The Effects and Benefits of Tourism (Grade 12 NSC Matric Economics): Revision Notes
The Effects and Benefits of Tourism
Tourism plays a vital role in South Africa's economy and has grown significantly due to factors like increased disposable income, better transport links, and improved marketing. Understanding both the effects and benefits of tourism is crucial for evaluating its overall impact on our country.
Tourism's growth in South Africa has been driven by multiple factors working together. The combination of economic development, infrastructure improvements, and strategic marketing has positioned the country as a major tourist destination in Africa.
Understanding tourism types
Before exploring the effects, it's important to understand different types of tourists. These classifications help us analyse tourism's impact more precisely:
- Foreign arrivals: International visitors who come to South Africa as their main destination
- Transit tourists: People stopping over briefly, also called same-day travellers
- Foreign tourists: International visitors who come for experiences like visiting friends, game farms, cultural sites, or sporting events
- Domestic tourism: South Africans travelling within the country (domestic tourists) or abroad (outbound tourists)
Understanding these tourist categories is essential because each type has different economic impacts and spending patterns. Foreign tourists typically contribute more foreign exchange, while domestic tourists support local economies differently.
The six main effects of tourism
Tourism significantly impacts the economy and society. You can remember the six key areas using the acronym PIGEEE: Poverty, Infrastructure, GDP, Employment, Environment, and Externalities.
Employment effects
Tourism is one of South Africa's largest job creators, employing approximately 7% of our workforce (about 1.12 million people). The industry creates employment opportunities because it:
- Requires intensive labour rather than expensive machinery
- Needs workers with diverse skill sets, from tour guides to hotel staff
- Provides immediate job opportunities in many communities
- Creates entrepreneurial opportunities for small business owners
- Generates foreign exchange earnings, as international tourists pay for services in foreign currency and typically spend more than local tourists
The labour-intensive nature of tourism makes it particularly valuable for countries like South Africa, where job creation is a national priority. Unlike manufacturing industries that rely heavily on machinery, tourism depends on human services and hospitality.
GDP (Gross domestic product) effects
Tourism makes substantial contributions to South Africa's economic output in two ways:
Direct contribution: Tourism directly adds 7.9% to South Africa's GDP, which is lower than the global average of 12% but still significant.
Indirect contribution: As a service-based industry, tourism supports many other sectors. In developed countries, tourism accounts for 65% of GDP, while in developing nations like South Africa, it contributes about 40% of GDP.
Tourism particularly impacts the services industry, creating a ripple effect throughout the economy.
Poverty reduction effects
Tourism serves as an effective tool for reducing poverty, especially in rural areas where job opportunities are typically limited. Here's how tourism helps:
- It acts as a fast mechanism for distributing economic resources to rural communities
- Many popular tourist attractions are located in rural areas, bringing economic activity to these regions
- Tourism development creates jobs in areas that previously had few employment opportunities
- It promotes balanced and sustainable development, allowing people to earn a living in their home communities
- This reduces rural-to-urban migration and creates more balanced population distribution across the country
Practical Example: Rural Tourism Development
Consider a rural community near Kruger National Park. Before tourism development, residents had limited income sources, mainly subsistence farming. With tourism growth:
Step 1: Lodge construction creates temporary construction jobs
Step 2: Permanent positions emerge (game rangers, housekeeping, guides)\
Step 3: Local entrepreneurs start craft businesses and transport services
Step 4: Community members can earn income without leaving their homeland
Result: Reduced poverty and migration to urban areas
Externalities (spillover effects)
Externalities refer to costs and benefits that result from tourism activities, affecting people who aren't directly involved in the tourism transaction.
Understanding externalities is crucial because they represent tourism's broader impact beyond direct economic transactions. These effects can be either positive or negative and often require careful management.
