Role of Tourism in Socioeconomic Development

ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
STUDY ON THE ROLE OF TOURISM

IN SOCIO-ECONOMIC DEVELOPMENT
UNITED NATIONS
ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
STUDY ON THE ROLE OF TOURISM

IN SOCIO-ECONOMIC DEVELOPMENT
UNITED NATIONS
New York, 2007
ST/ESCAP/2478
ESCAP WORKS TOWARDS REDUCING POVERTY

AND MANAGING GLOBALIZATION
This study was produced with financial assistance from the

Government of Japan.
The views expressed in the study do not necessarily reflect those of

the United Nations. The designations employed and the presentation of the
material in this publication do not imply the expression of any opinion whatsoever
on the part of the Secretariat of the United Nations concerning the legal status of
any country, territory, city or area, or of its authorities, or concerning the
delimitations of its frontiers or boundaries.
This study has been issued without formal editing.
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CONTENTS
Page
INTRODUCTION ………………………………………………………………
1
I. THE IMPORTANCE OF TOURISM IN THE ASIAN AND PACIFIC
REGION ………………………………………………………………………… 4
A. International tourism development ……………………………………… 4
B. Intra-regional travel ……………………………………………………….. 12
C. Importance of domestic tourism …………………………………………. 14
D. Tourism in least developed and island developing countries ………... 16
E. Summary observations ………………………………………………….. 18
II. THE ECONOMIC IMPACT OF TOURISM ………………………………….. 20
III. THE SOCIAL IMPACT OF TOURISM ……………………………………….. 32
IV. ASSESSING THE SOCIO-ECONOMIC IMPACTS OF TOURISM ………. 37
A. General approaches and methods ………………………………………. 37

B. Assessing linkages, leakages and multiplier effects …………………… 47
C. Strengthening the knowledge base ……………………………………… 53
V. TOURISM AND TRANSPORTATION INFRASTRUCTURE …………….. 56
VI. TOURISM AND THE MILLENNIUM DEVELOPMENT GOALS ………….. 74
VII. THE ROLE OF GOVERNMENT …………………………………………….. 83
A. Tourism ministries …………………………………………………….. 84

B. Tourism plans …………………………………………………………. 85
C. Empowerment of poor communities, property rights and
development control …………………………………………………. 86
D. Legislation and regulations ………………………………………….. 88
E. Training, capacity-building and certification ……………………….. 90
F. Taxes and levies ……………………………………………………… 90
G. Microfinancing and facilitating market access and linkages …….. 91
H. Marketing ……………………………………………………………… 92
VIII. THE ROLE OF THE PRIVATE SECTOR …………………………………. 95
IX. ALLIANCES AND PARTNERSHIPS ……………………………………….. 97
A. Regional and sub-regional marketing alliances …………………… 97

B. Networks, clusters and ICT …………………………………………. 98
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IMPLEMENTATION AND MONITORING OF THE PLAN OF ACTION
X.
FOR SUSTAINABLE TOURISM DEVELOPMENT IN ASIA AND THE
103
PACIFIC, PHASE II (2006-2012) ……………………………………………
XI. CONCLUSIONS AND RECOMMENDATIONS …………………………… 105
1. Tourism satellite account tables ……………………………….. 111
ANNEXES
2. Monitoring and evaluation elements …………………………… 116
3. Monitoring criteria ……………………………………………….. 118
List of boxes
1. Role of domestic tourism in supporting roadside facilities and services .... 15

2. Tourism in Lao People’s Democratic Republic …………………………….. 17
3. Case study of tourism in Maldives 18
4. Growth rate of the tourism industry (IND) and tourism economy (ECON)
contribution to GDP for selected Asian and Pacific
countries, 1995-2006 ………………………………………………………….. 26
5. Growth rates of government expenditure and capital investment in
tourism ………………………………………………………………………….. 30
6. Lao People’s Democratic Republic: Linkages at the Luang Prabang Night
Market …………………………………………………………………………… 51
7. Activities of ESCAP in the fields of tourism and poverty reduction ………. 55
8. India: Endogenous Tourism for Rural Livelihoods …………………………. 81
9. Nepal: Organizing local opportunities in Lumbini ………………………….. 87
10. Viet Nam: Empowerment through tourism legislation …………………….. 89
11. Nepal: Two examples of creating microenterprise opportunities
for the poor …………………………………………………………………….. 92
12. Mongolia and the Islamic Republic of Iran: Nomadic tourism ……………. 94
13. Nepal: Tourism operators make a commitment to train local people …..… 96
14. Thailand: The “Thai Village” at the Rose Garden ………………………….. 96
15. Creating opportunities for community-based tourism development and
ICT– Asian Encounters ………………………………………………………. 99
List of figures
1. Inbound tourism by region of origin, tourist arrivals 2003 …………………. 13

2. Types and number of enterprises in the Luang Prabang
tourism economy ………………………………………………………………. 45
3. Linkages between tourism and poverty reduction …………………………. 76
List of tables
1. International tourist arrivals by region and subregions, 1995-2005 and

2006 …………………………………………………………………………… 5
2. International tourism arrivals in selected Asian and Pacific countries …… 8
3. International tourism receipts by region, 1995-2005 and 2006 ………….. 10
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4. Comparing international and domestic tourism statistics in selected
Asian and Pacific countries ………………………………………………… 15
5. International tourism in selected least developed and island developing
countries of Asia and the Pacific ……………………………………………. 16
6. International tourism receipts in selected Asian and Pacific countries ….. 21
7. Economic contribution of tourism to GDP and total exports in selected
Asian and Pacific subregions and countries, 2006 ……………………….. 24
8. Economy contribution (direct and indirect) of travel and tourism to
employment in selected Asian and Pacific subregions and countries ……. 33
9. Summary of turnover and income estimates across four value chains of
the tourism economy in Luang Prabang, Lao PDR ………………………… 46
10. Examples of supply chain linkages within selected sectors of the tourism
industry …………………………………………………………………………. 49
11. Ranking and scores on the travel and tourism competitiveness index,
business environment and infrastructure, air and ground transport
infrastructure, selected Asian and Pacific countries ………………………. 60
12. Ranking and scores on quality of ground transport infrastructure
variables, selected Asian and Pacific countries ……………………………. 65
13. Comparing country scores on government priority given to travel and
tourism with selected infrastructure variables ………………………………. 67
14. Contribution of tourism to achieving the Millennium
Development Goals ……………………………………………………………. 77
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INTRODUCTION
ESCAP member countries have recognized the significant role of tourism in
the Asian and Pacific region as well as the various wide-ranging issues arising from
the impact of tourism on socio-economic development. Since the first Plan of Action
for Sustainable Tourism Development in Asia and the Pacific (PASTA Phase I)
covering 1999 to 2005 was adopted by the Commission, Asian and Pacific countries
and areas have devised strategies and plans designed to promote tourism by
strengthening national capabilities and promoting regional cooperation in sustainable
tourism development. PASTA Phase I set general requirements for sustainable
tourism development and proposed actions at the national and regional levels.
Implementation of PASTA Phase I was supported by the secretariat through
regional, subregional and national activities that have assisted countries in the region
and enhanced regional cooperation. Most countries in the region have adopted the
concept of sustainable tourism development and encouraged all concerned
stakeholders to participate actively. Many countries began to develop tourism master
plans and many countries developed programmes for human resources development
in the tourism sector. The Network of Asia-Pacific Education and Training
Institutions in Tourism (APETIT) was established in 1997 to promote regional
cooperation, strengthen institutional links among tourism training institutes and serve
as a platform to exchange information and expertise on human resources development
for the tourism sector. 1
At its sixty-second session, the Commission acknowledged the satisfactory
implementation and lessons learned from PASTA Phase I and resolved to implement
1
There are 248 education and training institutes and national tourism organizations in 44 countries and
areas that participate in APETIT activities. Refer to www.apetit-network.org
PASTA Phase II covering the period from 2006 to 2012 in order to facilitate and
guide the contribution of tourism to socio-economic development as well as take
greater action at the national and regional levels.
Before such action can be taken, however, there is an urgent need for all
policy-makers involved in socio-economic development to have greater awareness
and understanding of several important points. First, tourism has various wide-ranging
linkages throughout the economy and society at the macro, micro and institutional
level that need to be more thoroughly understood. Second, an improved policy
environment for sustainable tourism development has major implications for
macroeconomic goals and national social development objectives, especially those
related to poverty reduction, meeting Millennium Development Goals (MDGs) and
preserving unique environments and cultural heritage for the benefit of future
generations. Third, once policy-makers and planners in all areas of socio-economic
development better understand the role of sustainable tourism in national
development, its contribution can be enhanced by adopting best practices and
counteracting possible risks or negative impacts.
A number of major issues have already been identified and new issues have
recently emerged with respect to the role of tourism in socio-economic development
and poverty reduction. At the same time, there are new opportunities for increasing
the efficiency and effectiveness of tourism’s contribution involving the government,
the private sector and other stakeholders. In line with PASTA Phase II, policy-makers
should understand the role of tourism in socio-economic development in order to be
able to identify areas for action along with approaches to monitor activities, assess
outcomes and evaluate results.
At its sixty-second session, ESCAP also adopted resolution 62/3 on
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“Implementation of the Plan of Action for Sustainable Tourism Development in Asia
and the Pacific (PASTA, Phase II, 2006-2012) and the Regional Programme for
Sustainable Tourism Development”. In adopting the resolution, the Commission
requested the secretariat to prepare and conduct a regional study on the role of tourism
in socio-economic development. This present study is meant to assist member
countries to consider various measures for developing tourism in line with the Plan of
Action. It provides information on the impact of the tourism industry on the region’s
economy and its social development. This study proposes a common approach to
monitoring implementation of the Plan and includes a set of policy recommendation
aimed at increasing the effectiveness of tourism for socio-economic development and
poverty reduction.
The study is organized into eleven chapters. The first four chapters discuss
tourism in terms of its general economic and social aspects. Chapter I describes the
importance of tourism as a globalized industry and its significance for Asian and the
Pacific with a focus on international tourism development, intra-regional travel, the
importance of domestic tourism and tourism with reference to least developed and
island developing countries. Chapter II considers the economic impact of tourism and
how this is measured and interpreted in macroeconomic terms. The use of the tourism
satellite account is presented. Chapter III presents the social impact of tourism in
terms of its contribution to employment. Chapter IV provides an assessment of the
socio-economic impacts of tourism, which includes discussion of the general
approaches and methods, assessment of linkages, leakages and multiplier affects and
strengthening the knowledge base.
Chapter V focuses on various aspects of tourism and transportation
infrastructure in Asia and the Pacific. Chapter VI considers tourism and its linkage to
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the Millennium Development Goals, particularly with respect to how tourism might
be harnessed for poverty reduction. Chapter VII presents the main features concerning
the role of government with respect to enhancing the contribution of tourism to socio-
economic development and poverty reduction. Chapter VIII examines the role of the
private sector in the tourism industry with respect to contributing to socio-economic
development. Chapter IX considers the significance of alliances and partnerships
involving tourism at the regional and subregional level.
Chapter X discusses the implementation and monitoring of the Plan of Action
for Sustainable tourism Development in Asia and the Pacific, Phase II (2006-2012).
Chapter XI concludes the study and presents recommendations.
I. THE IMPORTANCE OF TOURISM IN THE

ASIAN AND PACIFIC REGION
A. International tourism development
1. Tourist arrivals
Tourism is a leading industry in the service sector at the global level as well as
a major provider of jobs and a significant generator of foreign exchange at the
national level. Tourism has become one of the largest and fastest growing industries
in the global economy. During the period between 1996 and 2006, international
tourist arrivals worldwide grew at an average annual rate of about 4.0 per cent. In
1996, there were 575 million tourists and in 2006, there were 846 million tourists, as
shown in table 1. During the ten-year period from 1996 to 2006, the Asian and Pacific
region was second only to the Middle East in outperforming the rest of the world,
with growth in tourist arrivals averaging 6.7 per cent a year. The global market share
of the Asian and Pacific region increased from 15.7 per cent in 1996 to 19.8 per cent
in 2006. Europe remained the top regional tourist destination, while the Americas
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moved from second to third place behind Asia and the Pacific. The global market
shares declined slightly from 57.8 per cent to 54.4 per cent for Europe and 19.9 per
cent to 16.1 per cent for the Americas over the decade from 1996 to 2006.
Table 1. International tourist arrivals by region and subregion, 1996- 2006

Arrivals (millions Market share Average
of people) (percentage) annual growth
rate
1996 2006 1996 2006 1996-2006
Africa 22.2 40.7 3.9 4.8 6.0
Americas 114.5 135.9 19.9 16.1 1.8
Asia-Pacific, of which: 90.4 167.2 15.7 19.8 6.7
North-East Asia 47.6 94.0 8.3 11.1 7.8
South-East Asia 29.8 53.9 5.2 6.4 5.5
South Asia 4.5 8.8 0.8 1.0 6.6
Oceania 8.5 10.5 1.4 1.2 2.6
Europe 332.1 460.8 57.8 54.4 3.3
Middle East 15.8 41.8 2.7 4.9 10.4
World 575.0 846.0 100.0 100.0 4.0
Sources: UNWTO, Tourism Market Trends: East Asia & Pacific (Madrid: UNWTO,
2000). UNWTO, Tourism Highlights, 2006. UNWTO, Tourism Highlights
2007 Edition.
North-East Asia has been the most dynamic subregion in Asia and the Pacific,
with an average growth rate in arrivals of 7.8 per cent over the decade, while its
global share grew from 8.3 per cent in 1996 to 11.1 per cent in 2006. China was the
strongest performer with an annual average growth of about 9 per cent over the ten-
year period. The number of international visitors to China more than doubled,
reaching 49.6 million in 2006, which was almost equivalent to the total number of
tourists visiting South-East Asia. This remarkable performance benefited from
growing international and intraregional demand, reduced transport costs and the
continued liberalization of outbound travel from China.
Despite disasters and various crises, other subregions in Asia and the Pacific
succeeded in maintaining a positive trend in growth of annual tourist arrivals over the
decade, varying from 5.5 per cent in South-East Asia to 6.6 per cent in South Asia and
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2.1 per cent in Oceania (Australia, New Zealand and Pacific island countries and
territories). Cambodia had an average annual growth rate of 20.3 per cent in tourist
arrivals from 1996 to 2006; Viet Nam had 6.5 per cent; and Thailand had 13.0 per
cent. India had an average annual growth rate of 10.0 per cent; and Maldives had
almost 30.0 per cent. 2
The strong growth in tourism arrivals for Asia and the Pacific, particularly the
subregions of North-East Asia, South Asia and South-East Asia is one indicator of the
increased significance of tourism for developing countries. Visitors worldwide have
clearly recognized the attractiveness of tourism experiences in Asian and Pacific
developing countries in terms of the rich cultural heritage and natural environment.
Many officials in these countries have seen that tourism can be part of their
development strategies, especially in economic terms.
In the last two years for which data are available, tourism has continued to
grow rapidly in Asia and the Pacific. While the world’s average annual growth rate
for international tourist arrivals was 5.4 per cent from 2005 to 2006, Asia and the
Pacific grew at 7.7 per cent, which was the third highest rate of growth for 2006,
behind Africa’s growth rate of 9.2 per cent and the Middle East at 8.9 per cent. A
break down of the regional figures for Asia and the Pacific shows major subregional
differences. That is, growth from 2005 to 2006 was 7.4 per cent in North-East Asia;
9.3 per cent in South-East Asia; 11.0 per cent in South Asia; and 0.2 per cent in
Oceania. 3 The strong growth in South-East Asia and South Asia was attributed in part
to the full recovery of Thailand and Maldives from the impact of the December 2004
2
UNWTO, Tourism Highlights (Madrid: UNWTO, 2006). Refer to
www.unwto.org/facts/eng/highlights.htm. UNWTO, Tourism Highlights 2007 Edition.
3
UNWTO, Tourism Highlights 2007 Edition.
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tsunami, as well as high growth rates for Cambodia; India; Macao, China; Malaysia;
the Philippines. 4
Table 2 presents data on tourist arrivals for almost all ESCAP-member
countries during the period from 1995 to 2004. Most noteworthy is the strong
percentage increase in tourist arrivals for economies in transition, such as Armenia,
Azerbaijan and Kyrgyzstan. Countries experiencing increases of over 100 per cent
include Cambodia, China, the Islamic Republic of Iran, Lao People’s Democratic
Republic, Malaysia, Mongolia, Myanmar, Turkey, Uzbekistan and Viet Nam. Almost
all of the countries showed increases, except for Kiribati and Singapore.
4
Ibid.
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Table 2. International tourism arrivals in selected Asian and Pacific countries
International tourist arrivals

Percentage increase,
Thousands of persons 1995-2004
1995 2004
Armenia 12 263 2 092
a/
Australia 3 726 4 774 28
Azerbaijan 93 1 349 1 351
Bangladesh 156 271 74
Bhutan 5 9 92
Brunei Darussalam 498 .. ..
Cambodia 220 1 055 380
China 20 034 41 761 108
Fiji 318 499 57
Georgia 85 368 333
India 2 124 3 457 63
Indonesia 4 324 5 321 23
Islamic Republic of Iran 489 1 659 239
Japan 3 345 6 138 83
Kazakhstan .. 3 073 ..
Kiribati 4 3 -18
Republic of Korea 3 753 5 818 55
Kyrgyzstan 36 398 1 006
Lao P.D.R. 60 236 293
Malaysia 7 469 15 703 110
Maldives 315 617 96
Marshall Islands 6 9 50
Federated States of
Micronesia .. 19 ..
Mongolia 108 301 179
Myanmar 117 242 107
Nepal 363 385 6
New Zealand 1 409 2 334 66
Pakistan 378 648 71
Palau 53 95 79
Papua New Guinea 42 59 40
Philippines 1 760 2 291 30
Russian Federation 10 290 19 892 93
Samoa 68 98 44
Singapore 6 422 5 705 -11
Solomon Islands 12 .. ..
Sri Lanka 403 566 40
Thailand 6 952 11 737 69
Tonga 29 41 41
Turkey 7 083 16 826 138
Turkmenistan 218 .. ..
Tuvalu 1 1.3 30
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International tourist arrivals
Percentage increase,
Thousands of persons 1995-2004
Uzbekistan 92 262 185
Vanuatu 44 61 39
Viet Nam 1 351 2 928 117
157
Total and regional average 84 267 273 87
Source: World Tourism Organization (UNWTO)
Note: a/ 3,726 is the figure for visitors.
.. indicates data are unavailable.
During the ten-year period of fast growth in tourist arrivals, several factors
contributed to the strong performance in most of the Asian and Pacific region. These
factors included rising levels of disposable income; improvements in transportation
and the introduction of low-cost airline services; easier access from traditional source
markets and the emergence of new source markets, such as China and India.
Moreover, the creation of new market niches such as cultural tourism, ecotourism and
adventure tourism has made the tourism industry more diversified.
2. Tourism receipts
The contribution of tourism to socio-economic development has been most
closely related to receipts and spending in the national economy. Table 3 presents the
international tourism receipts by regions of the world as well as Asian and Pacific
subregions. UNWTO has estimated that worldwide receipts from international
tourism reached US$ 733 billion in 2006, which was increase of 8.3 per cent over
2005 in current prices. 5 The tourism receipts in Asia and the Pacific made up 20.8 per
cent of all international tourism receipts in 2006, compared with arrivals of 19.8 per
5
Ibid.
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cent, suggesting that the Asian and Pacific region does slightly better on receipts from
international tourism than it does on international arrivals.
Table 3. International tourism receipts by region, 1996-2006

Receipts (US$ Average annual Market share
billion) growth rate (%) (percentage)
1996 2006 1996-2006 1996 2006
Africa 9.2 24.3 10.6 2.1 3.3
Americas 110.6 154.0 4.1 25.3 21.0
Asia-Pacific, of which: 86.2 152.6 6.6 19.7 20.8
North-East Asia 37.3 74.3 7.9 8.5 10.1
South-East Asia 30.5 40.6 4.1 7.0 5.5
South Asia 3.8 11.5 12.4 0.9 1.6
Oceania 14.6 26.3 6.7 3.3 3.6
Europe 222.3 374.5 5.5 51 51.1
Middle East 8.2 27.3 14.4 1.9 3.7
World 436.5 733.0 5.5 100.0 100.0
Sources: UNWTO, Tourism Market Trends: East Asia & Pacific (Madrid: UNWTO,
2000). UNWTO, Tourism Market Trends: Asia (Madrid: WTO, 2004).
UNWTO, Tourism Highlights (Madrid: UNWTO, 2006). UNWTO, Tourism
Highlights 2007 Edition.
Worldwide, receipts from international tourism amounted to US$ 733.0 billion
in 2006, a net increase since 1996 of US$ 296.5 billion, which was an average annual
increase of 5.5 per cent during the ten-year period. The Asian and Pacific region
posted significant increases in international tourism receipts, with an average annual
growth rate of 6.6 per cent in line with growth in terms of arrivals over the last ten
years. This was higher than the global growth rate of 5.5 per cent, outpacing tourism
receipts for Europe and the Americas. As a result, the global share of tourism receipts
in the Asian and Pacific region increased from 19.7 per cent in 1996 to 20.8 per cent
in 2006, almost equivalent to the share of destinations in the Americas. By 2006, the
global share of the Asian and Pacific region (20.8 per cent) was about equal to the
share of the Americas (21.0 per cent).
In relative terms, expressed in local currencies at constant prices (taking out
the effect of exchange rates and inflation), according to UNWTO, international
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tourism receipts worldwide grew by 4.3 per cent in 2006, compared to 3.2 per cent in
2005. The relative growth in receipts for Asia and the Pacific from 2005 to 2006 was
8.9 per cent, which was second to Africa (10.2 per cent). The relative growth reached
double-digit rates in the subregions of South Asia (14 per cent) and North-East Asia
(11 per cent). Growth in South-East Asia was 9.5 per cent and in Oceania 1.7 per cent
between 2005 and 2006. 6
For the decade from 1996 to 2006, South Asia emerged as the most dynamic
subregion, with an average percentage increase in double digits for tourism receipts,
followed by North-East Asia and Oceania. Despite recent disasters and crises, South-
East Asia managed to report positive annual average growth of 4.1 per cent during the
period from 1996 to 2006. Cambodia and Lao People’s Democratic Republic are two
countries in the greater Mekong Subregion, which had strong results. For Cambodia,
international tourism receipts had an average annual growth rate of 28.3 per cent and
10.8 per cent for Lao People’s Democratic Republic during the ten-year period.7 More
recently, international tourism receipts increased by 20.0 per cent between 2005 and
2006 for Cambodia. 8 However, each of the two Mekong subregion countries
accounted for less than one per cent share of international tourism receipts in Asia and
the Pacific during 2005, while Cambodia’s regional share was 0.6 per cent in 2006.
From 2005 to 2006, India’s international tourism receipts increased by 21.3
per cent and China’s by 15.9 per cent. At the same time, India accounted for 5.8 per
cent share of regional receipts while China accounted for 22.2 per cent in 2006. 9 Both
China and India were among the top 50 tourism destinations. Other countries in the
Asian and Pacific region among the top 50, which also had double-digit growth in
6
7
UNWTO, Tourism Market Trends: Asia (Madrid: UNWTO, 2004).
8
UNWTO, Tourism Highlights (Madrid: UNWTO, 2006).
9
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international tourism receipts between 2005 and 2006 included: Hong Kong, China
(12.9 per cent); Japan (34.8 per cent); Russian Federation (26.3 per cent); Singapore
(14.1 per cent); Thailand (22.0 per cent); and Viet Nam (71.7 per cent). 10
Destinations in Asia and the Pacific are expected to dominate global economic
growth in the travel and tourism industry in the years to come, even though they were
not very high on the list of top arrivals and earners in recent years. According to
UNWTO’s Tourism 2020 Vision, international arrivals have been forecast to reach
nearly 1.6 billion by the year 2020. Furthermore, the forecast for 2020 shows that
East Asia (comprising North-East Asia and South-East Asia) and the Pacific would
expect to receive about 397 million visitors. This long-term assessment includes an
average annual growth rate of 6.5 per cent for arrivals to East Asia and the Pacific and
6.2 per cent for South Asia during the period from 1995 to 2020, which exceeds the
projected growth rate of 4.1 per cent for the world. 11
B. Intra-regional travel
Growth of the tourism industry means that the Asian and Pacific region serves
as both an origin and a destination for international tourist arrivals. More people in the
region are able to travel due to easier access, rising levels of prosperity and increased
leisure time. Figure 1 shows that intraregional arrivals in Asia and the Pacific in 2003
accounted for 78 per cent of international travel in the region, amounting to 94 million
visitors. Among the subregions, intraregional travel accounted for 85 percent of
arrivals in North-East Asia and 77 percent of arrivals in South-East Asia in 2003. In
Oceania, intraregional tourism represented 65 percent of total arrivals and in South
Asia, it accounted for about 36 percent. The average annual growth rate for
10
UNWTO, World Tourism Barometer, vol. 5, #2 (June 2007).
11
UNWTO, World Tourism Barometer, vol. 5, # 1 (January 2007).
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intraregional tourism from 1995 to 2000 was 6.2 percent, which compared to a rate of
5.9 percent in the growth of total outbound tourism in Asia and the Pacific. 12
Figure 1. Inbound tourism by region of origin, tourist arrivals 2003 (percentage share)
2%
1%
11%
7%
1%
78%
Asia and the Pacific Africa Americas
Europe Middle East Origin not specified
Source: UNWTO, Asia Tourism Market Trends, 2004 Edition (Madrid: WTO, 2004), p. 53.
It can be assumed that intraregional travel will continue to grow rapidly for the
foreseeable future and become a more significant part of the regional economy.
Increased intraregional travel has significant implications for mode of transport and
related infrastructure development. Arrival by air transport accounted for almost half
of all arrivals in 2003, but the number traveling over land had reached a share of about
40 percent. Between 1990 and 2000, arrivals by air grew at an average of 6 percent,
while arrivals by road increased by an average of 10 percent a year. It has been noted
12
UNWTO, Tourism Market Trends: Asia (Madrid: WTO, 2004), p. 56, 62.
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that arrivals by road as part of intraregional travel has become increasingly important
in North-East Asia and South-East Asia, particularly between China and Hong Kong,
China and between Singapore and Malaysia. 13 There is potential for increased
intraregional travel by road to South Asia. Clearly, however, island countries such as
Maldives and Sri Lanka, as well as the Oceania subregion must rely on air and sea
travel.
By 2004, several Asian and Pacific countries had become increasingly
significant as markets of origin for international travel. According to UNWTO, Japan,
China and the Russian Federation were among the top ten in terms of international
tourism expenditure. The Republic of Korea; Hong Kong, China; Australia; and
Singapore were among the top twenty. Tourists from these seven countries spent
about US$ 116 billion on international travel and tourism in 2004. 14 More detailed
data and analysis are needed to assess the impact of expenditures due to intraregional
tourism.
C. Importance of domestic tourism
As developing countries of the region have become more prosperous, domestic
tourists have emerged as a significant market, often using the same facilities as
international tourists. Table 4 provides relevant statistics for selected countries in the
region. In India, it has been estimated that there were more than 100 domestic tourists
for every international tourist in 2003. In China the ratio was 26:1, while in Thailand
it was 7:1, in Indonesia it was 7:1 and in Viet Nam it was 5:1. This type of tourism is
often overlooked, although it brings wealthier urban dwellers to rural areas. This
provides opportunities for wealth redistribution and economic development, as well as
13
Ibid., p. 56.
14
UNWTO, Facts and Figures. http://www.unwto.org/statistics/index.htm
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contributing to greater awareness about the culture and environment in one’s own
country.
Table 4. Comparing international and domestic tourism statistics

