BTT107_CU -SEM II- BSC TTM-Tourism Economics (1)-converted

education facilities. • Environmental . It can provide economic incentives for a place to preserve, maintain, and regenerate the environment in both urban and rural settings. • Cross- Cultural . It promotes international connections which can bring more business and cultural collaborations in the long term. It also promotes cross- cultural awareness for both locals and tourist and builds bridges of understanding between cultures. • Promotional . It \"puts a place on the map\": Tourism gives the locality a chance to show itself off and raise its profile in the world. The Disadvantages of Tourism • Environmental . Tourism can often cause environmental damage with risks like erosion, pollution, the loss of natural habitats, and forest fires. Even if tourists behave responsibly, the sheer number of them can cause damage. Ancient buildings, monuments, and temples often struggle to cope with increased traffic and suffer inevitable wear- and- tear. Reefs and other natural tourist attractions can suffer permanent damage. • Cultural . The commercialization of culture can undermine the soul of a tourist destination. Local traditions that have a rich cultural heritage are reduced to wearing costumes and putting on acts for the tourists in return for money. • Culture Clashes. Tourists often lack respect for local traditions and culture, refuse to follow local dress standards, get drunk in public, or behave rudely or inappropriately towards locals. • Service Economy. Although jobs are created by tourism, most are relatively low- level such as bar work, hotel service, restaurant serving, and so forth. These low- wage, low- skill workers have litt le prospect for advancement or promotion.

• Seasonal Fluctuations. Tourism jobs are quite commonly seasonal and insecure, with no extra benefits such as pensions, sick pay, or healthcare. Some areas can be inundated with visitors during busy times, and then virtually deserted for many months. • Imbalanced Funding. Money can end up being directed to tourist areas when it could be used more effectively elsewhere in a country. The locals who don’ t live in specific tourist areas miss out and suffer relative decline. • Foreign Poaching . Oftentimes, most of the tourism industry in a developing country is owned by big foreign companies. They make the major profits, leaving local businesses with relatively little benefit. • Tourism Dependence. Sometimes, tourism becomes so focal that other forms of income- generation are neglected and an economic dependence on tourism forms. This is fine in good times, but it can leave the country vulnerable to economic ruin in the long run and can contribute to political upheaval or natural disasters. Economic Pros and Cons of Tourism Benefits Detriments Tourism- Money can end up being spent only on touristed areas while generated other places and industries suffer. income can be hugely beneficial both private and public concerns. It can Most tourism jobs are relatively low- level and low- skilled,

Benefits Detriments provide and these jobs may have drastic seasonal fluctuations. employment opportunities for people who can work in tourism- related industries. Tourism Attracted by opportunity, foreign companies begin poaching promotes business away from local businesses. international connections which can increase business opportunities. * The area may become dependent on tourists' dollars and risk loss and damage as a result. Negative Environmental Impacts of Tourism Although tourist money might be put to good use in preserving environments, tourism does put burdens on natural resources and often promotes overconsumption and unfair allocations of resources in places where resources are already limited. When tourism becomes unsustainable, it can permanently damage the environment. Tourism impacts the wildlife, vegetation, air quality, the quality and supply of water, and natural

phenomena. Pollution. When huge numbers of people visit, they invariably burden the transportation system and contribute to pollution— locally and globally. Flying one mile in a plane produces about 53 pounds of carbon dioxide, and tourists account for almost 60% of air travel. Some estimate that cruise ships to the Caribbean create over 70,000 tons of annual waste. Environmental Damage. Many tourist activities have negative ecological impacts. Snorkelling, hiking, and fishing all affect and deplete the local scenery. There's a trail in the Himalayas that's nicknamed the \"toilet paper trail.” A tropical golf course requires the amount of water that would feed 60,000 locals... plus over 3,000 pounds of chemical pesticides, fertilizers, and herbicides per annum. \"Ecotourism.\" Oftentimes, even environmentally Snorkelling have a negative impact. By traveling to witness remote natural sites like rainforests and other dwindling and at- risk spots, tourist often damage the things they came to see. Invasive Organisms . Tourism can spread non- native species. The increased human presence from many diverse geographical regions has a detrimental effect on native plants and introduces non- native species in these areas. Negative Effects of Human Interaction with Wildlife. Increased human presence can severely damage the delicate balance of the food webs, ecological communities, and keystone species of an area. Depletion of Natural Resources. Tourism can put pressure on natural resources and encourages over- consumption. This is particularly damaging in spots where resources like food and water are already scarce. Environmental Pros and Cons of Tourism Benefits Detriments

Benefits Detriments If managed Tourism often causes environmental damage to both the properly, it local infrastructure and the flora, fauna, and historical sites can provide in a location. economic incentives for a place to preserve, maintain, and regenerate the local history, infrastructure, and environment. Ecotourism Tourism depletes natural resources, which can be dangerous might in areas where resources are scarce. promote environmental awareness and activism. * Tourism contributes to pollution. Cultural Benefits of Traveling The Opportunity to Challenge Stereotypes When you visit another culture, you have the opportunity to be exposed to unfamiliar traditions and perspectives and to gain a broader, more informed, and kinder view of both the people and places you encounter, as well as of

humanity and the world in general. Preconceptions and stereotypes might be replaced by complexity, empathy, and first- hand knowledge. On the other hand, those that travel with a group and don' t interact with locals or merely visit tourist sites and never wander off the beaten path may not enjoy this benefit at all. Merely visiting a place is not enough to expose a person to culture. Learning about people takes effort. Gaining Cultural Sensitivity An important part of understanding a culture is getting to know its unique social manners and etiquette. Things that you think are normal or benign might be interpreted as offensive, and vice versa. Wearing shoes indoors, showing skin, pointing with your index finger, and making certain sounds might be considered rude in some places, so it' s wise to do your research on the local customs and morays ahead of time. An Authentic Experience of Culture Experiencing a community's traditions, rituals, festivals, celebrations, and rites can be a wonderful way to gain insight into a culture. When the local people get together to observe a tradition that has been performed for many generations, it is a great opportunity to understand that culture more deeply. However in many touristed places, you' ll find traditional dance, music, and other rites performed merely for entertainment and profit. For example when staged for tourists, the Hawaiian luau, Spanish flamenco dances, and Balinese ceremonies may lose their original meaning, energy, and purpose and become merely spectacle. Cultural Pros and Cons of Tourism Benefits Detriments It promotes When tourists don' t understand or respect local culture and

Benefits Detriments cross-cultural traditions, culture clashes result. connections, appreciation, and understanding. * The commercialization of a culture can undermine its meaning and detract from tradition. SUMMARY According to the World Tourism Organization tourists are the people who “travel to and stay in places outside their usual environment for not more than one successive year for leisure, business and other purposes not interrelated to the exercise of an activity rewarded from within the place visited”. Tourism is mainly popular as a global freedom activity. Tourism is a critical source of income for many countries and it generates income through the consumption of goods and services by tourists, the taxes levied on businesses in the tourism industry, and the opportunity for employment in the service industries associated with tourism. Some of the services offered by these industries include transportation services such as cruise ships and taxis, accommodation services such as hotels, restaurants, bars, and entertainment venues, and other hospitality industry services such as spas and resorts. The tourism requires having some of disposable income, time off from work and other responsibilities, proper transportation and accommodation facilit ies and legal clearance for travelling. More than all, sufficient health condition during the course of travel is required.

