Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 94

impacts of tourism. Although these impacts are usually considered from a
non-economic point of view, it can be argued that the environmental issues
of tourism development should also be located within the economic debate.
That is, tourism should no longer be viewed only as a reason for environmen-
tal protection. The environment is also a financial resource, with the envi-
ronmental resources the tourism industry indirectly sells becoming
increasingly important economic goods and, hence, an ever more important
element of market economies. Thus, in the context of tourism, environmen-
tal protection and valuation are becoming an economic activity and, there-
fore, part of economic development and contributors to economic growth.
Of course, tourism development also has many non-economic develop-
mental impacts, such as socio-cultural consequences (see Chapter 7), educa-
tional benefits and so on. However, this chapter is primarily concerned with
the economic dimension of tourism, in particular the issues surrounding
tourism's potential contribution to (economic) development. Therefore,
rather than addressing the wide range of topics typically included in an eco-
nomic analysis of tourism, it focuses principally on specific areas where tour-
ism, from an economic perspective, may contribute to or militate against
development. These include:

• the impact of tourism on economic development - convergence theory;

• the impact of tourism on the balance of payments;

• the impact of tourism on inflation/deflation;

• the impact of tourism on employment; and

• environmental goods valuation in tourism (Mihalič, 2002b).

The impact of tourism on economic development - convergence
theory
In the context of convergence theory, tourism is seen as a tool for bring-
ing the different economic growth rates in developed and less developed
areas closer together. Here, tourism consumption, which is directed towards
less developed countries or peripheral regions rich in tourist attractions (nat-
ural or social and cultural), leads to the redistribution of national income to
the benefit of the host destination. An increase in financial resources on the
demand side requires increased supply in the host country/region, provoking
new directly tourism-related activities, an increase in the production of indi-
rect suppliers to 'first-round' tourism businesses, the creation of new jobs,
extra incomes, new additional consumption on the part of new employees,
new investment and so on. As a result, national income in the incoming
destination, in theory, increases whilst, other things being equal, the reduced
final consumption in the visitor's place of residence slows down economic
growth in the more developed country or region. This gives rise to the con-
cept of convergence. That is, as a result of tourism consumption the relative