in selected Asian and Pacific countries
Estimated
International Ratio of
Reference domestic
tourist arrivals international
year tourists
(million) to domestic
(million)
China 2005 46.8 1,212.0 b 1 : 26
India 2003 2.8 a 309.0 a 1 : 110
Indonesia 2005 5.0 31.3 d 1:6
Thailand 2005 11.6 79.5 c 1:7
Viet Nam 2003 2.4 a 13.0 a 1:5
Source: UNWTO, Tourism Highlights 2006, unless otherwise indicated.

a
UNWTO, Tourism Market Trends: Asia, 2004. Based on research and
data from www.tourismofindia.com
b
National Bureau of Statistics of the People’s Republic of China, China
Statistics 2005.
c
Tourism Authority of Thailand, Statistics Division.
d
Republic of Indonesia, Statistics of Indonesia.
It has been suggested that domestic tourism is less vulnerable to fluctuations
than overseas travel. 15 Box 1 gives examples to show how domestic tourism can
affect the national economy at the regional and local level.
Box 1. Role of domestic tourism in supporting roadside facilities and services

It is possible for domestic tourism to support a spatial redistribution of income and
employment as in the cases of the Michi-no-Eki in Japan and the Dhaba in India, which
are roadside service centre concepts. An important cultural phenomenon observed in
many Asian countries is that when a domestic tourist travels, he or she is expected to
bring back gifts for friends and relatives that reflect the specialized food products and
handicrafts of the area visited. In Thailand, for example, this leads to large numbers of
roadside stalls, shops and agglomerations in the main regions--selling fruit in the north-
eastern part of the country, dried fish in the eastern part and confectionery in the
western part.
15
K. B. Ghimire, ed. The Native Tourist: Mass Tourism within Developing Countries
(London: Earthscan, 2001). Includes case studies of China, India and Thailand.
-15-
D. Tourism in least developed and island developing countries
Tourism has become a significant source of foreign exchange revenues for
many countries of the region, including some least developed countries (LDCs) and
island developing countries. Table 5 presents information about international tourism
for 12 LDCs and island developing countries in Asia and the Pacific. In most cases,
the data show that average annual growth in receipts has been somewhat faster than
growth in international tourist arrivals, particularly during the period from 1990 to
2000. This would tend to reinforce the attractiveness of the tourism industry as an
immediate source of foreign exchange earnings.
Table 5. International tourism in selected least developed and island developing countries
of Asia and the Pacific
International tourist arrivals International tourism receipts

Thousand of persons Average annual Value (US$ million) Average annual As % of exports
growth (%) growth (%) of goods and
services
1990 2000 2005 1990- 2000- 1990 2000 2005 1990- 2000-
2000 2005 2000 2005
Bangladesh 115 199 208 5.6 0.9 11 50 70 16.3 7.0 0.7
Bhutan 2 8 14 14.3 12.4 2 10 19 17.5 13.1 ..
Cambodia 17 466 1 422 39.2 25.0 .. 304 .. .. .. 18.6
Kiribati 3 5 .. 4.8 .. 1 3 .. 10.4 .. ..
Lao P.D.R 14 191 672 29.9 28.6 3 114 147 43.9 5.2 21.8
Maldives 195 467 395 9.1 -3.3 89 321 .. 13.7 .. 69.5
Myanmar 21 208 232 25.8 2.2 9 162 .. 33.5 .. 2.6
Nepal 255 464 376 6.2 -4.1 64 158 .. 9.5 .. 18.8
Samoa 48 88 102 6.2 3 20 41 77 7.4 13.4 ..
Solomon 9 .. .. .. .. 7 4 .. -5.4 .. ..
Islands
Tuvalu .. 1.1 .. .. .. .. .. .. .. .. ..
Vanuatu 35 58 .. 5.2 .. 39 56 .. 3.7 .. 42.6
Source: UNWTO
According to WTTC estimates for 2006 based on tourism satellite accounting,
the overall economic contribution of tourism in Maldives was 66.6 per cent of gross
domestic product (GDP) and accounted for 65.9 per cent of exports. In Vanuatu, the
tourism sector contributed 47.0 per cent to GDP and 73.7 per cent to total export
earnings. In Cambodia, Lao People’s Democratic Republic and Nepal, tourism was
estimated to account for more than 15 per cent of export earnings.
-16-
There are implications for LDCs and island developing countries when they
depend on international tourism as a development strategy, since it can lead to an
undiversified economy with significant negative side effects. This can create greater
risks when there are downturns in the international tourism market or unforeseen
events or natural disasters. An equally important issue is the balance between
economic development and well-being on the one hand and social and environmental
well-being on the other hand in countries where culture, heritage and the environment
are the main tourism assets. 16
More detailed information about two countries in Asia and the Pacific
highlight the situation of tourism as a development strategy for LDCs. The growing
economic important of tourism for Lao People’s Democratic Republic is presented in
Box 2. The case of Maldives, an island developing country, is described in Box 3.
Box 2. Tourism in Lao People’s Democratic Republic

Tourism has become a leading economic sector, as well as the country’s principal foreign
exchange earner. In 2005, receipts from international tourism amounted to $US 146.7
million. From 1995 to 2004, the number of international arrivals increased from 60,000 to
236,000 a year, a jump of 236 per cent.
Revenue and rank of various Lao industries (revenue in US$ million)
2001 2002 2003 2004 2005
Revenue Rank Revenue Rank Revenue Rank Revenue Rank Revenue Rank
Tourism 113.8 1 113.4 1 87.3 2 118.9 1 146.7 1
Garments 100.1 2 99.9 2 87.1 3 99.1 2 107.5 3
Electricity` 91.3 3 92.7 3 97.3 1 86.2 3 94.6 4
Wood Products 80.2 4 77.8 4 69.9 4 72.4 4 74.0 5
Coffee 15.3 5 9.8 7 10.9 9 13.0 8 9.5 8
Agricultural 5.7 6 25.6 5 11.1 8 20.5 6 26.6 6
Products
Minerals 4.9 7 3.9 8 46.5 5 67.4 5 128.3 2
Handicrafts 3.8 8 2.7 9 12.4 7 1.9 9 2.7 9
Other - - 19.9 6 17.1 6 13.4 7 11.9 7
Industries
Source: Ministry of Commerce and Lao National Tourism Administration.
16
David Harrison, ed., Tourism and the Less Developed World: Issues and Case Studies
(Wallingford, UK: CABI Publishing, 2004).
-17-
Box 3. Case study of tourism in Maldives
In Asia and the Pacific, Maldives has been the most successful LDC in attracting international
tourists, with about 600,000 international tourists in 2004, which was double the total resident
population. Maldives is one of five countries in Asia and the Pacific where tourism is the top
contributor to GDP. Fifty-seven per cent of total employment, or 1 in every 1.7 jobs, is created
by tourism. Tourism has been the major source of foreign exchange earnings and tax revenue
for many years. This has enabled the government to allocate financial resources for improving
education and health conditions. There is almost universal literacy and the infant mortality rate
went from 121 per thousand in 1977 to 35 per thousand in 2004. Over the same period,
average life expectancy at birth increased from 47 years to 67 years.
The dominance of tourism shows that the economy of Maldives is not very diversified,
however. The tsunami and seaquake of December 2004 underscored the country’s
vulnerability. International tourist arrivals dropped from 617,000 in 2004 to 395,000 in 2005.
Foreign exchange earnings also declined and the government faced a current account deficit as
well as a budget deficit. At the same time, the government faced supply constraints in its
reconstruction efforts.
Tourism arrivals recovered fairly quickly and grew by 70 per cent in the first eight months of
2006. The government had decided to add 35 uninhabited islands to its tourism portfolio in
order that foreign investors could gain leases to develop and build at least 20 new hotels and
15 new resorts, which would include shareholding by the Maldives government.
Sources: UNWTO, Tourism Highlights 2006. Asian Development Bank, Asian Development
Outlook 2006. Leisure Opportunties.com, November 2006,
http://www.leisureopportunities.co.uk/LOemail/wider_newsdetail.cfm?codeID=18577
E. Summary observations
Tourism continues to be important at the global level and the regional level of Asia
and the Pacific as tourism arrivals and receipts maintain or exceed growth expectations. This
indicates that the tourism industry is a major factor in globalization as well as resilient in the
face of natural disasters, health crises, oil price rises, exchange rate fluctuations and other
uncertainties.
The discussion in this chapter has underscored the importance of tourism in Asia and
the Pacific, while pointing out variation in some results and recent trends for the subregions
and various countries. Data about tourist arrivals and tourism receipts have been used to
describe the patterns and trends at global, regional, subregional and national levels.
-18-
This chapter has also described patterns of interregional travel, domestic
tourism and the role of tourism for least developed and island developing countries.
Such descriptions provide the starting point for raising policy issues about the
potential for tourism to make a greater contribution to socio-economic development.
Balancing economic well-being with social and environmental well-being has been
mentioned as a significant consideration affecting the role of tourism in socio-
economic development.
-19-
II. THE ECONOMIC IMPACT OF TOURISM
The purpose of this chapter is to focus on the economic aspects of tourism in
order to highlight the impact at the macroeconomic level. Trends for countries of Asia
and the Pacific are assessed by using several approaches to measuring impact,
including data based on tourism satellite account methodology as developed by the
World Travel and Tourism Council. Tourism is considered according to its
contribution in the form of receipts; share of gross domestic product (GDP) and
exports; and growth rate patterns for the tourism industry, tourism economy,
government expenditures and capital investment.
The economic impact of the tourism industry is usually assessed at the
macroeconomic level and can be measured in several different ways. The most
general measurement focuses on tourism receipts and the contribution of tourism to a
country’s GDP. Table 6 presents international tourism receipts of ESCAP member
states in 1995 and 2004, where figures are available, and the percentage increases
over this period. The table also shows tourism receipts as a percentage of GDP for
2004. 17 The data generally indicate the performance of tourism at the national level,
but not in a systematic way due to use of estimates and different definitions of the
tourism industry.
17
UNWTO, UNWTO World Tourism Barometer, vol. 4, #2 (June 2006), p. 2. For destination
countries, receipts from international tourism count as exports and cover all transactions
related to the consumption by international visitors of, for instance, accommodation, food and
drink, transport in the country, fuel, entertainment, shopping, etc. It includes transactions
generated by same-day as well as overnight visitors. However, it does not include receipts
from international passenger transport contracted from companies outside the travelers'
countries of residence, which are reported in a separate category, international passenger
transport.
-20-
Table 6. International tourism receipts in selected Asian and Pacific countries
International tourism receipts
Percentage increase, As % of
US$ million 1995-2004 GDP, 2004
1995 2004
Armenia 1 86 8 500 2.9
Australia 7 873 12 703 61 2.8
Azerbaijan 70 65 -7 0.9
Bangladesh 25 67 168 0.1
Bhutan .. 12 .. ..
Cambodia 53 604 1 040 14.7
China 8 730 25 739 195 1.7
Fiji 291 412 42 21.8
Georgia .. 177 .. 4.1
a/
India 2 582 3 887 51 0.7
Indonesia 5 229 4 798 -8 2.0
Islamic Republic of Iran 67 1 074 1 503 0.8
Japan 3 224 11 265 249 0.3
Kazakhstan 122 708 480 1.9
Republic of Korea 5 150 5 713 11 1.2
Kyrgyzstan 5 76 1 420 4.4
Lao P.D.R. 51 119 133 4.9
Malaysia 3 969 8 198 107 6.6
Maldives 211 471 123 62.5
Mongolia 21 185 781 13.4
Myanmar 151 84 -44 ..
Nepal 177 230 30 3.9
New Zealand 2 318 5 069 119 5.1
Pakistan 110 178 62 0.8
Papua New Guinea 25 .. .. ..
Philippines 1 136 2 012 77 2.8
Russian Federation 4 312 5 226 21 1.2
Samoa 35 71 103 ..
Singapore 7 646 5 093 -33 4.8
Solomon Islands 16 4 -75 ..
Sri Lanka 226 513 127 4.0
Tajikistan .. 1 .. 0.4
Thailand 8 035 10 043 25 8.0
Tonga 10 15 50 7.0
Turkey 4 957 15 888 221 5.3
Uzbekistan .. 28 .. 0.5
Vanuatu 45 52 16 25.7
66
Total 873 120 866 81 6.8
Source: UNWTO
Notes: a/ Figure is for 2003.
.. indicates data are unavailable.
-21-
The United Nations Statistics Division and the World Tourism Organization
(now UNWTO) developed the tourism satellite account in 2001 as one of the most
systematic measurement of the economic impact and contribution of tourism at the
national level. According to the World Travel & Tourism Council (WTTC), the TSA
is based on a demand-side concept of economic activity, because the tourism industry
does not produce or supply a homogeneous product or service like many traditional
industries. Instead, the travel and tourism industry is defined by a diverse collection of
products (durables and non-durables) and services (transportation, accommodation,
food and beverage, entertainment, government services, etc) that are delivered to
visitors. It is important for policy-makers at national and local levels to see that this
diversity has many complex links to all parts of the economy. This is what makes the
economic impact of tourism so significant for development.
There are two basic aggregates of demand: (1) travel and tourism consumption
and (2) total demand. Satellite accounting produces two different and complementary
aggregates of travel and tourism supply when input/output modelling is used
separately with these two aggregates. The first aggregate is the travel and tourism
industry, which captures the explicitly-defined production-side industry contribution
(the direct impact only), for comparison with all other industries. The second
aggregate is the travel and tourism economy, which captures the broader economy-
wide impact of travel and tourism—both direct and indirect. 18
As shown in table 7, the largest travel and tourism economy contributions to
GDP have been in the island states of Fiji, Tonga and Vanuatu. Many small island
18
World Travel & Tourism Council.
http://www.wttc.org/eng/Research/Tourism_Satellite_Accounting/TSA_Definitions_and_Met
hodology/index.php
-22-
economies are highly dependent on tourism for export earnings as well. In 2006, the
tourism economy contributed 43.5 per cent of total export earnings of Fiji and one
third of GDP. The tourism economy generated about 66.0 per cent of total export
earnings and 66.6 per cent of GDP for Maldives. Other small island states, such as
Tonga and Vanuatu, depended on tourism for half to almost three-fourths of their
export earnings. 19
The tourism economy provided a contribution of 13.7 per cent to China’s GDP
in 2006. Countries in the Greater Mekong Subregion are also benefiting from the
tourism industry thereby taking full advantage of the potential of their natural and
cultural tourism resources. In 2006, tourism in Cambodia and the Lao People’s
Democratic Republic accounted respectively for 22.3 and 21.4 per cent of their total
export earnings and contributed 19.6 and 9.3 per cent respectively of their GDP.
In other countries, the contribution of tourism to GDP and total exports
averaged between 7.0 and 10.0 per cent, mainly because their economies are more
diversified. However, in light of the continuing growth expected for the region’s
tourism industry in the foreseeable future, it can be assumed that the share of tourism
in the region’s economy will become more significant.
19
WTTC, “WTTC 2006 Tourism Satellite Accounts: Regional Reports”.
www.wttc.org/frameset2.htm
-23-
Table 7. Economic contribution of tourism to GDP and total exports in selected
Asian and Pacific subregions and countries, 2006a/
GDP Total exports

(per cent) (per cent)
North-East Asia, of which: 10.3 8.2

China 13.7 7.4
Republic of Korea 6.8 6.8
South-East Asia, of which: 7.0 8.4

Cambodia 19.6 22.3
Indonesia 8.7 11.5
Lao PDR 9.3 21.4
Papua New Guinea 9.2 7.5
Philippines 9.1 8.3
Singapore 10.3 4.2
Thailand 14.3 12.6
Viet Nam 10.9 9.4
South Asia, of which: 5.5 5.4

India 5.3 4.7
Iran (Islamic Rep. of) 9.8 12.1
Maldives 66.6 65.9
Nepal 8.2 22.6
Sri Lanka 9.6 14.9
Oceania, of which: 13.1 22.4