There are some countries which have legal limitations on travelling abroad. Any projections of growth in tourism serve as a suggestion of the relative influence that each country will exercise in the future. KEYWORDS • Sustainable Development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs • Sustainable tourism is tourism which develops as quickly as possible, taking account of current accommodation capacity, the local population, and the environment • Pro- poor tourism, which seeks to help the poorest people in developing countries, has been receiving increasing attention by those involved in development; the issue has been addressed through small- scale projects in local communities and through attempts by Ministries of Tourism to attract large numbers of tourists. • Recession tourism is a travel trend which evolved by way of the world economic crisis. Recession tourism is defined by low- cost and high- value experiences taking place of once- popular generic retreats. • Medical tourism : When there is a significant price difference between countries for a given medical procedure, particularly in Southeast Asia, India, Eastern Europe, Cuba and Canada where there are different regulatory regimes, in relation to particular medical LEARNING ACTIVITY 1. Discuss what makes a country a good tourist destination? 2. Discuss, Is tourism a good thing for the managing economy?

UNIT END QUESTIONS A. Descriptive Questions 1. What are the challenges of relying on tourism as the primary economic activity? 2. What benefits do emerging destinations bring in terms of tourism? 3. What are the disadvantages for the host of a tourist destination, that tourists don't is, if respect the locals? 4. What is sustainable tourism? 5. What are the strategic dimensions of economics in tourism? B. Multiple Choice Questions (Mcq’s) 1. Recreation is a a. Product b. Service c. Privilege of a tour operator d. Privilege of a tour guide 2. Which one of the following is not a pact of the infrastructure of Tourism a. Natural Spots b. Surais c. Rope ways d. Government owned factories .

3. . ……………….. is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs a. Sustainable tourism b. Sustainable Development c. Suitable environment d. Efficient environment 4. The World Commission on Environment and Development brought the term ‘sustainable tourism development’ into common use in its seminal report (1987) called ......................... ‘ a. Common Carpet b. Common area c. Common Tourism d. Our Common Future 5. …………… is tourism which develops as quickly as possible, taking account of current accommodation capacity, the local population, and the environment a. Sustainable tourism b. Sustainable Development c. Suitable environment d. Efficient environment

Answer 1. b 2. d 3. b 4. d 5. a SUGGESTED READINGS • . Golden Age of Mass Tourism: Its History and Development, Erkan Sezgin and Medet Yolal, Anadolu University, p. 74 • Lew, Alan A. (2008). \"Long Tail Tourism: New geographies for marketing niche tourism products\" (PDF). Journal of Travel & Tourism Marketing. 25 (3 –4): 409 –19. CiteSeer X 10.1 .1. 467 .6320. doi:10. 1080 /10548400802508515 . Archived from the original (PDF) on 14 June 2010. Retrieved 22 December 2011 . • \"Birthplace of winter tourism\". Archived from the original on 17 October 2013 . • \"Early Winter Tourism\". Tradition & History. St. Moritz: Kulm Hotel. Archived from the original on 19 December 2011 . Retrieved 23 December 2011 .

UNIT -10 TOURISM AS MULTIPLIER STRUCTURE 1. Learning objectives 2. Introduction 3. Tourism as multiplier 4. Balance of payments and tourism 5. The magic tourism multiplier. 6. Summary 7. Keywords 8. Learning activity 9. Unit end questions 10. Suggested readings LEARNING OBJECTIVES After studying this lesson, you will be able to: • Understand the multiplier effect and magic multiplier • Understand about the balance of payment INTRODUCTION Tourism development is seen today as a result of many economic changes such as revenue growth, use of pauses. Tourism has certainly taken a jerk and

growing both as a cause of perfection of transport, development of education and culture. Many foreign authors have provided some definitions of the term ''tourism'' The first definition is that of Littre in 1889 , which states: '' Tourists are travelers who visit foreign countries for curiosity, fun making a trip to places previously visited by their compatriots' ( Mathieson, A. & Wall, 1982 ) defined tourism as \"the temporary movement of people to destinations outside their normal places of work and residence, the activities undertaken during their stay in those destinations, and the facilities created to cater to their needs.\" According to (Mc Intosh, R. W. &Goeldner, 1986 ) tourism is \"the sum of the phenomena and relationships arising from the interaction of tourists, business suppliers, host governments and host communities in the process of attracting and hosting these tourists and other visitors.\" Defining the tourist industry is difficult. Tourism means different things to different people, because it is an abstraction of a wide range of consumption activities which demands products and services from a wide range of industries in the economy. For example, (OECD, 1991 ) observes that \"tourism is a concept that can be interpreted differently depending on the context. 'Tourism' may cover the tourists, or what the tourists do, or the agents which cater to them, and so on.\" Similarly, World Trade Organization (Council, 1995 ) defines tourism as \"the activities of persons traveling to and staying in places outside their usual environment for no more than one consecutive year for leisure, business and other purposes\", while at the same time World Trade Organization ( Organization, 1996 ) states that \"tourism is thus a rather general term, which can refer to the consumption of tourists, to the production units supplying goods and services particularly to tourists, or even to a set of legal units or of geographical areas related in a way or other to tourists.\" To summarize in more concise terms, tourism can be defined as a set of socioeconomic activities carried out either by or for tourists. Those carried out by tourists correspond to what tourists do, while those carried out for tourists correspond to what other socioeconomic institutions do to support the needs of tourists. What is worth emphasizing is that tourism so defined is neither a pure demand- side phenomenon nor a pure supply side one (UNWTO World Tourism Organization, 1994 ). The tourism industry, in common with

many other industries, is made up of a number of sectors. The tourism industry sectors and elements provide: Accommodation, Attraction, Tour Operators, Carriers, Promotion and Distribution, Co- ordination Agencies, Retail Service Support. According to the estimates from the World Travel and Tourism Council ( WTTC, 2004 ), tourism generates around 214. 7 million jobs worldwide (or 8.1% of world employment) and accounts for over 10% of global gross domestic product (GDP). The recent expansion and proliferation of tourism has spurred debates at all levels of government around the world. There may be debates about the precise scale of tourism’ s impact on the world economy, but few would argue against its major contribution. TOURISM AS MULTIPLIER (Hughes, 1994 ) and (D. C. Frechtling& Horvath, 1999) introduced the multiplier effect as a measure of the impact of extra expenditure introduced into an economy. All this expenditures (transactions) have their impact on GDP. To illustrate this we use the equation: Y = C + I + G + (E-H) where: Y – Gross national product C – Cost on consumers good I – Investment expenditure for goods G – Government expenditure E – Export H – Imports

When tourism import is greater than tourism export the impact on GDP is positive and when is lower than the impact is negative (Vanhove, 2010), where imports are travel expenses incurred by foreign tourists in our country. The multiplier effect is measured in two forms: the multiplier effect from tourism and the expenditure effect in term of tourism, taking in consideration the creation of new income in the national economy and the multiplier effect from the foreing investment. For example, the money spent by tourist on a hotel will be categorized as new investment (equipment, facilities, utilities) etc. According to (Archer, 1973) the analyses of impact of economic approach is used to measure the amount of income, government revenue, employment, and import generated in an economy from the effect of the expenditure of the visitors. We have direct effect and indirect effect. Direct effects are the changes in the industries associated directly with visitor spending and Indirect effects are sales, income, or jobs resulting from secondary rounds of purchases the hotel makes to other linked industries in the region. Tourism has great potential and plays an important role in meeting the main macroeconomic objectives related to economic growth, employment, sustainable economic and social development. The tourism industry is an important sector that affects economic growth worldwide. According to Institute of Statistics of Albania (“www.instat.gov.al,” n.d.) international revenues from tourism in the world for 2012 rose to US $ 1,030 billion as a result of the movement of 1035 million tourists. Direct contribution of tourism to Albania in the GDP for 2012 was 83.2 billion or 6.1% of total GDP, while the total contribution was 292.9 billion leks or 21.4% of PBB2. Tourism investment reached 19.7 bnlek, representing 4.5% of total investment in Albania. For 2023 these indicators are provided for Albania: Direct contribution of tourism to GDP will be 153.7 bnLek (2012 prices) The total contribution of tourism to GDP will be bn or 21.4% money GDP. Direct contribution to employment will be 72,000 jobs or 6.6% of total employment. In 2009, 2010 and 2011 tourist arrivals rose by 31%, 30% and 14%, while the contribution of tourism to GDP was (+14. 7%), (-4. 4%) and (-4. 8 %). This shows the decline in the efficiency of the tourism industry, owing not only the global crisis, but also the flow of currency out of the suppliers of tourism revenue composition of groups of tourists and low quality of services provided. The sector of tourism in Albania, is considered as one of the sectors with high growth level, especially during the second quarter and third. Tourism has a great potential in contributing to achievement of major objectives such as

