workforce to develop a
burgeoning technology sector, as well. Tourism is a growing portion of India's
economy with an earnings increase of more than 17 percent from 2009.
Reasons for Growth
o The Indian government played an important role in

promoting tourism.
India's government, through its Tourism Ministry, developed a National Action Plan
for Tourism to develop this portion of the economy. The plan sought to promote
tourism as a way to boost socio-economic development, increase employment,
preserve the nation's heritage and environment and promote international and
domestic tourists to visit India as a way to increase its share of global tourism.
Through this plan, the ministry began advertising campaigns at home and abroad.
The successful campaign has brought more tourists--and their money--to the country
and boosted employment in this sector to more than 20 million people by 2006.
Foreign Tourism to India
o The Taj Mahal is one of India's most famous

attractions.
In 2006, more than 4 million tourists visited India and spent the equivalent of $8.9
billion U.S. dollars, and this figure rose by about 22 percent each year from 2006 to
2009. Thanks again to its technology and service sectors, foreign business travelers
are descending on India in large numbers. Many extend their trips, adding more
tourist money to the economy. In fact, foreign tourists from all over the world spend
more in India than almost any other country worldwide, according to Economy
Watch. Tourists are attracted by India's cultural diversity, temples, scenery and
festivals. Each region of India offers something for foreign visitors, from the Taj
Mahal and New Delhi in the north, bustling Mumbai in the West to the religious
center of Varanasi in central India and any number of its beaches and coastal cities.
Indian Travelers Abroad
o Indians are a growing part of their country's tourism

sector.
Not only are foreign tourists traveling in India, its own citizens are taking more
vacations, as well. The country's economic growth increased its middle-class
population. This group is contributing the most to domestic travel thanks to an annual
10 percent increase in disposable income between 2001 and 2006.
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European Journal of Social Sciences – Volume 18, Number 4 (2011)

518
Causality between Tourism and Economic Growth:
Abstract
Tourism is one of the most important sectors in the world economy. It is now considered as
an efficient tool for promoting economic growth of the host country. Since last few
decades, tourism industry in India has been growing at a rapid pace and it has vast potential
for generating employment and earning large amount of foreign exchange besides giving a
fillip to the country’s overall economic and socio-cultural development. It is thus
imperative to examine the dynamics of the relationship between tourism sector expansion
and economic growth in India. The study using
popular time series models for the period spanning from 1978 to 2009, provides the
evidence of long-run unidirectional causality from tourism activities to economic growth of
the country. Therefore, as a part of the policy implications it is necessary that all wings of
the central and state governments, private bodies and voluntary organisations should
become the active partners in the endeavour to attain sustainable growth in tourism and
overall economy as well.
I. Introduction
In recent years, the role of tourism in the economic development of a country has been the
focus of
study and research. It is the general consensus that tourism has been pivotal in social
progress as well
as an important vehicle of widening socio-economic and cultural contacts throughout human
history.
Over the past years, many developing and developed countries have considered tourism as
an option
for sustainable development of their nations. The importance of tourism as a contributor to
economic
growth is so widely accepted that year after year throughout the world a massive investment
continues
to pour in its development.
Tourism has emerged from being a relatively small-scale activity into one of world’s largest
industries and a fastest growing global economic sector of the world economy from the
1960s onwards.
The international tourist arrivals have shown an uninterrupted growth from 25 million in
1950, to
681million in 1980, to 438 million in 1990 and to 681million in 2000. The international
tourist arrivals
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519
were 880 million and the corresponding international tourism receipts was US$ 852 million
in 2009.
The tourist arrivals in Asia and the Pacific were 181 million and corresponding tourism
receipt was
US$ 204 million. As per UNWTO estimates, the worldwide international tourist arrivals
increased by 7
per cent between January and June 2010. For the full year 2010, UNWTO projects a growth
in
international tourist arrivals of between 3 to 4 per cent. In 2010, tourism is expected to
generate 21.7
per cent of world gross domestic product; 10 per cent of global capital investments; 9 per
cent of
worldwide employment; and 22.2 per cent of worldwide exports of goods and services. All
these cast
for a significant role of tourism sector in the long-run growth of host countries across the
globe.
It was in 1945 that the first ever step was taken to popularize the concept of tourism in
India, by
appointing the Sir John Sargent Committee which in 1946 submitted the report with
suggestions of the
formation of regional offices at Bombay, Delhi, Calcutta and Madras. And, it came into being
in 1949
with the set up of a Tourist Traffic Branch along with two regional offices in Bombay and
Delhi. It was
however, on 1 March 1958, that a separate Tourist Department in the ministry of Transport
and
Communication was established in place of Tourist Traffic Branch in the same ministry. In
1967,
tourism elevated to the Ministry of Tourism and Civil Aviation. And, since then the concept
of tourism
developed and gathered momentum in India.
Tourism today has become an important segment of India economy contributing
substantially
to sustainable development of the country. India has succeeded in becoming the most
preferred place
amongst domestic and overseas travellers. Tourism exposes international travellers to India’s
diverse
culture. The tourism sector has been instrumental in generating foreign exchange,
employment
opportunities and household income for Indians, as it has in many other developing
economies. Thus,
the development of the tourism sector appears to have been as important as the
development of other
sectors of the Indian economy.
The biggest advantage of the tourism industry is that it can generate maximum employment
opportunity. Tourism helps in regional and economic development. Recent study shows
that the
globalisation and open economy helped tourism to emerge as one of the biggest forex
earners for India.
It brings the opportunity of infrastructure development.
The overall development of any country depends especially on the improvement of road,
vehicles, communication, water supply, airports and railway stations. Economic progress and
industry
development depend completely on the overall development of country. And tourism plays
a major
role in this overall infrastructural advancement. Tourism helps agriculture and other
industries directly
and indirectly. In India, the tourism industry helped generate about five million jobs; the
foreign
tourists buy handicrafts worth around Rs. 10 billion a year; the total income from this
smokeless
industry is around Rs. 200 billion; and the regions like Aurangabad in Maharashtra,
Khajuraho in MP,
Jammu & Kashmir, and Raghurajpur in Orissa have emerged with the help of tourism only.
Tourism is therefore, a major engine of growth for Indian economy. Today tourism is the
largest service industry in India, with a contribution of 6.23 per cent to the national Gross
Domestic
Product (GDP) and providing 8.78 per cent of the total employment. India witnesses more
than 5
million annual foreign tourist arrivals and 562 million domestic tourism visits. The tourism
industry in
India generated about US$100 billion in 2008 and that is expected to increase to US$275.5
billion by
2018 at a 9.4 per cent annual growth rate. According to World Travel and Tourism Council,
India will
be a tourism hotspot from 2009-2018, having the highest 10-year growth potential.
As per the Travel and Tourism Competitiveness Report 2009 by the World Economic
Forum,
India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on
the list of
the world's attractive destinations. It is ranked the 14th best tourist destination for its natural
resources
and 24th for its cultural resources, with many World Heritage Sites, both natural and cultural,
rich
fauna, and strong creative industries in the country. India also bagged 37th rank for its air
transport
network. The India travel and tourism industry ranked 5th in the long-term (10-year) growth
and is
expected to be the second largest employer in the world by 2019. Tourism sector in India is,
therefore,
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520
growing and it has vast potential for generating employment and earning large amount of
foreign
exchange besides giving a fillip to the country’s overall economic and social development.
It is with this backdrop, this paper is an attempt to investigate the dynamics of the
relationship
between tourism sector development and economic growth of India for the sample period
of 1978 to
2009. The study purports to answer the questions: Is there holds a long-run equilibrium
relationship
between tourism sector development and economic growth in India? And, if a long-run
relationship
exists, what is the direction of the causal relationship between them?
Above stated the research problem, the rest of the paper is organised as follows: Section II
reviews the related studies, Section III discusses the data and methodology, Section IV makes
the
analysis, and Section V summarizes and concludes.
II. Literature Review
There exists plenty of literature about the impact of tourism sector expansion on the host
country, but
the literature on whether it actually produces any significant economic growth is limited and
that too
for emerging countries like India, the empirical researches and evidences are almost non-
existent.
The researchers and analysts hold the view that the rapid growth of tourism sector causes an
increase of household incomes and government revenues through its multiplier effects,
improvements
in the balance of payments, and growth of the tourism industry by itself. As such, the
development of
tourism has usually been considered a positive contribution to economic growth (Khan et al,
1995; Lee
and Kwon, 1995; Lim, 1997 and Oh, 2005).
Keeping in view such positive impact of tourism on economic growth many researchers
have
investigated the relationship between tourism sector development and economic growth in a
country.
Using Spain’s economic data, Balaguer and Cantavella-Jorda (2002) examine the role of
tourism sector
in the long-run economic development of the country. The hypothesis of tourism-led
economic growth
was confirmed by applying cointegration and causality tests. In Turkey, Tosun (1999), Guduz
and
Hatemi (2005) and Zortuk (2009) have also found empirical support for the tourism-led
growth
hypothesis. Durbarry (2002) also provides the evidence of the tourism-led economic growth
by using
the cointegration and causality tests for Mauritius.
Dritsakis (2004) shows that tourism has a long-run economic growth effect for Greece. Oh
(2005) on Korean tourism concluded that the increase in tourism income influences the
economic
growth. Kim et al (2006) examine the causal relationship between tourism development and
economic
growth in Taiwan and find a reciprocal relationship between tourism development and
economic
growth.
Khalil et al (2007) examines the role of tourism in the short-run economic development in
case
of Pakistan through error correction model, and the Causal relationship between tourism
receipts and
economic expansion. The results points out that there is strong relationship among tourism,
receipts
and economic expansion which means that economic expansion is necessary for tourism
development
in Pakistan.
Wickremasinghe and Ihalanayake (2006) investigate the issue that tourism industry leads to
economic development for a developing country - Sri Lanka, using annual data from 1960 to
2000. The
results of the study suggest that there is a significant causal relationship from tourism
receipts to the
GDP of Sri Lanka.
Razaq and Masarwah (2006) discussed the effects of tourism sector on the Jordanian
economy.
The dimensions of the study clarified causal relationship between the tourism revenues and
the
economic growth, and employment in the tourism sector, and domestic private consumption.
Johansen
Co-Integration Approach clarified, that there is balanced relation in long-run among the
variables of
the study, while the findings of the short-run analysis pointed out that tourism revenues
played basic
role in the most important economic variables.
Page 4
521
Eugenio-Martin et al (2004) investigate the relationship between tourism and economic
growth
for Latin American countries from 1985 through 1998. The empirical results show that
tourism
development can contribute to the economic growth of medium or low-income countries,
while such a
role is unclear for developed countries. Lee and Chang (2008) reached the conclusion that
there is a
unidirectional relationship running from tourism towards growth for OECD countries
whereas a
bidirectional causal relationship exists for non-OECD countries. Skerritt and Huybers (2005)
investigate the effect of international tourism on GDP per capita of 37 developing countries,
the results
indicate that tourism positively affect economic development in these countries.
Comparing the relative growth performance of 14 “tourism countries” within a sample of
143
countries, Brau, Lanza, and Pigliaru (2003) and Lee and Chang (2008) document that, on the
average,
tourism enhances the economic growth process; i.e. tourism countries tend to grow faster
than all the
other sub-groups (OECD, Oil Exporting, LDC, Small). Many developing countries have, thus
started to
regard tourism as an integral part of their economic growth and development strategies
since it serves
as a source of scarce financial resources, job creation, foreign exchange earnings, and
technical
assistance (Sinclair, 1998; Dieke, 2004).
Fayissa et al (2007) using a panel data of 42 African countries, showed that receipts from
tourism industry significantly contribute to economic growth of Sub-Saharan African
countries. In
another study, Fayissa et al (2009) using a panel data of 17 Latin American countries for the
years that
span from 1995 to 2004, investigated the impact of the tourism industry on the economic
growth and
development Latin American countries within the framework of the conventional
neoclassical growth
model. The empirical results show that revenues from the tourism industry positively
contribute to both
the current level of gross domestic product and the economic growth of Latin American
Countries as
do investments in physical and human capital.
Kreishan (2010) examines the causality relations between tourism earnings and economic
growth for Jordan, using annual data covering the period 1970-2009. The findings of the
study showed
that there is a positive relationship between tourism development and economic
development in the
long-run. Moreover, the Granger causality test results revealed the presence of unidirectional
causality
from tourism earnings to economic growth.
Aliqah and Al-rfou' (2010) attempted to determine the impact of the tourism sector on
economic growth in Jordan during the period 1990 to 2008 by using descriptive statistical
approach.
The study concluded that the tourism sector witnessed significant growth in tourism
services, tourism
infrastructure, tourism legalisations, institutional framework, and the number of tourist
arrivals. The
study also revealed that the contributions of the tourism sector in GDP for the years 1990-
2008 have
seen variation ranged between 12.3 to 14.6 per cent and increase in the contributions of
tourism sector,
in the field of employment to become 2.5% of the total manpower recruitment.
It is at least inferred from the literature review that developing countries have started
considering tourism as an important and integral part of their economic growth and
development
strategies. It is in this context worthwhile to mention that the literature is almost silent about
a causality
study between tourism sector development and economic growth in case of India. The
current study is
an attempt to bridge this research gap.
III. Data and Methodology
The objective of this paper is to investigate the dynamics of the causal relationship between
tourism
sector development and economic growth in India for the period spanning from 1978 to
2009. This
study uses annual data on variables – Real Gross Domestic Product (RGDP) which measures
the
overall economic growth of the country, and Tourism Foreign Exchange Earnings (TFEE)
and Foreign
Tourist Arrivals (FTA) as measures of tourism sector expansion (Wang and Godbey, 1994;
Gunduz
and Hatemi-J, 2005; Kim et al, 2006). The time-series data of RGDP, TFEE and FTA
variables on

