Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 88

private foreign capital for tourism superstructure development such as
accommodation, restaurant or entertainment facilities. At the same time,
investment in general infrastructure, which is required for manufacturing
and other sectors, including the tourism industry, is also needed. The devel-
opment of general and tourism infrastructure, such as airports, terminals,
roads and power, water and sewerage, is often seen as the responsibility of
the national and local governments. It is recognised that the provision of
public infrastructure can facilitate growth. Indeed, new growth theorists
acknowledge that, within tourism, infrastructure represents a secondary
tourism resource base (Stabler et al. , 2010). International organisations, such
as the World Bank and other international development organisations, for
many years have been major suppliers of capital for such investments (Bull,
1995; Pearce, 1989).
There is certainly no doubt that foreign capital investment gives rise to
extra income and growth, encourages foreign currency earnings and creates
new jobs but, at the same time, it unfortunately generates more leakages
than domestic capital investment from local private or public sources. This
is, of course, because more foreign staff are usually employed, more imported
goods may be used to support the tourism business and profits are remitted
to the parent company.
At the same time, it is evident that the economically favourable third
stage of tourism development may not be reached as easily as theory suggests
(Mihalič, 2012). The achieved decrease in the average capital-output ratio,
based on an economy's ability to increase daily tourism consumption per
visitor without much new capital investment, depends on many factors. For
example, international tourism data show that the more a destination econ-
omy is developed, the higher the tourism earnings per visitor and vice versa.
Thus, for each tourist night, Germany earns approximately three times as
much as Turkey or Spain; Austria and Italy more than twice as much as
Egypt (Table 3.1). In other words, it tends to be those countries with more
developed and diverse economies to which the economic benefits of tourism
development accrue more effectively. Thus, the development level of the host
economy is an important factor in achieving a decrease in the tourism capi-
tal-output ratio. Further, developed countries may develop other, non-
tourism sectors that make a greater contribution to overall economic growth
than is possible through tourism. In this case, the potential of tourism-led
economic growth might be derived from other sectors that may service the
tourism consumption of connected tourism and other non-characteristic
tourism goods or from indirect or induced suppliers' industries.
Although diversification of the economy can be a major source of tour-
ism-led growth, Tooman (1997) claims that what seems critical for social
welfare in the case of smaller destinations is not the stage of local develop-
ment but the degree of diversity itself in the area where the development is
taking place. For example, in Buncombe County, North Carolina, tourism