Ch 8 the Impacts of Tourism on a Locality

7/31/2019 Ch 8 the Impacts of Tourism on a Locality

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Economic Growth growing economy means that

there will be more goods and services for peopleto consume. Inflation persistent increase of consumer prices

or persistent decline in purchasing power ofmoney ( caused by increase in available currencyand credit beyond the proportion of availablegoods and services)

Employment / Unemployment amount of peopleat work.

Balance of payment difference between all

imports and exports of a country. Surplus total value of exports exceeds the amount ofimports

Deficit total value of imports exceeds the total value ofimports


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Economic objectives Stable prices

Steady and sustained economic growth

Low unemployment

Balanced balance of payments

Factors that influence governments ability toachieve objectives Availability of factors of production Productivity of factors of production

Technology Amount of trade between UK and other countries Macroeconomic policy Laws and legal system geography


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The economy tends to experience differenttrends.

These trends can be categorised as the tradecycle (business cycle), and may feature boom,slump, recession, recovery. Boom - period of fast economic growth.

Due to increased demand output is high.

Unemployment is low.

Business confidence is high due to increased investment

Consumer confidence may lead to extra spending


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Slump a period when output slows down due to

reduction in demand Confidence may begin to suffer

Recession a period where economic growth slowsdown and the level of output may actually decrease.

Unemployment is likely to increase

Firms may loose confidence and reduce investment

Individuals may save rather than spend

Recovery a period when economy moves betweenrecession and a boom


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Business produce more goods

Businesses invest in more machinery

Consumers spend more money. There is afeel good factor

Less money is spent by the government inunemployment benefits

More money is collected by the governmentin income tax and VAT

Price tend to increase due to extra demand


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Businesses cut back on production

Some business may go bankrupt

Consumers spend less money. Fall in feelgood factor

Individuals may lose their jobs More money is spent by the Government on

unemployment benefits

Less money is collected by the Government in

income tax and VAT Prices start to fall


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Every market suffers from business cycles.

A business cycle consists of fluctuations oftotal production, or GDP, accompanied byfluctuations in the level of unemployment andthe rate of inflation

Governments attempt to modify fluctuations inthe business cycle through, Control of taxes and government spending

Ability to control quantity of money in the economy

The national government may reduce taxes ina recession - in the hope that people willincrease spending and thus raise GDP.


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In a recession, the central bank may increasethe quantity of money more rapidly, to helpto bring the economy out of it.

When inflation is high the central bank willreduce the rate of money growth with the aimof reducing inflation

Government cannot control the economy

perfectly. Some time it can worsen thebusiness cycle.


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Government Intervention Objective of the government is,

To achieve satisfactory and stable growth

Controlling inflation

Controlling value of the currencies Growth is important as it enhances general

economic well being and provides for high levels ofemployment and changes in household wealth.

Wealth value of assets owned by consumers. Eg.Houses and shares.


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Government can use various policy tools as

follows Fiscal Policy

Taxation and other sources of income

Government spending

Borrowing whenever spending exceeds income

Repaying debt when income exceeds expenditure

Monetary Policy Interest rates

Exchange rates or exchange controls

Control of the money supply

Controls over bank lending credit


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Regeneration is the term used to describe the

process of redevelopment in an area that hassuffered decline perhaps due to structuralchanges in the economy.

It can be applied to urban or rural areas

Market economies are dynamic andconstantly changing.

Where the rate of existing jobs exceeds the

rate of creation of new ones, a local area willsuffer economic decline.

Figure 9.1- pg 187


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If this pattern continues local area will becomedepressed or deprived

Like at the national level, localised recession canturn in to a long depression.

Regeneration is therefore about replacing the gapleft by declining industries by implanting newcentres of economic activity.

Leisure, recreation and tourism projects can providea popular focus the regeneration Local jobs - at the construction stage of a new project Local jobs when the new project are commissioned Leisure projects attract spending from outside local area


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When an area develops as local tourism localeconomy benefits as, New jobs are created

More business for shops and restaurants

Income generated will be used improve localservices


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Local economic benefits from an investmentin tourism can be both short term and longterm

2012 London Olympics an example

Pg 188

What are the short term and long termeconomic benefits from the 2012 London

Olympics?


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Pro-Poor Tourism (PPT) is tourism that result inincreased net benefits for poor people.

PPT is an approach to tourism development andmanagement. ( it is not a specific product or a

niche sector) It enhances the tourisms contribution to poverty

reduction.

It enhances the linkage between tourism

business and poor people So that poor people can participate more

effectively in product development (in tourism)


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But developing countries have to cope upwith a series of structural constraints, Lack of infrastructure

Unskilled human capital

Leakages Poor linkages

Pro-poor tourism is regular tourism except

it consciously benefits the poor and helpsreduce their poverty


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Pro-poor tourism can include,

Hotels that train local people for future jobs

Local handicraft sales

Wages and health services for local staff

Health services for local staff

Respect for local land ownership and boundaries

Consultation with local groups beforedevelopment


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More money re-circulates in a community whenpeople buy from locally owned and operatedindependent businesses, rather than nationallyowned businesses.

A market place of many small businesses helpsto ensure more innovation and competition , andlower prices over the long term.

Independent businesses, choosing productsbased on what their local customers need and

desire, guarantee a more diverse range ofproducts and service choices .

Pg 190.

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Ch 8 the Impacts of Tourism on a Locality