economic achievement, employment, sustainable economic development and social. Direct contribution of tourism industry in world GDP for 2011 was 2 trillion US $ or 2.8% of GDP, while in European GDP was 2.8%. We are going to use an economic model to estimate the economic impact on holding some event marketing as museum, sport event, festivals, food competition and other actions that can influence in economy. In the end, we can help the policymakers to evaluate current projects and to help on tourism development. Governments have to make important decision regarding tourism development. The main problem is to measure the impact of visitor spending. (Douglas C. Frechtling, 1994) said that tourism is essentially an activity that is defined by consumers at the point of consumption. In fact, a very large proportion of visitor expenditure goes into identifiable tourism characteristic sectors such as transport, hotels, recreation, etc. Yet, visitors will also spend money in other sectors – clothing, gifts and food – which are not normally associated with tourism. In this context, any attempt to examine the economic contribution of tourism, which looks at the United Nations’ System of National Accounts (SNA) only and considers only what might be classified as tourism-related sectors is likely to under-estimate the visitor expenditure and hence its economic impacts. Since tourism contributes on different part of the economy, is difficult to measure the its impact in economy. In early stage, the impact of tourism in economy according to (Archer, 1982) relays on simple Keynesian multiplier: Where c is the marginal propensity to consume and m is the marginal propensity to import. Essentially, the basic model shows that the multiplier is calculated by dividing a unit of visitor expenditure by the proportion of it “leaking” out of the economic system due to savings and spending on imports. Keynesian multipliers are relatively straightforward to calculate and provide a quick and simple way of assessing the overall magnitude of a change in visitor expenditure. However, such multipliers only give a limited and partial perspective on the impact of tourism, since they focus on simple aggregates and are unable to address the nature of linkages between sectors (Cooper, C., J. Fletcher, S. Wanhill, D. Gilbert, 1998). Because of this, (Akundi, 2003) introduced the equilibrium techniques such as Input-Output analysis. This method analyses the effects of tourism by charting the movement of initial visitor expenditure through different sectors of an economy. A simplified Input-output model

is: X - AX = Y where X and Y are the respective vectors of output and final demand and A is the matrix of technical coefficient. By restoring an identity matrix I to the equation, it can be written as: (I - A) * X = Y or X = (I - A)-1 Y where (I - A)-1 is the “Leontief Inverse Matrix” or called “Inter-industry Interdependence Coefficient Matrix” The use of this model for estimation of the economic impacts of tourism has become increasingly popular because of its ability to provide accurate and detailed information. (Loomis, 1997) conclude that the major strength of the Input-output analysis is that it provides detailed information on direct, indirect and induced effects of visitor spending on all economic measures for different industries in the local economy. In addition, (Cooper, C., Fletcher, J., Gilbert, D., &Wanhill, 1993) said that Input – Output technique is important because it measures the second and further round economic effects of tourism. Furthermore, the Input -Output model is essentially linear and static. It does not allow for factor substitution between sectors, and prices are taken as given (Zhou, Yanagida, Chakravorty, & Leung, 1997). In reality, a change in visitor expenditure would result in changes in both quantity supply and prices. Computable General Equilibrium (CGE) models have their historical origins in the Input-Output methodology, but have been developed to overcome many shortcomings of Input-Output models. They treat an economy as a whole, allowing for feedback effects of one sector on another. CGE models can make explicit assumptions about government policy settings, and can incorporate more realistic set of an economy. In particular, CGE modeling can allow for detailed inter-industry analysis together with an active price mechanism. Broadly speaking, the construction of a CGE model is a process of setting up a series of markets (for goods, services and factors of production), production sectors and household demand groups (Kehoe & Kehoe, 1994). Each market, sector or household has its own set of economic rules that determine how it reacts to external changes. By setting up the economic conditions whereby each market, sector or household reacts to changes in the economy, a CGE model can then represent a variety of possible scenarios. With this context, this gives CGE models a significant advantage in flexibility over other forms of modelling. [email protected] -P-o--i-n-t-s---a-r-e---r-e--q-u--iB-r-e-Ad--.-L---A---N---C---E- O- F PAYMENTS AND TOURISM

Tourism has a great potential and plays a very important role in reaching the main macroeconomic goals which regard economic growth, employment, sustainable economic and social development. Usually least developed or developing countries are characterized by a shortage of reserve currency and face difficulties finding the necessary funds to buy capital goods and secure services which are necessary for their economic development. Tourism is a good alternative to improve the reserve currency. It has a positive impact on the balance of payments through the foreign currency which enters the economy. Tourism has become, on a global scale, one of the main sectors in international trade which generates income and consequently affects positively the balance of payments. It is considered an exporting sector which can help the improvement of the balance of payments, since international tourism represents consumption of goods and services outside of the source country of tourists. Nowak, Sali, and Cort' es- Jim'enez (2007) provide a theoretical explanation of economic growth where the main point is the import of capitals financed through tourism receipts. The fast economic growth of the developed economies attracts foreigners to visit those countries and this thing leads to an increase in reserve currency of such countries. With more and more foreign visitors coming to Albania tourist attractions are trying to maximize their profit; consequently tourism sector in Albania is trying to function along the lines of tourism industry in the world. Various efforts for the development of tourism in Albania at the beginning of 90 s met with different difficulties mainly due to the lack of necessary funds which are disproportionate to the potential the country has. Nevertheless the number of visitors to Albania kept growing and the positive impact of tourism on the development of the Albanian economy is stronger. Income from tourism indirectly increases the demand for factors of production and consequently its contribution to national income increases, transforming it into a factor of high productivity. Despite the strong competition from countries of the region, such as, Croatia, Greece, etc., the tourism sector in Albania has the potential to affect positively the economic growth. The main goal of the

