TOURISM INDUSTRY

Tourism Industry

Tourism Industry

Introduction

The presence of a combination of several industries and the absence of its inclusion in the system of national accounts of many economies make it difficult to quantify the total economic impact of tourism industry in a simple way (Toepper, 2011). As a diversified industry, tourism industry generates a variety of economic impact for which it has been perceived to be a reliable source for economic development for many developed and developing nations. Developing countries, like Europe or UK, have relied a great deal on their tourist industries for economic growth. Since, the non-traditional exports of developing countries have too often failed to prove effective in economic development and so tourism is increasingly seen as something of a saviour. Its importance is gaining widespread recognition as developing countries view tourism industry as a cushion for their economic development and growth (Deane, 2011).

Discussion

This paper focused on factors within the firm's functional environment and those in its institutional environment, particularly economic institutions. Heng and Low (2010) identified the functional environment factors and referred them to as “operational factors” and those in its economic institutions were labelled “market factors.”

Previously undiscovered regions of the developing economies of the world continue to be the major player of world tourism growth trend and promote this industry. Economic impacts of tourism begin with an injection of tourism receipts that generate multiplier effects on output or sales, revenue, employment, income, and not suffice to say contributing significantly in infrastructural development of an economy (Durbarry, 2009). In an attempt to measure the economic impact of changes in the injection of inbound markets tourist expenditure, it is important to recognize that economic impacts occur across a wide range of economic variables and at different levels. Though primary effects or direct impacts of inbound tourist expenditure are those that occur within tourism related establishments, the measurement of primary benefits provides incomplete picture of the precise contribution made by tourism. Through inter-sectoral linkages, secondary (indirect and induced) impact of inbound tourist expenditure affects almost all sectors of an economy. The addition of secondary effects generates sufficient additional income and employment to rejuvenate the local economies since secondary benefits or indirect impacts are seen as better measure (Archer, 2009).

Economic Impact

Deane (2011) mentioned in his study that the economic impact process begins with a unit injection of tourist expenditure in an economy and rests on the structure of the economy and the nature of the expenditure pattern of inbound market tourists. By measuring the direct, indirect, and induced impact, total impact of tourist expenditure is formed. The accommodation sector, however, is included in this figure to show how the multiplier concept works.

The same concept can be applied to all other tourism related sectors such as food and beverage, transportation, entertainment, shopping, and miscellaneous services sector. Given its comparative advantages and potentiality, tourism industry is now considered as one of the most important engines of growth and development for the UK economy receiving vital focus in the government's industrial ...