Fiji 33.1 43.5
Tonga 17.5 47.2
Vanuatu 47.0 73.7
Source: World Travel & Tourism Council, WTTC 2006 Tourism Satellite Accounts.
a/
Note: Data used in the table refer to the travel and tourism economy (direct and indirect
impact) as this provides a more comprehensive account of the tourism sector.
Additional data from WTTC provides a time-series description for a number of
macroeconomic variables that show the economic impact of tourism. This data can also be
analyzed statistically to give policy-makers a deeper understanding of important economic
relationships in order to strengthen tourism policies and plans of the government and the
private sector. Annex tables 1 and 2 are descriptive reports on the variable of growth rate and
its impact on four macroeconomic dimensions of tourism.
-24-
Annex table 1 presents the growth rate variable covering various years. The two
dimensions are: (1) the tourism industry, which shows the direct impact and (2) the tourism
economy, which includes the wider direct and indirect impact of tourism activities. There is
clearly a wide variety of results among the 33 countries and areas of Asia and the Pacific, as
well as fluctuations over time for each country. However, when there is strong annual growth
for the tourism industry, there is strong growth in the wider tourism economy for at least nine
countries (Azerbaijan; Cambodia; China; Lao PDR; Macao, China; Malaysia; Philippines;
Thailand; and Viet Nam). The charts in box 4 present the results for the nine selected
countries from 1995 to 2006. While the nature of this relationship needs more careful study,
this suggests that the links between the tourism industry and other industries in these national
economies generate GDP growth that is noteworthy.
-25-
Box 4. Growth rate of the tourism industry (IND) and tourism economy (ECON) contribution to
GDP for selected Asian and Pacific countries, 1995-2006
Az e r b a ija n
5 0 .0 0
Percentage growth rate
4 0 .0 0
3 0 .0 0
2 0 .0 0
IND
1 0 .0 0
0 .0 0 ECO N
- 1 0 .0 0
95
96
97
98
99
00
01
02
03
04
05
06
19
19
19
19
19
20
20
20
20
20
20
20
- 2 0 .0 0
- 3 0 .0 0
C a m b o d ia
1 0 0 .0 0
8 0 .0 0
6 0 .0 0
4 0 .0 0 IN D
2 0 .0 0 EC ON
0 .0 0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-2 0 .0 0 2006
-4 0 .0 0
Ch in a
20.00
15.00
10.00 IND
5.00 ECON
0.00
95
96
97
98
99
00
01
02
03
04
05
06
-5.00
19
19
19
19
19
20
20
20
20
20
20
20
La o Pe ople 's De m ocra tic Re public
80.00
60.00
40.00
IND
20.00
ECON
0.00
95
96
97
98
99
00
01
02
03
04
05
06
-20.00
19
19
19
19
19
20
20
20
20
20
20
20
-40.00
-26-
Percentage growth rate Percentage growth rate
Percentage growth rate Percentage growth rate Percentage growth rate
-10.00
0.00
10.00
20.00
30.00
40.00
19
-15.00
-10.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
-5.00
-10.00
-5.00
0.00
5.00
10.00
15.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
19 19 19 19 95
95 95 95 95
19 19 19 19
19 96
96 96 96 96
19 19 19 19 19
97 97 97 97
97
19 19 19 19 19
98 98 98 98 98
19 19 19 19 19
99 99 99 99 99
20 20 20 20 20
00 00 00 00 00
20 20 20 20 20
01 01 01 01 01
20 20 20 20 20
02
Tha ila nd
M a la ys ia
02 02
Viet Nam
02 02
M aca o, China
P h ilipp in e s
-27-
20 20 20 20
03 03 03 03 20
03
Box 4. (continued)
20 20 20 20
04 04 04 04 20
04
20 20 20 20
05 05 05 05 20
05
20 20 20 20
06 06 06 06 20
06
IND
IND
IND
IND
IND
ECON
ECON
ECON
ECON
ECON
Annex table 1 also shows some distinctive patterns for island developing countries in
cases where there have been strong annual declines in the contribution of both the tourism
industry and the tourism economy to GDP. This appears to underscore the dependency of
some countries’ economies on tourism, although in subsequent years some recovery in the
growth rates was possible. It is important for policy-makers to know which factors are
influencing such declines and recoveries, including the role of government spending, the role
of capital investment, the effects of changes in international tourist markets, unexpected
crises, disasters, and so forth.
Annex table 2 presents data on the growth rate variable for various years along two
dimensions: (1) government expenditures (GOV) and (2) capital investment (CAP.INV) in the
travel and tourism industry. The descriptive statistics show a wide range of results among and
within the 33 Asian and Pacific countries and areas over time.
Box 5 shows two charts that give a general view of growth in government
expenditures (chart A) and capital investment (chart B) in tourism according to subregion.
The 1997 economic crisis in South-East Asia had a strong impact on government expenditure
on tourism as well as a significant impact on capital investment. However, strong growth
quickly followed such declines in growth; although subsequent declines lead to questions
about sustainable support and investment in the tourist industry. The South Asian growth
pattern for government expenditure showed some fluctuation in the 1990s, but the pattern
since 2001 has been a fairly steady increase in the growth rate. Capital investment in South
Asian tourism had fairly strong fluctuations in the pattern of growth during the 1990s, and
like government expenditure, began to grow again at a steady pace from 2001.
In the case of North-East Asia, the growth rate of government expenditure on tourism
has generally been at a steady rate of close to 5 per cent, as shown in box 5 (chart A). Capital
investment in North-East Asia had declined from 1995 to slightly negative growth up to 1999
and then began a trend of strong positive growth until about 2004. For the subregion of
Oceania, government expenditure showed wide fluctuation over the period from 1995 to
2005, but this never declined into negative growth. From peaks in 1996 and 1999, the general
-28-
trend has been a slowdown in the growth rate of government expenditures on tourism in
Oceania. (See box 5, chart A.) The growth rate for capital expenditures on tourism in Oceania
showed the greatest fluctuations of all subregions during the period from 1999 to 2005. (See
box 5, chart B.)
The data and patterns suggest that the relationship between government spending and
capital investment to develop the tourism industry is complicated and in need of more detailed
study. Once again, statistical analysis can give an improved understanding about relationships
involving government expenditures, private investment and growth of the tourism industry,
among others, in order that tourism policies and plans of the government and business
decisions of the private sector complement each other.
-29-
Box 5. Growth rates of government expenditure and capital investment in tourism
Chart A. Growth rate of government expenditures on tourism by subregion of Asia and the Pacific, 1995-
2005
20.00
15.00
10.00
5.00
South Asia
South-East Asia
North-East Asia
0.00 Oceania
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-5.00
-10.00
-15.00
Chart B. Growth rate of capital investment in tourism by subregion of Asia and the Pacific, 1995-2005
30.00
20.00
10.00
South Asia
0.00
South-East Asia
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 North-East Asia
Oceania
-10.00
-20.00
-30.00
-30-
Several important issues need to be taken into account when considering the
economic impact of tourism development. For example, policy-makers need to know whether
growth or decline in government expenditure leads or lags more general growth (or decline)
in the tourism industry or tourism economy. It is equally important to know if capital
investment leads or lags behind general patterns of growth or decline in the tourism industry
or tourism economy. In countries that are dependent on the tourism industry, such as island
developing countries and some least developed countries, it is important to understand what
have been the reasons for declines in capital investment and what factors have helped to
recover capital investment.
Policy-makers and planners can make use of a wealth of data and information when
tourism satellite accounts are fully implemented. As noted by WTTC, the tourism satellite
account can help governments understand: (1) the economic dynamics of tourism beyond the
traditional scope of tourism expenditure research and travel service sector production when it
is narrowly defined; (2) the relationship between tourism and the durables sector of the
economy; (3) the relationship between tourism and government spending to help establish a
clear linkage between tourism results and government support for tourism; (4) the balance of
payments arising from the comprehensive flow of tourism goods and services necessary to
make tourism possible and the possible discovery of hidden trade surpluses or deficits; and (5)
the relationship between tourism and capital investment to assist in long-term planning for
infrastructure, resort development, promotion, and so forth.
-31-
III. THE SOCIAL IMPACT OF TOURISM
This chapter considers some of the social aspects of tourism in order to
measure and understand the social impact. The main macro-level indicator is
employment created by the tourism economy for subregions and selected nations in
Asia and the Pacific. The discussions cover the gender aspects of employment
patterns in the tourism industry.
There are various definitions of social development, and most of them
converge around the concepts of improving the well-being of a country’s citizens,
promoting higher standards of living, increasing employment and creating conditions
of economic and social progress. Employment is one of the most readily available
indicators to begin measuring the social impact of tourism, since job creation
generally helps create the opportunities for better standards of living and related
conditions of socio-economic progress.
Tourism contributes significantly, both directly and indirectly, to the creation
of employment. In 2006, the tourism economy (direct plus indirect contribution)
provided jobs for about 140 million people in the selected subregions and countries of
the Asian and Pacific region, representing an average of 8.9 per cent of total
employment. As shown in table 8, tourism employment in North-East Asia was
estimated at 87.7 million jobs, which was 10.1 per cent of the total employment in the
subregion. This result can be attributed mainly to China, where 77.6 million people,
approximately 1 in every 10 employed persons worked in the tourism economy. In
Oceania, the workforce in the tourism economy accounted for 14.5 per cent of total
employment in the subregion, which was 1 in every 6.9 jobs. The importance of
tourism becomes more significant when the workforce ratios in selected Pacific island
-32-
economies is analysed. For instance, 1 in every 3.2 persons in Fiji was employed in
the tourism economy, while in Vanuatu the ratio was 1 in every 2.4 jobs in 2006. By
comparison, 1 in every 1.7 persons in Maldives was employed in the tourism
economy.
Comparisons among countries in other subregions show that the share of
tourism economy employment as part of total employment in 2006 varied from 5.4
per cent in India to more than 10 per cent in Cambodia, the Philippines and Thailand.
Table 8. Economy contribution (direct and indirect) of travel and tourism to employment in
selected Asian and Pacific subregions and countries
As percentage share of Ratio of tourism
Million of
total employment within employment to total
jobs
subregion and country employment
North-East Asia, of 1 : 9.9
87.58 10.1
which:
China 77.60 10.2 1 : 9.8
Republic of Korea 1.73 7.4 1 : 13.4
South-East Asia, of 1 : 11.7
21.74 8.6
which:
Cambodia 1.07 15.4 1 : 6.5
Indonesia 7.33 7.2 1 : 13.8
Lao PDR .20 7.3 1 : 13.7
Papua New Guinea .19 7.5 1 : 13.3
Philippines 3.34 10.8 1 : 9.2
Singapore 1.91 8.3 1 : 12.0
Thailand 3.82 10.7 1 : 9.4
Viet Nam 3.36 8.7 1 : 11.5
South Asia, of which: 30.89 5.2 1 : 19.4
India 24.35 5.4 1 : 18.4
Iran (Islamic Rep. of) 1.71 8.7 1 : 11.4
Maldives .69 57.6 1 : 1.7
Nepal .73 6.4 1 : 15.5
Sri Lanka .66 7.9 1 : 12.7
Oceania, of which: 1.91 14.5 1 : 6.9
Fiji .11 31.0 1 : 3.2
Tonga .01 15.2 1 : 6.6
Vanuatu .03 42.4 1 : 2.4
Source: WWTC, WTTC 2006 Tourism Satellite Accounts: Regional Reports.

www.wttc.org/frameset2.htm
-33-
Additional information about employment using data from the WTTC’s
tourism satellite accounting framework is presented in annex table 3. Patterns of
employment growth in the tourism industry and tourism economy for a number of
Asian and Pacific countries indicate significant fluctuations within many countries
over time as well as strong declines in employment for some countries in particular
years. In many cases, such as Australia in 2005; Azerbaijan in 1995; Cambodia in
2000, 2004 and 2005; China in 2000 and 2004; Hong Kong, China in 2000 and 2004;
Lao PDR in 1995 and 2000; Malaysia in 2000 and 2004; Maldives in 2004 and 2006;
Myanmar in 1995 and 2004; Nepal in 1995; Pakistan in 2005; Solomon Islands in
2004; Thailand in 2000 and 2004; Turkey in 2000; and Vanuatu in 2000 and 2006,
strong employment growth occurred simultaneously in both the tourism industry and
tourism economy. However, high employment growth in some years was followed by
slower growth or even strong declines in a number of countries.
In view of such fluctuations and wide variations within countries and among
countries, there is a compelling need to study and analyze further whether steep
declines mean jobs are lost or whether there is temporary unemployment followed by
rehiring. Detailed study would have to account for unique situations and factors
affecting particular countries or subregions, although analysis of a longer time series
could account for large increases or declines over the short term, thus giving a more
complete overall picture. A look at annex table 3 seems to suggest that even as the
tourism industry and tourism economy grow, the link to direct and/or indirect
employment needs to be more clearly established and understood. This could
contribute to improved planning and policy making for job creation and human
resource management as part of tourism development. Patterns of employment growth
-34-
and decline in the tourism industry and tourism economy have direct implications on
the social benefits and opportunities expected from tourism development.
When growth of the tourism industry is sustained, it is more likely to be a
significant provider of employment in countries of the Asian and Pacific region. It is
then possible to improve the social situation of people, often through Government
policies and programmes. In addition, revenue generated from tourism has enabled
Governments to allocate financial resources for improving education and health
conditions. For example, as indicated in box 3, in Maldives where tourism activity is
the economic mainstay, almost 100 per cent of the population was literate by 2004.
The infant mortality rate declined from 121 per 1,000 in 1977 to 35 per 1,000 in 2004.
Over the same period, the average life expectancy at birth increased from 47 years to
67 years. 20
The quantitative and qualitative dimensions of issues related to gender balance
in employment in the tourism industry require more analysis on both, especially if
tourism is expected to give women more and better employment opportunities and
improve their well-being. There is a general lack of available quantitative data that
disaggregates tourism employment, wage levels, types of jobs, etc. by gender. In
2003, the International Labour Organization (ILO) reported some general
impressions, information from other sources and a few results from a limited survey
of hotels in the Asia and Pacific region. 21
At the level of general impression, employment of women in the hospitality
sector, the term used by ILO, was higher than in many other industries, in part
reflecting the high percentage of low skilled jobs in hotels and restaurants such as
waitresses, chambermaids and so on. As a broad generalization, the ratio between

20
UNDP, Human Development Report (New York: UNDP, various years).
21
ILO, “Employment and Human Resources in the Tourist Industry in Asia and the Pacific”, Sectoral
Working Paper No. 204 (Geneva: ILO, 2003).
-35-
male and female employees in the Asian and Pacific region was fairly equally split.
Among respondents to the ILO survey, there was no indication that recruitment of
women was more difficult than recruitment of men. In Thailand, it was reported that
the majority of people working in the tourism industry were 21 to 30 years old, and
there was a relatively even split between men and women. 22 However, it was
mentioned that in China there were legal regulations protecting female workers. 23
The ILO reported that the hospitality sector in Singapore attracted a relatively
high proportion of female workers. In 2000, there was an almost even ratio of females
to males working in the hotels and restaurants sector (that is, a gender ratio of
48.5:51.5). This is compared with a 39:61 gender ratio for the Singaporean workforce
as a whole. It was noted that there was a higher proportion of younger (15-19 year
olds) and older (50 years and over) workers, particularly women, in the hotels and
restaurants sector compared with all sectors generally. Average earnings in hotels and
restaurants were the lowest of any category in Singapore’s formal sector. 24
According to the ILO study, the South Pacific Tourism Organization (SPTO)
stated that most small and medium enterprises (SMEs) in the Pacific island countries
are run as family operations. In that context, tourism offers opportunities to both male
and female entrepreneurs, especially in the case of ecotourism, when businesses are
established within their natural and cultural framework. In some cases, SPTO noted
that wives are operating and children are working in small family operations. In most
cases, rental cars, travel offices and booking agencies are dominated by female
entrepreneurs. 25
22
Ibid., p. 26.
23
Ibid., p. 11.
24
Ibid., p. 22.
25
Ibid., pp. 23-24.
-36-
More up-to-date, systematic statistics and general descriptions of gender
patterns in national tourism industries throughout Asia and the Pacific can help
strengthen the analysis about the social impact of tourism from a gender perspective.
This can help to improve the image of career opportunities for women and men in the
tourism industry. In addition, it can help employers as well as government policy
makers to have a more complete understanding about the gender dimensions of
tourism industry employment. Based on such understanding and analysis, it would
then be possible to decide whether protective, corrective or inclusionary policies and
regulations might be needed.
IV. ASSESSING THE SOCIO-ECONOMIC IMPACTS

OF TOURISM
This chapter addresses the ways in which the socio-economic impact of
tourism can be assessed at the macro-level and the micro-level. Various techniques,
such as TSA, social accounting matrix, project level approaches, and value chain
analysis, are reviewed. The discussion also covers the assessment of linkages,
leakages and multiplier effects. The overall aim of the discussion is to emphasize the
importance of the knowledge base to clearly show the socio-economic importance of
tourism.
A. General approaches and methods
A full assessment of the socio-economic impacts of tourism requires that the linkages
between tourism and socio-economic development need to be clearly identified. Having
established the linkages, policymakers are then in a better position to consider specific
interventions that can raise standards of living and reduce poverty. Techniques to assess such
impacts fall into two broad categories: “top-down”, aggregate or macrolevel approaches; and
“bottom-up”, project or microlevel approaches.
-37-
1. Macro-level approaches
Aggregate approaches include tourism satellite accounts (TSAs), input-output
tables, 26 social accounting matrices and computable general equilibrium models, as
well as econometric, correlation and regression analysis.
As an aggregate approach, data from TSAs were used in chapters II and III of
this document to show the importance and describe some features of the tourism
sector. The World Travel & Tourism Council (WTTC) is the leading organization,
which produces annual data and time series data on tourism’s contribution to GDP,
employment, exports, imports, taxes, among others. Since 1998, the Council has
developed tourism satellite accounts for 176 countries. At present, 33 are members or
associate members of ESCAP.
In addition, India and the Philippines have produced their own tourism
satellite accounts. Thailand has begun its tourism satellite account project and has
reached the stage of approximating preliminary tables. Once constructed, TSAs can
help to answer questions about the direct (industry) and indirect (economy) impacts of
tourism on GDP and employment; the strength of linkages between tourism and other
sectors of the economy; the multipliers (changes in income and employment resulting
from a change in expenditure) and the leakages (proportion of tourist expenditure that
does not remain in the economy).
The Government of India reported in 2006 on its tourism satellite account
covering the period of 2002-2003. As a pilot study, the Indian TSA focused on
constructing seven TSA tables: three tables to identify tourism consumption (inbound,
domestic and outbound); a fourth table to consolidate total tourism consumption; a
26
During the first half of the 1990s, ESCAP undertook 11 country studies on the economic
impact of tourism using input-output table methodologies. Publications relating to these
studies can be found at www.unescap.org/ttdw/index.asp?menuname=PublicationArchives.
-38-
fifth table to show the production account of tourism industries in order to compare
with tourism consumption; a sixth table bringing together the demand and supply side
to evaluate aggregate tourism value added and GDP; and a seventh table for analyzing
employment.
In India, it was found that adjustment factors had to be applied since some
expenditure, particularly for transport services, was considerably underestimated.
Overall, it was reported that the direct contribution of tourism accounted for 2.78 per
cent of GDP and when the indirect effects were added, the tourism share was 5.83 per
cent of GDP. The results for the total tourism output multiplier suggested that the
combined direct and indirect impact was 2.1 times the actual spending by tourists. The
tourism industry accounted for 4.59 per cent of employment and the tourism economy
accounted for 8.27 per cent of total employment in India, which was estimated to be
38.6 million jobs. Adjustment factors were applied to account for same-day tourism,
which was a large and growing segment of India’s tourism industry. After making
adjustments, it was found that the direct contribution increased from 2.78 per cent to
3.78 per cent and the tourism economy (direct and indirect) contribution went from
5.83 per cent to 6.83 per cent. The contribution to employment also went up from 8.27
per cent to 9.27 per cent. 27
In 1997, the Government of the Philippines created the Inter-Agency
Committee on the Development of a Satellite Account on Tourism and applied the
TSA framework to data covering 1994 and 1998. The Philippine TSA consisted of ten
tables, which included: two types of tourism value added; tourism GDP; tourism
employment; tourism gross fixed capital formation; tourism collective consumption
and tourism demand. A report in 2001 noted that the results were considered as
27
Ministry of Tourism, “Tourism Satellite Account for India” (New Delhi: National Council
of Applied Economic Research, January 2006), pp. 22, 30, 32 and 55.
-39-
preliminary with limited scope and coverage due to data constraints. Nevertheless, the
Philippine TSA report revealed significant features of tourism’s impact with a focus
on the link between tourism consumption and the supply of tourism goods and
services.
In the Philippines, the TSA framework showed that between 1994 and 1998
total tourism demand grew at an annual average of 11 per cent. Visitor consumption
expenditures accounted for more than 60 per cent of total tourism demand and grew at
about 20 per cent a year. Domestic tourism consumption expanded at an annual rate
33 per cent and inbound tourism grew at 13 per cent. Government consumption
expenditures had an average annual growth rate of 23 per cent and its share of total
tourism consumption was 22 per cent in 1994 and 26 per cent in 1998. The value
added of tourism industries was 12 per cent of GDP in 1994 and13 per cent 1998. On
the supply side, tourism generated 20 per cent of total employment in 1994 and 22 per
cent in 1998. It was found that 63 per cent of those employed in the tourism industry
were men and 37 per cent were women. This is in contrast to the general pattern
where women accounted for a larger share of total employment generated in the
economy. However, among all employed women, the proportion in tourism was 24
per cent in 1994 and 25 per cent in 1998. In comparison, among all employed men, 17
per cent worked in tourism in 1994 and 20 per cent in 1998. 28
In Viet Nam, data was gathered in 1999 in order to prepare a social accounting
matrix (SAM) as an economy-wide simulation model. The aim was to develop SAM
multipliers to show which components of the tourism sector have the greatest impact
on the overall domestic economy, which have the strongest linkages with other sectors
28
Romulo Virola et al., “Measuring the Contribution of Tourism to the Economy: The
Philippine Tourism Satellite Account”, paper prepared for the Eight National Convention on
Statistics, Manila, October 2001, pp. 16.
-40-
and how much household income is induced for a given expansion in various sectors
of the economy. Issues about the impact of tourism on poverty could be addressed by
including data from the Vietnam Living Standards Survey which provided
information valid to the regional and provincial level. 29 Among 13 sectors with total
SAM multipliers ranging from 2.24 to 9.48, the tourism multiplier was 5.16. The
range of multipliers for linkages with other sectors was 0.63 to 4.11, with tourism
having a multiplier of 2.07. For induced household income, the multipliers for the 13
sectors ranged from 0.14 to 1.31 with the tourism multiplier being 0.53. 30
Computable general equilibrium models have not been developed extensively
for tourism, but one developed by Adam Blake et al. for Brazil looked at the effects of
tourism expansion and concluded:
The results also show that tourism benefits the lowest income sections
of (the) Brazilian population and has the potential to reduce income
inequality. The lowest income households are not, however, the main
beneficiaries of tourism and we have also shown that alternative
revenue distribution by the government could double the benefits for
the poorest households and give them around one-third of all the
benefits from tourism. 31
2. Project-level approaches
Among the project-level approaches used to assess the impact of tourism are
traditional cost-benefit analyses, including their extensions to social impact analysis
and environmental impact analysis, livelihood analysis, accountancy-based lodging
and enterprise assessments, local economic mapping, tourism value chain analyses
and ex-post documentation of specific case studies. It is often easier to hypothesize
29
Christopher Edmonds, “Economic Modeling and Measurement of the Effects of Tourism
Growth on the Well-Being of the Poor” presentation for the Asian Development Bank, 2001.
30
Ibid.
31
Adam Blake et al., Tourism and Poverty Alleviation in Brazil, (Brasilia: University of
Brasilia, October 2005), p. 34. Accessed at www.unb.br/cet/noticias/ Adam_Blake.pdf/ on 27
February 2007.
-41-
and test linkages between particular interventions and improved standards of living at
this level, because these types of analyses are done at the micro level.
Some preliminary information provided by ESCAP-member countries shows
how various project- level approaches could be applied more extensively and
systematically to assess the socio-economic impacts of tourism. For example, in
Indonesia there was a joint venture project between the local government and Patra
Pala Foundation with support from the Japan International Cooperation Agency
(JICA) to provide alternative income for villagers living in the area surrounding the
Borobudur World Heritage site. The project was designed to provide agro-forestry
activities, develop community-based ecotourism, improve local awareness of resource
management, set up a training centre for villagers and establish a community forum
for networking and monitoring. Social impacts have been observed at the village level
and economic impacts still have to be analyzed quantitatively. More significantly, the
wider benefits have extended to the Borobudur World Heritage site since the villagers
understand that environmental resource management strengthens the zone
surrounding the site. 32
Another example is in Nepal where the Ministry of Culture, Tourism and Civil
Aviation initiated the Tourism for Rural Poverty Alleviation Programme (TRPAP)
from 2001 to 2005. The immediate objectives were to demonstrate sustainable
tourism development models, review and improve policy formulation and strategic
planning, adapt institutional mechanisms, including decentralization, in order to
achieve sustainable tourism development that would be pro-poor, pro-environment,
pro-rural communities and pro-women. 33 Six districts and 48 villages were involved
32
United Nations ESCAP, The Contribution of Tourism to Poverty Alleviation, Tourism
Review number 25 (New York: United Nations, 2005), p. 64. ST/ESCAP/2380.
33
Ibid., pp. 68-70.
-42-
in this pilot programme, which was supported by UNDP and the development
agencies of the United Kingdom and the Netherlands. According to one report,
regular monitoring and evaluation to assess the benefits was difficult at the field level
due to lack of communication, limits on transportation and on-going armed conflict in
some districts. Similarly, frequent transfer of the government officers from the
programme districts presented a challenge to monitoring implementation of pro-poor
tourism policies and strategies of TRPAP. Monitoring activities from the rural
community level to the central level in order to sustain the pilot rural tourism models
required a different evaluation strategy.
An evaluation tool known as the “Development Wheel” was designed for
communities to self-monitor their progress through discussions about changes in the
community structure, development of enterprises and natural and cultural resources.
The “Development Wheel” is one of several evaluation tools that is part of an
evaluation methodology known as the Appreciative Participatory Planning and Action
(APPA). The APPA methodology focuses on having local people identify plans and
activities that are positive, successful and strong so they can serve as a means to
empower communities. When people used the “Development Wheel”, it proved to be
the most effective participatory way to evaluate progress of TRPAP at the programme
sites. 34
3. Value chain analysis
One technique that has become increasingly popular in the current era of
globalization is value chain analysis (VCA). This type of analysis enables
34
Yogi Kayastha, “Monitoring and Evaluation of a Pro-Poor Tourism Project
in a Conflict Situation”, paper presented at the EASY–ECO 2005–2007
Conference Monitoring and Evaluation of Pro-Poor Tourism Policies for
Sustainable Development, Saarbrucken, Germany, 2006. www.wu-
wien.ac.at/inst/iuw/fsnu/saarbruecken/papers/abstracts/Kayastha.pdf
-43-
policymakers to consider each element of a tourist’s experience to see how the
product or service is produced, distributed and sold -- that is, the value added by each
element. This can help to identify where to make interventions that will increase
linkages with the local economy and create more opportunities for local people to gain
the benefits from tourism. In 2006, the technique was used in the city of Luang
Prabang, Lao People’s Democratic Republic, where opportunities to increase earnings
were identified by assessing value chains for accommodations, handicrafts, excursions
and food. Key aspects included in any form of local assessment are local employment,
the earnings of sole traders, micro-enterprises and SMEs, ownership by the poor of
tourism-related enterprises, the significance of tourism income at the household and
community level and linkages with other sectors. An inventory of tourism-related
businesses was developed as shown in figure 2.
-44-
Figure 2. Types and number of enterprises in the Luang Prabang tourism economy
Source: C. Ashley, “Participation by the poor in Luang Prabang tourism economy: Current
earnings and opportunities for expansion”, ODI WP273, 2006.
www.odi.org.uk/publications/working_papers/wp273.pdf
The study estimated the expenditure per tourist, including their expenditure on
accommodation, restaurant food, drinks, crafts, transport and guides. For each
enterprise chain an assessment was made of which owners and workers would benefit
if the value chain were developed further. This enabled the identification of those
value chains most likely to benefit the poor, women and minorities. Table 9 presents
estimates of earnings across the four value chains.
-45-
Table 9. Summary of turnover and income estimates across four value chains
of the tourism economy in Luang Prabang, Lao PDR
Sector Excursion and