policy of tourism development in Albania is to benefit as much as possible from the current trend in global tourism, that is to say more tourists should come to our country and make use of our touristic attractions and while doing so more money will be spent here. Tourism sector in Albania is estimated as one of the sectors with the greatest growth especially during the second and the third quarter of the year. The balance of payments is a statement that summarizes an economy’s transactions with the rest of the world for a specified time period. The balance of payments classifies these transactions in two accounts – the current account and the capital account. The current account includes transactions in goods, services, investment income and current transfers, while the capital account mainly includes transactions in financial instruments. An economy’s balance of payments transactions and international investment position (IIP) together constitute its set of international accounts. According to Samuelson (1972) the activity of export of tourism sector centers on the selling of goods and services on the part of the citizens of the host country to the international tourists. On the credit side of the “travel” item are recorded the expenses which the international tourists make for acquiring various goods and services in the host country, whereas on the debit side are recorded the expenses which the citizens of source country make for buying goods and services when they travel abroad. The net result of this transaction represents the difference between the two sides. That is why, the evaluation of the tourism sector based on the credit or debit surplus of the “travel” item is not seen as reliable. The calculation of the net tourism receipts would yield different results, because they do not include the expenses made by the citizens of the source country, but the expenses made by the citizens of the host country regarding currency exchange which affect directly tourism receipts. This category of expenses related to currency exchange is included on the debit side of the balance of payments through the various headings except for the one related to “travel” item. International tourism generates a series of transactions included in the current account and also in the capital account. However, these transactions are not present in an obvious way on the balance of payments. Tourism transactions affect other categories of the balance of payments. According to Βαρβαρεσος (2000) these are: Goods: This category includes on the debit side all the expenses made for the imported products which are destined to meet the tourism demands. Their

partial or complete substitution with domestic products is directly related to the policy of development of a country, whereas on the credit side are included all the products which are sold to the tourists like food, souvenirs, handicrafts, etc., Services: Usually the tourism receipts and tourism expenditure are recorded in the “ travel” category. But, services, apart from travels, include also transport, receipts deriving from work and capital. Transport costs of international travel are not included in the “ travel” category. Transport expenses of international tourists (domestic and foreign) from the source country to the host country are listed in the transport ( national and international) account. Income: Tourism at least in the first stages of its development needs qualified personnel especially in the least developed and developing countries. The need for qualified members is constant also in the later stages; such a thing is more pronounced due to the functioning of multinational enterprises which may be of different natures either those who employ senior executives from many countries and try to make decisions from a global perspective or those which have one centralized headquarters. These needs cause considerable foreign currency expenses, which are recorded on the debit side of the balance of payments. Capital movement: Capital movements are related to the financing of tourism infrastructure and superstructure of the host countries. These payments are listed as credit in the balance, because they have to do with foreign currency flowing into the host country which will be used to finance projects of tourism infrastructure and superstructure. Their effects are considered are long-term ones as far as their credit and debit character on the balance of payments is concerned, because their main goal is the periodic return of borrowed capital. Thus, the “ travel” item constitutes a more traditional approach to the economic analysis of tourism. THE MAGIC TOURISM MULTIPLIER.

Mathieson and Wall (1982) define the tourist multiplier 'as a number by which initial tourist expenditure must be multiplied in order to obtain the total cumulative income effect for a specific t ime period'. This is a dangerous definition, as it is presented as a black box process and there is a variation in multiplier values; the income multiplier is one of them. A more precise description can be found in Fletcher and Archer (1992). It is based upon the recognition that the various sectors that make up the economy are interdependent. In addition to purchasing primary inputs such as labour, imports, etc., each sector will purchase intermediate goods produced by other establishments within the local economy. Therefore, any autonomous change in the level of final demand (domestic expenditures, inbound tourism or investments) will not only affect the industry that produces that final good, but also that industry's suppliers and suppliers' suppliers, etc. Owing to this sector interdependence, any change in final demand will bring about a change in the economy's level of output, income employment and government revenue. The term 'multiplier' refers to the ratio of the change in one of the above variables to the change in final demand that brought it about. We can illustrate the mechanism with the following scheme (see Figure 7.1 ). [email protected] Wrong figure numbering.

SUMMARY The multiplier effect describes the economic benefits to a local economy of tourism money entering the economy. Follow the path of some of this money and see how it benefits more people than you would initially predict. Here is a wonderful thought. You are on vacation in Florida. It is February and you are glad to escape the Canadian winter (which always seems to be too long). You spend $1000 for your accommodation at a hotel near Clearwater, a major tourist city in Florida. (See Figure 2.6. 5 on the ILC Web site.) The owners of the hotel will use your money to help pay all the staff who work there. They also have to pay for the cost of food in the restaurant, as well as for new furnishings, cleaning windows, cleaning the staff's uniforms, and so on. In other words, they need to pay for the expense of running a hotel. They also have to pay taxes to their local governments on the money they earn. You can see that the owners of the hotel have to consider a lot of expenses. They also want to make a profit. While the $1000 you paid for your stay at the hotel was a great help, the hotel owners may make a profit of only $100 . The rest of your money ($900) will have a ripple effect through the local economy. For example, money paid to the hotel staff as wages may immediately go to the government in the form of taxation. Whatever is left over will be taken home and res pent. Hotel staff will themselves spend money on restaurants, transportation, and on things they do for fun. They may even save some of the money in a bank for future spending. As you can imagine, your money may spread throughout the local community. Once it enters someone else' s pocket, it can be spent over and over again. Little wonder that your tourism business is appreciated. Money spent by tourists is used many t imes over. All the spending that takes place in the community results in jobs being created or supported. What would happen if there were a significant increase in the number of tourists? There would be more money in [email protected], resulti ng in more spending. More and more jobs would be created -P-o--i-n-t-s---a-r-e---r-e-q--u--itr-o-e-d--m.---e-e--t---t-h-i-s----i-n-creas ed demand for spending, hence the multiplier effect.

KEYWORDS • multiplier effect: process of spending money a multiple number of times in an economy and the effect this has in the creation of new jobs to satisfy the extra spending. • Labour- intensive: describes an activity that uses much more human labour than machines (a \"machine- intensive\" activity would use more machines than human labour). • Leakage: money removed from the local economy, usually by sending it out of the community or the country. • Multinational company: company, such as hotel business, that operates in more than one country • staged authenticity: local people acting out their traditional culture (which may no longer be part of their everyday life) for the benefit of tourists, such as wearing a local t raditional dress that seldom gets worn, except on special occasions. LEARNING ACTIVITY 1. Explain the multiplier effect and give an example of how tourism spending benefits a local economy. Explanation: How it benefits a local economy 2. Discuss about the multiplier effect on your country tourism UNIT END QUESTIONS A. Descriptive Questions 1. What is the tourism multiplier?

2. Explain Balance of payment in tourism? 3. How balance of payment and tourism is interconnected? 4. Explain the concept of magic tourism. 5. What is multiplier effect. B. Multiple Choice Questions (Mcq’s) 1. In Consumption function formula C = a + b. Yd, what does 'Yd' denotes? a. Disposable income b. MPS c. Slope of consumption line d. C/Y 2. What will be the value of multiplier if MPC is 0. 5? a. 0.5 b. 1 c. 2 d. 5 3. The following factors deal with tourism income except: a. Multiplier effect b. Leakage c. Input- output analysis

d. Balance of payments e. Foreign exchange earnings 4. To minimize leakage from a destination's economy, the following strategy should be encouraged: a. Demonstration effect b. Income elasticity of demand c. Import substitution d. Transfer pricing e. Factors of production 5. A nation' s balance of payments is the record of all economic transactions between its residents and the rest of the world. It includes the followings except: a. The gross domestic account b. The current account c. The capital account d. The financial account Answer 1. a 2. c 3. c

4. c 5. a SUGGESTED READINGS deficits and tourism receipts in • Landau, S., &Everitt, B. S. (2004). A handbook of statistical analysis using SPSS. London: Chatman& Hall/ CRC Press LLC. Ongan, S. (2008 ). The sustainability of current account deficits and tourism receipts in Turkey. The International Trade Journal, 22 (1 ), 39 – 62. • Ozturk, I., &Acaravcı, A. (2009). On the causality between tourism growth and economic growth: Empirical evidence from Turkey. Transylvanian Review of Administrative Sciences, 25, 73 – 81. • Pitchford, J. (1995). The current account and foreign debt. London: Routledge. Thirlwall, A. P. (1979). The balance of payments constraint as an explanation of international growth rate differences. Banca National del Lavoro,32( 128), 45 – 53