522
annual basis have been collected from the RBI database on Indian economy, Bureau of
Immigration,
and from tourism statistics published by Ministry of Tourism, Government of India.
All the variables of the study have been transformed to their natural logarithms to avoid the
obvious problems of heteroscedasticity. Then, the stationarity of the variables have been
tested by
Augmented Dickey-Fuller unit Roots Test. In the second step, the Johansen’s cointegration
test has
been performed to assess whether a long-run equilibrium relationship holds between the
research
variables. Finally, the Granger causality test has been applied in the vector error correction
framework
to find out the direction of causal relationship between the cointegrated variables.
IV. Results and Discussion
At the outset, the Pearson’s correlation coefficient between real GDP and Foreign Arrivals
(FTAs) in
India, and between real GDP and Foreign Exchange Earnings (FEEs) from tourism have
been
calculated over the sample period and their significance have been tested by the t-test. The
value of
Pearson’s correlation coefficient (r) between real GDP and FTAs is 0.985. Similarly, the
correlation
coefficient between real GDP and FEEs is 0.988. It shows that these three variables are
positively
related over the sample period in India and that to a very high degree of correlation is
evident between
them. To test whether these values of ‘r’ shows significant relationships between three time
series,
student’s t-test has been used. The null hypothesis of the test is r = 0 against the alternative of
r ≠ 0 for
both the correlations. Since the t-statistic at 30 degrees of freedom exceeds the critical value
of ‘t’ at
5% level of significance, the null hypotheses are rejected. So, it can be said that the
correlation
between the variables of the study are statistically significant. Correlation, however, does not
say
anything about long-run relationship and thus, leaves unsettled the debate concerning the
long-run
relationship between tourism sector expansion and economic growth in India.
As an essential step of time series empirical analysis, it is first, required to determine the
order
of integration for each of the three variables used in the analysis. The Augmented Dickey-
Fuller unit
root test has been used for this purpose and the results of such test are reported in Table-1.
And, it is
clear that the null hypothesis of no unit roots for all the time series are rejected at their first
differences
since the ADF test statistic values are less than the critical values at 1%, 5% and 10% levels
of
significances. Thus, the variables are stationary and integrated of same order, i.e., I(1).
In the next step, the cointegration between the stationary variables has been tested by the
Johansen’s Trace and Maximum Eigenvalue tests. The results of these tests are shown in
Table-2. The
Trace test indicates the existence of one cointegrating equation at 5% level of significance.
And, the
maximum eigenvalue test makes the confirmation of this result. Thus, the three variables of
the study
have long-run equilibrium relationship between them. But in the short-run there may be
deviations
from this equilibrium and we have to verify whether such disequilibrium converges to the
long-run

