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How can tourism lead to poverty reduction?

Time (GMT +00) 17:30 19:00


Jonathan Mitchell - Author, Tourism and Poverty Reduction: Pathways to Prosperity

Caroline Ashley - Author, Tourism and Poverty Reduction: Pathways to Prosperity


John de Vial - Director of ABTA, Travelife and a Trustee of The Travel Foundation

The chair, Simon Maxwell, welcomed everyone to the launch of the book Tourism and Poverty: Pathways to Prosperity and introduced the panel. The presenters were Jonathan Mitchell and Caroline Ashley, the authors of the book. The discussant was John de Vial.


Jonathan Mitchell and Caroline Ashley’s presentation highlighted how their work since the early nineties has evolved, adding piece by piece to the jigsaw of knowledge on the role of tourism in development. It went on the explain that, uniquely, the book looks beyond the authors own work on pro-poor tourism, livelihoods and value chains to assess what other research methods have to say on tourism-poverty linkages. The book is therefore able to highlight the contributions – and frankly the weaknesses – of findings from across the spectrum, whether from economic modelling, tourism satellite accounts or more.

The first chapter of the book is available as a free download. Two blogs linked to the book, entitled The Power of Tourism to Fight Poverty and Tourism in Poor Places – Who Gets What, have also been written by the authors.


John de Vial suggested that one of the striking features of the book is the poverty of ideas and thought it reveals amongst the specialists researching the tourist sector. This weakness is also evident amongst the mainstream industry actors. There is a real need for decisive leadership in the industry to enhancing the socio-economic impacts of tourism. So the key issue is how to sell these contained in this book to the mainstream industry.

This task is likely to become more difficult as the structure of the outbound travel market changes. In the past, this market was dominated by a small number of very large tour operators. Increasingly, as more tourists organise their own packages of flights and accommodation independently, it will be much more difficult to affect step change across the industry as a whole.

Public discussion

A public discussion, chaired by Simon Maxwell, focused mainly on the socio-economic, environmental and cultural impacts of tourism, along with the public policy implications of the book’s findings.

The socio-economic impacts of tourism

  • Corruption has a strongly negative impact on the pro-poor effects of tourism. Land grabs nearly always disadvantage the poor and vulnerable and may disrupt their livelihoods if they are natural resource-based. Dodgy deals with, for example, exclusivity agreements for airlines serving tourism destinations, impair the development of competitive markets and the growth and dynamism of the industry
  • We have found little evidence to support the contention that foreign-owned tourist establishments in developing countries are more exploitative than domestic entrepreneurs. In fact, foreign enterprises tend to offer slightly better benefit packages to staff than indigenously owned enterprises
  • There is a viewpoint – popularised by Schumpeter - that tourist development (like any other form of economic development) is a process of ‘creative destruction’. This suggests that the innovative entry by entrepreneurs is the force that sustains economic growth even as it destroys the value of established companies (witness the trend towards self-arranged holiday packages). There are winners and loser from any commercial development process and, to focus too much on the losers, will form a barrier to the rate of innovation which will ultimately benefit the majority of the population. This may well be the case but, it important when undertaking tourism analyses, to examine the losers from the process as well as the winners in order to assess the net benefits of tourism. Assessing some of the dis-benefits of tourism is a challenge within the context of a socio-economic analysis (how do you quantify the impact of loss of culture?). However, it is important to include negative as well as positive effects of tourism as part of the assessment
  • Taxation: in our analyses we have generally not taken account of the tax take from the tourist industry because this would require an evaluation of the pro-poor impact of government spending – itself a complicated issue. However, we have traced the tourism dollar where tourists contribute funds to park fees, and the results generally show a small contribution to the poor – even where public agencies are publicly committed to benefiting the local community
  • Looking across a wide range of destinations, the factors which are strongly associated with healthy linkages between the tourism sector and the local economy are: the rule of law; the status of women; and a conducive environment for enterprise. Community based tourist products are often unable to develop sustainable linkages, partly because of limited tourist flows, but also because they generally have a very poor record of financial viability
  • The ever-thorny question of how to define poverty was raised. This is an important issue which is extensively addressed in the book in some length
  • The business case for pro-poor interventions is often a complex mixture of factors. The easiest business case is where interventions can be made that save money for tourist enterprises and increase local links – there are some examples of localisation of supplies (particularly labour) where these have been achieved. Beyond the short-term financial case, tourist operators need a ‘social license to operate’ in many developing country environments – and demonstrating local linkages can generate this goodwill. An increasingly important part of the business case for adopting more responsible business practices is the need for outbound tour operators (the two major players in the UK outbound market now being FTSE 100 companies and subject to much closer scrutiny) to protect their brand from the reputational risk. The missing link in the mainstream market at present is a demand push from tourists themselves demanding more responsible business practices and being prepared to pay to make this demand effective
  • There have been long-standing initiatives to investigate fair trade in tourism in the UK (Tourism Concern has been at the centre of this process). The only certification scheme which is up and running is the South African Fair Trade in Tourism label. There are real practical difficulties with transferring a business model based on export-orientated commodities (like coffee, tea, bananas, etc) to a complex service sector supply chain