UNIT -11 INCOME AND EMPLOYMENT GENERATION STRUCTURE 1. Learning objectives 2. Introduction 3. Tourism as income generations 4. Tourism as employment generation 5. Special characteristic 6. The impact of events 7. Summary 8. Keywords 9. Learning activity 10. Unit end questions 11. Suggested readings LEARNING OBJECTIVES After studying this lesson, you will be able to: • Understand the income and employment generation from tourism • Understand the impact of events on tourism INTRODUCTION The most important economic feature of activities related to the tourism sector is that they contribute to three high- priority goals of developing countries: the generation of income, employment, and foreign- exchange earnings. In this respect, the tourism sector can play an important role as a

driving force of economic development. The impact this industry can have in the different stages of economic development depends on the specific characteristics of each country. Given the complexity of tourism consumption, its economic impact is felt widely in other production sectors, contributing in each case toward achieving the aims of accelerated development. A major difficulty in defining the boundaries of the tourism sector is to ascertain what investment costs should be ascribed to the development of tourism. Although heretofore not treated by international agencies as a “sector” in national accounting terms, tourism entails a collection of goods and services that are provided specifically for visitors and would not have been provided otherwise. Because of its interdependence with other sectors of the economy, it is difficult to analyze and plan for tourism. The lack of reliable statistical data hampers identification of the mechanisms by which tourism generates growth, as well as its potential for development. Yet, in those instances where analysis has been carried out and research has preceded planning, tourism’ s priority in competing for scarce investment funds has been established. In these cases, long- term programs for tourism development have been designed. Nature and heritage tourism development has investment needs that differ, in certain respects, from traditional tourist hotel development. There may be a greater need to improve access to the attraction site or facility, and for a mode of development that does not interfere with a sensitive habitat or historic area. TOURISM AS INCOME GENERATIONS The IDE offers one of the strongest socioeconomic arguments in favour of tourism development. It describes how income generated by the sector is distributed. The analysis can be undertaken at a spatial and at a functional level. At the spatial level, tourists prefer to travel in regions with little industrial

development. They also tend toward areas of litt le agricultural value. For these reasons, tourism can become a dynamic force in regional economies. Within a country, tourism demand originates in urban concentrations where the highest incomes are found. A percentage of such incomes is normally set aside for tourism in areas that are geographically different from the visitors’ home base, reinforcing the process of internal income redistribution. Internationally, a portion of the tourism consumption by developed countries occurs in developing countries, favouring the process of international income redistribution. At the functional level, the income generated tends to favour employment, which is estimated to contribute more to the total value- added of the industry than other factors do, because so much of tourism involves personal services. It has been estimated that, worldwide, tourism directly or indirectly supports sixty- five million jobs, including hotel managers and staff, taxi drivers, tour operators, and shop attendants, among others. Secondary employment is generated in agriculture, industry, handicrafts, and services. Tourism compares favourably with other economic activities as a generator of both employment and income, both directly and diffused through the economy. An OAS study on new hotel development in the Caribbean estimates that every investment of US$80,000 in the tourism industry in the region generates forty-one jobs 7 . The same investment would create only sixteen new jobs in the petroleum industry and fifteen in metallurgy. According to the CTO, the 77,319 hotel rooms in fifteen Caribbean countries equalled 88,697 jobs, or almost 1.15 per room 8. 7 Organization of American Slates. The Optimum Size and Nature of New Hotel Development in the Caribbean, Washington, D.C., 1987 . 8Caribbean Tourism Organization, Caribbean Tourism Statistical Report, 1992 . Hotels account for about 75 percent of tourism employment (distribution, transport, finance and insurance, and entertainment make up the other 25

percent). Every room in a three- or four- star hotel in Venezuela generates one job, according to the IDB; for five- star hotels, each room creates 1.3 jobs. According to the OAS study, one job generated by a hotel generates one more job elsewhere in the tourism trade and two in the rest of the economy; thus one job generates an estimated three others. The tourism sector, particularly hotels, can play an important role in attracting foreign investment and providing training for nationals. Many tourism ventures include foreign equity participation and technical knowledge about the construction and operation of hotels. The former represents a mobilization of international financial resources, which can be regarded as a desirable substitute for foreign borrowing. Outside management can be used to train large numbers of nationals who would not otherwise have access to training. Furthermore, tourism provides a stimulus for the development of other ancillary businesses catering to tourists. An illustration of this can be found in Mexico, where foreign companies are seeking investment opportunities in the tourism sector because it is perceived to be less sensitive to trade agreements than, for example, manufacturing. Recent and prospective foreign investors in Mexico include the following: · Japan’ s Aoki Group, a major shareholder in the Westin chain of U.S. hotels, will build a hotel and golf course in Cancún catering to foreign tourist groups, including Japanese vacationers. · Another Japanese group will invest US$20 million in the Ruinasdel Rey tourism project. · Investors from Germany’ s Robinson GmbH have signed an agreement to develop a US$30 million ecologically oriented project south of Cancún, in the midst of Mayan archaeological ruins. · France’s GrupoDipe is investing in the US$560 million Puerto Loreto project in Baja California. · Italy’s SocietàEsercizio Cantieri signed a contract with Fonatur, the national

tourism development agency, to jointly develop a US$1. 5 billion marina in Cancún. It is expected that the projects will bring in US$2 .2 billion in foreign- exchange revenues annually. The tourism sector in Mexico attracted 40 percent of total foreign investment in 1991 and at least US$3 .5 billion, or 14 percent of total foreign direct investment in all sectors, over the last five years. In Venezuela, six debt- equity swaps totalling nearly US$360 million are benefiting the tourism industry. The funds are being used to develop four resorts on Margarita Island, where approximately 60 percent of all tourism projects under development are located. Spain’ s Grupo Once is building a US$50 million resort named Isla Bonita on the island’ s northern coast. Posadas de Mexico and Club Aguasal are planning a US$150 million hotel and housing project nearby. Ramada Inn will soon be operating the third project, a US$57.2 million hotel called Complejo Porlamar, owned by Promenade and Nocal N.V. of Curacao. The fourth project, owned by Grupo L’ Hermitage, is the US$88 million L’Hermitage Hills, in Pampatar. Do you know tourism is one of the world’ s biggest businesses? Today, tourism is a major source of income for many countries and affects the economy of both the source and host countries, in some cases being of vital importance. Tourism is an important, even vital, source of income for many countries. It brings in large amounts of income into a local economy in the form of payment for goods and services needed by tourists, accounting for 30 per cent of the world’ s trade of services, and 6 per cent of overall exports of goods and services. It also creates opportunities for employment in the service sector of the economy associated with tourism. The service industries which benefit from tourism include t ransportation services, such as airlines, cruise ships, and taxicabs; hospitality services, such as accommodations, including hotels, restaurants, resorts, and vacation

homes; and entertainment venues, such as amusement parks, casinos, shopping malls, music venues, and theatres. This is in addition to goods bought by tourists, including souvenirs, clothing, and other supplies through retailers and shopping arcades. Tourism in India 1. In 2017 , foreign tourist arrival in India stood at 10 .177 million and reached 12 million in 2018 . 2. The numbers of foreign tourist arrivals in February 2018 were 1.05 million as compared to 849, 000 lakh in February 2016 . 3. The growth rate in foreign tourist arrival in February 2018 over February 2017 was 10.1 per cent. 4. The Government of India has set a target of 20 million foreign tourist arrivals by 2020 and double the foreign exchange earnings as well. 5. The Government of India is working to achieve 1 per cent share in the world’s international tourist arrivals by 2020 and 2 per cent share by 2025 . Government initiatives The government has taken several steps to make India a global tourism hub. Some of the major init iatives planned by the Government of India to give a boost to the tourism and hospitality sector of India are as follows: The Government of India is working to achieve 1 per cent share in world’ s international tourist arrivals by 2020 and 2 per cent share by 2025 . Under Budget 2018 -19, the government has allotted Rs 1,250 crore (US$ 183. 89 million) for Integrated development of tourist circuits under Swadesh Darshan and Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD). Source: IBEF

