Week 2

Tourism
Continuation from last week

How Does Tourism Contribute to the Commonwealth Economy.

The Agricultural Sector
An economic link is formed when the output of one industry becomes an input for another. The
link between agriculture ad tourism forms local agriculture is able to supply hotels and
restaurants with produce. The link exists but is not particularly strong given the requirement of
most tourists to consume items that generally need to be imported.
The tourism industry also has some potentially negative effects on the agricultural sector. The
tourism sector can offer higher wages and so workers leave the agricultural sector, meaning that
there can be an inadequate supply of labor. The development of tourist sites, such as hotels and
golf clubs, can often take place on prime agricultural land, reducing the amount of land available
for food production and having possible implications regarding food security.

Imports
Large quantities of food are imported to feed tourists, which increase a country’s food import
bill. It is necessary to balance the income from tourists and tourist consumption against these
additional costs. The tourists’ consumption habits often reinforce messages contained in foreign
media and together these may influence local residents’ tastes and habits over time.

Real Estate Values

When facilities in popular resort areas are to be developed or expanded, the land on which they
will be built becomes increasingly expensive and unaffordable for local people. A similar
situation arises in resort areas where real estate prices can rise due to expenditure and
improvements in the area. Real estate prices are pushed beyond the reach of local residents.
Rents charged for some tourists accommodation in residential areas can affect the rents charged
to local residents.
Economic Leakage of Foreign Exchange
Some foreign exchange earnings from tourism go back out of the country. This is known as
economic leakage.
Economic leakage happens when money is spend on importing food items for tourist
consumption or importing materials to produce items to meet tourists’ demands, for example
souvenirs. Leakage also occurs if tourist facilities are owned and operated by foreign companies.
In such a case, profits from the business go back to the country from where the owner operates.