Tourism and Economic Development Issues - Tourism and Development: Concepts and Issues - page 99

Despite the wealth of evidence of a stronger impact of tourism expendi-
tures in developed destinations, there are doubts about the developmental
role of tourism in richer regions. It is true that tourism's impacts on income
generation or the balance of payments in these areas are in most cases mar-
ginal since tourism is not a main activity. Many authors (Dwyer et al. , 2010;
Smeral, 2001; Vanhove, 2011) warn against unrealistic development expecta-
tions from tourism since the interactive effects between tourism and other
well-developed sectors of the economy must be taken into account. Moreover,
the situation might be very different in less developed regions in less devel-
oped countries (Mihalič, 2012). Many authors have proven that tourism
demand raises aggregate household income and substantially benefits the
destination. Unfortunately, its potential to alleviate poverty has been ques-
tioned by many studies, with contemporary analyses showing that it also
worsens the distribution of income. Wattanakuljarus and Coxhead (2008)
found that the general equilibrium effects on growth in inbound tourism in
Thailand undermined profitability in agriculture, from which the poor
mainly derive their income. Furthermore, others have confirmed that tour-
ism benefits the lowest income groups less than some higher income groups
and, thus, does not reduce inequalities if additional policy instruments are
not implemented (Blake, 2008; Blake et al. , 2008).
In general, then, empirical evidence on tourism-led economic growth
theory supports both its defenders and opponents. Many researchers
(Balaguer & Cantavella-Jorda, 2002; Holzner, 2011; Kim et al. , 2006; Lee &
Chang, 2008) claim that tourism has a positive impact on the nation's output
and growth. In addition, Holzner (2011) argues that tourism and the manu-
facturing sector can co-exist and together can generate above-average income
based on a common investment in the physical infrastructure both need. Lee
and Chang (2008) point out that in developed (e.g. Organisation for Economic
Co-operation and Development (OECD)) countries, tourism has an impact
on economic growth yet in less developed countries and in sub-Saharan
African countries the causality is stronger and bidirectional. Similarly,
Seetanah (2011) confirms a bi-causal relationship between tourism and
growth for island countries. Another study of Taiwan came to the same
conclusion (Kim et al. , 2006). In addition, the unidirectional tourism-led eco-
nomic growth hypothesis has been confirmed by Spanish researchers
(Balaguer & Cantavella-Jorda, 2002; Parrilla et al. , 2007) for the Spanish
economy and for the Balearic and Canary Islands. In contrast, Oh (2005)
questions the general validity of these findings, demonstrating empirically
that the expected co-integration between tourism and economic growth
does not exist in Korea. He shows that economic growth may result in tour-
ism development and not vice versa. This again points to the dependency
between general economic and tourism development. Accordingly, questions
remain about whether, in a given country, tourism contributes to the econ-
omy as is commonly believed, whether economic growth results in tourism