Question

explain the negative impacts of a country pr region that is economically dependent on tourism?

Answer 1

Diversification in an economy is a sign of health. If a country or region within a country becomes dependent for its economic survival on one industry say tourism and that industry fails then the social consequences could be devastating.

Overdependence on one or two industries is also often accompanied by underdevelopment within other sectors of the economy such as education, health, and the manufacturing and agricultural industries.

The tourism industry is extremely vulnerable to economic, social and political changes in either the generating or host countries.

Negative impact includes leakages of expenditure out of the economy, pressure for increased imports, new utility and infrastructural costs,ex-patriat labor, inflation and higher land values, issues relating to foreign capital investment, seasonality, opportunity costs and displacement effects.

Leakage

The revenue loss, which accompanies the spending of newly acquired foreign exchange on buying foreign goods for re-sale to tourists is called leakage.

Pressure for increased imports

Growing tourists numbers may lead to increasing import requirements. The demands by some tourists for their home comforts while on overseas holidays, can impose extra costs on host countries by requiring them to import these items for re-sale to the visitors.

Utility and infrastructural costs

More tourists means new or increased requirements for utility production such as water, electricity, and gas supplies. In addition,tourism facilities will need routine repairs and maintenance. Infrastructure needs like roads, railways, air and water links are also necessary.

Ex-patriat labor

The managementof many of the new tourism facilities may initially be by expatriat staff who will repatriat most of their savings from this work back to their home countries- another form of leakage.

Foreign capital investment

Investment in tourism can be very expensive and may require foreign capital investment. However,profits will almost inevitably leak out, in such cases to investors in investing countries.

Seasonality

Revenue and income flows usually vary with the seasons. Peak season, visitors are high whereas in off season, meeting fixed costs itself is difficult.