523
equilibrium or not. And, Vector Error Correction Model can be used to generate this short-
run
dynamics. Error correction mechanism provides a means whereby a proportion of the
disequilibrium is
corrected in the next period. Thus, error correction mechanism is a means to reconcile the
short-run
and long-run behaviour.
The estimation of a Vector Error Correction Model (VECM) requires selection of an
appropriate lag length. The number of lags in the model has been determined according to
Schwarz
Information Criterion (SIC). The lag length that minimizes the SIC is 1. Then, an error
correction
model with the computed t-values of the regression coefficients is estimated and the results
are
reported in Table-3.
The estimated coefficient of error-correction term in the LGDP equation is statistically
significant and has a negative sign, which confirms that there is not only any problem in the
long-run
equilibrium relation between the independent and dependent variables in 10% level of
significance, but
its relative value (-0.063929) for India shows the rate of convergence to the equilibrium state
per year.
Precisely, the speed of adjustment of any disequilibrium towards a long-run equilibrium is
that about
6.39 per cent of the disequilibrium in real; GDP is corrected each year.
Furthermore, the existence of cointegration implies the existence of Granger causality at least
in
one direction (Granger, 1988). The negative and statistically significant value of error
correction
coefficient indicates the existence of a long-run causality between the variables of the study.
As is evident
from Table-3, there exists unidirectional causality running from foreign exchange earnings
from tourism to
real GDP in the long-run. However, no short-run causality between variables is indicated. In
order to
524
confirm the result of the short-run causality between the ΔLGDP, ΔLFTA and ΔLFEE based
on
VECM estimates, a standard Granger causality test has been performed based on F-statistics.
Table 4: Results of Granger Causality Test
The result in Table-4 indicates that all the null hypotheses are accepted at 5% level of
significance. These results support the previous results obtained from VECM about the non-
existence
of short-run causality at the 5% level of significance.
V. Summary and Conclusion
In this paper, the relationship between real GDP, foreign tourist arrivals and foreign
exchange earnings
from tourism in a developing country like India has been investigated using popular time
series
methodologies. The data properties are analyzed to determine the stationarity of time series
using the
Augmented Dickey-Fuller unit root test which indicates that all the three series are I(1). The
results of
the Cointegration test based on Johansen’s procedure indicate the existence of the
cointegration
between variables. Therefore, the variables have a long-run equilibrium relationship between
them,
although they may be in disequilibrium in the short-run. The estimation of vector error
correction
model based on VAR indicates the existence of long-run unidirectional causality running
from foreign
exchange earnings from tourism to real GDP in the long-run. However, no short-run
causality between
variables is indicated.
The findings of this study confirms the tourism-led growth hypothesis maintained earlier for
other countries that tourism has a positive impact on the economic activity and hence, the
GDP growth
of India. The study also validates the stable long-run relationship between tourist activities
and GDP
growth rate. It means that if tourists activities increase, the GDP growth rate improves via
increase in
foreign exchange earnings. It provides the rationale of government role for providing and
generating
the tourism facilities in India. Fortunately, India has several unique opportunities for
different types of
tourism including traditional tourism, rural tourism, medical tourism, cruise tourism,
adventure
tourism, and wellness tourism. Its geographical location has made it a historical and cultural
hub for
the tourism. The country has great potential in coastal tourism, mountain climbing and
layout tourism
adventures trip and tremendous opportunities in the areas of echo and safari tourism.
Some of the recent initiatives taken by the Government of India to boost tourism include
grant
of export house status to the tourism sector and incentives for promoting private investment
in the form
of income tax exemptions, interest subsidy and reduced import duty. The hotel and tourism-
related
industry has been declared a high priority industry for foreign investment which entails
automatic
approval of direct investment up to 51 per cent of foreign equity and allowing cent per cent
non-
resident Indian investment and simplifying rules regarding the grant of approval to travel
agents, tour
operators and tourist transport operators. The government joined hands with leading airlines,
hoteliers,
holiday resorts and tour operators, and offered them a wide range of incentives and bonuses
during the
period between April and December, 2009.
In spite of the aforesaid initiatives, the major constraints in the development of tourism in
India is
the non-availability of adequate infrastructure including adequate air seat capacity,
accessibility to tourist
destinations, accommodation, and trained manpower in sufficient number. Besides, the poor
visitor

