TOURISM IS NOT ALWAYS GOOD FOR THE ECONOMY
Andrea Jones-Rooy of five-thirty-eight has written a great article quoting the most recent economic research arguing that tourism does not necessarily lead to economic growth. It is worth noting that tourism can sometimes make the economy bad off.
Read More:
This was noted after President Donald Trump of the United States effected a ban on travel of Americans to Cuba. Economic analysts have indicated that this may not harm the economy as intended. In stead it will help the Cuban economy.
It’s true that countries with more tourists visiting are wealthier than to those with less. That notwithstanding, tourism alone is not enough. If that were the case, then, the Caribbean countries would be much wealthier than they are now. It’s estimated that a third of the Caribbean population lives below the poverty line.
Why is this the case? It has been revealed that many tourists do not leave their resorts. So do their money. These resorts are in many cases funded by expatriates. This means that the money spent by tourists on these resorts flows to their foreign-owners rather than flowing into the pockets of the local population.
Bombshell on link between Tourism and Economic Growth
This is a bombshell on the theories of tourism economic thinking. The most recent study has indicated that increasing economic growth leads to more tourism but the reverse is not true. This does not mean that tourism does not contribute to economic growth. It does but not in all cases.
Export-led Economic Growth
Japan is touted as one of the most successful cases of export-led economic growth. Japan was exporting goods and services to other countries in Asia and globally. This drove its economy past the ceiling. It worked well for Japan but never did for China and Vietnam. In China economists are already questing the model sustainability.
This is a puzzle that need to be solved. Why is it that some countries are doing very well through exports while others ate performing poorly? This is a million-dollar question.
Experts out there are arguing that Sub-Saharan countries are failing economically because they put a lot of effort on exports and as a result ignored other sectors such as agriculture. According to those experts, this is the genesis of their economic nightmares.
Nations such as Caribbean which depend on tourism alone for economic growth are suffering while other states such as Spain which have a diversified economy are flourishing in terms of their economy.
Resource Curse
There are some cases where an abundance of a given resource may not be good for the economy. There are many examples around the world. In West Africa, Nigeria is the leading oil producer but more than half of its population live below the poverty line. This scenario according to experts is caused by unequal distribution of resources, catching the ‘dutch disease’ or refusing to develop other sectors in the economy and the issue of not allowing the local currency to trade freely in the marketplace.
It’s not a must that when a country has resources they must have a ‘resource curse.’ Actually, Norway is free from this kind of curse.
Countries which have not yet started exploiting their oil reserves such as Kenya and Uganda should tread carefully to avoid getting into the ‘resource curse’ disease. Why do I say this? Because countries with large oil reserves tend to focus too much on the oil wealth and hence forgetting that some of the residents should be doing other businesses in other sectors such as farming, mining and manufacturing among others.
