Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 87

normally substantial. At the same time, they might be more important at
the local level if the destination's GDP is low due to the under-development
of economic activities. However, as a result of the non-existent capital
investment in tourism businesses, the marginal capital-output ratio 4 sug-
gests that the amount of additional investment required in the tourism sector
in order to boost tourism earnings is almost zero.
As the number of visitors and consequential opportunities for tourism
businesses expand, the destination enters the second tourism development
stage. The destination becomes aware that tourism investments are needed
to support further tourism growth. Now, tourism development is promoted
and politically supported with investment in tourism infra- and superstruc-
ture. Significant levels of capital investment are usually required and, since
there is a time lag between invested inputs and generated outputs in the form
of tourism earnings, the average capital-output ratio for the tourism sector
rises and becomes higher than the average ratio for the economy as a whole.
Thus, during this second stage, the capital-output ratio within the tourism
sector increases substantially and might exceed the overall economy's aver-
age capital-output ratio, thereby slowing down the average national eco-
nomic growth rate. However, during this stage, other benefits of tourism
development are promoted, such as improvements in the host population's
quality of life in terms of new infrastructure or the opportunity for cultural
exchanges with visitors, and the multiplier effect of tourism consumption,
where the (future) indirect and induced effects of tourism consumption on
non-tourism sectors are stressed.
The third stage of tourism development is reached when the average
tourism capital-output ratio falls. This results from both the benefits of
past investment in tourism infra- and superstructure being realised and cur-
rent innovations and improvements in the quality and assortment of tour-
ism products which, together, encourage higher levels of tourist consumption,
hence contributing to the local economy's economic growth. This is a stage
of maturity where tourism-led economic growth theory may find its place
if the tourism coefficient falls below that for the economy. The marginal
capital-output ratio is low and little additional tourism capital investment
is required for an additional increase in tourism yields. Ideally, the latter is
mainly achieved by enlarging daily tourism consumption per visitor, with
the number of visitors being unchanged. However, in many cases a rise in
the tourism yield is achieved by increasing visitor figures by promoting large
numbers that lead to mass tourism and the related advantages of large-scale
production and disadvantages in terms of cultural and natural environmen-
tal damage.
There is much evidence to suggest that many destinations have
attempted to overcome their lack of financial resources and to speed up the
process of developing tourism infra- and superstructure with the help
of international capital and expertise. That is, they have tried to attract