One of the most important contributors to international trade in services is tourism. In addition to the direct service itself, tourism has large multiplier effects that extend to the domestic economy. It promotes growth and employment in a multitude of economic sectors, such as transportation, hotels and restaurants, retail trade, financial services and cultural services. It also attracts domestic and foreign investment and promotes the development of the private sector. For this reason, UNCTAD has recognized that touristic services, if properly harnessed, can become an important engine for inclusive and sustainable economic growth in developing countries (UNCTAD, 2017).
For many developing countries, tourism is one of the most important exports and an essential source of revenue. Figure 12 shows that, on average, tourism contributes to the economy at comparable rates in developing, developed and transition economies. However, for LDCs and especially SIDS, this sector is responsible for a larger share of total economic activity. During 2017-2019, tourism accounted for, on average, 12 per cent of SIDS’ GDP. Moreover, the contribution of tourism to the economy seems to be increasing over time.
Figure 1. Direct contribution of tourism to GDP by country group, average
(Percentage of total GDP)
Source: UNCTAD calculations from UNWTO (2021b)
Note: Averages include only countries with available data. Data cover approximately 40 per cent of SIDS’ total GDP, and about 50 per cent of LLDCs’ total GDP. The coverage is over 90 per cent for developing economies and 100 per cent for developed economies.
As mentioned above, tourism has a multiplier effect on the domestic economy through several channels. One of these, depicted on map 2, is through its direct contribution to employment creation. In addition to SIDS, many countries in all geographic regions, including South-East Asia (Cambodia, Philippines), North Africa (Tunisia, Morocco), the Caucasus (Georgia), the Americas (Belize, Uruguay, Mexico), Europe (Croatia, Montenegro, Iceland, Greece) and Oceania (New Zealand), benefit greatly from the employment generated across the tourism industries. Overall, current estimates place tourism’s direct contribution to worldwide GDP at 3.3 per cent and to global employment at 3.9 per cent (World Travel & Tourism Council data gateway, 2021)5.
Map 2. Direct tourism contribution to employment, 2019
(Percentage of global employment)
Despite its increasing economic weight, touristic service supply is still relatively concentrated. Around 43 per cent of all international tourists were still travelling to European countries in 2019. As illustrated in figure 14, other regions of the world received a comparatively small share of international tourist arrivals. This is the case of Oceania, Central Asia, Sub-Saharan Africa and Latin America and the Caribbean, regions where many developing economies are located, including many LDCs. In many regions of the world, tourism still has unexploited potential as a means of development.
Figure 13. International tourist arrivals, distribution by region, 2019
(Percentage)
Source: UNCTAD calculations based on data from UNWTO (UNWTO, 2021b).
However, this is gradually changing. Worldwide tourist arrivals increased by almost 50 per cent between 2010 and 2018. While tourists travelling to Europe and Northern America increased by only 41 and 32 per cent, respectively, over the same period they increased by 93 per cent in South and South-East Asia and by a remarkable 243 per cent in Central Asia. The only developing region that did not benefit from this dynamism in tourism was Sub-Saharan Africa, where the number of tourists fell by nine per cent over the period.
Tourism remains vulnerable to global and regional risks
SDG target 8.9 aims to develop and implement policies to promote sustainable tourism that will result in more jobs and support of local cultures and products. However, even if tourism can bring substantial revenues and economic opportunities, it can also bring challenges for sustainable development. For example, tourism can help finance the preservation of historical and environmental treasures, but if poorly managed could also have reverse effects (UNCTAD, 2016b). Tourists also directly contribute to greenhouse gas emissions and climate change in many ways: through transportation by air, rail, road and sea, and by consumption of goods and services whose production is intensive in energy, water or other resources.
However, this is gradually changing. Worldwide tourist arrivals increased by almost 50 per cent between 2010 and 2018. While tourists travelling to Europe and Northern America increased by only 41 and 32 per cent, respectively, over the same period they increased by 93 per cent in South and South-East Asia and by a remarkable 243 per cent in Central Asia. The only developing region that did not benefit from this dynamism in tourism was Sub-Saharan Africa, where the number of tourists fell by nine per cent over the period.
Tourism remains vulnerable to global and regional risks
SDG target 8.9 aims to develop and implement policies to promote sustainable tourism that will result in more jobs and support of local cultures and products. However, even if tourism can bring substantial revenues and economic opportunities, it can also bring challenges for sustainable development. For example, tourism can help finance the preservation of historical and environmental treasures, but if poorly managed could also have reverse effects (UNCTAD, 2016b). Tourists also directly contribute to greenhouse gas emissions and climate change in many ways: through transportation by air, rail, road and sea, and by consumption of goods and services whose production is intensive in energy, water or other resources.
Figure 14. Worldwide number of commercial flights, 2019-2021
(Number of flights)
Considering the vulnerabilities of developing economies and especially LDCs exposed by the COVID-19 crisis and the longer-term implications, international support will be essential not only for responding to immediate recovery needs, but also for accelerating structural transformation, trade support and assistance and development of resilience to external shocks.
Taken from UNCTAD