525
experience is another obstacle in the growth of tourism sector which is due to inadequate
infrastructural
facilities, poor hygienic conditions and incidents of touting and harassment of tourists in
some places.
So the following suggestions may be put forward for the growth of tourism sector in India:
First, the Government of India should concentrate on the means of transportation,
communication and
power for the promotion of tourism industry in the country; Second, to attract the foreign
tourist, the
security issues should be handled in the best possible manner; Third, as the tax structure
plays a vital
role in industrialization process, the government should give tax incentives to the air fares,
hotels and
other tourism related industries; Fourth, the cultural and traditional festivals should be
organized to
create attractions for foreign tourists; Fifth, the journals, brushers with maps and proper
guidance
should be placed in all important hotels and tourists gateways so that the tourist from any
corner of the
world can benefit from it without any communication barrier; Sixth, both the electronic and
print
media should be encouraged to play an important role in enhancing the demand for tourism
in India
through aggressive advertisement; Seventh, the eco-tourism needs to be promoted so that
tourism in
India helps in preserving and sustaining the diversity of the country's natural and cultural
environments; Last but not the least, tourism in India should be developed in such a way
that it
accommodates and entertains visitors in a way that is minimally intrusive to the environment
and
sustains and supports the native cultures in the locations it is operating in.
tourism dimension. In terms of lending, direct Bank operations have invested in
infrastructure, which facilitates tourism development. Others that have tried to
mitigate the negative impacts of tourism, such as the spread of diseases such as
HIV/AIDS. In terms of strategic and policy advice, the Bank has supported projects
that were environmentally and socially sustainable and that helped reduce poverty.
The assessment looked at projects that focus on economic development through
infrastructure provision. Among the 1,500 or so projects that were appraised, 32 had
tourism as a central or significant feature. Only eight of the 32 provided any real
quantification of the benefits of tourism. A careful look at these eight revealed that
larger infrastructure investment projects were effective in providing benefits from
tourism. Smaller projects with investment in improving facilities and providing
technical assistance were more effective and yielded higher returns. Projects involving
cultural site development and promotion were also effective in yielding large benefits.
In terms of environmental impacts, the projects generally followed good practice and
ensured that negative environmental impacts were avoided or mitigated. Social
impacts were studied in less detail, according to the study.
68
VII. THE ROLE OF GOVERNMENT
Government intervention may be necessary to enhance the contribution of
tourism to socio-economic development and poverty reduction. One of the principal
roles of Governments is to set policy and legislative frameworks for tourism. Two
main reasons why governments should formulate tourism development strategy are:
68 Anil Markandya, Tim Taylor and Suzette Pedroso, “Tourism and Sustainable Development:
Lessons from Recent World Bank Experience”, (Washington, D.C.: IBRD, 2003), pp. 20-
21.
http://info.worldbank.org/etools/docs/library/107771/SD_Communication/epublish/zip_fi
les/b
iodiversity_russia2003/pdf/TourismSDMarkandya-Taylor.pdf
Page 2
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(1) the tourist industry has many negative externalities, in particular negative social
and environmental impacts that need to be regulated and managed at national or local
levels, and (2) tourism can offer major opportunities for local economic development,
which can enhance the positive effects of tourism on local socio-economic
development and poverty reduction. In India, the Planning Commission has identified
tourism as one of the major vehicles for generating employment and promoting
sustainable livelihoods.
Real progress can be facilitated by using a wide range of instruments. A
number of these have been identified by the World Tourism Organization and the
United Nations Environment Programme and are categorized into measurement
instruments (sustainability indicators and monitoring; identification of limits),
command and control instruments (legislation, regulation, rules and licensing; land-
use planning and development control), economic instruments (pricing, charges and
taxation; property rights and trading; financial incentives; and voluntary
contributions), voluntary instruments (guidelines and codes of conduct, reporting and
auditing, and voluntary certification), and supporting instruments (infrastructure
provision and management, capacity-building, and marketing and information
services). The precise mix of policies and instruments will vary depending on the
As tourism moves up the national agenda, the government departments dealing
with tourism may need to be upgraded and strengthened. In order to achieve
sustainable management of tourism, tourism ministry staff need coordination,
networking and support of colleagues in other ministries and in a range of subnational
administrations. These needs emerge because the administration and governance of
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tourism takes places in localities where tourists and host communities interact, while
regulations and incentives are applied within a framework laid down at the national
level.
Tourism ministries have to be alert to the impact of institutional fragmentation
on the governance of tourism. Major decisions about planning, management of
cultural and natural assets, labour regulations, environmental impact assessments,
financial incentives and taxation policy are often the responsibility of other ministries,
where there might not be enough awareness about the impact on tourism policies and
plans. The functions of tourism ministries should go beyond regulating tourism
businesses, marketing and promotion and include wider consultation and
coordination.
For example, air transport has changed considerably in recent years due in part
to policy initiatives, such as deregulation of air services, adding a substantial number
of new routes and allowing operations by low-cost carriers; all of which would aim to
increase the number of tourists. While the economic benefits of tourism are now
explicitly evaluated in aviation policy in countries such as Singapore, tourism
ministries also have to consider the implications for tourism strategies, policies and
plans.
Tourism ministries can provide the government and its agencies with good
quality, systematic data, particularly about the effects of different types of tourism on
local socio-economic development. Provision of such data can help to substantiate the
contribution of tourism and convince policy makers.
B. Tourism plans
Tourism master plans are useful tools for identifying areas with tourism
potential, determining tourism strategy and structuring the provision of infrastructure,
Page 4
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investment promotion and financial and other incentives. Governments need to ensure
that master plans and tourism development strategies address local economic
development goals, the geographic distribution of tourism activities and poverty
reduction.
Many governments have been increasing their efforts to identify and plan
tourism development located in areas that can help poor communities. In addition to
planning based on inventories of natural and cultural assets, information about the
spatial distribution of poverty should also be used when planning tourism
infrastructure and related tourism development projects. Such information can help
with plans to develop clusters of activities and attractions and tourism routes, as well
as stimulate cooperation and partnerships within and between local areas. Plans based
on clustering assume that tourists need a range of complementary tourism services
and attractions supported by infrastructure to make the area accessible.
Government agencies can promote the empowerment of communities in
planning and managing tourism assets by initiating partnership approaches that
include poor people. Engaging the poor is particularly important in order to identify
opportunities that fit their livelihood strategies and overcome barriers to employment
and enterprise. Policy makers need to consider the appropriate mix between
promoting the formal and informal sector as this is a key variable for maximizing
local economic development and poverty reduction. One example of development
control and empowerment in Nepal is described in box 9. This activity in Lumbini is
Page 5
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part of the government’s Tourism for Rural Poverty Alleviation Programme
(TRPAP).
Box 9. Nepal: Organizing local opportunities in Lumbini
The Tourism for Rural Poverty Alleviation Programme (TRPAP) implemented by the
government
and the Nepal Tourism Board has been working with local communities in and around
Lumbini, the
birthplace of Lord Buddha, to create more benefits from the large number of tourists
visiting the area.
The TRPAP facilitated the organization of functional groups involving various tourism-
related
activities. The Rickshaw Pullers Functional Group is example.
The group has 70 members (rickshaw owners) and TRPAP has supported the following
activities:
• Form the Rickshaw Puller Group
• Lobby for a policy of “No Four-Wheel Entry into the Area”
• Fix the price of rickshaw services
• Introduce a queue system to provide equal opportunity to all members
• Introduce a compulsory identity card for all group members
• Provide training on cleanliness and hygiene
• Training in customer behaviour and guest relations
• Training in English for basic communication
• Provide a uniform
• Provide venture capital funds (soft loans) to purchase, decorate and repair rickshaws.
The following good practices resulted:
• Collaboration with the main local stakeholder to monitor the local transportation
system,
standardize services and orient the rickshaw pullers made monitoring and control easier.
• Identification cards with the local stakeholder’s stamp helped give the rickshaw pullers
recognition by tourists.
• A sense of ownership was created by the Rickshaw Pullers Functional Group along with
continuous awareness about the benefits of being in the group.
• Local transportation services were promoted, which increased economic opportunities
for
local poor people.
Penalties were introduced for rickshaw pullers who break the rules.
70 to 100 rickshaw pullers have benefited as follows:.
• Their monthly income increased by more than 70 per cent
• They earn US$7 to US$11 a day during the high season (4 months per year) and US$3
to
US$5 a day during the low season (4 months per year). Another four months is the rainy
season, when there is almost no business.
• More tourists are using rickshaws.
• There are visible changes in family income.
• They can receive soft loans to buy, decorate and repair rickshaws.
• They have increased awareness of economic opportunities offered by tourism.
• Services and communication have improved for them.
• They are recognized by all local stakeholders in Lumbini.
Source: SNV Nepal, ‘Lessons Learned on Pro Poor Sustainable Tourism in Nepal’, SNV
Nepal, 2006.
Page 6
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In Viet Nam, provincial and district-level governments have been given
greater responsibility for tourism planning and development in line with the overall
decentralization of governance. Provincial and district governments have the statutory
duty to consult and collaborate with other government agencies, as well as with other
tourism stakeholders, such as businesses and local communities. Overall, this
decentralized and a more integrated approach to tourism planning is a significant step
towards enhancing opportunities for incorporating poverty reduction and other local
Several areas of legislation have an impact on the capacity of small-scale
producers to develop tourism-related enterprises. These include access to credit,
business licensing, employment legislation, environmental health, and health and
safety regulations as well as the regulation of micro, small and medium-sized
enterprises. Governments need to ensure that people engaged in tourism are
remunerated fairly and receive adequate social protection in areas such as the
minimum wage, policies on equal opportunities, holiday entitlement and security of
employment.
In Viet Nam, for example, the Tourism Law was designed to create more
opportunities at the local level. Box 10 outlines some of the articles of the Tourism