The environmental impacts of tourism:

  • The climate change debate is a necessary reminder that simply focusing on the socio-economic benefits of international trade at the destination is necessary but no longer sufficient to fully justify any economic activity. Some innovative work has been already done looking at the trade-off between the environmental damage caused by aviation compared with the socio-economic benefits generated by economic activity at the developing country destination in the context of the export of horticultural goods from East Africa to Europe (the ‘Fair Miles’ work-stream in the International Institute of Environment and Development). There is no reason why this analysis cannot be extended to the tourist sector, and ODI are about to start a project focusing on this
  • The issue of climate change could stimulate an accelerated adoption by tour operators of practices to increase the socio-economic impact of tourism at the destination. The reason for this is that, other than incremental improvements in the efficiency of flights and operation of hotels, the limits to carbon reduction by operators are real and tight. However, the scope for increasing socio-economic impacts is considerable. If the industry is to credibly use destination socio-economic impacts to create the license to trade on an aviation based model, there is a strong imperative to make rapid progress on improving socio-economic impacts
  • At the destination level, there are some important initiatives to reduce the environmental impact of tourism – mainly as a result of self-regulation within the industry. However, in specific destinations, the environmental impacts of tourism are reaching the barriers of natural resource capacity (for instance water supply for resorts in Zanzibar).

The cultural impacts of tourism:

  • ODI’s approach self-consciously focuses on the socio-economic effects of tourism in destinations. This is not to say that cultural factors are unimportant, it is just that these have been covered extensively by anthropologists and other social scientists and we have sought to fill the gap in socio-economic analysis. As the balance of socio-economic and cultural research becomes more balanced, it will become possible to compare the two for specific destinations

Public policy implications:

  • Governments and the tourist industry do need to work together more productively at the destination level. The industry can make changes to operating practices which will result in significant benefits to the local economy and people and government can create a much more enabling environment in which tourism can flourish and better link with the local area
  • Governments in destination countries need to recognise the importance of tourist sector to their national development effort. Tourist ministries need to become much better at explaining the indirect and dynamic effects of tourism to their finance ministry
  • The time for tourist ‘exceptionalism’ is over. Tourism can form a useful part of a development strategy but is not the exclusive answer to all development problems. As such, rather than calling for more donor support for tourism, a more nuanced suggestion would be to call for more support to allow developing countries to develop enterprise, global competitiveness and local economic development.


Spending by tourists in developing countries is almost three times the level of official development assistance. But to date, assessments of the poverty impact of this major business sector have been largely unsatisfactory and the big question remains. How can tourism drive poverty reduction?

A new book, by Jonathan Mitchell and Caroline Ashley ‘Tourism and Poverty Reduction: Pathways to Prosperity’ examines the poverty-reducing impacts of tourism across a range of developing countries. The book looks to answer the following urgent questions for policy makers.

  1. How much should be invested in developing tourism?
  2. What kind of investment will optimise poverty reduction impact?

The authors climb a figurative tree, to get a broader view of the landscape. The result is the first attempt to integrate findings from economic models of tourism sectors, case studies of a business or intervention, tourism satellite accounts, and numerous consultancy inputs to planners, using jigsaw pieces from each to build the big picture. It identifies different pathways by which poverty is affected, and compares the data available on the significance of each one. 

As the co-authors demonstrated at this meeting, the findings in the book clearly point the way for researchers, towards cross-fertilising methods, and filling gaps of our own making in our knowledge.  And for practitioners across the corporate and development spectrum, it shows how a more nuanced and multi-disciplinary approach can move our understanding forward of how private enterprise affects livelihoods of the poor.

Visit the Earthscan website to buy a copy of the book.