- The ST-EP Initiative
Tourism and Poverty Alleviation
Tourism is one of the strongest drivers of world trade and prosperity. Poverty alleviation is one of the greatest global challenges. Despite turbulent times for the world’s economy, these basic facts are unlikely to change. Focusing the wealth creating power of tourism on people most in need remains an immense task and opportunit.
THE SPECIAL POSITION OF TOURISM IN POVERTY ALLEVIATION
1. The size and growth of the sector
In many countries, tourism acts as an engine for development through foreign exchange earnings and the creation of direct and indirect employment. Tourism contributes 5% of the world’s GDP. It accounts for 6% of the world’s exports in services being the fourth largest export sector after fuels, chemicals and automotive products. Tourism is responsible for 235 million jobs, or one in every 12 jobs worldwide.
In 2011, international arrivals grew by over 4% reaching 982 million, up from 939 million in 2010, in a year characterized by a stalled global economic recovery, major political changes in the Middle East and North Africa and natural disasters in Japan.
2. The relative importance of tourism in developing countries
Tourism in many developing and least developed countries is the most viable and sustainable economic development option, and in some countries, the main source of foreign exchange earnings. Part of this income trickles down to different groups of the society and, if tourism is managed with a strong focus on poverty alleviation, it can directly benefit the poorer groups through employment of local people in tourism enterprises, goods and services provided to tourists, or the running of small and community-based enterprises, etc, having positive impacts on reducing poverty levels.
Tourism in the recent years has been characterized by two main trends; firstly, the consolidation of traditional tourism destinations, like those in Western Europe and North America; and secondly, a pronounced geographical expansion. There has been a substantial diversification of destinations, and many developing countries have seen their tourist arrivals increase significantly. Arrivals to developing countries accounted for 46% of the total international arrivals in 2011. Tourism has become a major player in the economy of developing countries.
Here are some facts:
- In 2011, international tourism arrivals to emerging market and developing countries amounted to 459 million.
- Tourism is the first or second source of export earnings in 20 of the world’s 48 least developed countries .
- In some developing countries, notably small island states, tourism can account for over 25% of GDP.
3. The character of tourism
There are many characteristics of tourism as an activity which make it particularly relevant to low income countries and to poor communities within them. These include:
- Its response to particular assets. Tourism places great value on some common features of developing countries, such as warm climate, rich cultural heritage, inspiring landscapes and abundant biodiversity. These strengths can be particularly apparent in rural areas, which may have a comparative advantage for tourism while being at a disadvantage in most other economic sectors.
- Its accessibility to the poor. Tourism is a relatively labour intensive sector and is traditionally made up of small and micro enterprises. Many activities in tourism are particularly suited to women, young people and disadvantaged groups such as ethnic minority populations. Many tourism jobs are potentially quite accessible to the poor as they require relatively few skills and little investment. Some may also be part time and used to supplement income from other activities.
- Its connectivity. As so many different activities and inputs make up the tourism product, which has a large and diversified supply chain, spending by tourists can benefit a wide range of sectors such as agriculture, handicrafts, transport and other services. Additional rounds of spending by those people whose income is supported by tourism spread the economic benefit further (the multiplier effect).
- Its linking of consumers to producers. Tourism, unusually, is an activity which brings the consumers to the producers. The interaction between tourists and poor communities can provide a number of intangible and practical benefits. These can range from increased awareness of cultural, environmental, and economic issues and values, on both sides, to mutual benefits from improved local investment in infrastructure.
On the other hand, there are also negative aspects of tourism as a basis for poverty alleviation, which require particular attention. The main ones include:
- Unpredictability and fluctuations in demand. Tourism is very sensitive to economic, environmental, and socio-political events affecting tourists’ willingness to travel. In the absence of insurance cover and social security, the poor can be particularly vulnerable to sudden downswings in demand. However, tourism demand often bounces back quickly when circumstances change.
- The seasonal nature of demand, which can be very peaked. This requires good integration between tourism and other economic activities to provide a sufficient year-round source of livelihood.
- Impact on life-supporting resources. These include water, land, food, energy sources and biodiversity. Their availability to the poor can be threatened by competition and over use from tourism. Degradation of cultural assets and disruption to social structures are parallel threats. Global issues of resource depletion and environmental degradation may be as important as local ones, including the long term effect of tourism on climate change and the impact of adaptation and mitigation measures on travel patterns.
- Weak linkages to the poor. The nature of tourism investment and lack of engagement of the poor can cause much tourism spending to leak away from poor destinations. The income that remains may not end up benefiting the poor, reaching instead the better educated and well-off segments of society.
Tourism should not be seen on its own as ‘the answer’ to the elimination of poverty but it can make a powerful contribution. The potential to develop more tourism and to channel a higher percentage of tourism spending towards the poor may be great in some areas and quite small in others. However, given the size of the sector, even small changes in approach when widely applied can make a significant difference.
Given an overall aim of increasing the amount of economic and other benefits gained by the poor, the focus should be twofold:
- To increase the size and performance of the tourism sector as a whole (size of the cake) –
through increasing, for example, the number of visits, length of stay and spend per person.
- To increase the proportion of spending in the sector that reaches the poor (share of the cake) –
through specific action to enable and help the poor participate in tourism or benefit from it indirectly.
In order to make significant contributions to the alleviation of poverty, it is essential to work in the mainstream of tourism, which will require an emphasis on two key challenges:
- Engaging private sector businesses, including sizeable operations and investors as well as small and micro businesses. This is where tourism wealth is created and distributed. They should be helped to deliver more benefits to the poor, through employment practices, local linkages and pro-poor tourism activities and products, as well as to be more competitive.
- Ensuring that tourism destinations as a whole are both competitive and sustainable, addressing issues of resource management and the relationship between tourism and other economic sectors.
This approach should be combined with working at the local level within communities in order to engage with and reach the poor, to fully understand and address their needs, and to create opportunities accessible to them. This must, however, relate properly to the wider tourism context and the market.
10 Principles for pursuing poverty alleviation through tourism 
Adapted from: Manual on Tourism and Poverty Alleviation, Practical Steps for Destinations. UNWTO and SNV 2010
These principles acknowledge and have taken account of previous, longstanding and highly relevant principles for ‘pro-poor tourism’.
(e.g. Ashley et al, 2000; Pro-Poor Tourism Partnership, 2005)