Law, as well as the opportunities created and the expected results at the local level in
terms of empowerment, property rights and control over development.
Article 6: Tourism Development Policy
6.2. The State shall undertake incentive and prioritized policies on land, finance, credits
for
foreign and domestic individuals and organizations investing in the following fields:
g) Development of tourism whereby having potentials in remote and isolated areas,
and in areas with socio-economic difficulties so as to make use of the labour force,
consume goods and services on the spot, contributing to raising intellectual level of the
people, and to hunger elimination and poverty reduction.
Results: Incentives and directives are to be made available for developing tourism in
disadvantaged areas that address poverty reduction and hunger eradication. Further
incentives
such as local hiring and training, purchasing from local suppliers could also be included
in the
sub-decrees that guide implementation.
Opportunity: Enhance greater opportunities for local involvement in tourism planning.
Article 7. Participation of Local Community in Tourism Development
7.1. The local community shall have rights to participate in and benefit from tourism
activities;
be liable to preserve tourism resources and nurture local cultural identity; maintain
security,
safety, social orders and environmental sanitation to create the attractiveness of tourism.
7.2. The local community shall be enabled to participate in the investment of tourism
development, restoration and enrichment of various types of traditional cultures, folklore
arts,
crafts, goods production in service of tourists, contributing to uplift the material and
spiritual life
of the local people.
Results: Local communities are now provided with a strong and clear legal position to
participate and benefit from, tourism development.
Opportunity: Avoid inadvertent barriers to poor peoples’ participation
Article 62. Types of Tourism Accommodation Establishments
Tourism accommodation establishment now includes the legal recognition of “Household
room
for tourist lease”. For the first time, individual families can have legal recognition as
accommodation providers for tourists.
Article 78. Narrator: This is a new category of guide. Tour guides are required to hold
university
degrees, but a “narrator” is defined as a “person who delivers on-site interpreting services
to the
tourists at the tourist resort and tourist attraction.” A higher education degree is not
required to
work in this capacity. This is extremely significant as the vast majority of rural poor do
not have
the opportunities for higher education, but they are the most appropriate interpreters of
their
culture.
Results: Some barriers to poor peoples’ participation under the old Tourism Ordinance
have
now been removed by broadening the types of tourism products and services that may
now be
officially recognized.
Source: Douglas Hainsworth, Senior Tourism Advisor, SNV-Vietnam, no date.
Page 8
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The needs and existing capacity of local people have to be assessed to
ascertain where training interventions would be most useful. There is a need to
strengthen informal learning methods and in-place on-the-job training. The
certification of guides has been used in several places to control quality and supply,
and to ensure minimum standards of service and knowledge. In Viet Nam, a new
category of “narrator” has been introduced, which enables people without a formal
education to work as local guides. (See box 7.) At Keoladeo National Park, in India,
local rickshaw drivers are registered with the park to take tourists around the site.
The government is often required to play the lead role when issues of women’s
participation and empowerment in the tourism industry are involved. One example is
the government-run TRPAP in Nepal. TRPAP has been running different
empowerment schemes for women and has emphasized their participation in various
tourism activities. The programme has given training to local women on craft skills to
make souvenir items. Women are also ready to be trained in order to provide several
tourism services, such as running a grocery store and serving as tour guides. In such a
case, TRPAP can help provide financing to increase capacity as well as training.
69
National and local governments can provide incentives, pre-employment
training and continuing education programmes to promote employment of local
people in private tourism enterprises.
F. Taxes and levies
Taxes on goods, services and transactions, which provide funds for
government at the local or national level can be used specifically to support either
poor communities or the environments that provide their livelihood. For instance,
69 Nepal Tourism Board, E-Newsletter, 18 February 2005, p. 5.
www.anmausa.org/tourism/2005_02_18.pdf
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Bhutan levies a high daily royalty on tourists, which is used to fund education and
health programmes in remote rural areas.
Government policies on tourism taxation must be evaluated and designed in
ways that are comprehensive and integrated in order that the necessary revenues are
balanced against the affect on tourism markets and the profits of tourism businesses.
The poor have limited access to the tourism market for several reasons,
including lack of business skills, low educational levels, demanding regulations,
inability to escape severe poverty, poor health and social exclusion. Governments can
reduce the bureaucracy that small enterprises face, and create advisory services on
business development, provide seed-funding for entrepreneurs, develop business
linkages with established operators, assist micro, small and medium-sized enterprises
to form production or marketing cooperatives and provide educational, technical and
professional training programmes to improve quality and business standards.
Examples of linkages and cluster mechanisms described in box 11 can assist in market
access.
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H. Marketing
Destination marketing is increasingly the remit of the private sector, private-
public sector partnerships or clusters. (See chapter VIII.) This means that micro,
small and medium-sized enterprises and poorer producers may be excluded from the
formal marketing processes and distribution channels. To address this problem,
Governments can encourage discussions between national and regional tourist boards
and the institutions involved in local economic development and resource
conservation. They can also encourage the organization of marketing campaigns to
promote responsible tourism practices and suppliers, and give preferential marketing
terms to suppliers that adopt sustainable, responsible, poverty alleviation practices.
Box 11. Nepal: Two examples of creating microenterprise opportunities for the poor
The Explore Nepal Group spent approximately US$ 57,000 on constructing and
furnishing the Koshi Tapu Wildlife Camp. All materials, except the toilet, were sourced
from local entrepreneurs of the Koshi Tapu area. Each year approximately US$ 5,700 is
spent for Bhojan Griha Restaurant in Kathmandu, another business of the Explore Nepal
Group, in order to renovate or replace the “soft furniture” of the restaurant, including
items such as candles, arts and crafts, tables and mats. This furniture is acquired only
from
women’s handicraft associations such as Dhukuti and Sano Hastakala.
The Tiger Mountain Group supports local entrepreneurs while minimizing distortions
in
the local market, such as price rises that would have an adverse impact on local people.
The Temple Tiger Jungle Lodges and Wildlife Camp in Pokhara buy supplies from local
markets but at established retail prices. Buying locally has the added benefit of
significantly reducing the company’s transport costs.
Ensuring that the sources of supply are diverse and the benefits within the community
widespread has proven to be a challenge because lodge employees tend to favour local
businesses with connections to their relatives. To overcome this tendency, the lodge
identifies services and supplies in an open, accountable and transparent manner. It
develops clear criteria for the supplies and services sought and ensures that the criteria
are
widely disseminated among community members.
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Tourism market analysts have identified a number of market trends which
should inform the strategies and marketing decisions of policy-makers and investors
in Asia and the Pacific. One important trend is that tourists are increasingly willing to
travel long distances for longer periods and to take more frequent holidays. There is
growing demand for nature, adventure, activity and health-related holidays, with more
emphasis on individualism and flexibility. This leads to more independent travel and
tailor-made packages which enable tourists to seek authenticity through enhanced
knowledge or more interactions with other cultures. The market is becoming more
demanding in standards of service, product and accommodation. Tourists are making
greater use of the internet for researching destinations and booking holiday travel and
accommodation, often based on growing awareness of the environmental and social
impacts of tourism.
While keeping up with market trends in international tourism, much can be
done through careful marketing to alleviate the uneven geographic distribution of
tourists and to spread the benefits of the industry. For instance, the Nepal Tourism
Board has given particular promotional emphasis to areas of the country that
traditionally receive fewer visitors, such as the Chitwan Hills. Promotion builds on
extensive product development, which has improved facilities and enhanced the
visitors’ experience, and has succeeded in extending the range of tourism products
and the tourism season in Nepal. In other countries, as shown in box 12, unique
experiences have been developed and marketed as a tourism niche market.
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Box 12. Mongolia and the Islamic Republic of Iran: Nomadic tourism
Nomadic community-based tourism in Mongolia
Since 2005, Mongolia has adopted a new approach to community-based tourism, the
“ger-to-ger bottom-up approach”.a
The country focuses particularly on promoting
appropriate socio-economic linkages between the rural nomadic groups in Mongolia,
their
local communities and the public and private sectors.
This initiative has led to the establishment of 12 community routes over 3 regional
provinces and 5 community-based ticketing/information centres. Rural nomadic groups
and their communities are gaining valuable knowledge and skills that lead to greater local
ownership and management. Instead of competing with tour operators, communities are
learning how to cooperate and benefit from mobilizing “ethical” partnerships within the
private and public sectors, while maintaining their independence.
Such a regional development concept contributes to the empowerment of local
communities and their nomadic herders. Apart from the training they receive, the
partnerships also help in the development of economically viable travel routes. For
example, along the “Dundgovi travel route” the tourist is invited to share the harmonic
melodies and natural wonders of the Nobel Rock Palace or Fortress with nomadic
herders,
while travelling by horseback, in a horse-drawn cart, riding a camel or trekking and
staying at one of the community’s ger. Of the revenues from tickets (trail passes), 55 per
cent goes directly to families and 10 per cent to their community environmental fund.
Nomadic tourism development in the Islamic Republic of Iran
In 2006 the Iranian Cultural Heritage and Tourism Organization entered into a
memorandum of understanding with the Nomads’ Issues Organization to establish the
Nomadic Cooperative Association, which was entrusted with the task of attracting
foreign
tourists to nomadic regions of the country.
Persian society was formerly a nomadic one. Thus, nomads are considered to be a
cultural treasure which needs to be preserved. The Department of Tourism Development
in Nomadic Regions was thus established to provide economic development for the
nomads by carrying out technical and infrastructural studies. Along with the Department,
the Nomadic Tourism Institute undertakes measures in marketing, advertising and
attracting foreign tourists by organizing tours in nomadic areas, providing posters,
catalogues, pictures and other advertising instruments.
In addition, a special centre will be established in Tehran to provide an outlet for the
sale of nomadic products.
The authorities hope that devising appropriate tourism programmes for nomadic
regions will lead to an increase in the incomes of the nomadic tribes, which would, in
turn,
raise their standard of living without harming their social systems and traditional
lifestyles.