Are there enough jobs? The travel & tourism sector in India accounted for 8 per cent of the total employment opportunities generated in the country in 2017 , providing employment to around 41.6 million people during the same year. The number is expected to rise by 2 per cent annum to 52 .3 million jobs by 2028 . The number of hotel rooms has increased from 94,000 in 2001 to 168, 000 rooms in 2013 which will increase to 238, 000 rooms in 2022 . In addition, there are unclassified and unorganized accommodation units across the country, such as non- star hotels, apartment hotels, guest houses, lodges, inns, youth or YMCA hostels, dharmshalas, sarais, musafirkhanas, bed and breakfast units. Yes, there are enough jobs in this industry. Why you should join this industry? Due to shortage of trained manpower, talent poaching has increased. Increase in the attrition rate is as high as 50 per cent across functions. Entry- level has even higher attrition rates. This is good news for graduates entering the industry. In the last decade, the age at which a person becomes a Manager has been reduced by five to seven years. Characteristics such as long and irregular working hours, high pressure situations, fast- paced work, and a heavy workload during festive seasons, define this sector which collectively is a cause of concern for current and prospective employees. So if you want a peaceful nine to five job, this is not suitable for you. This is an ideal place for all those who are willing to work hard and learn quickly. Due to saturation in big cities, new properties will come up in smaller towns. Graduates from big cities are unwilling to move to smaller towns. This is good news for graduates in smaller towns, for two reasons—less competition and starts your career closer to home. The hotel industry today employs youth in significant numbers and hence you can expect a young peer group. In addition, this employee mix is cosmopolitan. Both these are great for young

graduates. TOURISM AS EMPLOYMENT GENERATION Tourism is a people’ s industry in all its aspects. Not only because the core of the tourism industry is hospitality, but also because the local population is often part of the experience of visitors. From a socio- economic perspective, employment is important for the income, personal development and self- esteem of people. It also contributes greatly to the development of regions. Therefore, the quality of the workforce is a key indicator for the functioning of an industry. According to the World Tourism Organization (UNWTO) about 10 percent of the world’ s workforce is directly and indirectly related to tourism (UNWTO, 2018 ). Based on this, one might expect that tourism- related employment is high on the agenda of the industry and policy makers. However, the attention for employment in the tourism industry has ebbed away somewhat in the last two decades. For example, in the Netherlands in the 90 ’ s every two years research was carried out about the state of affairs of the employment situation in the tourism industry, often supplemented with research into the alignment between education programmes ( qualifications) on the one side and the needs of the tourism industry on the other. However, this kind of research is hardly ever done anymore. Therefore, the main goal of this paper is to reinforce the attention for tourism- related employment again. Not least because of the underestimated effects of the quickly advancing digitalization on employment. To do so, this paper, first of all, looks how tourism- related employment can be measured (par. 2). This is not a straight forward exercise. Secondly, the paper presents some basic tourism- related employment figures (par 3) from the Netherlands, compared to the EU- 28 . And, finally, the paper discusses, in general terms, the effects of digitalization on the employment in the tourism industry (par. 4).

1. Measurement of tourism- related employment The demand for tourism goods and services determines how much of these products has to be produced. To produce these products also people need to be employed. Employment then is defined as the total demand for labour as a production factor. Subsequently, surveys can measure, for example, how many people have a job in a specific industry and what the characteristics of the workforce are. However, measuring tourism- related employment is not straight forward. The main problem is that tourism is not an unambiguous industry, like agriculture, manufacturing or education. The tourism industry is not defined as such in standard classifications used in statistics. It is a collection of industries, which serve visitors when they travel outside their usual environment. These industries range from, for example, travel agencies, transportation and accommodation services to food and beverage services, retail trade and information services. This paragraph deals with some of the issues related to the measurement of tourism- related employment. When one sees figures about tourism- related employment, firstly, it should be realized that there are different types of employment figures with different scopes, that is: direct, indirect and induced employment. Direct employment is generated directly from the consumption or spending of visitors and government. This involves, for example, the travel agent, the taxi driver, the receptionist and manager of a hotel, who (almost) directly deal with the visitor. Most figures that are published on tourism- related employment are based on direct employment. That also accounts for the figures in the next paragraph of this paper. The disadvantage of direct employment figures is that they only partially reflect economic reality. For example, the food a visitor eats in a restaurant is produced by the agriculture industry and brought to the restaurant by the transportation industry. So, a part of the job of a farmer and a driver is indirectly generated by the activities of visitors. The main reason that indirect employment is often not taken into account is that they cannot directly be derived from basic statistics. One needs a model about which industries supply (down the value chain) to which other industries and which part of that indirect employment is generated based on

the activities of visitors. Without going further into detail, the model and the tables of the National Accounts can be used for this. These tables, the supply and use tables, provide insight into the ( financial) relationships between industries in the economy of a country. Based on these tables so-called tourism multipliers can be calculated. Translated to employment, a tourism multiplier expresses the number of indirect employed persons for each of direct employed persons. So, if a tourism employment multiplier is, for example, 1,50 then for every person working directly in the tourism industry, 1,50 people is indirectly employed in other industries, which supply goods and services to the tourism industry. It is clear that trends like outsourcing and subcontracting can affect the size of direct and indirect employment figures, without changing the overall effect of tourism activities on employment. Another reason why indirect employment is not always taken into account is that it makes it more difficult to compare these figures with other industries in the National Accounts. In that case also indirect employment effects of these other industries should be included. Finally, employment is also generated by the spending of people, who earn their money in the tourism industry. This is called induced employment. Also here multipliers can be calculated. Figure 1. Scope of tourism- related employment A second issue of tourism- related employment is that the consumption of visitors and government do not generate all the employment in the industries which relate to tourism. Transportation services, like trains or busses for example, are mostly used by locals for travelling to and from their work or

school. So only a part of the employment of transportation services can be assigned to the consumption of visitors and therefor tourism. That also accounts even more for, for example, the retail trade. Even hotels will be used for weddings or meetings of locals. So, the employment in some tourism- related industries is for their existence almost totally dependent on the consumption of visitors (e.g. accommodation services) and some only for a small part (e.g. retail trade). To determine which part of the employment of industries can be assigned to tourism, again the National Accounts tables can be used. On the basis of the total production of an industry and the total consumption (e.g. spending) of visitors on goods and services in that industry a so- called tourism ratio can be calculated. These tourism ratios can subsequently also be applied to the employment in an industry. If in an industry, for example, employs 100 persons and the tourism ratio (based on the tourism consumption part of the total production) is 0, 72, then 72 employed persons can be assigned to tourism- related employment. If this is done for all tourism- related industries (starting from the activities or spending of visitors), the sum of all the tourism- related employment in these industries is then the total direct employment in the tourism industry. This method is much more accurate than simply adding up all the employment in a set of selected tourism- related industries. This last method leads either to overestimation if all the employment in selected industries is taken into account which serve visitors, totally or partly. Or underestimation if only the employment in some core tourism- related industries is taken into account. Until now, the discussion has focused on measurement of the size of tourism- related employment, directly or indirectly generated. The question that goes with this, is by which variables the size of tourism- related employment is usually expressed? Mostly, the number of people employed is used, that is employers as well as employees. People employed have a job. A job is an employment contract between a person and an organization that indicates what kind of work must be performed with a ( financial) reward in return. Some people will have more than one job, which is not unusual in tourism. So, there are more jobs than persons employed. Besides that, jobs do not have to