Accommodation Food and drink Curios and crafts
transport
Approximate
annual turnover in
8 700 000 7 000 000 4 400 000 1 800 000
Luang Prabang
(US$)
Percentage of
income accruing to
6 45-50 40 33
semi-skilled and
unskilled workers
Estimated income
accruing to semi-
skilled and 555 000 3 000 000 1 800 000 600 000
unskilled workers
(US$)
Main types of Weavers: 550 000
3-wheel taxi
income earners and Hotel workers: Meat and fish Silver and other
drivers: 300 000
approximate 290 000 producers: 2 400 000 suppliers 505 000
Boat owners: 110
aggregate annual Guest house Fresh food producers: Silk suppliers: 265
000
income (US$) workers: 215 000 883 000 000
Guides: 150 000
Vendors: 200 000
People categorized Silk producers,
Villagers with
as poor who Farmers supplying gatherers of wood
Small amounts shops, homestay
receive income fresh produce products, sellers of
and other fees
Hmong silver
Opportunities for Increase supply of
increased income Supplies of fresh Lao silk; make point Provide more
Increased
produce on regular of sale in rural areas; products and
employment as
schedule; supply of provide products with services in villages;
supply of rooms
specialty food to higher value added; increase number of
and beds expands
increase value added provide tailor-made village guides
products
Source: C. Ashley, “Participation by the poor in Luang Prabang tourism economy: Current
earnings and opportunities for expansion”, ODI WP273, 2006.
VCA can help to generate recommendations for interventions designed to
increase the socio-economic impact of tourism. Table 9 suggests three areas for
priority action with the greatest potential for benefiting large numbers of poor people
by increasing the proportion of: (1) fruit and vegetables from Lao farmers; (2) types
of silk and products from Lao producers that are popular with tourists; and (3) tourism
developed in rural areas to provide a greater range of services and products for
tourists.
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The methodology of VCA requires that the analysis starts with careful
definitions concerning the income levels and types of jobs used to categorize people
as poor, among other variables used to define poverty. The way in which data are
collected and the scope of its coverage, even at the local level, must be carefully
planned and implemented as well. It should be noted that VCA identifies existing
value chains that can be developed further. Gap analysis can be used to identify those
income-earning opportunities that have not yet been developed locally. This can help
to identify which goods and services are in demand with tourists, but are unavailable
from local supply sources. With these conditions in mind, VCA can provide policy
makers with information to help set priorities when considering the socio-economic
impact of programmes and projects at the micro level.
B. Assessing linkages, leakages and multiplier effects
As the global tourism industry has grown and spread to more developing
country destinations, crucial issues about assessing the impact of tourism at the
national level concern how benefits are created and how they are distributed in the
host developing country. The concepts of linkages and leakages provide one way for
assessing whether tourism is having a positive or negative impact in terms of whether
tourism expenditures generate income, employment and government revenues within
the national economy or whether the expenditures are for imported goods, thus
creating leakages via imports. 35
In order to see if the initial tourism expenditure has significant effects
throughout the economy due to a process of spending and re-spending, the concept of
35
UNWTO, “Adapting the National Tourism Satellite Account (TSA) Project to Subnational
Levels”, Discussion Paper (Madrid: UNWTO, September 2005), p. 38.
-47-
multiplier effect is used as a measurement of economic impact. The multiplier effect
refers to the cumulative impact of a unit of tourism expenditure as that expenditure is
re-spent in the local economy. The multiplier effect arises because induced increases
from tourist spending affects consumer spending which occurs due to the increased
incomes and because of the feedback into increased business revenues, jobs, and
income. 36 The multiplier describes the final change in an economy’s output relative to
the initial change in tourist expenditure.
In socioeconomic terms, linkages refer to the connections between the tourism
industry and local suppliers of goods and services through both the formal and
informal economy. Leakages refer to payments or financial flows made outside the
economy of the destination country. For companies in various sectors of the tourism
industry, linkages are seen in business terms as the supply chain. Linkages can
stimulate increased economic activity and have a positive effect on balance of
payments as local products replace imported ones. The positive impact of linkages
also relates to the capabilities and competitiveness of domestic firms. Among the
direct benefits from effective linkages are increased output of the linked enterprises,
increased employment, improved market access, increased knowledge and a broader
skill base. In addition this could improve efficiencies in productivity, managerial
capabilities and market penetration. Table 10 lists some of the main linkages in terms
of supply chains back to local producers and sellers to three sectors of the tourism
industry: hotels, restaurants and tour guide operations.
36
K. E. Case and R. C. Fair, Principles of Macroeconomics. (Englewood Cliffs, NJ: Prentice
Hall, 2006).
-48-
Table 10. Examples of supply chain linkages within selected sectors
of the tourism industry
Hotel companies: • construction materials, such as wood, stone, straw for

thatching and locally made mud bricks, giving a local
style to the hotels and could enhance their
attractiveness;
• furniture made of local wood varieties, provided its
exploitation is environmentally sustainable;
• carpets and rugs, locally woven by traditional
craftsmen and women;
• decorative objects designed, painted and/or produced
by local artists;
• bed linen, tablecloths, napkins and other textile items,
which need frequent replacement;
• food items, especially fresh produce grown by local
farmers, but also some processed items such as juices,
bread, etc;
• laundry services, especially to replace expensive, often
imported washing and/or drying equipment in small
and medium-sized accommodation establishments.
Restaurants and other • furniture, tablecloths, decorative objects, etc. as listed
catering establishments: above
• local food items, especially fresh produce grown by
local farmers
• local drinks, freshly-produced juices, etc.
• local dishes, reflecting the local gastronomy
Tour operating • local guides
companies: • local, traditional means of transport
• local cultural attractions and traditional ceremonies.
Source: Eugenio Yunis, "Poverty-sensitive Value Chains in the Tourism Industry", (Madrid:
UNWTO, October 2006.
Other forms of linkages that create benefits at the local level include:
employment in larger enterprises of the formal sector; development of traders or
micro and small and medium enterprises, especially in the informal sector;
distribution of tax revenues and collective income to communities; and infrastructure
improvements such as roads, potable water, telecommunications and other services
such as health, waste management, and banking. Local ownership of land or
-49-
businesses is another linkage mechanism that helps to avoid marginalizing local
people, especially if it results in more local expenditure or reinvestment.
Linkages can involve complementary products, which are those that do not
directly compete with the goods and services sold by the established industry at a
tourist destination. Tourists can be encouraged to purchase complementary products
in the local economy in order to create more linkages. Goods such as handicrafts, art
and local food and beverages or services such as guiding, massage, dance and music
add to the tourism experience and provide opportunities for local producers to create
linkages with the tourism industry. When TSA tables are compiled and analyzed, it is
important to clarify whether the category of connected products is identical to
complementary products. It could also be the case that analysis of complementary
products is one way to measure the informal sector of the tourism economy at the
local level.
Local authorities can facilitate linkages at the local level in ways that create
opportunities for the informal sector as well as micro, small and medium-sized
enterprises to sell to tourists and locals alike. One example is the creation of street
markets such as in Luang Prabang, Lao People’s Democratic Republic. As described
in box 6, the night market in Luang Prabang enhances tourism’s links to the local
economy.
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Box 6. Lao People’s Democratic Republic: Linkages at the Luang Prabang Night Market
The night market, which started in 2002/2003, supports the craft industry and
provides many opportunities for linkages that increase incomes and well-being for
producers and sellers. A study in 2006 reported the following:
1. The night market is a relatively low-cost outlet, which makes it accessible to

producers with little capital. A site costs 30 cents per day to rent or 60 cents
with electricity. While these costs are significant to local producers, they are
much less than for a permanent shop. Producers and sellers can come for
short periods, thus enabling women to come from distant villages, sell their
stock and then return home.
2. More than half of the total 400 stalls sell Hmong embroidery, woven silk and
textiles. Other craft products include mulberry paper products, cotton clothes
and T-shirts, jewellery, antiques and a few imports.
3. Semi-skilled and unskilled people earned about US$ 1.8 million a year from
crafts and curios, according to supply chain analysis. This was about 40
percent of total estimated turnover of US$ 4.4 million. This compares to total
estimated annual tourism receipts in Luang Prabang of US$ 22.5 million, of
which 27 per cent (US$ 6 million) went to semi-skilled and unskilled people.
4. Hmong embroidery plus silk and cotton weaving accounted for an estimated
US$3.0 million annual tourist expenditure, of which about US$1.1 million
(38 per cent) went to local producers, vendors and workers, with half of this
income going to weavers as both wage earners for shops and village weavers
selling direct or to vendors Many households could earn about US$ 30 per
month from weaving.
5. In terms of leakages, 100 per cent of cotton and about 50 per cent of silk was
imported, which means that about US$ 900,000 per year goes out of the
country to pay for imported inputs.
6. The night market has an international reputation and is a core attraction of

Luang Prabang.
Source: C. Ashley, “Participation by the Poor in Luang Prabang Tourism Economy: Current Earnings
and Opportunities for Expansion”, ODI Working Paper 273 (London: ODI, 2006). Available at
-51-
One review observed that leakages in the tourism industry occur when revenue
arising from tourism-related economic activities in a destination country is not
available for (re-)investment or consumption of goods and services within that
country. Financial resources "leak away" from the destination country to another
country, particularly when the tourism company is based abroad and when tourism-
related goods and services are being imported to the destination country, thus limiting
the economic benefits of tourism development. Estimates are often cited saying that a
significant percentage of revenues from tourism leak from developing countries due to
foreign ownership in the industry, imported resources, foreign tour operators, foreign
airlines and other reasons. However, the extent of leakages depends on a number of
factors such as economic size, industrial structure, among others. Updated analysis
can support or refute the argument about whether the more established a country
becomes as a tourism destination, the greater the proportion of revenue which will
leak away. 37
In the absence of reliable data, however, it is possible to have only general
impressions about the amounts and share of tourism revenue that leaks from tourist
destinations in developing countries. The complexities of the industry must be taken
into account as well. That is, some leakage occurs where tourists spend money at the
destination for imported goods and services; other leakages are external payments that
never make it to the destination country, such as travel agent commissions, tour
operator profits and financial transactions of foreign airlines. 38 Most information
37
Minu Hemmati and Nina Koehler, “Financial Leakages in Tourism”, Sustainable Travel &
Tourism (2000), pp. 25-29.
38
Jonathan Mitchell and Sheila Page, “Linkages and Leakages, Local Supply and Imports”
id21 insights, number 62 (June 2006), p. 5. www.id21.org
-52-
about leakages is in the form of general estimates and approximate shares, which
makes it difficult to analyze the impact or take related policy action.
One way to reduce leakages is by creating and strengthening linkages within
the domestic economy. Tourism businesses and governmental tourism organizations
can be encouraged to buy supplies from people in the host country, recruit labour
locally, use locally-owned accommodation and work more with informal tourism
enterprises. Tourism destinations that integrate tourists into the local economy and
purchase local products can be encouraged, especially at resorts that employ local
staff at reasonable salaries.
Analysis of the multiplier effect leads to the understanding that the true impact
of tourism is not simply the actual expenditure by visitors since there are indirect and
induced effects that can be measured. Input-output (I-O) modelling has usually been
used to derive multipliers, although this approach consumes time and resources and
has significant limitations. 39 The multiplier effect provides one way to take account of
the interrelationships between the tourism industry and different sectors within an
economy. However, there has been little recent work or research to update the reports
about tourism multipliers that were done in the 1990s.
C. Strengthening the knowledge base
A variety of techniques using data at the macro level can clearly show
policymakers the importance of tourism for national economic development. The
time-series data available from TSA can show some of the complex interrelationships
and patterns involving the tourism economy and the tourism industry. When these
39
M. Thea Sinclair and Mike Stabler, The Economics of Tourism (London: Routledge, 1997).
See also C. Cooper, J. Fletcher, S. Wanhill, D. Gilbert and R. Shepherd, Tourism Principles
and Practice (Essex: Pearson Education, 1998). As noted above, ESCAP undertook
studies designed to consider the multiplier effect in the 1990s. See
www.unescap.org/ttdw/index.asp?menuname=PublicationArchives
-53-
patterns are assessed, their relationship to important social indicators can be the
subject of in-depth research and analysis. In this way, the scope and extent of
tourism’s socio-economic contribution and impact will provide a stronger knowledge
base for policy formulation and related decisions, plans and programmes involving
tourism.
Thus far, development of TSAs has focused mainly on production of the
accounts. There is still a need for more analysis and assessment derived from TSAs in
order to contribute to the processes of policy-making and decision-making. The
Seventh International Forum on Tourism Statistics held in June 2004 encouraged
researchers to report and evaluate TSA with examples of usability and analysis. 40
Information and documentation about specific case studies can provide a
means of illustrating the role of tourism in socio-economic development and poverty
reduction. A search on the Internet using the words “poverty reduction tourism”, for
example, yields a vast amount of information on the subject. ESCAP has undertaken a
number of activities that are highlighted in box 7 as a contribution to this knowledge
base.
40
Seventh International Forum on Tourism Statistics, Stockholm, S?weden, 9-11 June 2004.
www.tourismforum.scb.se/default.asp
-54-
Box 7. Activities of ESCAP in the fields of tourism and poverty reduction
Workshops and seminars

(a) Regional workshop on urban tourism and poverty alleviation, Colombo,
November 2002;
(b) Seminar on poverty alleviation through sustainable tourism development,
Kathmandu, August 2003;
(c) Expert group meeting on measuring and assessing the impact of tourism
At the sub-national
initiatives on povertyand local level,
alleviation, value chain
Bangkok, and
October supply chain analysis
2004;
as in(d)
theInter-agency
case of Laoexpert group
People’s meeting onRepublic
Democratic tourism and poverty
have given reduction, Bali,who
insights into
Indonesia, December 2005;
benefits from tourism
(e) Seminar activities.
on impact In particular,
of tourism such
initiatives on analysis
poverty can provide
reduction, detailed
Bangkok,
November 2006.
information to policymakers about the role of the formal and informal sectors,
(f) Expert group meeting on enhancing the role of tourism in socio-economic
income development
groups and and poverty
gender reduction,inBangkok,
distribution October
the supply 2007. products and
of tourism
(g) Workshop on expanding the role of tourism in poverty reduction,
services.Nuku’alofa, Tonga, October 2007.
Publications
(a) Poverty Alleviation through Sustainable Tourism Development, August 2003
(ST/ESCAP/2265).
(b) The Contribution of Tourism to Poverty Alleviation, ESCAP Tourism Review
No. 25, December 2005 (ST/ESCAP/2380).
At the sub-national and local level, value chain and supply chain analysis as in
the case of Lao People’s Democratic Republic have given insights into who benefits
from tourism activities. In particular, such analysis can provide detailed information
to policymakers about the role of the formal and informal sectors, income groups and
gender distribution in the supply of tourism products and services. A briefing was
made recently to assess the key lessons from using tourism value chain analysis in six
-55-
developing countries, including Lao People’s Democratic Republic, Sri Lanka and
Viet Nam. 41
V. TOURISM AND TRANSPORTATION INFRASTRUCTURE

As part of the growing impact of globalization in Asia and the Pacific,
international tourism is dependent on efficient, reliable and cost-effective transport
infrastructure and services to support continued growth and development. At the same
time, transport policies and infrastructure development influence the quality, capacity,
extensiveness and efficiency of transport, which contributes to the competitiveness of
national tourism industries. Transport infrastructure provides the backbone of
transport systems, both within and between countries through networks of airports,
highways, railways and ports. Tourism will benefit from the work being done by
countries and areas of the region at the national and regional level to provide a
framework for internationally agreed routes and infrastructure standards.
The various forms of transportation and related infrastructure play a vital role
in economic growth by providing fast, reliable connections between population
centres for business, tourism, ordinary citizens and government. In countries where
the infrastructure policy environment is forward-looking in support of growth and
safety, social and economic needs can be met along with the demands of the tourism
industry. An infrastructure policy environment that includes consideration of tourism
development would have to address: (1) constraints to sector development; (2) which
infrastructure sectors to prioritize; (3) how to strengthen international and/or cross
border linkages; and (4) the complexity of relations between tourism development,
41
C. Ashley et al., “Assessing how tourism revenues reach the poor”, ODI Briefing Paper 21
(June 2007). http://www.odi.org.uk/Publications/briefing/bp_june07_tourism_vca.pdf
-56-
environmental sustainability, geographic location of expanded infrastructure and
related socio-economic changes.
According to data gathered by the World Bank for 118 airport projects with
private sector participation worldwide between 1991 and 2006, a total of 25 airport
infrastructure projects were carried out in low and middle income countries of East
Asia and the Pacific and 8 projects in South Asia. The total value of private
investment was US$ 4,281 million in East Asia and the Pacific, of which US$ 3,130
was for projects involving runway and terminal construction, US$ 881 million for
terminal construction only and US$ 270 million for runway construction only. The
total value of private investment in South Asia was US$ 3,426 million for projects
that involved runway and terminal construction. The total value for 33 projects that
meet private sector participation criteria in both Asian subregions (US$ 7,707 million)
accounted for 30 per cent of total investment of US$ 25,552 million in low and
middle income countries worldwide. 42
For about the past four years, the travel industry in Asia and the Pacific has
been undergoing a dynamic change, and the growth of low cost carriers has been cited
as the single most important factor currently shaping the region’s airline industry. In
2003, low cost carriers accounted for 5 per cent of the Asian and Pacific travel
market. 43 In January 2007, there were 342,000 low-fare flights offered around the
world, which was 15 per cent higher than in January 2006. According to the Official
Airline Guide (OAG), more than half of the world’s new low-cost flights were in Asia
and the Pacific. There were more than 22,000 additional low-fare services within the
42
World Bank, Private Participation in Infrastructure Database.
http://ppi.worldbank.org/explore/ppi_exploreSubSector.aspx?SubSectorID=5
43
MarketShare, “The Impact of Low Cost Airlines on the Asia Pacific Travel Sector” (Singapore:
MarketShare Pte Ltd, February 2005).
-57-
region during January 2007, representing a 67 per cent increase year on year. 44 The
growth in low cost carriers has made international, regional and domestic travel
accessible to more people in the region. At the same time, the aviation industry has
had to adjust its strategic marketing and understanding of consumer behavior in the
region. For example, low cost domestic sector flights in India grew 62 per cent and
the number of seats grew 151 per cent between May 2006 and May 2007. In
Malaysia, 40 per cent of the flights and 59 per cent of the seats were on low cost
carriers. 45
In a recent study of the tourism industry worldwide, the World Economic
Forum (WEF) developed the travel and tourism competitiveness index (TTCI) to
provide a fairly comprehensive tool for measuring the factors and policies that help in
assessing the comparative strengths and weaknesses of 124 countries and areas,
including 26 in Asia and the Pacific, in their ability to develop travel and tourism.
According to WEF, its assessments of the travel and tourism environments can be
used by all stakeholders to work together to improve the industry’s competitiveness in
their national economies, thereby contributing to national growth and prosperity. 46
The term national competitiveness must be used carefully, however, The notion of
national competitiveness is controversial, although it is one way to start asking about
the appropriate role and extent of government policy. Given that it is firms that
compete, according to the Asian Development Bank (ADB), from the national point
of view the real question would be about how government policies might ensure that
44
“January Flights Increase Marks Five Years of Aviation Growth-Global”, OAG Press Release, 29
January 2007.
www.oag.com/oag/website/com/OAG+Data/News/Press+Room/Press+Releases+2007/January+Flights
+increase+marks+five+years+of+aviation+growth+GLOBAL+2901071
45
“Aviation Growth Hits All-Time High”, OAG Press Release, 8 May 2007.
www.oag.com/oag/website/com/en/Press+Releases+2007.
46
World Economic Forum, Travel & Tourism Competitiveness Report 2007 (Geneva: World
Economic Forum, 2007), p. xi.
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firms are competitive. Despite arguments about whether or not nations compete,
governments play a critical role in shaping the competitive environment and behavior
of firms through a variety of policies and activities. 47
Table 11 presents the ranking and scores (on a 7-point scale) for selected
Asian and Pacific countries as taken from the ranking of 124 countries and areas
worldwide. The overall rank is composed of three dimensions of travel and tourism:
(1) regulatory framework, (2) business environment and infrastructure and (3) human,
cultural and natural resources. Within each dimension there are several factors that are
measured by a number of variables. For the purpose of table 11, two out of five
factors directly related to transport infrastructure are presented. Air transport
infrastructure was scored and ranked based on six variables and ground transport
infrastructure based on four variables.
47
ADB, Asian Development Outlook 2003 (Manila, ADB, 2003), p. 59.
www.adb.org/Documents/Books/ADO/2003/part3_3-2.asp
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Table 11. Ranking and scores on the travel and tourism competitiveness index,
business environment and infrastructure, air and ground transport infrastructure,
selected Asian and Pacific countries a/
World Overall travel Business Air transport Ground