68

68Anil Markandya, Tim Taylor and Suzette Pedroso, “Tourism and Sustainable Development:
Lessons from Recent World Bank Experience”, (Washington, D.C.: IBRD, 2003), pp. 20-21.
http://info.worldbank.org/etools/docs/library/107771/SD_Communication/epublish/zip_files/b
-84-
Page 3
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level.
coordination.
plans.
B. Tourism plans
Page 4
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reduction.
Page 5
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(TRPAP).
The Tourism for Rural Poverty Alleviation Programme (TRPAP) implemented by the government
and the Nepal Tourism Board has been working with local communities in and around Lumbini, the
birthplace of Lord Buddha, to create more benefits from the large number of tourists visiting the area.
The TRPAP facilitated the organization of functional groups involving various tourism-related
The group has 70 members (rickshaw owners) and TRPAP has supported the following activities:
• Collaboration with the main local stakeholder to monitor the local transportation system,
• Local transportation services were promoted, which increased economic opportunities for
local poor people.
• They earn US$7 to US$11 a day during the high season (4 months per year) and US$3 to
Source: SNV Nepal, ‘Lessons Learned on Pro Poor Sustainable Tourism in Nepal’, SNV Nepal, 2006.
Page 6
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employment.
terms of empowerment, property rights d control over development.
-89-
Box 10. Viet Nam: Empowerment through tourism legislation
In 2003, the Vietnam National Administration of Tourism (VNAT) was given responsibility for
drafting the nation’s first law on tourism. VNAT received support from UNWTO and the
Netherlands in order to incorporate international best practices when drafting the law. As a
result the Law on Tourism reflects concerted efforts aimed at ensuring that future tourism
development addresses poverty reduction and sustainable development objectives. Some
important elements of the law are described in terms of the opportunity created and the expected
results.
Opportunity: Provide incentives and directives for developing tourism for poverty reduction
purposes
6.2. The State shall undertake incentive and prioritized policies on land, finance, credits for
disadvantaged areas that address poverty reduction and hunger eradication. Further incentives
such as local hiring and training, purchasing from local suppliers could also be included in the
7.1. The local community shall have rights to participate in and benefit from tourism activities;
be liable to preserve tourism resources and nurture local cultural identity; maintain security,
development, restoration and enrichment of various types of traditional cultures, folklore arts,
crafts, goods production in service of tourists, contributing to uplift the material and spiritual life
Tourism accommodation establishment now includes the legal recognition of “Household room
Article 78. Narrator: This is a new category of guide. Tour guides are required to hold university
degrees, but a “narrator” is defined as a “person who delivers on-site interpreting services to the
tourists at the tourist resort and tourist attraction.” A higher education degree is not required to
work in this capacity. This is extremely significant as the vast majority of rural poor do not have
the opportunities for higher education, but they are the most appropriate interpreters of their
culture.
Results: Some barriers to poor peoples’ participation under the old Tourism Ordinance have
now been removed by broadening the types of tourism products and services that may now be
Page 8
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69
F. Taxes and levies
Nepal Tourism Board, E-Newsletter, 18 February 2005, p. 5.
69
Page 9
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access.
Page 10
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H. Marketing
items such as candles, arts and crafts, tables and mats. This furniture is acquired only from
The Tiger Mountain Group supports local entrepreneurs while minimizing distortions in
develops clear criteria for the supplies and services sought and ensures that the criteria are
Page 11
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impacts of tourism.
Page 12
-94-
appropriate socio-economic linkages between the rural nomadic groups in Mongolia, their
melodies and natural wonders of the Nobel Rock Palace or Fortress with nomadic herders,
Nomadic Cooperative Association, which was entrusted with the task of attracting foreign
regions will lead to an increase in the incomes of the nomadic tribes, which would, in turn,
lifestyles.
Source: <www.gertoger.com/index.html, http://www.asianews.ir/en/main1.asp?a_id=1394>.
a Ger is a traditional Mongolian dwelling, commonly known in English as a “yurt”. The ger has a
wooden framework covered by large pieces of felt, easily assembled and disassembled.
This is the html version of the file
http://www.unescap.org/ttdw/Publications/TPTS_pubs/pub_2478/pub_2478_ch7.pdf.
Google automatically generates html versions of documents as we crawl the web.
Page 1
-83-
68
68 Anil Markandya, Tim Taylor and Suzette Pedroso, “Tourism and Sustainable Development:
Lessons from Recent World Bank Experience”, (Washington, D.C.: IBRD, 2003), pp. 20-
21.
http://info.worldbank.org/etools/docs/library/107771/SD_Communication/epublish/zip_fi
les/b
Page 2
-84-
Page 3
-85-
level.
coordination.
plans.
B. Tourism plans
Page 4
-86-
reduction.
Page 5
-87-
(TRPAP).
The Tourism for Rural Poverty Alleviation Programme (TRPAP) implemented by the
government
and the Nepal Tourism Board has been working with local communities in and around
Lumbini, the
birthplace of Lord Buddha, to create more benefits from the large number of tourists
visiting the area.
The TRPAP facilitated the organization of functional groups involving various tourism-
related
The group has 70 members (rickshaw owners) and TRPAP has supported the following
activities:
• Collaboration with the main local stakeholder to monitor the local transportation
system,
• Local transportation services were promoted, which increased economic opportunities
for
local poor people.
• They earn US$7 to US$11 a day during the high season (4 months per year) and US$3
to
Source: SNV Nepal, ‘Lessons Learned on Pro Poor Sustainable Tourism in Nepal’, SNV
Nepal, 2006.
Page 6
-88-
employment.
terms of empowerment, property rights and control over development.
Page 7
-89-
Box 10. Viet Nam: Empowerment through tourism legislation
In 2003, the Vietnam National Administration of Tourism (VNAT) was given
responsibility for
drafting the nation’s first law on tourism. VNAT received support from UNWTO and the
Netherlands in order to incorporate international best practices when drafting the law. As
a
result the Law on Tourism reflects concerted efforts aimed at ensuring that future tourism
development addresses poverty reduction and sustainable development objectives. Some
important elements of the law are described in terms of the opportunity created and the
expected
results.
Opportunity: Provide incentives and directives for developing tourism for poverty
reduction
purposes
6.2. The State shall undertake incentive and prioritized policies on land, finance, credits
for
disadvantaged areas that address poverty reduction and hunger eradication. Further
incentives
such as local hiring and training, purchasing from local suppliers could also be included
in the
7.1. The local community shall have rights to participate in and benefit from tourism
activities;
be liable to preserve tourism resources and nurture local cultural identity; maintain
security,
development, restoration and enrichment of various types of traditional cultures, folklore
arts,
crafts, goods production in service of tourists, contributing to uplift the material and
spiritual life
Tourism accommodation establishment now includes the legal recognition of “Household
room
Article 78. Narrator: This is a new category of guide. Tour guides are required to hold
university
degrees, but a “narrator” is defined as a “person who delivers on-site interpreting services
to the
tourists at the tourist resort and tourist attraction.” A higher education degree is not
required to
work in this capacity. This is extremely significant as the vast majority of rural poor do
not have
the opportunities for higher education, but they are the most appropriate interpreters of
their
culture.
Results: Some barriers to poor peoples’ participation under the old Tourism Ordinance
have
now been removed by broadening the types of tourism products and services that may
now be
Page 8
-90-
69
F. Taxes and levies
69 Nepal Tourism Board, E-Newsletter, 18 February 2005, p. 5.
Page 9
-91-
access.
Page 10
-92-
H. Marketing
items such as candles, arts and crafts, tables and mats. This furniture is acquired only
from
The Tiger Mountain Group supports local entrepreneurs while minimizing distortions
in
develops clear criteria for the supplies and services sought and ensures that the criteria
are
Page 11
-93-
impacts of tourism.
Page 12
-94-
appropriate socio-economic linkages between the rural nomadic groups in Mongolia,
their
melodies and natural wonders of the Nobel Rock Palace or Fortress with nomadic
herders,
Nomadic Cooperative Association, which was entrusted with the task of attracting
foreign
regions will lead to an increase in the incomes of the nomadic tribes, which would, in
turn,
lifestyles.
Source: <http://www.gertoger.com/index.html, http://www.asianews.ir/en/main1.asp?
a_id=1394www.gertoger.com/index.html, http://www.asianews.ir/en/main1.asp?
a_id=1394http://www.gertoger.com/index.html, http://www.asianews.ir/en/main1.asp?
a_id=1394>.
a Ger is a traditional Mongolian dwelling, commonly known in English as a “yurt”. The ger has a
wooden framework covered by large pieces of felt, easily assembled and disassembled.
Economic development in India