be occupied. In that case there is a job vacancy. Also not uncommon in tourism, not everybody works full- time: people can only work a few hours per week. To be able to make good comparisons, the size of employment can also be expressed in labour volumes or full- t ime equivalents. Labour volumes are calculated as all hours worked by persons employed converted into full jobs. So one should be aware that the size of tourism- related employment can be expressed in one of these three variables, people employed ( employees and employers), jobs and labour volumes. These different variables can lead to different numbers and trends. Finally, people employed and jobs have characteristics. For example, age, gender and level of education or full- t ime and part- time or permanent or temporary jobs. The measurement of characteristics of jobs and people employed in tourism- related employment cannot be treated with the same method used for the size of tourism- related employment. If only a part of an industry serves visitors, one simply does not know which person (and thereafter characteristics) in that industry much be assigned to tourism- related employment, because most people serve visitors as well as locals. Therefore, figures on the characteristics of people employed or jobs in tourism- related employment can only be expressed on the basis of total industries, which are designated as tourism- related industries. In itself this is not a problem, because policy will be directed to the whole industry. So, one has to be aware that figures on characteristics are based on the employment in selected tourism- related industries and not on a part of the employment related to tourism. SPECIAL CHARACTERISTIC Employee Being Disciplined and Dependable Reliability is a trait that is – or should be – instilled at an early age, and employees often can overcome deficiencies such as lack of experience simply by showing up on time and performing their assigned duties. Being able to

work without a supervisor hovering over your shoulder is a sign of discipline. So is not having to be told not to make personal phone calls, surf the Internet or constantly text and tweet. Closely related traits are work ethic, honesty and integrity. It boils down to an employer being able to count on you to show up, do your job, stay focused, be prepared and not steal – either physically or by stealing company t ime. Taking Initiative and Responsibility Offering solutions to problems in a constructive manner, as well as standing up and taking responsibility for mistakes you’ ve made, goes a long way in catching an employer’ s attention. Supervisors can' t be everywhere at all t imes, so it is up to you to pay attention and speak up when you identify a problem or a way that a process can be improved. You should also be willing to pitch in when your company is faced with a serious deadline or a coworker has to take an unexpected break. Bosses take notice when you are willing to do more than just your own job as a way of looking out for the company' s interests. A Good Attitude Even dependable and responsible employees may not have the most cheerful dispositions. A smile alone won’ t get the job done, but a positive outlook and a pleasant disposition – combined with fundamentals such as work ethic and discipline – make for a well- rounded employee. Flexibility and enthusiasm also are components of possessing a good attitude. Being a team player, which is another attribute of a successful employee, is difficult if you’re not approachable and if you don’t play well with others. This doesn' t mean that you need to be a pushover, but you can learn to be assertive while not demoralizing your coworkers. Good Communication Skills Whether writing, speaking or using computers, communication skills are

essential in virtually any job. These skills often are the result of upbringing and education but are fundamental to most businesses. Improving these skills is vital to becoming a successful employee. It’s especially important when trying to communicate ideas to improve your company’ s performance. Your good ideas won't help anyone, or your career, if you can' t deliver them effectively. Think before you speak and take a few minutes to read and proofread your emails before sending them. Employment The characteristics of employment are as follows:- 1. service to others: employment is service of others. 2. Personal service: an employee has to provide service to himself; he cannot get service from somebody else. 3. Agreement: a contract is signed by the employees which involves salary, commission, fees etc. 4. servant: an employee is servant of master and work according to his orders 5. No need of capital: no capital is required in employment 6. No risk: the inherent risk in the job is that of master and not of the employee THE IMPACT OF EVENTS Tourism in the past has been based only on the accommodation and hospitality sector, t ransportation sector and entertainment sector with visitor attractions, such as, theme parks, amusement parks, sports facilit ies, museums etc., taking the Centre stage. This focus diverted the minds of everyone to those areas until event organizers and event managers realized that there was an area that was yet to be tapped into and this realization gave birth to the event tourism industry. Although people had always travelled not only for leisure purposes or for relaxation, there had also been those who had travelled for entertainment and business purposes, either to a meeting,

conference, workshop, event, etc, and these people or tourists had contributed to the growth of the destinations they had visited directly or indirectly, and at large developed the event tourism industry as a whole. One will agree that tourism whether on a large scale or low scale, in no small measure affects the host community. This is particularly evident during the period of the events and sometimes afterwards. Tourism is an economic sector able to offer a significant contribution to the economic growth of a region and to the labor market, and creates occupation opportunities directly and indirectly through the supply of goods and the necessary services for tourist activities. Moreover, tourism produces social benefits to the region ( i.e. small and medium sized enterprises’ development, creation of new jobs, improvement of infrastructure etc.). Culturally, tourism is considered as an element of community enrichment; this is attributed to the meeting of different cultures. Also, tourism can positively contribute to the maintenance of natural environment by protecting, creating or maintaining national parks or other protected areas. (Event tourism: statements and questions about its impacts on rural areas, 2012 .) This research work consists of three parts: the introduction, the theoretical framework and the empirical part. The introduction contains the aim of the study, objectives and the limitations of the study. The theoretical framework analyzes event tourism, event industry, and typology of 2 planned events, stakeholders of events, Pietarsaari at a glance, Pietarsaari as a host community, Pietarsaari and events and the impacts of event tourism on a host community. The last part, which is the empirical part, deals with the research method that was applied which was the qualitative research method adopting the semi- structured interview way. However, this research will focus on the perception that event tourism is one of the few feasible options for destination development. The main aim of this research is the examination of how a form of tourism – event tourism can impact on a host community’s development while also considering the negative side. And putting the case study into play, major events held in the city of Pietarsaari which have in past time or recently showed the potential for developing the community socially, culturally and economically will be dealt with. In the course of this research work, more light and analysis will

be given in order to educate the readers that events are a versatile and developmental tool in upgrading any given community or destination. Another point that will be made will be how events can be organized and properly managed in order to bring benefits to the host community by the community events’ managers and organizers i.e. steps and measures that have to be put in place and who and how these measures should be dealt with in a systematic way in order to get the desired result. The main aim of this thesis project is to highlight the economic impact and other impacts of well- organized and managed events by host communities on the host community, using Pietarsaari as a case study. In any work of this magnitude, there are tendencies that there will be quite a lot of challenges in one way or the other. In this regard, the research part will be quite difficult as there are no major events currently going on now in the host community in focus. This factor is believed to possibly affect the result of the research, because the participants of the research might not be able to give as concrete answers as they could have done if it had been carried out during the events. Another limitation will be the fact that the research is intended only for Pietarsaari which does not organize events basically to make economic benefits but just for the fun of it and to satisfy the residents. Having mentioned all these limitations, there are possibilities that 3 the result will be measureable as the researcher has already put some systematic measures in place to check these limitations. Although hosting an event or events can be of economic importance or benefit to a host community, there are also instances where it ends up costing the host community more in the long run if not properly organized and managed. Factors like infrastructural breakdown, solid waste disposal after large scale events have been held in a community or other forms of environmental pollution caused by the events to the community, can cost the community a lot. These factors have in past time acted like a storming block towards the achievement of the desired result by the host community and therefore made most host communities think twice before hosting a major event even if those events are part of the community’ s norm. The objectives of this research work are hereby highlighted and they are: to show reasons why events should be properly organized and managed, to give logical steps