Positive externalities include:
- Attracting substantial revenue to local economies
- Improving infrastructure development that benefits everyone
- Stimulating employment in related industries
- Helping preserve cultural and natural heritage sites
Negative externalities include:
- Environmental damage when tourism isn't managed properly
- Waste generation and damage to sensitive natural sites
- Strain on infrastructure due to increased visitor numbers
- Rising prices for local residents in popular tourist areas
Environmental effects
Tourism can create significant environmental challenges, including:
- Landscape changes: Permanent alterations through construction of roads, hotels, and other facilities
- Waste production: Both biological waste (sewage) and non-biological waste (litter) from increased visitor numbers
- Wildlife impact: Direct environmental stress, such as loss of animal species due to activities like safari hunting
- Population dynamics: Changes in local population density and migration patterns as communities adapt to tourism demands
Environmental effects require careful monitoring and management. While tourism can help fund conservation efforts, uncontrolled development can cause irreversible damage to the natural assets that attract tourists in the first place.
Investment effects
Tourism development requires substantial investment in infrastructure, which includes:
Transport infrastructure: Improved roads, airports, and public transport systems to help tourists reach destinations
Communication infrastructure: Reliable telephone and internet services for booking systems and guest services
Energy infrastructure: Adequate electricity supply to power tourist facilities and attractions
Basic services: Clean water supply, sewage treatment, and waste removal systems to maintain health and safety standards
The four main benefits of tourism
Tourism provides benefits to different groups in society. Use the mnemonic HOT BEACHES IN GEORGE to remember: Households, Businesses, Infrastructure, and Government.
Benefits to households
Tourism improves household prosperity and wealth in three important ways:
- Increased employment opportunities: More people can earn salaries and wages through jobs created by the tourism industry
- Shared infrastructure: Facilities built for tourists (like improved roads and communication systems) are also available for local residents to use
- Skills development: The tourism industry requires diverse skills, providing training and career development opportunities for community members
The household benefits of tourism extend beyond direct employment. When tourism infrastructure is developed, entire communities gain access to improved services and facilities that enhance their quality of life.
Benefits to businesses
The business sector gains significantly from tourism development:
Infrastructure provision: Government typically provides basic infrastructure (roads, water, electricity) needed for tourism, which businesses can also utilise.
Superstructure opportunities: Tourism creates demand for superstructure - privately-owned facilities that provide accommodation, transport, attractions, retail, and entertainment services. This superstructure is usually profitable for private sector investors.
Partnership opportunities: Public-private partnerships (PPPs) are commonly used to develop tourist destinations, creating business opportunities.
New business sectors: Previously disadvantaged entrepreneurs can enter new markets including:
- Entertainment, laundry, and transportation services
- Car rental, arts and crafts, and curio sales
Benefits to government
Government gains from tourism primarily through tax collection, which serves two purposes:
Cost recovery: Taxes help compensate the government for providing infrastructure and services to support tourism.
Revenue generation: Tourists contribute to the overall tax base through various taxes like airport departure taxes and hotel tourism levies, increasing government income.
Government benefits from tourism extend beyond tax revenue. Tourism development often justifies infrastructure spending that serves broader economic development goals, creating a foundation for other industries to grow.
Infrastructure development benefits
All infrastructure built to support tourism becomes a long-term asset for South Africa:
- Shared benefits: Both residents and visitors can use well-maintained physical infrastructure and basic services
- Economic priorities: The Department of Transport prioritises economic infrastructure development
- Strategic development: Spatial Development Initiatives and economic corridors focus on tourism, using public-private partnerships for infrastructure development
- National asset creation: Tourism infrastructure becomes part of the country's permanent asset base, benefiting the economy long-term
Infrastructure Legacy Example: World Cup 2010
When South Africa hosted the FIFA World Cup in 2010:
Step 1: Major infrastructure investments were made (airports, roads, stadiums)
Step 2: These facilities served the tournament successfully\
Step 3: Post-tournament, the infrastructure continued serving the country
Step 4: Airports handle increased tourism, roads improve transport efficiency
Result: Tournament infrastructure became permanent national assets benefiting all South Africans
Key Points to Remember:
- Tourism affects six main areas: PIGEEE (Poverty, Infrastructure, GDP, Employment, Environment, Externalities)
- Tourism benefits four key groups: HOT BEACHES IN GEORGE (Households, Businesses, Infrastructure, Government)
- Tourism employs 7% of South Africa's workforce and contributes 7.9% to GDP
- While tourism brings many benefits, it can also create negative externalities like environmental damage and increased local prices
- Infrastructure built for tourism becomes a permanent national asset that benefits all South Africans