The Economic Costs of Tourism
Geography: Edexcel IGCSE, topic 3.2.9
Economic Costs of Tourism
There are several economic costs of tourism, including export and import leakage, and other harms to the local economy of a tourist destination.
Export leakage
- Some MNC/TNC big chain companies that have resorts or hotels in LICs employ only people from the HIC in their manager positions.
- These managers are paid in the HIC where the company headquarters are, which means that the wage money does not enter the LIC at all.
- If people book through travel agents in HICs, to travel to a LIC, the travel agent keeps up to 60% of the profits, so the LIC doesn’t see much of the money.
Import leakage
- Tourists from HICs are often ignorant and want to only have food and drink from their own country because they trust it more.
- So, LICs are forced to provide international brands, rather than supplying local foods and drinks.
- This means that local companies earn a lot less money.
Other economic costs
- A lot of tourists do not leave their holiday resorts and so they do not help to improve the local economy.
- Jobs in the tourism industry are often hard work and lowly paid (maid, waiter) and many jobs are only seasonal (skiing resorts).
Test yourself on The Economic Costs of Tourism
What is export leakage?
Which of the following statements about import leakage are correct?