Tourism in Developing Countries Essay Example

significant leakage to Japan's economy. 2] Leakage not only varies from country to country, but also from industry to industry. High-income tourism may well significantly increase leakage, as that industry likely involves importing more goods and services than usual.

Ecological or adventure tourism may exhibit a very small degree of leakage, however, as they place value solely on what the host country has to offer.

Effect

As a result of the leakage effect, tourism industries in developed countries often are much more profitable per dollar received than tourism in smaller countries. Islands, n particular, suffer from significant leakage. In countries such as Turkey and the United Kingdom, the benefit to the economy from tourism is twice the dollar amount spent by tourists.

In smaller places, such as Micronesia and Polynesia, that benefit is half the dollar amount spent. Some locations have managed to nullify the leakage effect almost entirely - New York City claims to generate seven dollars for the local economy per dollar spent by tourists. Some estimates of the degree of leakage claim only 5% of money spent on tourism remains in a developing country's economy.

Reducing leakage

For many countries, some sources of leakage are unavoidable.

Foreign-owned hotels and airlines are necessary for all but the most established of tourism industries. However, encouragement of domestic involvement in a country's tourism industry may reduce leakage in the long run. Currently, the most popular measure is restrictions on spending. Countries may limit the use of foreign currency within their borders, reducing the effect of transfer pricing (see above). Many countries require visitors to have a certain amount of money before entering, as well.