GDP and Its Link With Tourism Research Paper

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Excess relying on Tourism for GDP in Fiji, Seychelles, Costa Rica, Hawaii and Caribbean Islands.

Over Reliance of Tourism for GDP

Holiday business is a global economic and regional development force. Tourism comes with various costs and benefits. Furthermore, the growing tourism economics contributes in tourism policymaking, planning as well as business practices. In STCRC life span, a number of research documents got printed and distributed bringing forth various methods and new perspectives enabling the understanding of how global tourism affects destinations, use of resources, evaluations and business practices (Dwyer & Spurr, 2010).

According to world trade and tourism council (WTTC), tourism is estimated to contribute about 9.2% of the world GDP. It is also forecasted that this trend is likely to continue at a 4% growth per annum in the next decade in order to account for a 9.4% GDP (Dwyer & Spurr, 2010). Expenses associated with Tourism make an important contribution to the economy of Australia at a national level, state wise as well as regionally (Dwyer & Spurr, 2010). An example is that Australia contributes 40.639 million U.S. dollars in GDP to its economy through tourism, an equivalent of 3.6% of the entire GDP and making 4.7% of the total employment population (Australian Bureau of statistics). The numbers rose by $31billion and 377,000 jobs if the indirect economic contributions are included. Any changes in this trend brought about by changing market shares and destinations will further influence the export earnings and as such change gross domestic product and data on employment. This should be a reason to understand the roles of tourism economics in policy formulation (Dwyer & Spurr, 2010).

Influence of Tourism in Economic status and GDP

Direct contribution of tourism and travel shows the internal expenditure on tourism and travel (total spending in a specific country on tourism and travel by both residents and nonresidents for either business or leisure purposes). It also encompasses government expenditure on tourism and travel which refers to the direct spending of government on travel and tourism services that are associated with guests such as those that include, but are not restricted to, culture, i.e. museums or recreation i.e. National parks (World travel & Tourism Council, 2011)

This direct contribution of tourism and travel to the economy's GDP is measured and found to be consistent with output. This is shown in national accounting of tourism characteristic sectors like hotels, travel agents, airlines, airports as well as leisure and fun related services that involve direct interactions with tourists. The direct involvement of Travel and Leisure industry to the economy is calculated from the internal spending by netting out the different procurements from varied tourism sector players. This technique is in line with the tourism GDP definition specified in the 2008 Tourism Satellite Account: Recommended Methodological Framework (World Travel & Tourism Council, 2011).

Advantages and disadvantages of Depending on Tourism

The amount of contributions made by tourism and travels includes its wider impacts (both induced and indirect influences) to economic advancement. Contributions made indirectly include GDP employment opportunities resulting from travel and tourism investment spending, which is a vital component of both existing and coming activities that include new aircrafts purchase and new hotel constructions. The Government's spending on tourism and Travel also helps in different ways because the intended purpose is to benefit the community at large, for example through tourism marketing advertisement, flight, management, safety services, hotel security services, resort area sanitation services among others. Also in this category is the domestic purchase of commodities and services by sectors directly involved with tourists for example purchase of foodstuff and washing amenities by hotels, fuel as well as cuisine by airlines as well as technology services from travel agents. Induced contribution measures GDP and jobs supported by the expenditure from those employed on primary or secondary basis by Travel and Tourism industry (World Travel & Tourism Council, 2011).

Tourism has great potential to influence the growth of world economy. Tourism economy represents 5% of the world GDP in addition to contributing 6-7% of total workforce. Global tourism is fourth (after fuels, chemicals and automotive products) in international export markets. It has an annual trade worth of $1 trillion, accounting for 30% of the world's commercial services exports or 6% total exports. In 2010, 935 million universal travelers were recorded while 2008 had 4 billion domestic arrivals (UNEP, 2011).

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This travel business suffers from various important sustainability-related challenges (UNEP, 2011). This industry has several challenges that can only be resolved by going green. Some of these include

1. Energy and GHG emissions

2. Water consumption

3. Waste management

4. Loss of biodiversity

5. Effective supervision of traditional heritage (UNEP, 2011)

Climate change is the other factor that influences the tourism sector in a nation directly by affecting the benefits that would have otherwise been available, were it not for the damage or destruction of attractions, as well as prices of reworking and replacing capital infrastructure (Dwyer & Spurr, 2010)

Climate majorly influences the choice of tourist destinations. Tourist can avoid certain destinations in preference of others because of changing climate conditions while some may change their timings to avoid unfavorable conditions. Climate changes can influence the tourism sectors either negatively or positively. Furthermore, these impacts vary depending on the market segment and geographical location. The sector has winners and losers in business, destinations, and national levels. Nations relying majorly on nature attractions will suffer most due to climate changes that trigger tourism international pattern changes. However, based on the nature of the tourism industry, dealers in addition to consumers will shift from unfavorable destinations due to climate changes to more attractive destinations (Dwyer & Spurr, 2010).

A major challenge for tourism in the future would be to live and manage effects of climate changes. As all players in the industry are trying to mitigate emissions from green houses, TSA provides the opportunity for the tourism economist to foster the understanding of the carbon emissions from the tourism industry. Using TSA as a tool that estimates carbon footprint has had the advantage of comprehensiveness as it incorporates all industrial residues from tourists-linked industries. This means that if the relationship between industrial manufacturing and green house gas emissions is known then the possibilities of calculating and measuring the emissions due to tourism by TSA exists (Dwyer & Spurr, 2010).

Case of Caribbean

Performance has been on the downside since 1990 in most Caribbean states even with prior successes. This slow growth rate is responsible for the Caribbean's outputs falling behind their competitor countries in this sector. At least three findings explain this phenomenon clearly. The first explanation for this growth slowdown is due to reduced productivity as opposed to lack of investment. Secondly, tourism has contributed to rising rate of growth (over capital accumulation and efficiency) and lesser output instability with a higher scope for expansion in this sector being available in most countries. The third factor is the small size because these countries are small islands that limit growth. Strategies meant to improve output, extra development of tourism sectors and local incorporation pay dividends through increased regional growth (Thacker, Acevedo & Perrelli, 2012).

On average, the growth rate among Caribbean countries has been low compared to their counterparts' developing countries and emerging markets. The average growth rate based on buying power parity (PPP) stands at 2.2%, which is based on GDP measurements (or 3.4% based on simple regional average), compared to 5.1% in emerging markets and developing economies. These margins have increased even further in recent years as Caribbean countries and FDI took a down turn after the global crisis in the economy whereas LA countries benefited from rising commodity markets as well as large capital inflows (Thacker et al. 2012).

The case of Seychelles

The GDP of Seychelles increased to 3.5% in 2013 from 2.8% with an even higher expected rise in 2014 and 2015 due to rebound in the travel sector. This rebound is the reason behind the ten percent rise in tourist numbers. 2013 marked the country's 5-year period since the beginning of a complete financial transformation that resulted in economic stabilization, debt reduction, liberalization, and communal sector restructuring. Even though, challenges still exists, as the aim is to diversify economic involvement in order to create local employment, as well as eliminate constraints for the private sector. Seychelles, which is ranked first in terms of human expansion in Africa, has been able to fulfill most of its millennium development goals with a prospect of developing a post 2015 agenda that integrates issues in a manner that is relevant to small island developing states (SIDS) (Mpande & Kannan, 2014).

The 2007 economic collapse that saw the GDP fall from 10.4 to -2.1%.....

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