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What Is the Relationship between Tourism and Economic Development?

Esther Ejim
Updated: May 16, 2024

Tourism and economic development are linked by the various ways in which tourism can contribute to the economic development of a tourist destination. This relationship between tourism and economic development is the basis for the dependence of some tourist-based economies on the effects of tourism for their economic development. For instance, tourism provides more jobs for local citizens, helps local citizens start businesses that cater to tourists, leads to the generation of revenue from tourist spending and fiscal policies, and aids in the development of infrastructure.

One of the benefits or links between tourism and economic development is the fact that a vibrant tourist region provides employment for the citizens of that area. Tourism needs a lot of services in order to sustain the industry. For example, the hospitality industry creates jobs for people in businesses like hotels and restaurants. Employment is a macroeconomic factor that contributes to the growth of an economy by providing workers with disposable income and consequently leading to an increase in the Gross Domestic Product (GDP) of the region.

Another way in which tourism and economic development are linked is through the provision of small or micro enterprises for certain citizens. The citizens that might benefit from small businesses linked to tourist include individual or sole entrepreneurs with limited funds and other types of collaborations that do not require a lot of finance. For instance, some people might open a store that mainly caters to the needs of tourists. They could collaborate with local artisans and craftsmen to supply them with handcrafted objects, which they would sell to the tourists as souvenirs.

The store owners will share the profits with the local artisans, or they may buy the objects from them outright. This helps the economy by providing the poorer members of the community with disposable income. Tourists also like to visit places with a rich cultural heritage. Frequently, these places are located in villages that would otherwise not receive much government attention. Due to the significance of the villages, they will receive more attention and more development as a result.

Infrastructure to support the tourist market or trade includes factors like good airports, security, hotels and roads. Such factors help facilitate economic development and might not be as developed if not for their importance to the economy. For instance, a tourist destination that is located in a remote village will need good access roads, which might not be built if not for the tourist interest in the area.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Esther Ejim
By Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and executive director of a charitable organization, she actively encourages the well-being of vulnerable populations through her compelling storytelling. Esther's writing draws from her diverse leadership roles, business experiences, and educational background, helping her to create impactful content.
Discussion Comments
By bear78 — On Feb 09, 2013

@burcinc-- Not at all. Tourism can uplift local economies in developing countries very well. In addition to investment and small enterprises, tourism is one of the major components that international development organizations encourage in such places. United Nations is active in this area.

Even countries like China, that have been growing very well compared to the rest of the world, are paying more attention to tourism now. They have realized that tourism can speed up economic development.

By burcinc — On Feb 08, 2013

To me, it seems like it's a bad idea for the economy of a country to rely on tourism. Tourism doesn't seem like a great investment to me. Just imagine that crime or another type of conflict emerged, tourists will disappear. This doesn't seem like the ideal way to develop the economy because it's unreliable.

By turquoise — On Feb 07, 2013

I completely agree that in order for tourism to contribute to economic development, it requires sustainability and extra efforts by authorities of that region.

Any area that has history and artifacts remaining from it can technically be a tourist attraction. But for it to really bring profit and positively affect the economy of that region, it has to be very vibrant.

This not only requires authorities to maintain historical buildings and artifacts, but also run marketing campaigns, tours and programs to attract more people to visit these areas.

It's a lot of work, it's not "free" money so to speak. It still requires investment.

Esther Ejim
Esther Ejim
Esther Ejim, a visionary leader and humanitarian, uses her writing to promote positive change. As the founder and...
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