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Main article: Economy of India
The economic development in India followed a socialist-inspired policies for most of its
independent history, including state-ownership of many sectors; extensive regulation and
red tape known as "Licence Raj"; and isolation from the world economy. India's per
capita income increased at only around 1% annualized rate in the three decades after
Independence.[1] Since the mid-1980s, India has slowly opened up its markets through
economic liberalization. After more fundamental reforms since 1991 and their renewal in
the 2000s, India has progressed towards a free market economy.[1]
In the late 2000s, India's growth has reached 7.5%, which will double the average income
in a decade.[1] Analysts say that if India pushed more fundamental market reforms, it
could sustain the rate and even reach the government's 2011 target of 10%.[1] States have
large responsibilities over their economies. The annualized 1999-2008 growth rates for
Gujarat (9.6%), Haryana (9.1%), or Delhi (8.9%) were significantly higher than for Bihar
(5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (6.5%).[2] India is the eleventh-largest
economy in the world and the fourth largest by purchasing power parity adjusted
exchange rates (PPP). On per capita basis, it ranks 128th in the world or 118th by PPP.
The economic growth has been driven by the expansion of services that have been
growing consistently faster than other sectors. It is argued that the pattern of Indian
development has been a specific one and that the country may be able to skip the
intermediate industrialization-led phase in the transformation of its economic structure.
Serious concerns have been raised about the jobless nature of the economic growth. [3]
Although living standards are rising fast, 75.6% of the population still lives on less than
US$2 a day (PPP, around US$0.5 in nominal terms), compared to 73.0% in Sub-Saharan
Africa.[4] In terms of occupation, two-thirds of the Indian workforce earn their livelihood
directly or indirectly through agriculture in rural villages. As a proportion of GDP, towns
and cities make over two thirds of the Indian economy.
Favourable macroeconomic performance has been a necessary but not sufficient

condition for the significant reduction of poverty among the Indian population. The rate
of poverty decline has not been higher in the post-reform period (since 1991). The
improvements in some other non-economic dimensions of social development have been
even less favourable. The most pronounced example is an exceptionally high and
persistent level of child malnutrition (46% in 2005–6). [5]
The progress of economic reforms in India is followed closely. The World Bank suggests
that the most important priorities are public sector reform, infrastructure, agricultural and
rural development, removal of labor regulations, reforms in lagging states, and
HIV/AIDS.[6] For 2010, India ranked 133rd in Ease of Doing Business Index, which is
setback as compared with China 89th and Brazil 129th. According to Index of Economic
Freedom World Ranking an annual survey on economic freedom of the nations, India
ranks 124th as compared with China and Russia which ranks 140th and 143rd respectively
in 2010.
GDP growth rate

Since the economic liberalisation of 1991, India's GDP has been growing at a higher rate.
[24]
Year Growth (real) (%)

2000 5.5
2001 6.0
2002 4.3
2003 4.3
2004 8.3
2005 6.2
2006 8.4
2007 9.2
2008 9.0
2009 7.4
Tourism in 10th Five Year Plan
In order to further accelerate the development of tourism in the country, the thrusts
during the 10th Five Year Plan has been to:
• Position tourism as a major engine of economic growth

• Harness the direct and multiplier effects of tourism for employment generation
and economic development
• Provide impetus to rural tourist
• Provide a major thrust to domestic tourism which will act as a spring board for
growth and expansion of international tourism
• Position India as a global brand to take advantage of the burgeoning global travel
and trade and the vast untapped potential of India as a destination
• Acknowledge the critical role of private sector with government working as an
active facilitator and catalyst
• Create and develop integrated tourism circuits based on India's unique
civilisation, heritage and culture in partnership with states, private sector and
other agencies
• Ensure that the tourist to India gets physically invigorated, mentally rejuvenated,
culturally enriched, spiritually elevated and "feels India within him".
Celebration of Various Tourism Events

A number of events and road shows have been organised during 2005-06 for spreading
awareness about India Tourism in domestic and international tourism market to attract
more tourists to India. The major events organised by the Ministry in collaboration with
various State Tourism Departments are: Golf open tournament, Srinagar; Sindhu Darshan
at Leh; Heritage Festival, New Delhi; All India Crafts Mela, Hyderabad; Heritage
International Festival, Jaipur; India International Boat Show, Kochi; Paragliding Show
and Tourism Conclave in Himachal Pradesh; Mega Folk Festival "Virasat" in Dehradun;
Prithivi 05-Global Eco-Meet, Kochi; Domestic and International Photo Exhibition "A
Confluence of Cultures" and Essay and Photographic competition on "What Tourism
Means To Me" on World Tourism Day on 27 September (every year); India National
Tourism Day on 17 March 2006; Designer's Night Bazar, Surajkund Crafts Mela,
Haryana; 3 Global Interline Golf Championship, Photo Exhibition, Eco-Tourism
Marketing Meet; Mussorie (Uttarakhand), WTTC, Himalayan Run and Trek and Photo
Exhibition on Hindu, Buddhist and Islamic monuments of Kashmir.
The Ministry of Tourism also participated in various travel and tourism events, trade fairs
and exhibitions in India and abroad. The important fairs and exhibitions are Tourism
Travel Fair in New Delhi, Mumbai, Bangaluru, Chennai and SATTE (South Asia
Tourism and Travel Expo), New Delhi. India Tourism offices located in 20 cities in India
also participated at local important fairs. The Ministry of Tourism participated in several
overseas travel and tourism trade fairs, notably World Travel Market, London; ITB
(International Tourism Bourse), Berlin; Arabian Travel Market (ATM), Dubai; EIBTM,
Spain; IMEX, Frankfurt; Pata Travel Mart, Malaysia; FITUR, Spain; and World Travel
Fair, Shanghai. India Tourism offices located in 13 overseas cities also participated in
various travel and tourism fairs.
National Tourism Policy 2002