Bank and tourism environment infrastructure transport
income competitiveness and factor infrastructure
groupingb/ infrastructure factor
dimension
Rank Score Rank Score Rank Score Rank Score
Australia HI 13 5.21 10 5.04 5 5.41 20 5.18
Azerbaijan LMI 75 3.92 70 3.29 77 2.75 49 3.87
Bangladesh LI 120 3.21 108 2.61 114 1.99 87 2.82
Cambodia LI 96 3.64 103 2.71 89 2.54 82 2.93
China LMI 71 3.97 61 3.51 36 3.78 45 3.99
Georgia LMI 66 4.13 98 2.77 106 2.16 76 3.07
Hong Kong, HI 6 5.33 14 4.81 12 4.83 2 6.46
China
India LI 65 4.14 55 3.64 33 3.86 40 4.17
Indonesia LMI 60 4.20 68 3.30 64 2.98 89 2.80
Japan HI 25 4.99 17 4.72 16 4.68 6 6.32
Kazakhstan LMI 82 3.81 81 3.03 75 2.76 72 3.19
Republic of HI 42 4.58 24 4.46 24 4.10 19 5.30
Korea
Kyrgyzstan LI 102 3.54 104 2.69 107 2.15 104 2.41
Malaysia UMI 31 4.80 27 4.44 31 3.91 15 5.58
Mongolia LI 91 3.72 109 2.57 96 2.31 109 2.35
Nepal LI 106 3.49 117 2.47 112 2.02 116 2.11
New Zealand HI 14 5.20 20 4.57 15 4.69 25 4.83
Pakistan LI 103 3.52 75 3.19 84 2.64 52 3.84
Philippines LMI 86 3.79 79 3.10 72 2.80 91 2.70
Russian UMI 68 4.03 49 3.75 21 4.23 65 3.52
Federation
Singapore HI 8 5.31 11 5.01 10 4.88 3 6.45
Sri Lanka LMI 79 3.89 91 2.86 91 2.48 74 3.11
Tajikistan LI 110 3.46 112 2.52 109 2.09 94 2.58
Thailand LMI 43 4.58 35 4.14 25 4.07 28 4.67
Turkey UMI 52 4.32 63 3.49 51 3.34 59 3.66
Viet Nam LI 87 3.78 95 2.81 90 2.52 85 2.88
Source: World Economic Forum, The Travel & Tourism Competitiveness Report 2007 (Geneva:
World Economic Forum, 2007).
Note: a/Air transport infrastructure factor is comprised of six variables: (1) quality of air transport
infrastructure, (2) available seat kilometres, (3) departures per 1,000 population, (4) airport
density, (5) number of operating airlines and (6) international air transport network.
Ground transport infrastructure factor is comprised of four variables: (1) road infrastructure,
(2) railroad infrastructure, (3) port infrastructure and (4) domestic transport network.
b/
World Bank classification of countries by income group as of 2005, annual GNI per capita.
Low income (LI) is US$ 875 or less; lower middle income (LMI) is US$ 876 to US$ 3,465;
upper middle income (UMI) is US$ 3,466 to US$ 10,725; and high income (HI) is
US$ 10,726 or more.
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The business environment and infrastructure dimension showed one of the
highest positive correlations with the overall index by 96 per cent, according to
further analysis done for WEF. 48 This tends to confirm the argument that a country
seeking success with its tourism industry must give direct attention to the impact of
transport infrastructure policies and plans.
Several results for countries of Asia and the Pacific, as shown in table 11, are
noteworthy. The rank of Azerbaijan on overall competitiveness is generally parallel to
its rank on the dimension of business environment and infrastructure. However, when
comparing the two component factors of air transport and ground transport
infrastructure, Azerbaijan’s rank of 77 out of 124 countries on air transport
infrastructure is about the same as the two rankings already discussed. The relatively
higher ranking of 49 on ground transport infrastructure suggests the importance of this
factor for tourism accessibility. In the case of China, much higher rankings for air
transport (36) and ground transport (45) infrastructure when compared to the overall
competitiveness ranking suggests that these two transport factors generally contribute
to the strength of the national tourism industry. India achieved higher rankings for
both air (33) and ground (40) transport infrastructure factors relative to its rank for
overall competitiveness (65).
Malaysia’s high score (31) on overall competitiveness and on the business
environment and infrastructure dimension (27) outranked some high income countries
with major tourism industries. In fact, Malaysia jumps to the rank of 15 for the ground
transport infrastructure factor. This shows how the efficiency and accessibility of
ground transport is important for the success of Malaysia’s tourism industry.
48
Jurgen Ringbeck and Stephan Gross, “Taking Travel & Tourism to the Next Level: Shaping
the Government Agenda to Improve the Industry’s Competitiveness”, World Economic
Forum, Travel & Tourism Competitiveness Report 2007 p. 28.
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The rankings for Pakistan varied widely and showed a low rank of 103 out of
124 countries for overall travel and tourism competitiveness. However, on the
dimension of business environment and infrastructure its ranking moved to 75th.
Within this dimension, Pakistan’s ranking on the ground transport infrastructure factor
moved up to 52.
For a country with a large geographic area such as the Russian Federation, a
high ranking on air transport infrastructure (21) contrasts with lower rankings for
ground transport infrastructure (65) and overall travel and tourism competitiveness
(68). This underscores the dominance of air transport in quantitative terms (such as
availability of seat kilometres, number of airlines and airport density) for the Russian
Federation. However, these rankings contrast with one of the lowest rankings (120 out
of 124) for the government of the Russian Federation giving priority to the travel and
tourism industry. (See table 13.)
Thailand had a rank of 43 on overall competitiveness, but moved up strongly
to 25th for the air transport infrastructure factor and 28th for the ground transport
infrastructure factor. This was the best result among the seven Asian and Pacific
countries classified in the lower middle income group.Among the selected Asian and
Pacific countries and areas, Hong Kong, China was assessed as having the strongest
travel and tourism competitiveness overall, followed closely by Singapore. Both
economies were ranked as having excellent infrastructure, including their ground
transport infrastructures, which were assessed as among the top three in the world,
and their air transport infrastructures, for which Singapore ranked 10 and Hong Kong,
China ranked 12.
When the Asian and Pacific countries and areas are assessed within groups
defined by the World Bank income categories, nine were found to have ranked in the
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top 10 of their respective groups. That is, Malaysia ranked third among the upper-
middle income group. Thailand ranked second and Indonesia ranked tenth within the
lower-middle income group. India ranked first, China second, Viet Nam fourth,
Mongolia fifth and Cambodia ninth within the low income group. 49
Table 12 presents details about three variables that are part of the ground
transport infrastructure factor: road infrastructure, railroad infrastructure and domestic
transport network. 50 According to WEF, domestic transport network refers to the
national transport network consisting of domestic flights, buses, trains, taxis and so
forth. Data about the selected Asian and Pacific countries as a group showed that their
average score on the quality of road infrastructure was 3.60 which was below the
average score of 3.70 for all countries surveyed worldwide. However, the averages of
the Asian and Pacific group for railroad infrastructure (3.47) and domestic transport
network (4.75) were considerably higher than the respective world averages (2.90 for
railroad and 4.60 for domestic transport infrastructure).
Results for the quality of road infrastructure highlight the fact that 10 of the 26
selected countries had scores higher than the world average. Six of these countries
were from the high income group; Malaysia and Turkey were from the upper middle
income group; and China and Thailand were from the lower middle income group.
This means that 16 countries, including ten low income countries, five lower middle
income countries and one upper middle income country had below-average scores,
which suggests that road infrastructure linked to tourism was not very extensive or
well-developed for this group.
Results for the quality of railroad infrastructure show that 15 of the 26
countries in Asia and the Pacific had scores above the world average of 2.90,
49
Ibid., p. 30.
50
Port infrastructure is a fourth variable of this factor, but data are not presented here.
-63-
including all six high income countries, two upper middle income countries (Malaysia
and the Russian Federation), five lower middle income countries (Azerbaijan, China,
Georgia, Kazakhstan and Thailand) and two low income countries (India and
Pakistan). Such scores must be viewed in the context of how much railroad
infrastructure exists in the country and whether constraints of size, geography and
history, among others, influence the role of such infrastructure, especially for the
tourism industry.
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Table 12. Ranking and scores on quality of ground transport infrastructure variables,
selected Asian and Pacific countries a/
Road Railroad Domestic transport

infrastructure infrastructure network variable
variable variable
Rank Score Rank Score Rank Score
Australia 24 5.20 22 4.60 21 5.80
Azerbaijan 63 3.30 34 3.80 45 4.80
Bangladesh 72 3.10 68 2.30 107 3.50
Cambodia 77 2.90 97 1.50 84 4.00
China 45 4.00 33 3.80 64 4.50
Georgia 80 2.80 52 3.00 112 3.20
Hong Kong, China 6 6.30 5 6.30 3 6.70
India 66 3.20 21 4.70 32 5.30
Indonesia 110 2.10 64 2.40 74 4.20
Japan 8 6.10 2 6.60 6 6.60
Kazakhstan 98 2.30 46 3.30 59 4.50
Republic of Korea 25 5.20 13 5.20 27 5.60
Kyrgyzstan 115 1.90 74 2.00 72 4.30
Malaysia 15 5.70 17 5.00 23 5.80
Mongolia 118 1.80 63 2.50 106 3.50
Nepal 100 2.20 119 1.20 99 3.70
New Zealand 41 4.40 37 3.70 24 5.70
Pakistan 61 3.50 39 3.60 65 4.40
Philippines 86 2.60 86 1.70 92 3.80
Russian Federation 103 2.20 30 3.90 54 4.60
Singapore 1 6.70 9 5.70 5 6.60
Sri Lanka 81 2.70 61 2.50 105 3.50
Tajikistan 109 2.10 55 2.80 94 3.80
Thailand 28 5.00 40 3.60 31 5.40
Turkey 53 3.70 67 2.30 28 5.50
Viet Nam 91 2.50 70 2.20 77 4.20
Average score for 3.60 3.47 4.75
selected Asian and
Pacific countries
Average score for all 3.70 2.90 4.60
124 countries surveyed
Source: World Economic Forum, The Travel & Tourism Competitiveness Report 2007
(Geneva:
Note: Ranking covers a group of 124 countries, with 1 as the highest ranking. Scores for
each variable are based on a scale of 1 to 7 utilized in the WEF’s executive opinion
survey. 1 represents the lowest possible score and 7 is the highest possible score.
-65-
Results for the quality of the domestic transport network show that 12
countries had scores above the world average of 4.60. This included all six of the high
income countries and three upper middle income countries (Malaysia, the Russian
Federation and Turkey), two lower middle income countries (Azerbaijan and
Thailand) and one low income country (India). For seven of the 12 countries, such
high scores may be connected to their above-average scores on the extent to which the
government prioritizes the travel and tourism industry, as shown in table 13.
However, five of the 12 countries had below average scores on the government
priority given to tourism (Azerbaijan, Japan, the Republic of Korea, the Russian
Federation and Turkey).
At the same time, eight countries with high scores for giving due consideration
and priority to the tourism industry had below average scores on the quality of their
domestic tourism network. Such results suggest that there may be a more complex
linkage and related conditions involving an efficient and accessible domestic transport
network and giving priority to tourism development. It is also important to understand
more carefully the role of transport infrastructure development in the overall context
of national socio-economic planning as well as in general tourism development
planning. The results from the WEF survey can be considered as suggesting
perceptions about the quality of transport infrastructure in the selected countries that
need to be backed up with more quantitative data and analysis.
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Table 13. Comparing country scores on government priority given to travel and
tourism with selected infrastructure variables
Government Quality of
prioritization Quality of air Quality of Quality of domestic
of travel and transport railroad road transport
tourism infrastructure infrastructure infrastructure network
Australia 5.30 6.00 4.60 5.20 5.80
Azerbaijan 3.90 5.10 3.80 3.30 4.80
Bangladesh 3.20 2.50 2.30 3.10 3.50
Cambodia 5.90 3.90 1.50 2.90 4.00
China 4.80 3.70 3.80 4.00 4.50
Georgia 4.80 3.40 3.00 2.89 3.20
Hong Kong,
China 6.00 6.70 6.30 6.30 6.70
India 4.70 5.10 4.70 3.20 5.30
Indonesia 5.10 4.10 2.40 2.10 4.20
Japan 3.60 6.40 6.60 6.10 6.60
Kazakhstan 3.90 4.10 3.30 2.30 4.50
Kyrgyzstan 4.60 3.10 2.00 1.90 4.30
Malaysia 5.90 6.00 5.00 5.70 5.80
Mongolia 4.50 2.80 2.50 1.80 3.50
Nepal 4.80 3.30 1.20 2.20 3.70
New Zealand 5.80 5.70 3.70 4.40 5.70
Pakistan 3.50 4.60 3.60 3.50 4.40
Philippines 4.50 4.00 1.70 2.60 3.80
Republic of Korea 3.90 5.50 5.20 5.20 5.60
Russian
Federation 4.30 3.90 2.20 4.60
Singapore 6.00 6.90 5.70 6.70 6.60
Sri Lanka 5.30 4.10 2.50 2.70 3.50
Tajikistan 4.50 2.90 2.80 2.10 3.80
Thailand 5.60 5.50 3.60 5.00 5.40
Turkey 4.40 4.70 2.30 3.70 5.50
Viet Nam 4.70 3.80 2.20 2.50 4.20
Average for
selected countries
of Asia and the
Pacific 5.08 4.55 3.47 3.60 4.75
Average for 124
countries 4.50 4.50 2.90 3.70 4.60
Source: World Economic Forum, The Travel & Tourism Competitiveness Report 2007
(Geneva:
Note: Scores for each variable are based on a scale of 1 to 7 utilized in the WEF’s
executive opinion survey. 1 represents the lowest possible score and 7 is the highest
possible score.
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Developing routes by land and air in order to link existing tourism centres or
open new areas in less developed regions are important mechanisms for spreading
benefits to areas that might have not directly benefited from tourism development.
Route development clearly requires planning and cooperation among a number of
partners to create a network of tourist activities, attractions and support services that
are structured to provide the maximum socio-economic benefits. Such cooperation
also requires coordination in order to understand the tourism product in a systematic
way and seek appropriate marketing channels. It has been suggested that heritage and
nature tourism throughout a country provides a greater range of choices to tourists,
contributes to longer stays, builds capacity and spreads the benefits of tourism and
counterbalances over-reliance on hubs. 51
A number of ESCAP-member countries have supported the opportunities for
shared benefits to the tourism industry at the regional and subregional level from
transport infrastructure development. For example, the Asian Highway project is a
cooperative undertaking among member countries aimed at improving highway
systems throughout Asia. The system is expected to facilitate access to tourism
destinations. It is one pillar of the Asian Land Transport Infrastructure Development
(ALTID) project with the aim of expanding and standardizing roadways in the region.
The Intergovernmental Agreement on the Asian Highway Network was adopted in
November 2003 and entered into force on 4 July 2005.
There are 55 Asian Highway routes, which have been identified among 32
countries covering a total of about 141,000 km. According to a recent ESCAP
publication, member countries, multilateral and bilateral donors have committed to
51
“Tourism and Poverty Reduction – Making the Links”, Pro-Poor Tourism Info-Sheets,
Sheet Number 3, (London: Pro-Poor Tourism Partnership, 2004).
-68-
investing about US$ 26 billion in the construction, rehabilitation and upgrading of
some 37, 000 km of the Asian Highway network. By 2005, China invested about US$
6.65 billion in the development of the Asian Highway network, followed by India at
US$ 3.64 billion and the Russian Federation at US$ 2.65 billion. Almost US$ 18
billion in investment was still required as of 2005 to implement 121 priority road
projects for upgrading some 26,000 km of the Asian Highway in 25 member
countries. Central and South-West Asia required about US$ 7.3 billion followed by
South-East Asia at US$ 4.6 billion. 52 At the same time, ESCAP has identified tourism
attractions and suggested various activities at the national and regional levels to
promote tourism, especially through cooperative efforts. 53
The Trans-Asian Railway is a second pillar of ALTID that represents the
potential for sharing benefits from tourism. The Intergovernmental Agreement on the
Trans-Asian Railway Network was signed at Busan in November 2006. Along with
the Almaty Programme of Action of August 2003, which was designed to address the
special needs of landlocked developing countries within a new global framework for
transit transport cooperation, it is recognized as an example of successful regional
cooperation. The Busan Declaration adopted by the Ministerial Conference on
Transport in November 2006 resolved that government authorities would develop and
implement transport policies at the national, subregional and regional levels that
would meet the challenges of globalization. Promoting the potential and opportunities
that such infrastructure implies for tourism development, especially in landlocked and
transit developing countries, is one of those challenges.
52
United Nations, Priority Investment Needs for the Development of the Asian Highway
Network (New York: United Nations ESCAP, 2006), pp. 26, 34. (ST/ESCAP/2424)
53
United Nations, Asian Highway Handbook (New York: United Nations ESCAP, 2003)
ST/ESCAP/2303. See also “Tourism Attractions along the Asian Highway.
http://www.unescap.org/ttdw/common/tis/ah/tourism%20attractions.asp
-69-
In 2001, ESCAP organized the Seminar on the Promotion of Buddhist
Tourism Circuits. This resulted in a publication covering Buddhism as part of cultural
and heritage tourism in nine countries in South and South-East Asia. Several countries
identified the importance of providing connections via air, rail and road infrastructure
for the tourist destinations along the Buddhism circuit. 54
Infrastructure related to ports and inland waterways is in the process of
becoming a more significant and dynamic sub-segment of tourism-related transport.
Reports indicate that the cruise industry has emerged as one of the fastest growing and
popular segments of the worldwide travel and leisure industry. Between 1999 and
2005, passenger levels for conventional cruises have expanded from about 8.5 million
to 13.9 million. During the same period, the Asian and Pacific region accounted for
from 5 per cent to 8.6 per cent of the worldwide cruise market.55 Singapore; Hong
Kong, China; and Australia are well-established destinations, as well as home bases,
for cruise ships due to the capacity of their port infrastructure. Within the cruise
industry, Asia and the Pacific is seen as a region with great potential given the
opening of new routes and the diverse cultural attractions. Destinations that aim to
attract the cruise industry must focus on port facilities, and ancillary services,
according to cruise industry officials. 56 One cruise line has already added Cambodia
as a destination that involves travelling from Thailand to Hong Kong, China with
destinations in at least four ports in Viet Nam. Another cruise line starts in Bangkok,
Thailand and ends in Mumbai, India with stops in Cambodia, Viet Nam, Singapore,
Malaysia and Sri Lanka. India and China are considered as emerging destinations. A
54
ESCAP, “Promotion of Buddhist Tourism Circuits in Selected Asian Countries”, Tourism
Review Number 24 (New York: United Nations, 2003). ST/ESCAP/2310
55
Tourism Commission and Hong Kong Tourism Board, “Consultancy Studies on Cruise
Market Development” (Findings), no date. Refer to
www.info.gov.hk/gia/general/200610/24/P200610240216.htm
56
World Cruise Network, “A Taste of Eastern Promise” 3 April 2006.
http://www.worldcruise-network.com/features/feature110/
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new cruise ship terminal developed in Shanghai was expected to open in 2007 and
cover 160,000m² with a length of 850m, which would accommodate three large cruise
liners or four standard-sized passenger ships at one time. 57
The possibilities for developing tourism opportunities based on inland
waterways transport has been recognized by ESCAP-member countries as recently as
1999, when the Commission included tourism development in Resolution 55/1 on
sustainable development of inland water transport in the Asian and Pacific region
adopted at the fifty-fifth session. 58 Navigable rivers run through large areas of the
country in many riparian Asian countries, including the Yangtze and Pearl Rivers in
China, the Greater Mekong River (including the Lancang River in China) in six
countries, the Buriganga River in Bangladesh, the Ganges River in India, the
Ayeyarwady River in Myanmar and the Chao Phraya River in Thailand, among
others.
Subregional cooperation is an important element for tourism development
along the Mekong River. In 1995, the Governments of Cambodia, the Lao People’s
Democratic Republic, Thailand and Viet Nam signed the Agreement on the
Cooperation for the Sustainable Development of the Mekong River Basin and
identified tourism as one of the areas of cooperation. In 2000, the Governments of
China, the Lao People’s Democratic Republic, Myanmar and Thailand signed the
Agreement on Commercial Navigation on the Lancang-Mekong River. The Greater
Mekong Subregional Economic Cooperation Programme was established with
financing from the Asian Development Bank (ADB) in 1992 among Cambodia, China
(Yunnan province), Lao People’s Democratic Republic, Myanmar, Thailand and Viet
57
Ibid.
58
United Nations ESCAP, Manual on Modernization of Inland Water Transport for
Integration within a Multimodal Transport System (New York: United Nations, 2004), pp.
105-106. ST/ESCAP/2285
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Nam with the aim of strengthening economic linkages, including tourism. In March
2005, it was reported that the ADB had appropriated $US28 million for infrastructure
in the Mekong Tourism Development Project in the context of tourism-related
infrastructure improvements. This financial support covered 11 subprojects in
Cambodia, Lao People’s Democratic Republic and Vietnam, which included, among
others, construction of river piers and feeder roads to tourist destinations. 59
A tourist route in the Lancang-Mekong River border areas of China, Lao
People’s Democratic Republic, Myanmar and Thailand has been taking shape. A
commercial navigation route from Simao in Yunnan Province to Luang Prabang, Lao
People’s Democratic Republic was officially opened in 2001. In 2006, the capacity
along the Lancang-Mekong River was upgraded so that ships with loading capacity
below 300 tonnes can cruise the river throughout the year. China established a regular
international passenger line from Jinghong port in Yunnan Province to Thailand's
Chiang Saen port in September 2006. One tourism organization at the prefecture level
in Yunnan Province offers trips along the river that start from Xishuangbanna and
travel to Lao People’s Democratic Republic, Myanmar and Thailand via Jinghong. 60
An efficient transport infrastructure has been considered as a key component
that directly influences the competitiveness of a country’s travel and tourism industry.
For countries in Asia and the Pacific, this includes an accessible, high-quality air
traffic network, established tourism infrastructure, and a well-developed multi-modal
ground transportation network. As suggested by WEF, the importance of various
factors and variables that make up travel and tourism competitiveness is likely to vary
59
Asian Development Bank, Sixteenth Meeting of the Working Group on the Greater
Mekong Subregion Tourism Sector, 25-27 March 2005.
www.adb.org/Documents/Events/Mekong/Proceedings/wgt16.asp
60
Government of China, web portal, 2 March 2007. http://english.gov.cn/2007-
03/02/content_539707.htm. See also, www.xsbnly.com/english/travel8.htm
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depending on each country’s stage of development. Determining the dynamics of
building up infrastructure as well as the air and ground transport network in different
development and geographical contexts could be based on systematically comparing
economies in various stages of development, identifying specific key success factors
and learning lessons that can be applied for particular groups of countries.61
61
Jurgen Ringbeck and Stephan Gross, “Taking Travel & Tourism to the Next Level: Shaping
the Government Agenda to Improve the Industry’s Competitiveness”, World Economic
Forum, Travel & Tourism Competitiveness Report 2007, p. 29.
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VI. TOURISM AND THE MILLENNIUM DEVELOPMENT GOALS
The Millennium Development Goals (MDGs) represent a global partnership
aimed at responding to the world's main development challenges, including poverty
reduction, opportunities for education, better maternal health, gender equality, and
reducing child mortality, AIDS and other diseases. The MDGs are an agreed set of
goals to be achieved by 2015 based on all actors working together at global, regional
and national levels. Strategies based on working with a wide range of partners can
help create coalitions for change that support the MDGs at all levels; benchmark
progress; and help countries build the institutional capacity, policies and programmes
needed to achieve the MDGs. 62 It is generally assumed that international tourism can
generate benefits for poor people and poor communities in the context of sustainable
tourism development, usually without specifically targeting the poor.
However, greater attention has been given to the argument that tourism could
be more effectively harnessed to address poverty reduction in ways that are more
direct. For example, according to UNWTO, tourism can contribute to development
and poverty reduction in a number of ways. Although the focus is usually on
economic benefits, there can also be social, environmental and cultural benefits.
Poverty can be reduced when tourism provides employment and diversified livelihood
opportunities, which provides additional income. This can contribute to reducing the
vulnerability by increasing the range of economic opportunities available to
individuals and households living in conditions of poverty. Tourism can also
contribute through direct taxation and by generating taxable economic growth since
taxes can then be used to alleviate poverty through education, health and
62
UNDP, Millennium Development Goals. www.undp.org/mdg/
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infrastructure development. 63 These points refer to the general contribution of tourism
at the macro level. When considering targeted interventions aimed at achieving
specific MDGs, then actions to make tourism contribute to poverty alleviation at local
and community levels needs to be considered. At the same time, however, it is equally
important to consider how such targeted interventions can be replicated in other
communities or scaled up to have a wider impact.
Targeted interventions to address the issues raised in the Millennium
Development Goals require that the linkages between tourism and poverty be
identified. Figure 3 illustrates many of these linkages.
63
WTO, Tourism and Poverty Alleviation, (Madrid: WTO, 2002), p. 31
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Figure 3. Linkages between tourism and poverty reduction
Table 14 develops the figure further and lists the potential contributions that
appropriate interventions in the tourism sector can make to the achievement of each of the
MDGs. As discussed in chapters II and III, the creation of income and employment in the
tourism industry and the tourism economy would contribute to reducing the proportion of
people living on less than a dollar a day (target for Goal 1).
Similarly, the provision of infrastructure facilities and services for tourists (roads,
communications, health and sanitation services) can be designed to benefit local communities
at the same time. Such facilities can contribute to the achievement of Goals 4, 5, 6 and 7. In
the area of gender equality and the empowerment of women (Goal 3), tourism is recognized
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as a sector that employs a high proportion of women. However, careful attention needs to be
given to gender patterns in tourism careers and employment should be carefully studied and
analyzed with particular attention to gender segregation by job category or wage gaps
according to gender.
Table 14. Contribution of tourism to achieving the Millennium Development Goals
Goal Contribution of tourism

