The role and impact of tourism on local economic development: A comparative study

Abstract

The purpose of this study was to determine what role tourism plays in the economic development of local regions. Tourism is globally recognised as one of the largest and fastest growing economic sectors. In developing countries, tourism is specifically seen as a tool to promote economic development, and alleviate poverty as an alternative to other traditional economic sectors such as industrialization. The study was conducted using tourism statistical data from two geographical areas namely the Metsimaholo municipal area and the Emfuleni municipal area (region previously known as the “Vaal-Triangle”), South Africa. Secondary data were used from the Global Insight data base. Global Insight is one of the world’s largest sources of global financial, economic and sectoral data. Data obtained from this source were further analysed, refined and reported on. The results indicated that tourism trips in both areas have shown a steady growth from 2001 to 2013. Within the Emfuleni municipal area, business tourism specifically has shown rapid growth of 8.36 percent per annum, while holiday tourism has grown at a relatively slower rate of 3.31 percent. The Metsimaholo municipal area on the other hand has shown much lower tourism growth. If the two areas in the study region are compared with international standards on the percentage contribution of gross domestic product (GDP) of tourism, the Emfuleni area compares well with a 7.7 percent contribution and Metsimaholo with only a 2.2 percent contribution. Globally the contribution of tourism is between 8 to 10 percent of GDP. Tourism as a low skilled, labour intensive industry, has many benefits for local regions including poverty alleviation and a key sector for local economic development (LED).