Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 91

development level ? In 2003, tourists in Germany spent 42% and in Cyprus
13% on related products. Even if we agree with the above criteria for defin-
ing a destination's development level, would not such a tourism country list
again assume that becoming a developed tourism country requires a certain
level of general country economic development ? And if so, how can tourism
then be seen as a tool for reducing the development gap between the devel-
oped and less developed world if a less developed country can never effi-
ciently reach the tourism development stage and be competitive with
developed ones on the other side of the gap ? Can the criteria for a developed
tourism country ignore a country's level of development in terms of GDP
per capita and structural characteristics ?
The Economic Impacts of Tourism
Seventy years ago, Hunziker and Krapf (1942) showed that tourism has
an influence on national economies. They demonstrated that, depending on
the inward or outward direction of tourist flows, tourism can have both a
positive and negative impact on the national income. Consequently, tourism
first brings about a redistribution of national income, dividing the world into
tourist-generating and tourist-receiving countries, regions and destinations.
Second, it also leads to a redistribution of income between sectors and com-
panies within the economy, with the latter reflecting the fact that tourism
consumption differs from personal consumption.
Since then, many tourism analysts have studied the different so-called
economic impacts of tourism, amongst which the tourism multiplier effect
is probably the most widely considered. When a country starts to develop its
tourism infra- and superstructure, large financial resources are needed and
the value of the capital coefficient in tourism starts to grow strongly, exert-
ing a negative impact on economic growth. At this stage, tourism's economic
benefits in terms of income, jobs and foreign exchange have yet to emerge
and, hence, strong arguments are needed to support the decision to under-
take such tourism-related investments. It is here that the idea of a tourism
multiplier, whereby the total change in tourism output is even greater than
the initial change in tourist consumption, becomes relevant.
The tourism multiplier concept is based on the recognition that tourism
introduces extra expenditure into an economy, such as tourists' spending on
goods and services in the visited area, tourism-related investment, govern-
mental spending or exports of goods stimulated by tourism. Tourism expen-
ditures have direct, indirect and induced effects. For example, first-round
direct tourism expenditures, such as tourists' spending on hotels, food, bever-
ages, transport, culture, recreation, gambling or shopping, is known as direct
or primary tourism consumption and equates to the amount of tourism con-
sumption (tourism receipts) in the host country.