1. Eradicate extreme (a) Tourism stimulates economic growth both at the
poverty and hunger national and local levels and promotes the growth of the
agricultural, industrial and service sectors;
(b) Tourism provides a wide range of employment
opportunities easily accessible by the poor. Tourism
businesses and tourists purchase goods and services
directly from the poor or enterprises employing the
poor. This creates opportunities for micro, small and
medium-sized enterprises in which the poor can
participate;
(c) International and domestic tourism spreads
development to poor regions and remote rural areas of a
country that may not have benefited from other types of
economic development;
(d) The development of tourism infrastructure can benefit
the livelihood of the poor through improvement in
tourism-linked service sectors, including transport and
communications, water supply, energy and health
services.
2. Achieve universal (a) The construction of roads and tracks to remote areas for
primary tourists also improves access for school-age children
education and for teachers;
(b) Tourism can help local resource mobilization, part of
which can be spent on improvement of education
facilities.
3. Promote gender equality (a) The tourism industry employs a high proportion of
and empower women women and creates microenterprise opportunities for
them. It promotes women’s mobility and provides
opportunities for social networking.
4. Reduce child mortality (a) The construction of roads and tracks to remote areas for
tourists also improves access to health services;
5. Improve maternal health
(b) Revenues accruing to national and local governments
6. Combat HIV/AIDS,
through taxes on the tourism industry can be used to
malaria and other
improve health services and nutrition for young
diseases
children and their mothers;
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Goal Contribution of tourism
(c) Tourism raises awareness about HIV/AIDS issues and
supports HIV/AIDS-prevention campaigns;
(d) Tourism aggravates the spread of HIV/AIDS (negative
effect).
7. Ensure environmental (a) Tourism can generate financial resources for

sustainability conservation of the natural environment;
(b) Tourism raises awareness about environmental
conservation and promotes waste management,
recycling and biodiversity conservation;
(c) Uncontrolled tourism may generate negative
externalities as a result of pollution, congestion and
depletion of natural resources (negative effect).
8. Develop a global (a) Tourism contributes to the socio-economic
partnership for development of least developed countries, landlocked
development countries and island developing countries through
foreign exchange earnings and the creation of job
opportunities;
(b) Tourism stimulates the development of the transport
infrastructure, which facilitates access to and from the
least developed countries, landlocked countries and
island developing countries;
(c) Tourism stimulates internal and external trade and
strengthens supply chains;
(d) Tourism promotes the integration of isolated
economies with regional and global flows of trade and
investment;
(e) Tourism reduces the burden on government budgets
through implementation of public-private initiatives;
(f) Tourism creates decent and productive work for youth;
(g) Tourism provides opportunities for bilateral,
multilateral and subregional cooperation among
countries;
(h) Information technologies play an important role in
integrating tourism enterprises into global tourism
markets.
Source: United Nations ESCAP, Transport and Tourism Division, Transport Policy
and Tourism Section.
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The MDG agenda and the role of tourism in poverty alleviation converges
with recent efforts based on the concept of pro-poor tourism. Pro-poor tourism is an
approach to tourism development and management that results in increased net
benefits for poor people by enhancing linkages between tourism businesses and poor
people. Its strategies focus on the local or community level and aim at increasing
tourism's contribution to poverty reduction and enabling poor people to participate
more effectively in tourism development. Among the many different types of poor
people to be considered are: staff, neighbouring communities, land-holders, producers
of food, fuel and other suppliers, operators of micro-enterprises, informal businesses,
craft-makers, other users of tourism infrastructure and resources, and so forth. Types
of pro-poor tourism strategies include economic benefits, livelihood benefits and
increasing local participation by building mechanisms for consultation. Such
strategies often begin by policies, processes and actions designed to reduce negative
impacts on poor people. 64
An instructive example of taking action based on the MDGs and the Tenth
Plan of the Government of India is a four-year project (2004-2008) entitled
“Endogenous Tourism for Rural Livelihoods” being funded by UNDP. The project
incorporates strategies designed to work with a wide range of partners to create
coalitions for change in support of achieving the MDGs at the local level and build
institutional capacity based on a new model known as endogenous tourism, which is
linked to the concept of rural tourism. In India, 74 per cent of the population resides in
7 million villages, which makes the concept of rural tourism appropriate.
64
Pro-poor Tourism www.propoortourism.org.uk/strategies.html
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Urban-centric industrialization along with the stress of urban lifestyles has led
to "counter-urbanization" thinking. 65 That is, theories of demographic transition due
to migration based on past patterns presumed a series of three major population
movements (rural to rural, rural to urban and urban to urban) as determined by
industrialization, economic development and urbanization. Demographers have
recently recognized a fourth movement, especially in developed countries: urban to
rural, or counter-urbanization. It is generally presumed that developing countries such
as India are going through a delayed transition in migration patterns, where
urbanization has contributed to falling income levels and fewer job opportunities in
rural areas, thus contributing to ongoing rural to urban migration. The Indian
government aims to identify and strengthen local resources (cultural heritage, local
traditions, art and crafts) and empower communities in rural areas through
management of endogenous tourism with a view to influencing the patterns of
migration.
In 2004, UNDP began concrete planning on an Endogenous Tourism Project
for Rural Livelihoods in India, involving communities throughout the country. The
project is structured in terms of India’s cultural heritage and indigenous traditions,
with common facility centres set up for craftspeople with local showcases for art and
craft wares, along with the history and traditions of each area. Communities manage
the project activities with partial financing from an incentive fund to encourage a
variety of rural tourism initiatives and the marketing of local craft products, as well as
dissemination of experiences and practices. Rural tourism in India is in line with
65
Thomas Kontuly, “International Comparisons of Counter-Urbanization”, Geographical
Perspectives, vol. 61 (Spring 1988), pp. 1-5. David Plane, Christopher Henrie, and Marc
Perry, “Migration across the Micropolitan /Metropolitan Spectrum”, paper presented at the
41st Annual Meeting of the Western Regional Science Association, Monterey, California, 17-
20 February 2002.
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increased levels of awareness, growing interest in heritage and culture, improved
accessibility and environmental consciousness. This new style of tourism in village
settings would allow international and domestic tourists visitors to experience a
unique lifestyle as well as sustain livelihoods in villages. 66
The main features of the project are presented in box 8.
Box 8. India: Endogenous Tourism for Rural Livelihoods
From 2003 to 2007, the Ministry of Tourism and Culture, Government of India, has been
working with 34 implementing agencies, 30 NGOs and 4 panchayats at 36 sites across 20 states
throughout the country. Alternative models of rural tourism are being developed across India,
since the government has identified tourism as a vehicle for generating employment and
promoting sustainable livelihoods. Micro-financing is included as part of the project.
Cultural heritage and indigenous tradition are the foundations of the project’s model of rural
tourism. Common facility centres for village craft persons and village art centres are set up at
the 36 project sites to showcase the culture and living heritage characteristic of each site.
Where appropriate, rest houses are built based on local skills and construction materials.
People in the communities are trained in different aspects of hospitality to provide services of
international standard.
Community ownership and management is central to the project’s strategy. At every stage in
the implementation, care is taken to ensure the participation of women, youth and other
disadvantaged groups.
In order to mainstream gender and HIV/AIDS concerns into the project, one of the partner
agencies is the Health Institute for Mother and Child.
By October 2006, most sites were ready to receive tourists and all implementing partners had
become sensitized to gender and HIV/AIDS concerns.
The project won a World Travel Award in the category of “World’s Leading Responsible
Tourism Project” in 2006.
Source: www.exploreruralindia.org
66
UNDP, “Endogenous Tourism for Rural Livelihoods”, Fact Sheet, May 2007.
http://data.undp.org.in/factsheets/hd-rl/may07/ETP.pdf
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It has been noted that results from such strategies could mean that low
numbers of people are employed and they might be concentrated in certain types of
jobs. However, the spread of earnings, collective income and other livelihood benefits
throughout a community can make pro-poor tourism significant to local poverty
reduction. It is not always possible to say what contribution this makes to national
poverty reduction efforts, since that depends on the scale of tourism within the
economy and the degree of pro-poor change within the sector. However, such tourism
can be very significant to a district or provincial economy, even if it might not be
large enough to affect national aggregates. 67
There are limits to using case studies for assessing the effectiveness of tourism
in alleviating poverty. However, final evaluation of multi-site projects such as India’s
“Endogenous Tourism for Rural Livelihoods” suggests the possibility of learning and
then scaling up such a project for wider coverage. Consideration of the linkages
between tourism and the MDGs clearly illustrates the potential of tourism to have a
greater socio-economic impact. Governments and other stakeholders face the
challenge of translating the potential into actual achievements.
One effort to assess the effectiveness of tourism projects was a World Bank
study that examinined the role of tourism in the World Bank's development strategy
and its lending activities in order to estimate the impacts on the sustainable
development of Bank actions. While tourism has not played an important role in the
Bank's development strategy in the recent past, there are some signs that it is being
seen as more important. Of the 1,500 or so new projects in the Bank from 1998 to
2003, about 6 per cent in terms of number and 3 per cent in terms of value had some
67
Caroline Ashley et al., Pro-Poor Tourism Strategies: Making Tourism Work for the Poor,
Pro-Poor Tourism Report Number1 (Nottingham, United Kingdom: Overseas Development
Institute, 2001), p. 41.
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tourism dimension. In terms of lending, direct Bank operations have invested in
infrastructure, which facilitates tourism development. Others that have tried to
mitigate the negative impacts of tourism, such as the spread of diseases such as
HIV/AIDS. In terms of strategic and policy advice, the Bank has supported projects
that were environmentally and socially sustainable and that helped reduce poverty.
The assessment looked at projects that focus on economic development through
infrastructure provision. Among the 1,500 or so projects that were appraised, 32 had
tourism as a central or significant feature. Only eight of the 32 provided any real
quantification of the benefits of tourism. A careful look at these eight revealed that
larger infrastructure investment projects were effective in providing benefits from
tourism. Smaller projects with investment in improving facilities and providing
technical assistance were more effective and yielded higher returns. Projects involving
cultural site development and promotion were also effective in yielding large benefits.
In terms of environmental impacts, the projects generally followed good practice and
ensured that negative environmental impacts were avoided or mitigated. Social
impacts were studied in less detail, according to the study. 68
VII. THE ROLE OF GOVERNMENT
Government intervention may be necessary to enhance the contribution of
tourism to socio-economic development and poverty reduction. One of the principal
roles of Governments is to set policy and legislative frameworks for tourism. Two
main reasons why governments should formulate tourism development strategy are:
68
Anil Markandya, Tim Taylor and Suzette Pedroso, “Tourism and Sustainable Development:
Lessons from Recent World Bank Experience”, (Washington, D.C.: IBRD, 2003), pp. 20-21.
http://info.worldbank.org/etools/docs/library/107771/SD_Communication/epublish/zip_files/b
iodiversity_russia2003/pdf/TourismSDMarkandya-Taylor.pdf
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(1) the tourist industry has many negative externalities, in particular negative social
and environmental impacts that need to be regulated and managed at national or local
levels, and (2) tourism can offer major opportunities for local economic development,
which can enhance the positive effects of tourism on local socio-economic
development and poverty reduction. In India, the Planning Commission has identified
tourism as one of the major vehicles for generating employment and promoting
sustainable livelihoods.
Real progress can be facilitated by using a wide range of instruments. A
number of these have been identified by the World Tourism Organization and the
United Nations Environment Programme and are categorized into measurement
instruments (sustainability indicators and monitoring; identification of limits),
command and control instruments (legislation, regulation, rules and licensing; land-
use planning and development control), economic instruments (pricing, charges and
taxation; property rights and trading; financial incentives; and voluntary
contributions), voluntary instruments (guidelines and codes of conduct, reporting and
auditing, and voluntary certification), and supporting instruments (infrastructure
provision and management, capacity-building, and marketing and information
services). The precise mix of policies and instruments will vary depending on the
situation, objectives and government structures.
A. Tourism ministries
As tourism moves up the national agenda, the government departments dealing
with tourism may need to be upgraded and strengthened. In order to achieve
sustainable management of tourism, tourism ministry staff need coordination,
networking and support of colleagues in other ministries and in a range of subnational
administrations. These needs emerge because the administration and governance of
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tourism takes places in localities where tourists and host communities interact, while
regulations and incentives are applied within a framework laid down at the national
level.
Tourism ministries have to be alert to the impact of institutional fragmentation
on the governance of tourism. Major decisions about planning, management of
cultural and natural assets, labour regulations, environmental impact assessments,
financial incentives and taxation policy are often the responsibility of other ministries,
where there might not be enough awareness about the impact on tourism policies and
plans. The functions of tourism ministries should go beyond regulating tourism
businesses, marketing and promotion and include wider consultation and
coordination.
For example, air transport has changed considerably in recent years due in part
to policy initiatives, such as deregulation of air services, adding a substantial number
of new routes and allowing operations by low-cost carriers; all of which would aim to
increase the number of tourists. While the economic benefits of tourism are now
explicitly evaluated in aviation policy in countries such as Singapore, tourism
ministries also have to consider the implications for tourism strategies, policies and
plans.
Tourism ministries can provide the government and its agencies with good
quality, systematic data, particularly about the effects of different types of tourism on
local socio-economic development. Provision of such data can help to substantiate the
contribution of tourism and convince policy makers.
B. Tourism plans
Tourism master plans are useful tools for identifying areas with tourism
potential, determining tourism strategy and structuring the provision of infrastructure,
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investment promotion and financial and other incentives. Governments need to ensure
that master plans and tourism development strategies address local economic
development goals, the geographic distribution of tourism activities and poverty
reduction.
Many governments have been increasing their efforts to identify and plan
tourism development located in areas that can help poor communities. In addition to
planning based on inventories of natural and cultural assets, information about the
spatial distribution of poverty should also be used when planning tourism
infrastructure and related tourism development projects. Such information can help
with plans to develop clusters of activities and attractions and tourism routes, as well
as stimulate cooperation and partnerships within and between local areas. Plans based
on clustering assume that tourists need a range of complementary tourism services
and attractions supported by infrastructure to make the area accessible.
C. Empowerment of poor communities, property rights

and development control
Government agencies can promote the empowerment of communities in
planning and managing tourism assets by initiating partnership approaches that
include poor people. Engaging the poor is particularly important in order to identify
opportunities that fit their livelihood strategies and overcome barriers to employment
and enterprise. Policy makers need to consider the appropriate mix between
promoting the formal and informal sector as this is a key variable for maximizing
local economic development and poverty reduction. One example of development
control and empowerment in Nepal is described in box 9. This activity in Lumbini is
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part of the government’s Tourism for Rural Poverty Alleviation Programme
(TRPAP).
Box 9. Nepal: Organizing local opportunities in Lumbini

The Tourism for Rural Poverty Alleviation Programme (TRPAP) implemented by the government
and the Nepal Tourism Board has been working with local communities in and around Lumbini, the
birthplace of Lord Buddha, to create more benefits from the large number of tourists visiting the area.
The TRPAP facilitated the organization of functional groups involving various tourism-related
activities. The Rickshaw Pullers Functional Group is example.
The group has 70 members (rickshaw owners) and TRPAP has supported the following activities:
• Form the Rickshaw Puller Group
• Lobby for a policy of “No Four-Wheel Entry into the Area”
• Fix the price of rickshaw services
• Introduce a queue system to provide equal opportunity to all members
• Introduce a compulsory identity card for all group members
• Provide training on cleanliness and hygiene
• Training in customer behaviour and guest relations
• Training in English for basic communication
• Provide a uniform
• Provide venture capital funds (soft loans) to purchase, decorate and repair rickshaws.
The following good practices resulted:
• Collaboration with the main local stakeholder to monitor the local transportation system,
standardize services and orient the rickshaw pullers made monitoring and control easier.
• Identification cards with the local stakeholder’s stamp helped give the rickshaw pullers
recognition by tourists.
• A sense of ownership was created by the Rickshaw Pullers Functional Group along with
continuous awareness about the benefits of being in the group.
• Local transportation services were promoted, which increased economic opportunities for
local poor people.
Penalties were introduced for rickshaw pullers who break the rules.
70 to 100 rickshaw pullers have benefited as follows:.

• Their monthly income increased by more than 70 per cent
• They earn US$7 to US$11 a day during the high season (4 months per year) and US$3 to
US$5 a day during the low season (4 months per year). Another four months is the rainy
season, when there is almost no business.
• More tourists are using rickshaws.
• There are visible changes in family income.
• They can receive soft loans to buy, decorate and repair rickshaws.
• They have increased awareness of economic opportunities offered by tourism.
• Services and communication have improved for them.
• They are recognized by all local stakeholders in Lumbini.
Source: SNV Nepal, ‘Lessons Learned on Pro Poor Sustainable Tourism in Nepal’, SNV Nepal, 2006.
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In Viet Nam, provincial and district-level governments have been given
greater responsibility for tourism planning and development in line with the overall
decentralization of governance. Provincial and district governments have the statutory
duty to consult and collaborate with other government agencies, as well as with other
tourism stakeholders, such as businesses and local communities. Overall, this
decentralized and a more integrated approach to tourism planning is a significant step
towards enhancing opportunities for incorporating poverty reduction and other local
development priorities into tourism development.
D. Legislation and regulations
Several areas of legislation have an impact on the capacity of small-scale
producers to develop tourism-related enterprises. These include access to credit,
business licensing, employment legislation, environmental health, and health and
safety regulations as well as the regulation of micro, small and medium-sized
enterprises. Governments need to ensure that people engaged in tourism are
remunerated fairly and receive adequate social protection in areas such as the
minimum wage, policies on equal opportunities, holiday entitlement and security of
employment.
In Viet Nam, for example, the Tourism Law was designed to create more
opportunities at the local level. Box 10 outlines some of the articles of the Tourism
Law, as well as the opportunities created and the expected results at the local level in
terms of empowerment, property rights and control over development.
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Box 10. Viet Nam: Empowerment through tourism legislation
In 2003, the Vietnam National Administration of Tourism (VNAT) was given responsibility for
drafting the nation’s first law on tourism. VNAT received support from UNWTO and the
Netherlands in order to incorporate international best practices when drafting the law. As a
result the Law on Tourism reflects concerted efforts aimed at ensuring that future tourism
development addresses poverty reduction and sustainable development objectives. Some
important elements of the law are described in terms of the opportunity created and the expected
results.
Opportunity: Provide incentives and directives for developing tourism for poverty reduction
purposes
Article 6: Tourism Development Policy
6.2. The State shall undertake incentive and prioritized policies on land, finance, credits for
foreign and domestic individuals and organizations investing in the following fields:
g) Development of tourism whereby having potentials in remote and isolated areas,
and in areas with socio-economic difficulties so as to make use of the labour force,
consume goods and services on the spot, contributing to raising intellectual level of the
people, and to hunger elimination and poverty reduction.
Results: Incentives and directives are to be made available for developing tourism in
disadvantaged areas that address poverty reduction and hunger eradication. Further incentives
such as local hiring and training, purchasing from local suppliers could also be included in the
sub-decrees that guide implementation.
Opportunity: Enhance greater opportunities for local involvement in tourism planning.

Article 7. Participation of Local Community in Tourism Development
7.1. The local community shall have rights to participate in and benefit from tourism activities;
be liable to preserve tourism resources and nurture local cultural identity; maintain security,
safety, social orders and environmental sanitation to create the attractiveness of tourism.
7.2. The local community shall be enabled to participate in the investment of tourism
development, restoration and enrichment of various types of traditional cultures, folklore arts,
crafts, goods production in service of tourists, contributing to uplift the material and spiritual life
of the local people.
Results: Local communities are now provided with a strong and clear legal position to
participate and benefit from, tourism development.
Opportunity: Avoid inadvertent barriers to poor peoples’ participation