A National Tourism Policy-2002 was announced by the Government with, inter-alia
attempts to position India as a global brand to take advantage of the burgeoning global
travel and trade and the vast untapped potential of India as a destination
Tourism
Hotel Management and Food Craft Institutes
The Ministry of Tourism has accorded high priority to the development of manpower to
meet the growing needs of Hotels, Restaurants and other Hospitality-based Industries.
For this purpose, 21 Institutes of Hotel Management and Catering Technology and 10
Food Craft Institutes (3 of these are now also State IHMS) have been set up in the
country. In addition to the above, four more Institutes of Hotel Management are in the
pipeline at Uttarakhand (Dehradun), Jharkhand (Jamshedpur), Chhattisgarh (Raipur) and
Haryana (Kurukshetra). These Institutes conduct Degree courses in the field of Hotel
Management, Catering Technology and Applied Nutrition and Craft Courses in Food and
Beverage Services, Accommodation Operations, Dietetics and Hospital Food Service,
Food Production and Patisserie, House Keeping, Front Office, etc. IHM's Mumbai,
Bangalore and Pusa (New Delhi) have started 2 Years M.Sc Hospitality courses also.
Food Craft Institutes conduct Craft Courses for duration ranging from six months to one
year for operational staff. All these training Institutes are affiliated to the National
Council for Hotel Management Catering Technology and Applied Nutrition (NCHMCT)
at apex level which regulates academics for all these Institutes.
Capacity Building for Service Providers (CBSP)

In the year 2002, the Ministry launched a programme called CBSP to train the persons
engaged in small hotels, dhabas, eating joints, restaurants, etc., and also handling tourists
like Immigration staff, airport staff, security/Police personnel, guides, taxi operators, bus
drivers, etc. The objective was to provide short term training to improve their etiquette,
behaviour and attitude towards tourists.
The scope of this scheme has been further enlarged and the training programmes of 3/6
months duration have been added for skill development of existing as well as fresh
service providers. Under this scheme, a new programme called 'Project Priyadarshini' was
also launched in 2005 aimed at imparting training to women in taxi driving/operation,
entrepreneurship like setting up souvenir kiosks, etc, to adopt tourism as their profession.
Hotel Accommodation
The hotel sector forms one of the most important segments of the tourism industry with
high potential for employment generation and foreign exchange earnings. To give
impetus to this sector, the government provides concessions under EXIM Policy and
other incentives. The Industrial Policy has now placed hotels and tourism related
activities as a priority industry. Foreign investment and collaborations are now facilitated
under the new economic policy. Automatic approval is available for foreign direct
investment upto 100 per cent in Hotel and Tourism sector.
Travel Trade
The Department of Tourism has a scheme of approving Travel Agents, Tour Operators,
Adventure Tour Operators and Tourist Transport Operators. During 2005, keeping in
view the spurt in Domestic Tourism, a new category for the recognition of Domestic
Tour Operators has been introduced. The aims and objectives of this scheme are to
encourage quality, standard and service in these categories so as to promote tourism in
India. The Travel Trade Division also interacts with the travel trade associations like
Travel Agents Association of India (TAAI), Indian Association of Tour Operators
(IATO), Indian Tourist Transport Operators Associations (ITTA), etc., and other agencies
like India Convention Promotion Bureau, Pacific Asia Travel Association (PATA), etc.
The Travel Trade Division also deals with all matters pertaining to the regulation and
training of tourist guides at Regional level and also co-ordinates with other Ministries
such as Civil Aviation, Culture, Railways, Surface Transport, External Affairs and Home
Affairs on various issues to improve the facilities for the tourists visiting various
destinations in India.
Role of Tourism Industry in India

GDP
Role of Tourism Industry in India GDP has been quite alarming since the past few
decades.
Tourism industry has contributed enormously in the flourishing graph of India's economy by
attracting a huge number of both foreign and domestic tourists traveling for professional as well
as holiday purpose.
The tourism industry in India witnessed a stupendous growth in 2006. The growth in the inflows
in India's tourism industry is calculated both in terms of business and vacations.
The number of foreign tourists arriving from all over the world rose from 0.37 percent to 0.53
percent as has been stated by UN World Tourism Organization (UNWTO) in the year 2006. This
remarkable growth in the graph of tourism industry in India popularized the entire
South Asia as one of the most spectacular tourist terminal. Indian tourism industry
contributes to around 5.9 percent of the country's GDP and it provides employment to
around 41.8 million of inhabitants.
Some of the most significant features of India's tourism industry or the Role of Tourism Industry
in India GDP have been listed below:
• The percentage of foreign tourists in India has increased by 12.4 percent in one year,
that is, from 2006 to 2007. In 2006, Indian tourist industry witnessed a growth of 14.3
percent, which reached around 3.89 million in 2007
• The foreign tourists arrival led to a robust growth in the foreign exchange earnings that
increased from USD 5.03 billion during January-October 2006 to USD 6.32 billion during
January-October 2007, which is apparently a 25.6 percent rise.
• Deeming the growing rate of the tourists arrival in the country, the Indian tourism
industry designed a wide spectrum of holiday packages and cheaper airfares to attract
more tourists.
• Nonetheless, the outgoing graph of tourism industry in India is in no way lagging behind
from the inbound one. People traveling from India to abroad or states within India have
increased by 25 percent.
• The United Nations World Tourism Organization (UNWTO) has estimated the outgoing
tourists to reach around 50 million by the year 2020.
• According to the European Travel Commission, the average expenditure per trip of
Indian tourists traveling abroad has increased from USD 611 in 2000 to USD 822 in
2006
• The booming success of Indian tourism industry has led to a drastic change in the
hospitality department as well. The increase in the ratio of tourists resulted in the
increase of room rates and also setting up of a wide range of hotels and other residing
areas.
• A number of international hotels such as the Hilton, Accor, Marriott International,
Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and Inter Continental Hotels
groups have professed about making some large-scale investments to append 65,000
additional rooms to suffice the needs
• India is most likely to set up forty hotels of global brands by 2011. The hospitality
segment in India is assumed to reach USD 11.41 billion in the coming two years
Following are the few benefits ensured by the tourism industry in India GDP in order to boost up
the GDP of India:
• The Indian tourism industry offers online booking system, one of the basic proofs of
technological advancement in this sector. These online bookings are applicable for
booking the air tickets via Internet by logging on to the website and also booking the
hotel room of the place to be visited
• The online tourism industry has accounted for a turn over of USD 800 million which is
apparently 14 percent of the entire travel and tourism industry
• The Role of Tourism Industry in India GDP also features medical tourism that includes
traditional therapies like yoga, meditation, ayurveda, allopathy and other conventional
systems of medicines is currently estimated at USD 333 million and is most likely to
reach USD 2.2 billion by the year 2012.

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I.

THE IMPORTANCE OF TOURISM

II. THE ECONOMIC IMPACT OF TOURISM

III. THE SOCIAL IMPACT OF TOURISM

VI. THE ROLE OF GOVERNMENT

VII. THE ROLE OF THE PRIVATE SECTOR

The Role of Tourism in India

Tourism is an increasingly vital part of the Indian economy.

o New Delhi is India's capital.

o Tourism is becoming more and more a vital part of

Reasons for Growth

o The Indian government played an important role in

Foreign Tourism to India

o The Taj Mahal is one of India's most famous

Indian Travelers Abroad

o Indians are a growing part of their country's tourism

Read more: Economic Importance of Tourism in India | eHow.com

European Journal of Social Sciences – Volume 18, Number 4 (2011)

European Journal of Social Sciences – Volume 18, Number 4 (2011)

European Journal of Social Sciences – Volume 18, Number 4 (2011)

European Journal of Social Sciences – Volume 18, Number 4 (2011)

tourism dimension. In terms of lending, direct Bank operations have invested in

VII. THE ROLE OF GOVERNMENT

Economic development in India

Favourable macroeconomic performance has been a necessary but not sufficient

GDP growth rate

Year Growth (real) (%)

Tourism in 10th Five Year Plan

• Position tourism as a major engine of economic growth

Celebration of Various Tourism Events

National Tourism Policy 2002

Capacity Building for Service Providers (CBSP)

Role of Tourism Industry in India

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