and processes involved in organizing events, to open the eyes of event organizers towards the economic impact and other impacts of events on their host community and to assess more possible ways of achieving more economical gains from event hosting for a host community. Going in- depth into event tourism without first and foremost describing what tourism is would not be proper because events and tourism go hand in hand. So many definitions of tourism have emerged as a result of the growth and changes of tourism- related activities, but there is one simple definition that has been accepted for a long time now: ‘‘ the temporary movement of people to destinations outside their normal places of work or residence, the activities undertaken during their stay in those destinations, and the facilities created to cater to their needs’’. (Cooper, Fletcher, Fyall, Gilbert, &Wanhill 2008 , 5.) Since the beginning of time, people have always been involved in some kinds of events when they have tried to mark either a special moment or happening in their lives. People have always felt the need to celebrate milestones for example, the coming of age. Even now that the world has gone more global with media and high- tech taking over everything and has made a lot of people lose interest in common norms and beliefs, there is still a need for social events to earmark the indigenous nature of our lives. And in recent times, events have become a central part to the way of life of people as there has been increment in leisure and disposable incomes which has led to the rapid growth of public events, celebration and entertainment. Event tourism is a systematic planning, development, and marketing of festivals and special events as tourist attractions, image- makers, catalysts for infrastructure and economic growth, and animators of built attraction. Tourism management deals with tourism development based on analyzing the behavior and motivation of all kinds of tourists. On the other hand, event management deals with event marketing, design and managing of an event. Moreover, it tries to understand the event experiences and to manage them. Hence, event tourism is in the middle of the two sectors. In other words, event tourism aims at full exploitation of the capabilities of events in order to achieve tourism development of host communities (Getz 1997 , 16) 5 Over the years,

event tourism has been characterized as being inclusive of all planned events in an integrated approach to development and marketing. Event tourism has also been seen as having some similarities with other special forms of tourism. Some basic travelling motives have been identified as being physical, cultural, interpersonal or prestigious and these motives are satisfied by different types of events. SUMMARY Tourism in the past has been based only on the accommodation and hospitality sector, t ransportation sector and entertainment sector with visitor attractions, such as, theme parks, amusement parks, sports facilit ies, museums etc., taking the Centre stage. This focus diverted the minds of everyone to those areas until event organizers and event managers realized that there was an area that was yet to be tapped into and this realization gave birth to the event tourism industry. Although people had always travelled not only for leisure purposes or for relaxation, there had also been those who had travelled for entertainment and business purposes, either to a meeting, conference, workshop, event, etc, and these people or tourists had contributed to the growth of the destinations they had visited directly or indirectly, and at large developed the event tourism industry as a whole. One will agree that tourism whether on a large scale or low scale, in no small measure affects the host community. This is particularly evident during the period of the events and sometimes afterwards. Tourism is an economic sector able to offer a significant contribution to the economic growth of a region and to the labor market, and creates occupation opportunities directly and indirectly through the supply of goods and the necessary services for tourist activities. Moreover, tourism produces social benefits to the region ( i.e. small and medium sized enterprises’ development, creation of new jobs, improvement of infrastructure etc.). Culturally, tourism is considered as an element of community enrichment; this is attributed to the meeting of different cultures. Also, tourism can positively contribute to the maintenance of natural [email protected] by pr otecting, creating or maintaining national parks or other Points are recompmroetnedcetded areas.

KEYWORDS • Economically active population: The economically active population or labour force comprises all persons of either sex who furnish the supply of labour for the production of goods and services as defined by the system of national accounts during a specified t ime- reference period (ILO, Thirteenth ICLS, 6. 18). • Employees: Employees are all those workers who hold the type of job defined as “paid employment” (ILO, Fifteenth ICLS, pp. 20 -22). • Employer- employee relationship: An employer- employee relationship exists when there is an agreement, which may be formal or informal, between an entity and an individual, normally entered into voluntarily by both parties, whereby the individual works for the entity in return for remuneration in cash or in kind (BPM6, 11 .11 ). • Employers: Employers are those workers who, working on their own account with one or more partners, hold the type of job defined as a “self- employment job” and, in this capacity, on a continuous basis ( including the reference period) have engaged one or more persons to work for them in their business as “ employee( s)” • Employment: Persons in employment are all persons above a specified age who, during a specified brief period, either one week or one day, were in paid employment or self- employment LEARNING ACTIVITY 1. Discuss the characteristics of employee and employee. 2. Discuss and compare the 2 countries of your choice income generation through tourism

UNIT END QUESTIONS A. Descriptive Questions 1. What do you understand by event? 2. How events impacts tourism 3. How tourism helps in income generations? 4. How tourism helps in employment? 5. How we can do measurement of income generation? B. Multiple Choice Questions (Mcq’s) 1. How does tourism impact the economy? a. It predicts revenue for local government agencies. b. It creates jobs. c. It predicts the Gross National Product of a nation. d. It determines export trends. 2. Tourism is a major creator of jobs in the world. Approximately what percentage of global employment is represented by tourism? a. 20% b. 2% c. 9% d. 50%

3. What percentage of the world’s GDP is accounted for by tourism? a. More than 10% b. More than 5% c. More than 20% d. More than 15% 4. Which of the following statements is correct? a. Domestic tourism predominantly uses air t ransport b. International tourism has the majority share c. Domestic tourism has the majority share d. International tourism accounts for more than 50% of all travel in the world 5. Which of the following statements is correct? a. Surface transport is more popular for tourism than air b. Sea travel is the most common t ransport mode for leisure tourism c. The majority of international tourism is by car d. Most tourists travel by air 6. Which of the following is the major driver of Leiper’s Tourism System? a. The environmental context

b. The transit route region c. The traveller- generating region d. The tourist destination region Answer 1. b 2. c 3. b 4. c 5. a 6. d SUGGESTED READINGS Methodology 2012 Available: • http://dictionary.reference.com/browse/methodology. Accessed 26 January 2012 • Middleton, T.C., Alan, F., Morgan, M. with Ranchhod, A. 2009, Marketing in Travel and • Adelaide Festival 2012 Available: http://www.adelaidefestival.com.au/. Accessed 11 February 2012 • Allen, J., O`Toole, W., Harris, R. & McDonnell, I. 2011. Festival & Special Event Management. Australia: John Wiley & Sons. • Cook, R. A., Yale, L. J., Marqua, J. J. 2010. Tourism: the Business of Travel (4th Ed.) Pearson Education Limited: Pearson Prentice Hall. • Cooper, C., Fletcher, J., Fyall, A., Gilbert, D. &Wanhill, S. 2008. Tourism, Principles and practice. Essex: Pearson Prentice Hall. • Tourism (4th ed.). Elsevier Ltd: Oxford. • Paivi, R. Pietarsaari Cultural Secretary. Interviewed 12 March 2012. • Page, S. J. 2009, Tourism Management: Managing for Change (3rd Ed.) Elsevier Ltd: Oxford.

• Pelkonen, T. Tourist Office Manager, Pietarsaari. Working life Instructor. Interviewed 22 March 2012.