Article 62. Types of Tourism Accommodation Establishments
Tourism accommodation establishment now includes the legal recognition of “Household room
for tourist lease”. For the first time, individual families can have legal recognition as
accommodation providers for tourists.
Article 78. Narrator: This is a new category of guide. Tour guides are required to hold university
degrees, but a “narrator” is defined as a “person who delivers on-site interpreting services to the
tourists at the tourist resort and tourist attraction.” A higher education degree is not required to
work in this capacity. This is extremely significant as the vast majority of rural poor do not have
the opportunities for higher education, but they are the most appropriate interpreters of their
culture.
Results: Some barriers to poor peoples’ participation under the old Tourism Ordinance have
now been removed by broadening the types of tourism products and services that may now be
officially recognized.
Source: Douglas Hainsworth, Senior Tourism Advisor, SNV-Vietnam, no date.
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E. Training, capacity-building and certification
The needs and existing capacity of local people have to be assessed to
ascertain where training interventions would be most useful. There is a need to
strengthen informal learning methods and in-place on-the-job training. The
certification of guides has been used in several places to control quality and supply,
and to ensure minimum standards of service and knowledge. In Viet Nam, a new
category of “narrator” has been introduced, which enables people without a formal
education to work as local guides. (See box 7.) At Keoladeo National Park, in India,
local rickshaw drivers are registered with the park to take tourists around the site.
The government is often required to play the lead role when issues of women’s
participation and empowerment in the tourism industry are involved. One example is
the government-run TRPAP in Nepal. TRPAP has been running different
empowerment schemes for women and has emphasized their participation in various
tourism activities. The programme has given training to local women on craft skills to
make souvenir items. Women are also ready to be trained in order to provide several
tourism services, such as running a grocery store and serving as tour guides. In such a
case, TRPAP can help provide financing to increase capacity as well as training. 69
National and local governments can provide incentives, pre-employment
training and continuing education programmes to promote employment of local
people in private tourism enterprises.
F. Taxes and levies
Taxes on goods, services and transactions, which provide funds for
government at the local or national level can be used specifically to support either
poor communities or the environments that provide their livelihood. For instance,
69
Nepal Tourism Board, E-Newsletter, 18 February 2005, p. 5.
www.anmausa.org/tourism/2005_02_18.pdf
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Bhutan levies a high daily royalty on tourists, which is used to fund education and
health programmes in remote rural areas.
Government policies on tourism taxation must be evaluated and designed in
ways that are comprehensive and integrated in order that the necessary revenues are
balanced against the affect on tourism markets and the profits of tourism businesses.
G. Microfinancing and facilitating market access and linkages
The poor have limited access to the tourism market for several reasons,
including lack of business skills, low educational levels, demanding regulations,
inability to escape severe poverty, poor health and social exclusion. Governments can
reduce the bureaucracy that small enterprises face, and create advisory services on
business development, provide seed-funding for entrepreneurs, develop business
linkages with established operators, assist micro, small and medium-sized enterprises
to form production or marketing cooperatives and provide educational, technical and
professional training programmes to improve quality and business standards.
Examples of linkages and cluster mechanisms described in box 11 can assist in market
access.
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Box 11. Nepal: Two examples of creating microenterprise opportunities for the poor
The Explore Nepal Group spent approximately US$ 57,000 on constructing and
furnishing the Koshi Tapu Wildlife Camp. All materials, except the toilet, were sourced
from local entrepreneurs of the Koshi Tapu area. Each year approximately US$ 5,700 is
spent for Bhojan Griha Restaurant in Kathmandu, another business of the Explore Nepal
Group, in order to renovate or replace the “soft furniture” of the restaurant, including
items such as candles, arts and crafts, tables and mats. This furniture is acquired only from
women’s handicraft associations such as Dhukuti and Sano Hastakala.
The Tiger Mountain Group supports local entrepreneurs while minimizing distortions in
the local market, such as price rises that would have an adverse impact on local people.
The Temple Tiger Jungle Lodges and Wildlife Camp in Pokhara buy supplies from local
markets but at established retail prices. Buying locally has the added benefit of
significantly reducing the company’s transport costs.
Ensuring that the sources of supply are diverse and the benefits within the community
widespread has proven to be a challenge because lodge employees tend to favour local
businesses with connections to their relatives. To overcome this tendency, the lodge
identifies services and supplies in an open, accountable and transparent manner. It
develops clear criteria for the supplies and services sought and ensures that the criteria are
widely disseminated among community members.
Source: The Netherlands Development Organization (SNV) Nepal, 2006.
H. Marketing
Destination marketing is increasingly the remit of the private sector, private-
public sector partnerships or clusters. (See chapter VIII.) This means that micro,
small and medium-sized enterprises and poorer producers may be excluded from the
formal marketing processes and distribution channels. To address this problem,
Governments can encourage discussions between national and regional tourist boards
and the institutions involved in local economic development and resource
conservation. They can also encourage the organization of marketing campaigns to
promote responsible tourism practices and suppliers, and give preferential marketing
terms to suppliers that adopt sustainable, responsible, poverty alleviation practices.
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Tourism market analysts have identified a number of market trends which
should inform the strategies and marketing decisions of policy-makers and investors
in Asia and the Pacific. One important trend is that tourists are increasingly willing to
travel long distances for longer periods and to take more frequent holidays. There is
growing demand for nature, adventure, activity and health-related holidays, with more
emphasis on individualism and flexibility. This leads to more independent travel and
tailor-made packages which enable tourists to seek authenticity through enhanced
knowledge or more interactions with other cultures. The market is becoming more
demanding in standards of service, product and accommodation. Tourists are making
greater use of the internet for researching destinations and booking holiday travel and
accommodation, often based on growing awareness of the environmental and social
impacts of tourism.
While keeping up with market trends in international tourism, much can be
done through careful marketing to alleviate the uneven geographic distribution of
tourists and to spread the benefits of the industry. For instance, the Nepal Tourism
Board has given particular promotional emphasis to areas of the country that
traditionally receive fewer visitors, such as the Chitwan Hills. Promotion builds on
extensive product development, which has improved facilities and enhanced the
visitors’ experience, and has succeeded in extending the range of tourism products
and the tourism season in Nepal. In other countries, as shown in box 12, unique
experiences have been developed and marketed as a tourism niche market.
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Box 12. Mongolia and the Islamic Republic of Iran: Nomadic tourism
Nomadic community-based tourism in Mongolia
Since 2005, Mongolia has adopted a new approach to community-based tourism, the
“ger-to-ger bottom-up approach”.a The country focuses particularly on promoting
appropriate socio-economic linkages between the rural nomadic groups in Mongolia, their
local communities and the public and private sectors.
This initiative has led to the establishment of 12 community routes over 3 regional
provinces and 5 community-based ticketing/information centres. Rural nomadic groups
and their communities are gaining valuable knowledge and skills that lead to greater local
ownership and management. Instead of competing with tour operators, communities are
learning how to cooperate and benefit from mobilizing “ethical” partnerships within the
private and public sectors, while maintaining their independence.
Such a regional development concept contributes to the empowerment of local
communities and their nomadic herders. Apart from the training they receive, the
partnerships also help in the development of economically viable travel routes. For
example, along the “Dundgovi travel route” the tourist is invited to share the harmonic
melodies and natural wonders of the Nobel Rock Palace or Fortress with nomadic herders,
while travelling by horseback, in a horse-drawn cart, riding a camel or trekking and
staying at one of the community’s ger. Of the revenues from tickets (trail passes), 55 per
cent goes directly to families and 10 per cent to their community environmental fund.
Nomadic tourism development in the Islamic Republic of Iran

In 2006 the Iranian Cultural Heritage and Tourism Organization entered into a
memorandum of understanding with the Nomads’ Issues Organization to establish the
Nomadic Cooperative Association, which was entrusted with the task of attracting foreign
tourists to nomadic regions of the country.
Persian society was formerly a nomadic one. Thus, nomads are considered to be a
cultural treasure which needs to be preserved. The Department of Tourism Development
in Nomadic Regions was thus established to provide economic development for the
nomads by carrying out technical and infrastructural studies. Along with the Department,
the Nomadic Tourism Institute undertakes measures in marketing, advertising and
attracting foreign tourists by organizing tours in nomadic areas, providing posters,
catalogues, pictures and other advertising instruments.
In addition, a special centre will be established in Tehran to provide an outlet for the
sale of nomadic products.
The authorities hope that devising appropriate tourism programmes for nomadic
regions will lead to an increase in the incomes of the nomadic tribes, which would, in turn,
raise their standard of living without harming their social systems and traditional
lifestyles.
Source: <www.gertoger.com/index.html, http://www.asianews.ir/en/main1.asp?a_id=1394>.

a
Ger is a traditional Mongolian dwelling, commonly known in English as a “yurt”. The ger has a
wooden framework covered by large pieces of felt, easily assembled and disassembled.
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VIII. THE ROLE OF THE PRIVATE SECTOR
A socio-economic climate characterized by increasing levels of corporate
social responsibility has resulted in awareness that economic instruments can be
manipulated for altruistic ends as well as commercial gain. The private sector can
contribute to local economic development and poverty reduction by changing the way
that it does business and through philanthropic activity.
There are strong commercial motivations for private sector engagement in
local economic development and poverty reduction, principally by creating an
enhanced range of products, which adds market advantage, and improving the
business environment, which fosters favourable staff attitudes and morale. These
factors will, in turn, help to enhance the tourist’s experience.
Particular areas where the private sector can foster local socio-economic
development are in recruiting and training local people, procuring goods and services
locally and shaping local infrastructure development to include benefits for the poor.
The private sector can also encourage tourists to purchase products that are
complementary to the core holiday, such as handicrafts, art and local food and
beverages, and services such as guide services, music and dance. These add to the
holiday experience and provide economic opportunities for local providers.
Complementary products often draw on local culture, including the way that the
people’s way of life has evolved in relation to their history and environment.
A number of examples from throughout the region can be cited. For example,
one tourism business enterprise in Nepal makes a special effort to recruit and train
local staff, as well as provide retirement and insurance benefits, as described in box
13. In Thailand, the private-sector business that created and operates the Rose Garden
as a cultural centre is an example of helping create opportunities for local people and
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their families. (See box 14.)
Box 13. Nepal: Tourism operators make a commitment to train local people
The Explore Nepal Group has a policy to hire only local people to work at their resorts located
close to national parks and wildlife reserves. In Chitwan, the group hired 82 local people from
surrounding communities to work at the Gaida Wildlife Camp in Chitwan. In Koshi Tapu, it hired
25 local people to work at the Koshi Tapu Wildlife Resort. “Learning by doing” has been the
method used by Explore Nepal to train new staff. Training is paid. Since 2001, there have been
fewer opportunities in Nepal due to the decrease in tourist numbers. In the past five years, however,
18 employees have left the company and migrated to the Middle East searching for new
employment opportunities.
The Tiger Mountain Group employs and trains members of community groups as staff in order to
support income generation opportunities in the areas where the group has business activities. The
following results have been reported:
• 34 per cent of Tiger Mountain Pokhara Lodge employees have been hired from
surrounding communities.
• 90 per cent of Tiger Tops Nepal employees have been hired from local groups (CFUGs,
Buffer Zone Groups and poor and excluded groups such as Dalit and Janajati).
The training approach is based on “one-on-one” learning in order to build capacities of new staff.
Each person trains another according to his or her specialty -- cooking/watering/gardening/guiding,
and so forth.
Tiger Mountain Group offers its staff:

• Pension benefits (on average, after working 11 years, each employee receives US$ 4,300 to
US$ 5,500 when they retire).
• Insurance for accidents at work and death benefit.
Source: ‘Lessons Learned on Pro Poor Sustainable Tourism in Nepal’, SNV Nepal, 2006
Box 14. Thailand: The “Thai Village” at the Rose Garden

A visit to the Polynesian Cultural Center in Hawaii, United States, inspired the owner of
the Rose Garden in Thailand to create a similar cultural centre called the “Thai Village” in the
town of Samphran, 32 km west of Bangkok.
Instead of hiring professional performers, the Rose Garden created its own cultural troupe
for the Thai Village. With the help of the Department of Fine Arts and the Ministry of
Education, workers at the Rose Garden were trained as dancers and performers. It took them
almost a year to learn the intricacies of Thai dancing. Over time, the troupe became skilled
professionally that it was called upon when Thai Airways International Public Co., Ltd., and the
Tourism Authority of Thailand needed dancers to promote Thai culture abroad.
To encourage the workers’ children and local boys and girls to spend their leisure time
constructively, the Rose Garden also started a Sunday school which taught the youngsters Thai
folk dancing, music, martial arts, vegetable and fruit-carving, and handicraft-making. Today the
Rose Garden’s 150-strong cultural troupe comprises many of the original performers, their
children and grandchildren.
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IX. ALLIANCES AND PARTNERSHIPS
A. Regional and subregional marketing alliances
Subregional tourism cooperation involving governments is now being pursued
between countries in several subregions. The ASEAN Tourism Agreement was
concluded in Phnom Penh, Cambodia on 4 November 2002. The members of the
Association of Southeast Asian Nations (ASEAN) committed themselves to work
together to facilitate travel into and within ASEAN-member countries, to undertake
joint marketing and promotion, to liberalize trade in travel and tourism, to enhance
cooperation in raising the quality and sustainability of tourism in the region and to
ensure tourist safety and security and human resources development.
In the Pacific subregion, the South Pacific Tourism Organisation is charged
with facilitating the sustainable development of tourism, strengthening regional
capacity, and planning, marketing and managing the tourism sector on a sustainable
basis. In January 2007 Brunei Darussalam, Indonesia and Malaysia agreed to conserve
areas of high biodiversity along common frontiers on the island of Borneo based on a
tripartite agreement focusing on ecotourism. Other economic groupings actively
engaged in cooperative tourism development include the Working Group on the
Greater Mekong Subregion Tourism Sector, the Ayeyarwady-Chao Phraya-Mekong
Economic Cooperation Strategy, the Bay of Bengal Initiative for Multisectoral
Technical and Economic Cooperation, the South Asian Association for Regional
Cooperation and the South Asia Subregional Economic Cooperation (SASEC).
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Subregional cooperation can achieve efficiencies in marketing, information-
sharing, destination access, human resources development and capacity-building, and
synergistic product development.
B. Networks, clusters and ICT
The “story” of globalization is essentially one of technological change

coupled with the development and organization of interacting physical and non-
physical networks designed to take advantage of the change. 70
Networks clusters and ICT provide mechanisms by which the role of tourism in
socio-economic development can be enhanced.
The interrelationship between tourism networks and technology

[ICT] is not a recent phenomenon. … Computerised Reservation Systems
(CRS), developed and operated by airline companies in the 1960s to
manage their increasing volume of passengers and related logistics, were
among the first integrated global information technology networks. In due
course, proprietary CRS were made accessible to travel agents and
subsequently expanded to include hotels and car rental companies…. In
the 1980s, CRS started to integrate with other technology networks to
form Global Distribution Systems (GDS), examples of which are
Amadeus, Galileo, Sabre, Worldspan and the Australian ETAS system. 71
Advances in information technology are giving micro, small and medium-
sized enterprises unprecedented access to markets, and the Internet is being used to
facilitate information exchange and the process of booking accommodation. An
example is Worldhotel-linkcom Limited, an e-marketplace which acts as the interface
between accommodation providers in several Asian countries (initially Cambodia, the
70
ESCAP and Asian Institute of Transport Development, Towards an Asian Integrated
Transport Network (ST/ESCAP/2399), accessed from
<www.unescap.org/ttdw/PubsDetail.asp?IDNO=182>, on 28 February 2007.
71
Patrice Braun, “Creating value to tourism products through tourism networks and clusters:
Uncovering destination value chains”, paper presented at the Conference on Global Tourism
Growth: A Challenge for Small and Medium-sized Enterprises, in Gwangju, Republic of
Korea, 6-7 September 2005.
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Lao People’s Democratic Republic and Viet Nam) and independent travellers.
Another example is described in box 15.
Box 15. Creating opportunities for community-based tourism development

and ICT– Asian Encounters
Opportunities for the poor to innovate with Information and Communication

Technologies (ICTs) can be facilitated by Asian Encounters, an initiative in social
entrepreneurship. As the search for new travel destinations widens and access to the
internet becomes more prevalent in rural Asia, there is an opportunity for introducing
innovative tourism practices through the use of ICTs.
Asian Encounters combines a new style of tourism with a new style of community
development and poverty reduction by promoting community-based tourism (CBT) as
a way of generating incomes for poor people in Asia, not by acting as a travel agent or
tour operator. Instead, Asian Encounters specializes in empowering poor
communities with ICTs to help them promote local tourism that is sensitive to the
needs of the community, its culture and its environment by what is called electronic
commerce for Community Based Tourism, or e-CBT.
Asian Encounters provides shared computers and Internet access to local communities
for promoting and marketing their CBT products. Home stay operators and local
guides interact directly with distant clients without having to depend on intermediary
agents. Once communities become familiar with the technology, they can use it for
other development activities of their choice; improving health, education, agriculture,
enterprise development, employment and so on.
Partner communities include:
• Moon Hill Village (Gao Tian) in Guangxi Province located in southern China
• Bario in north-eastern Sarawak, Malaysia
• Ta Van, a small village at Lao Cai, Viet Nam
• Kampung Papaga in Sabah, Malaysia
Source: Asian Encounters. http://asianencounters.org/
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A cluster, as popularized by Michael Porter, is broadly defined as a geographic
concentration of competing and cooperating companies; suppliers; service providers;
government, education and training institutions; and other associated organizations. 72
One of the central propositions underlying the formation of clusters is that, while the
conditions for increased competitiveness are created by a sound macroeconomic,
political, legal and social environment, competitiveness itself ultimately depends on
improving the microeconomic capability of actors in the economy and the
sophistication of local companies and local competition.
The cluster concept is being used widely in the tourism sector in both
developed and developing countries. For example, Sri Lanka has identified eight
clusters in its “competitiveness programme” (ceramics, coir, ICT, jewellery, rubber,
spices, tea and tourism). Five sectors have been identified in Thailand: the automotive
industry, fashion, food, tourism and software. An example of the work of a cluster is,
in the jargon of the tourism industry, “destination marketing” whereby the various
stakeholders in the cluster work together to generate a “total tourism experience”.
Subject to the consensus of the members of a cluster, special emphasis can be placed
not only on supporting and promoting micro, small and medium-sized enterprises but
also on the special needs of poorer sectors of the community in providing tourism
services.
In addition to facilitating the marketing of the tourism product, ICT has an
important role to play in capacity-building through distance learning, the sharing of
experiences and virtual networking.
By drawing on the lessons and experiences in other sectors, ICT may provide
the opportunity for “scaling-up” or at least “replicating” (with modifications to reflect
72
Michael Porter, The Competitive Advantages of Nations (New York, Free Press, 1990).
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local circumstances) the successful elements of particular interventions or pilot
projects. The principal area of difficulty in such “replication” relates to governance,
standardization and the transfer of implicit and tacit knowledge. In this respect, ICT
may offer a way forward. One example from a different sector is the Prime Minister’s
Rural Road Project in India. The project is very large and aimed at providing all-
weather access for villages of more than 1,000 people (500 people in some tribal
areas) to the main road network. The project is being financed from the proceeds of a
federal tax on diesel sales and it is being implemented by individual states. ICT has
played a major role in a number of aspects of the project: engineering, administration,
monitoring of project implementation and other governance matters. One of the key
elements in this application would appear to have been the ability to “standardize”
many of the project’s activities.
Another concept that has close tourism connections is the “one village, one
product” programme, which was started in Japan in 1979, and later introduced in
other countries, for example the “1K1P” programme in Malaysia and the “one tambon
(subdistrict), one product” (OTOP) programme in Thailand. The latter programme
was started in 1999 to promote entrepreneurs at the village level through the
manufacture of local specialty products based on the abundant native culture, tradition
and nature. 73 The OTOP type of programme has considerable potential for
developing the local economy and can also promote tourism. However, any
successful large-scale replication and upscaling of local initiatives requires that the
local entrepreneurs be assisted in product development, guidance and support
(concept, design, prototype-making, finance, manufacturing and business operations);
standardization (including branding, product rating and classification); and marketing.
73
The programme has been recently renamed “local and community product”, but the
OTOP brand name has been retained.
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ICT can be an appropriate tool for providing these support services to
entrepreneurs and for the management of the programme, in a manner similar to that
of the Prime Minister’s Rural Road project in India. Through the use of
standardization and Internet technology, the government agencies concerned, with
helping private organizations, can provide the services and manage the programme,
thereby achieving the economies of scale enjoyed by larger organizations. An
Internet site can be a resource and e-business centre for the local producers, and can
also help in fostering local tourism by providing tourists with the necessary
information. Currently, an Internet site <ThaiTambon.com> is helping in the
marketing of OTOP products and the networking of entrepreneurs. It also provides
information on local tourism. Such efforts could be further extended to include other
services and could be used as a tool for management of the programme by the
Government.
The networking strategies discussed above rely on supply-side initiatives as well as
distribution and marketing initiatives to enrich the destination for both local communities and
tourists alike. In order to be successful, the formal and informal sectors must develop mutual
understanding and respect to discover the benefits of enriching destinations through
cooperation.
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X. IMPLEMENTATION AND MONITORING OF THE PLAN
OF ACTION FOR SUSTAINABLE TOURISM DEVELOPMENT
IN ASIA AND THE PACIFIC, PHASE II (2006-2012)
The Commission at its sixty-second session requested that a common
approach to the monitoring of the implementation of the Plan of Action for
Sustainable Tourism Development in the Asia and the Pacific Region be prepared. In
response, the secretariat developed a draft analytical framework as a common
approach for the purpose of monitoring implementation of the Plan. Before
developing the framework, the secretariat examined alternative approaches to
monitoring the implementation of a plan at the strategic level that can assess complex
situations involving multiple criteria.
The proposed analytical framework is based on a widely applied analytic
hierarchy process that allows consideration of both qualitative and quantitative
assessment of the extent to which an element of a plan is completed. A systematic
breaking down of higher level objectives into lower level activities allows them to be
readily identified and measured in quantifiable terms. Indexing can be applied as a
statistical technique to calculate the weighted score at each level of hierarchy. The
framework is easy to understand, allows flexibility in assessment, has minimal
resource and data requirements and can be easily adapted to spreadsheet software.
Similar frameworks are already being used for strategic management in many
developing countries for programmes and projects and can service a wide range of
purposes, including monitoring the progress in plan implementation, situation
analysis, benchmarking, and performance evaluation.
In order to operationalize the monitoring system, some rearrangement and
reformulation of the objectives and actions under each theme of the previously
mentioned Plan of Action have been proposed. However, a direct correspondence
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between the items in the monitoring system and the Plan of Action has been fully
retained. In addition, a fourth element labelled “activity” has been introduced into the
monitoring system.
Consequently, the proposed monitoring system has four hierarchical levels,
namely the five themes of the Plan of Action; a number of objectives that contribute
collectively to the overall objective of the theme; a set of actions that broadly
correspond to the actions in the Plan of Action and contribute to the achievement of
the objective; and a set of activities that are required to be carried out in order to
complete the action.
In order to assess the extent to which the Plan of Action has been completed,
the analyst is required only to make either a quantitative or qualitative assessment of
the extent to which each activity is completed. A set of weights, reflecting the level of
importance of the activity, action, objective and theme at the country level, are then
applied to ascertain the degree (in percentage terms) to which the Plan of Action is
completed at each hierarchical level.
The monitoring system can be implemented with readily available spreadsheet
software. Outputs include time-series graphs of planned versus actual completion for
each of the activities, actions, objectives and themes as well as radar (or spider)
diagrams for each action, objective and theme. Presentation of information in these
forms enables policymakers to readily visualize the progress being made in
implementing the Plan of Action.
In order to further support the monitoring of the Plan of Action, a separate
form with monitoring and evaluation elements has been developed for each action. A
copy of the suggested form with the example of Theme I is contained in Annex 2 of
the present document.
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There may be two types of activities. Answers about the first type could be
either “yes” or “no” implying 100 per cent or 0 per cent achievement. For the second
type, a subjective assessment comparing progress against the actual condition would
be required. Assigning a value can range between 0 and 100 per cent, and thus a 10-
point interval scale from 0 to 100 per cent is proposed. The values could be assigned
by a group of knowledgeable people at the country level. They may come from a
broad section of concerned policy makers, representatives of implementing agencies,
business representatives, investors and the civil society as deemed appropriate. A
simple format can be used to register the “consensus” scores given by group of
knowledgeable people for each action. A sample form of monitoring criteria for theme
I is presented in annex 3.
XI. CONCLUSIONS AND RECOMMENDATIONS
A. Summary and conclusions
The foregoing study has clearly demonstrated that tourism is playing a major
role in socio-economic development in Asia and the Pacific. A number of techniques
can be used to measure and assess the impact of tourism at the macroeconomic level,
and the tourism satellite accounting framework, in particular, shows that its
contribution is complex and far-reaching at the national level.
Among other observations, the study has shown that, for many countries of the
region, the economic significance of tourism is very large when measured as a share
of GDP and exports. For many countries in general and the least developed countries
in particular, tourism is a sector in which they have comparative advantages for which
they can efficiently utilize domestic resources to earn foreign exchange. If used
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appropriately, such foreign exchange can purchase the investment goods necessary to
support more broadly based economic development policies.
The study has demonstrated that the social significance of tourism, measured
in terms of employment is very large. It has also illustrated that appropriate tourism-
related interventions can play a role in raising the standard of living and reducing
poverty in local communities.
It is often necessary, however, to develop and implement policies that take
advantage of the potential benefits of tourism in socio-economic development. In
some cases, this is simply a matter of increasing awareness so that the joint benefits to
tourists and local communities can be “factored-in” at the planning stage. In other
cases it may involve reducing leakages (or retaining tourist spending). In other cases,
“affirmative action” may need to be taken to capture the benefits.
There is a strong case for considering tourism as an important sector in socio-
economic development. Towards this end, the following recommendations have been
prepared for the consideration.
B. Recommendations
1. Planning
National tourism master plans need to be prepared with specific objectives to
be integrated within a country’s overall economic and social development objectives.
The plan needs to include comprehensive strategies, implementation plans and
priorities to enhance the role of tourism in socio-economic development and poverty
reduction. In developing a master plan countries may wish to consider incorporating
the recommendations presented below as well as those contained in Commission
resolution 62/3 on “Implementation of the Plan of Action for Sustainable Tourism
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Development in Asia and the Pacific, phase II (2006-2012) and the Regional Action
Programme for Sustainable Tourism Development”.
2. Information for decision making
Governments should consider stepping up their efforts to assess the economic
impact of tourism. The formulation of national tourism development policies is often
hindered by a lack of data on the scope and extent of tourism’s economic contribution
and impact. When such data is absent, it is likely that tourism will be given an unduly
low priority in the allocation of domestic resources and foreign assistance. Tourism
satellite accounts and other quantitative and qualitative analytical techniques help
remedy this situation by allowing tourism to be compared to other economic activities
measured in the national accounts.
3. Coordination and monitoring
Governments should consider establishing inter-ministerial committees that
include representatives of the tourism industry in order to coordinate and monitor
implementation of the plan, including development of tourism-related infrastructure
and facilitation of international travel through improvements in procedures for the
issuance of visas, border formalities and customs regulation. Governments may also
wish to consider the common approach to the monitoring of the implementation of the
Plan as outlined in chapter IX.
4. Private sector participation
(a) Public-Private Partnerships
Private sector participation and public-private partnerships should be
strengthened in a number of areas including: (i) tourism development planning, policy
formulation and implementation, monitoring and evaluation, (ii) infrastructure
development and investment for the tourism sector, (iii) tourism promotion, marketing
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and product development, (iv) environmental management of tourism and
preservation of cultural heritage, (v) human resources development, (vi) facilitation of
travel, (vii) risk management in tourism, (viii) pro-poor tourism initiatives, and (ix)
awareness creation about tourism's role in the socio-economic development.
(b) Development of micro, small and medium-sized enterprises and employment
generation
Special efforts should be made to foster micro, small and medium-sized
enterprises to ensure locally based opportunities for engagement in tourism.
(c) Mainstream tourism and corporate social responsibility
The contribution of mainstream tourism to local economic development needs
to be better understood and its role further expanded. There is also a need to foster a
climate characterized by increased corporate social responsibility in the tourism
industry.
5. Networking, clusters and ICT
Governments should consider the fostering of tourism networks and clusters as
part of a bottom-up business oriented approach to developing the tourism sector.
Advances in information and communication technologies can contribute
significantly to expansion of tourism. The public and private sectors should build-up
ICT infrastructure and services as well as strengthening capabilities to utilize ICT in
tourism.
6. Improving living standards and poverty reduction
The role of tourism in socio-economic development and in achieving the
Millennium Development Goals should be clearly identified. To increase the positive
impact on local economic development and poverty reduction, linkages to poor
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communities need to be strengthened through, among others, the abovementioned
MMSE, mainstreaming and clustering initiatives.
7. Domestic tourism
Governments should make special efforts to promote domestic tourism in view
of its potential size, spatial density, cultural affinity, language commonality or
similiarity, and role in a risk-management strategy.
8. Environmental and socio-cultural considerations
Environmental and socio-cultural considerations should be integrated into
policies and plans for tourism development. Collaborative approaches that include the
public sector, the private sector and stakeholders can internalize some of the external
costs of tourism thereby preserving cultural heritage and protecting the environment.
9. Human resources development
Countries should consider undertaking surveys to assess workforce
requirements by the demand for skill levels and current and future training
requirements in the tourism sector, and develop a national tourism training plan.
Governments may also wish to consider establishing national tourism training
committees, consisting of representatives of the Government, training institutes and
the tourism industry. At the regional level; the Network of Asia Pacific Education and
Training Institutes in Tourism (APETIT) provides a useful mechanism for
cooperation in tourism education and training.
10. Regional economic cooperation
Bilateral, multi-lateral and sub-regional cooperation in tourism development
should be further strengthened. In particular, countries in Central Asia and South-
West Asia should step up their efforts to strengthen sub-regional cooperation in
tourism. Overland travel has great potential for expanding in the region and can
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contribute to local economic development. Countries linked by the Asian Highway
and Trans-Asian Railway share a wealth of historical and cultural heritage as well as
unspoiled natural beauty. These countries could jointly promote tourism along the
Asian Highway and Trans-Asian Railway.
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Annex 1
Tourism satellite account tables
Annex table 1. Annual growth rates of tourism industry (IND) and tourism economy
(ECON) contribution to GDP, various years (percentage)
1995 2000 2004 2005 2006
IND ECON IND ECON IND ECON IND ECON IND ECON
Australia 5.98 7.17 3.47 0.57 -4.13 -6.31 14.87 15.77 0.41 3.16
Azerbaijan 29.71 14.46 -2.42 0.72 28.98 26.20 2.94 19.99 20.30 21.19
Bangladesh 4.93 4.97 6.84 10.17 9.59 9.64 4.61 7.41 3.29 6.02
Brunei
Darussalam 8.43 -0.72 -9.61 3.84 15.05 21.36 -9.64 -7.98 0.81 3.58
Cambodia 13.58 6.05 58.35 54.61 42.64 33.74 28.37 24.66 13.61 12.26
China 12.98 10.98 9.79 10.15 14.77 17.61 10.83 15.91 9.20 14.94
Fiji 8.13 -8.15 13.19 0.27 0.32 -9.96 -0.39 0.81 2.40 0.96
Hong Kong,
China 8.68 9.71 21.31 20.67 33.63 23.41 14.71 12.05 10.27 10.67
India 5.80 6.41 0.82 5.76 10.65 10.85 11.76 12.14 3.48 5.00
Indonesia 5.66 5.17 0.28 4.88 8.17 10.00 2.00 6.48 -2.61 -1.30
Islamic Republic
of Iran 8.13 -11.33 -1.22 1.03 4.75 4.49 5.59 6.59 3.77 2.97
Japan -0.84 -1.31 0.90 0.96 -2.64 1.63 10.67 8.12 4.60 5.24
Kiribati -43.50 -44.98 -55.56 -57.45 -21.39 -21.40 7.55 7.42 8.46 9.75
Republic of
Korea 10.25 10.94 2.33 6.31 4.13 8.68 2.73 4.00 9.24 3.39
Lao People's
Democratic
Republic 19.14 19.76 45.86 42.55 9.07 3.83 8.93 7.26 5.46 5.23
Macao, China 6.10 4.90 25.19 11.41 37.62 37.40 3.52 12.63 5.37 12.69
Malaysia 6.10 3.33 12.31 33.62 24.03 18.77 4.19 8.22 5.19 5.82
Maldives 21.95 7.98 1.38 -0.95 10.04 13.05 -42.12 -34.65 42.33 35.41
Myanmar 39.81 39.06 3.19 8.54 22.81 22.39 14.67 14.85 10.04 9.18
Nepal 16.12 22.13 2.18 0.34 3.53 3.30 -29.65 -21.63 0.96 1.53
New Zealand 7.94 8.86 4.86 2.60 -0.73 -0.57 4.44 5.36 4.92 3.97
Pakistan -1.74 -5.14 -2.84 4.84 7.32 6.80 13.85 14.89 9.23 9.07
Papua New
Guinea 0.25 7.95 -12.16 10.36 -0.20 -0.84 12.77 9.37 7.93 8.87
Philippines -5.66 2.42 -4.69 -1.29 22.03 16.35 8.47 5.14 16.37 12.98
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1995 2000 2004 2005 2006
Russian
Federation -6.57 -13.01 -5.86 9.22 0.96 1.75 5.83 7.19 3.19 -1.96
Singapore -0.80 -5.68 -1.63 -3.79 16.50 5.69 12.11 10.02 18.07 17.23
Solomon Islands -16.95 -7.09 -12.43 -17.63 16.40 11.08 -3.47 -3.97 14.10 8.90
Sri Lanka 13.82 6.81 -3.91 20.46 8.66 12.05 -8.28 -2.61 6.15 6.74
Thailand 11.31 12.86 12.38 11.08 11.23 10.96 -3.25 0.62 7.90 6.76
Tonga 19.01 -0.46 18.88 3.62 -5.30 -4.22 -20.15 -14.48 -1.69 -1.57
Turkey 9.74 9.53 28.10 44.50 4.11 -1.91 5.13 12.79 -4.62 -0.14
Vanuatu 14.27 2.56 34.08 23.28 5.12 5.45 15.47 9.57 16.85 12.30
Viet Nam 22.71 14.83 1.77 6.64 13.35 16.26 16.61 14.55 8.81 11.37
Source: WTTC, Country TSA data files. www.wttc.org
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Annex table 2. Annual growth rates of government expenditures (GOV) and capital investment
(CAP.INV) in the travel and tourism industry,
various years (percentage)
1995 2000 2004 2005 2006
GOV CAP.INV GOV CAP.INV GOV CAP.INV GOV CAP.INV GOV CAP.INV
Australia 2.32 8.45 5.60 -11.19 2.33 -13.77 0.79 18.12 0.43 9.10
Azerbaijan 6.80 -7.13 -28.91 -26.15 15.14 20.55 -5.47 -1.72 24.64 13.49
Bangladesh 2.79 14.50 5.69 16.65 10.46 8.71 7.62 10.30 7.72 7.47
Brunei
Darussalam 68.23 22.76 13.58 -68.61 -11.52 94.84 -44.37 -43.88 2.69 5.93
Cambodia 5.92 1.38 15.83 31.09 -6.04 6.62 3.51 13.68 9.10 8.89
China -0.42 5.47 12.75 7.17 5.84 21.53 8.89 21.01 8.11 19.06
Fiji -1.72 -47.30 -0.53 -26.20 6.77 -52.97 6.27 4.82 1.98 -5.62
Hong Kong, China 10.39 32.13 6.15 5.87 1.39 9.24 -4.21 6.04 1.76 13.22
India 2.56 4.64 3.99 17.93 8.82 12.17 8.03 11.82 7.77 7.84
Indonesia 4.53 9.74 15.82 17.50 8.92 17.39 4.20 15.41 8.60 0.88
Islamic Republic
of Iran 4.14 -32.05 16.35 -1.34 -1.15 9.31 11.71 -2.97 7.63 3.07
Japan 4.18 0.47 5.59 0.52 2.78 20.68 3.42 -8.15 2.19 7.15
Kiribati 10.51 5.36 0.76 5.13 -0.42 -6.37 0.11 3.94 0.60 -5.65
Republic of Korea 6.19 9.68 7.61 21.21 7.73 8.73 9.38 5.22 9.63 -1.82
Lao People's
Democratic
Republic 75.66 -1.32 26.65 4.01 12.35 -9.09 7.31 -3.85 7.37 7.45
Macao, China 2.31 0.84 -11.75 -32.80 2.73 47.58 7.37 74.24 3.55 48.32
Malaysia 15.34 19.87 3.31 16.72 2.44 3.51 3.53 10.70 2.37 3.29
Maldives -12.05 -43.60 17.45 -18.55 17.34 34.26 7.01 3.31 19.00 13.90
Myanmar -1.08 0.87 8.06 41.52 11.66 19.12 14.56 14.48 7.41 7.05
Nepal 26.72 38.04 6.83 -8.80 3.70 2.81 2.90 4.62 3.22 3.16
New Zealand 3.58 8.32 -1.39 -8.89 1.13 -1.26 2.89 8.80 2.25 1.02
Pakistan -1.53 -15.52 -11.84 29.40 0.81 10.10 1.72 20.24 6.97 10.85
Papua New
Guinea 24.79 23.88 -4.24 63.24 -1.51 -5.54 2.85 3.78 3.65 7.00
Philippines 16.75 39.40 6.03 10.58 -2.65 1.52 1.13 -2.81 3.44 0.09
Russian
Federation -32.69 -18.53 15.34 9.00 2.22 3.60 7.31 28.07 5.51 -3.81
Singapore 10.96 0.46 21.47 -15.79 -1.73 -3.08 6.64 3.90 13.62 7.00
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1995 2000 2004 2005 2006
GOV CAP.INV GOV CAP.INV GOV CAP.INV GOV CAP.INV GOV CAP.INV
Solomon Islands 23.20 6.38 -14.97 -16.91 -5.07 9.27 11.95 2.54 8.30 7.71
Sri Lanka 17.54 -23.10 25.58 88.71 9.08 26.98 8.81 13.19 7.35 11.31
Thailand 17.38 22.55 3.09 -4.06 10.48 8.54 12.89 19.72 5.16 0.75
Tonga 3.82 -39.12 2.48 -35.32 -1.52 0.12 1.90 0.45 1.99 -0.24
Turkey 8.85 15.30 0.87 101.01 7.65 -26.32 8.39 55.05 2.13 12.92
Vanuatu -6.22 -20.06 -9.26 -10.13 4.26 6.16 5.79 -7.76 2.06 -3.41
Viet Nam -1.69 -16.10 1.20 14.52 9.77 10.07 4.93 3.40 7.77 9.79
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Annex table 3. Annual growth rates of employment in the tourism industry (IND) and
tourism economy (ECON), various years (percentage)
1995 1995 2000 2000 2004 2004 2005 2005 2006 2006
Australia 6.51 7.76 4.29 1.89 -5.09 -8.32 17.40 17.31 -1.35 0.25
Azerbaijan 48.41 30.50 -8.11 -5.08 18.94 16.34 -16.31 -2.22 -6.33 -5.63
Bangladesh 1.42 1.46 3.07 6.44 4.37 4.42 1.73 4.58 -0.05 2.71
Brunei Darusalam 0.36 -4.30 -2.99 2.34 -0.07 4.59 0.00 2.14 1.15 3.06
Cambodia 9.69 2.13 50.75 46.97 34.15 25.31 16.67 13.09 7.47 6.11
China 7.33 5.07 9.26 5.88 5.20 8.95 4.30 8.38 3.93 7.66
Fiji 13.97 2.17 6.21 -3.58 -2.15 -1.09 2.06 0.78 -4.15 -3.04
Hong Kong, China 8.44 -1.44 43.11 42.64 24.18 21.18 9.73 9.41 5.61 6.98
India 6.33 6.62 -10.86 -5.80 3.36 4.03 3.53 4.33 -1.78 -0.86
Indonesia -4.63 -5.08 -3.78 0.65 3.92 5.69 -2.14 2.17 -6.23 -4.97
Islamic Republic of
7.76 -10.66 -3.28 -1.24 2.17 1.94 3.70 4.62 0.99 0.26
Iran
Japan -2.38 -2.76 -0.75 -0.96 -4.91 -1.09 10.70 7.43 4.49 4.91
Kiribati -45.22 -46.67 -55.12 -57.04 -18.78 -18.76 8.53 8.39 9.44 10.72
Republic of Korea 3.90 4.40 -1.63 1.20 1.31 4.68 0.15 1.09 5.33 1.00
Lao People's
Democratic
Republic 14.41 15.04 41.64 38.26 5.26 -0.07 4.87 3.17 0.74 0.50
Macao, China 6.84 6.06 17.79 9.18 7.39 7.39 9.17 9.17 3.42 3.42
Malaysia -1.14 -4.69 12.12 31.55 22.09 15.57 0.59 3.24 3.67 3.27
Maldives 18.91 5.81 2.28 0.03 11.64 14.55 -36.88 -29.08 27.50 21.54
Myanmar 33.51 32.85 -0.84 3.78 11.37 11.02 2.50 2.65 4.94 4.20
Nepal 15.89 22.29 -1.01 -2.89 2.49 2.24 -29.43 -20.91 0.06 0.66
New Zealand 9.66 10.72 3.54 2.14 -2.50 -2.73 3.27 3.45 3.23 1.81
Pakistan -4.58 -7.98 -4.63 3.15 3.70 3.18 10.13 11.17 4.88 4.72
Papua New
Guinea 7.23 15.51 -7.20 16.72 0.17 -0.48 12.54 9.13 6.19 7.12
Philippines -1.97 5.30 8.95 6.62 14.21 8.59 4.49 1.66 10.35 6.62
Russian
-5.75 -12.08 -14.21 -0.82 -4.15 -3.41 0.74 2.01 -2.34 -7.11
Federation
Singapore 7.92 13.86 12.66 7.93 15.25 1.93 10.65 7.66 17.56 15.63
Solomon Islands -19.25 -9.55 5.67 -0.68 15.55 10.22 -5.18 -5.69 11.01 5.89
Sri Lanka 6.58 -0.07 -7.22 16.65 4.72 8.04 -12.66 -7.18 1.80 2.37
Thailand 5.85 7.77 13.32 12.34 8.61 8.58 -7.14 -3.21 5.35 4.26
Tonga 15.84 -2.45 13.79 -0.32 -6.63 -5.62 -21.65 -16.31 -3.19 -3.08
Turkey 7.24 8.36 19.37 35.23 -2.61 -8.24 -0.40 6.86 -7.95 -3.63
Vanuatu 18.16 6.77 33.12 23.16 2.94 3.23 9.94 4.73 16.05 11.88
Viet Nam 14.58 6.87 -2.56 2.31 7.58 10.44 9.55 7.55 4.11 6.65
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Annex 2. Monitoring and evaluation elements
Theme I. Enhancing the role of tourism in socio-economic development

and poverty reduction
Objective: I.1. To enhance the understanding needed to give priority to tourism
development in national development strategies, policies, regulations,
plans and the allocation of resources.
Action: I.1.(a). Improve national tourism statistics and indicators, including indicators of the socio-
economic, cultural and environmental impact.
1. Activities to be implemented
(i) Collect the currently available statistics and indicators.
(ii) Examine their suitability for the desired objective.
(iii) Identify the deficiencies and gaps.
(iv) Organize a seminar to consider additional data needs and their collection mechanism.
(v) Introduce the new data capturing mechanism and reporting system.
2. Organizations involved in implementation
Lead organization
Cooperating organizations
3. Time frame
Starting date_______________________ Completion date _____________________
4. Monitoring indicators
5. Current status of implementation
(i) A list of currently available statistics and indicators prepared by (date).
(ii) A document describing suitability of currently available statistics and indicators
-116-
prepared by (date)
(iii) A document identifying the deficiencies and gaps prepared by (date)
(iv) Recommendations of the seminar concerning additional data needs and their collection
mechanism available by (date)
(v) A national tourism statistics report prepared based on the recommendations of the
seminar available by (date)
6. Results achieved
7. Evaluation of accomplishments
-117-
Annex 3. Monitoring criteria (showing theme I only)
Theme I. Enhancing the role of tourism in socio-economic development and poverty reduction
Scale of progress in per cent
1. To enhance the understanding to give

priority to tourism development
(a) Improve national tourism 100 90 80 70 60 50 40 30 20 10 0

statistics and indicators
(b) Undertake analytical studies 100 90 80 70 60 50 40 30 20 10 0
(c) Prepare tourism satellite 100 90 80 70 60 50 40 30 20 10 0

accounts
(d) Undertake case studies 100 90 80 70 60 50 40 30 20 10 0
(e) Undertake public relations 100 90 80 70 60 50 40 30 20 10 0

programme
(f) Undertake pro-poor 100 90 80 70 60 50 40 30 20 10 0

approaches
2. To develop tourism in a
comprehensive and sustainable
manner
(a) Identify contribution to 100 90 80 70 60 50 40 30 20 10 0

MDGs
(b) Integrate into national plans 100 90 80 70 60 50 40 30 20 10 0
(c) Prepare tourism master 100 90 80 70 60 50 40 30 20 10 0

plans
(d) Incorporate into poverty 100 90 80 70 60 50 40 30 20 10 0

reduction
3. To facilitate the opportunities

for poor communities to benefit
from tourism
(a) Foster and support tourism 100 90 80 70 60 50 40 30 20 10 0

related enterprises
(b) Organize collaborative 100 90 80 70 60 50 40 30 20 10 0

actions
(c) Encourage the uses of local 100 90 80 70 60 50 40 30 20 10 0
resources
(d) Promote local arts and crafts 100 90 80 70 60 50 40 30 20 10 0
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(e) Expand the role of tourism 100 90 80 70 60 50 40 30 20 10 0
(f) ensure the involvement of 100 90 80 70 60 50 40 30 20 10 0

stakeholders
(g) Monitor and assess the 100 90 80 70 60 50 40 30 20 10 0

impact of tourism
(h) Improve the capacity of the 100 90 80 70 60 50 40 30 20 10 0

poor
(i) Strengthen the backward 100 90 80 70 60 50 40 30 20 10 0

linkages
(j) Encourage private entities 100 90 80 70 60 50 40 30 20 10 0

in remote
(k) Facilitate access to capital 100 90 80 70 60 50 40 30 20 10 0

by tourism-related micro
and small enterprises
________________________
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Role of Tourism in Socioeconomic Development

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Role of Tourism in Socioeconomic Development

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ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC

STUDY ON THE ROLE OF TOURISM

STUDY ON THE ROLE OF TOURISM

ESCAP WORKS TOWARDS REDUCING POVERTY

This study was produced with financial assistance from the

The views expressed in the study do not necessarily reflect those of

This study has been issued without formal editing.

IV. ASSESSING THE SOCIO-ECONOMIC IMPACTS OF TOURISM ………. 37

A. General approaches and methods ………………………………………. 37

A. Tourism ministries …………………………………………………….. 84

A. Regional and sub-regional marketing alliances …………………… 97

1. Role of domestic tourism in supporting roadside facilities and services .... 15

1. Inbound tourism by region of origin, tourist arrivals 2003 …………………. 13

1. International tourist arrivals by region and subregions, 1995-2005 and

strengthening national capabilities and promoting regional cooperation in sustainable

tourism development. PASTA Phase I set general requirements for sustainable

Implementation of PASTA Phase I was supported by the secretariat through

concept of sustainable tourism development and encouraged all concerned

stakeholders to participate actively. Many countries began to develop tourism master

in the tourism sector. The Network of Asia-Pacific Education and Training

Institutions in Tourism (APETIT) was established in 1997 to promote regional

as a platform to exchange information and expertise on human resources development

for the tourism sector. 1

At its sixty-second session, the Commission acknowledged the satisfactory

guide the contribution of tourism to socio-economic development as well as take

greater action at the national and regional levels.

policy-makers involved in socio-economic development to have greater awareness

level that need to be more thoroughly understood. Second, an improved policy

environment for sustainable tourism development has major implications for

macroeconomic goals and national social development objectives, especially those

related to poverty reduction, meeting Millennium Development Goals (MDGs) and

generations. Third, once policy-makers and planners in all areas of socio-economic

development better understand the role of sustainable tourism in national

development, its contribution can be enhanced by adopting best practices and

counteracting possible risks or negative impacts.

recently emerged with respect to the role of tourism in socio-economic development

the efficiency and effectiveness of tourism’s contribution involving the government,

should understand the role of tourism in socio-economic development in order to be

outcomes and evaluate results.

At its sixty-second session, ESCAP also adopted resolution 62/3 on

Sustainable Tourism Development”. In adopting the resolution, the Commission

in socio-economic development. This present study is meant to assist member

monitoring implementation of the Plan and includes a set of policy recommendation

aimed at increasing the effectiveness of tourism for socio-economic development and

Pacific with a focus on international tourism development, intra-regional travel, the

terms of its contribution to employment. Chapter IV provides an assessment of the

socio-economic impacts of tourism, which includes discussion of the general

strengthening the knowledge base.

Chapter V focuses on various aspects of tourism and transportation

private sector in the tourism industry with respect to contributing to socio-economic

development. Chapter IX considers the significance of alliances and partnerships

involving tourism at the regional and subregional level.

Chapter X discusses the implementation and monitoring of the Plan of Action

Chapter XI concludes the study and presents recommendations.

I. THE IMPORTANCE OF TOURISM IN THE

A. International tourism development

a major provider of jobs and a significant generator of foreign exchange at the

Table 1. International tourist arrivals by region and subregion, 1996- 2006

World 575.0 846.0 100.0 100.0 4.0

tourists visiting South-East Asia. This remarkable performance benefited from

continued liberalization of outbound travel from China.

almost 30.0 per cent. 2

increased significance of tourism for developing countries. Visitors worldwide have