Reconsidering Tourism As A Facilitator For Economic Growh In Less Developed Countries

2008:125 MASTER'S THESIS Reconsidering Tourism as a Facilitator for Economic Growth in Less Developed Countries Mitra Mahmoudi Luleå University of Technology Master Thesis, Continuation Courses Tourism and Hospitality Management Department of Business Administration and Social Sciences Division of Industrial marketing and e-commerce 2008:125 - ISSN: 1653-0187 - ISRN: LTU-PB-EX 08/125 SE Reconsidering Tourism as a Facilitator for Economic Growth in Less Developed Countries Supervisors: Prof Mahmood Ketabi Prof Metin kozak By: Mitra Mahmoudi December 2007 University of Isfahan APPROVAL Name: Mitra Mahmoudi Degree: Master of Science Title of Thesis: Reconsidering Tourism as a Facilitator for Economic Growth in Less Developed Countries This thesis is evaluated and approved by Examination Committee: Chair: Prof.Komail Tayyebi Prof Mahmood Ketabi Supervisor Prof Metin kozak Supervisor Prof Iran Ghazi Iranian Examiner Prof.Peter Dieke Foreign Examiner Date of Viva: 8Dec.2007 International Scientific Cooperation office Isfahan University Prof.Arash Shahin Abstract Influence of tourism as a catalyst for global economic growth is conventionally viewed as an unquestionable fact Observation suggests that this idea is appraised without being subjected to more holistic analysis and organizational contributions The research seeks to evaluate the impact of tourism through considering related international growth approaches and recognizes prospective growth theories in connection to challenges that tourism is facing regarding its role as a facilitator for economic growth in less developed countries The complicacy of economic growth theories postulated in extensive researches leaves tentative option to assume a simple approach towards direct impact of tourism on economic progress in less developed countries The research sets out to assess the correlation between tourism and growth theories as well as the impacts of indicators like Geographical Zone, Gross National Product (GNP) per capita as an indicator of General Standard of Living in a Country and Economic Classification of a country The data suggest that tourist exchange process is considerably intense among countries that are located in the same Geographical Zone or in nearby zones and also among countries with close recorded Gross National Product (GNP) per capita which lie under the same Economic Classification i Acknowledgements I would like to express my gratitude to all those who gave me the possibility to complete this thesis I would like to thank the Department of marketing and eCommerce at Lulea University of Technology and International Scientific Cooperation Office at Isfahan University I am deeply indebted to my supervisors Professor Mahmood ketabi and Professor Metin Kozak, for their valuable guidance, stimulating suggestions, patience and for encouraging me to go ahead with my thesis And also I would like to thank Professor Esmail Salehi-Sangari and Professor Arash Shahin for their continuous help and support during my research I would like to give my special thanks to my brother Mehrdad and my dear husband Pedram who their continuous encouragement enabled me to complete this work Especially, I would like to give my special thanks to my parents for their love, patience, motivations and encouragements during my study and life Mitra Mahmoudi December 2007 ii Table of Contents Abstract .i Acknowledgements ii Table of Contents .iii List of Tables v Chapter 1.Introduction 1.1 Research objectives 1.2 Outline of the thesis Chapter 2.Litareture review 2.1Introduction 2.2 Tourism 2.3 Growth 13 2.3.1 International Growth Theories 14 2.3.2Growth and Economic Progress 17 2.3.3 Industrialized Economies 18 2.4 Economic Growth Theory .20 2.5 Modernization Theory .27 2.6 Dependency Theory 33 2.6.1The Interaction between Dependency Theory and Marxism 35 2.6.2The Interaction between Dependency Theory and Economic Progress 37 2.7 Post -Progress Theory 38 2.8 The Relationship between Tourism and Growth Concept 40 2.8.1 The Interaction between Tourism and Economic Growth 41 2.8.2The Interaction between Tourism and Modernization Theory 45 2.8.3 The Interaction between Tourism and Dependency Theory .46 2.8.4 The Interaction between Tourism and Economic Growth Theory 47 2.8.5The Interaction between Tourism and Post -Progress Theory .48 Chapter Methodology 49 3.1Research Purpose 49 3.2 Research Approach 50 iii 3.3 Research Strategy .52 3.4 Data Collection .53 3.5 Sample Selection .53 3.6 Data Analysis 54 3.7 Quality Standards .55 3.7.1Validity and Reliability .56 Chapter Presentation of Findings .57 4.1 Major Discussion: Tourism as a Function of Growth Studies 57 4.2 Structural analysis and evaluation 58 4.3 Data analysis and results 62 Chapter 5.Conclusion and Recommendations 72 References 74 iv List of Tables Table 4.1 Average Tourist Exchange Process from 2000-2004 per year 63 Table4.2 Global Tourist Exchange Process .68 Table 4.3 Shares of Global Tourist Exchange Process 69 Table 4.4 Regression output 70 v Chapter Introduction Chapter1.Introduction Tourism's economic influence and opportunity was first realized in the 1950s and 1960s by countries like France, Spain, Italy, Greece, UK, Ireland, Australia and the USA, who used tourism as part of an integrated growth strategy to fuel urban regeneration, develop transport systems, finance rural growth and catalyze private sector improvement through employment and economic growth As travel became cheaper and accessible to more people, developing countries offered the prospect of exotic destinations and products attractive to the fast expanding market-driven foreign travel companies Tourism's role in growth and progress has evolved considerably in the past 15 years It is increasingly considered a stimulant not just for foreign exchange, economic growth and employment, but also an opportunity for host community participation in biodiversity conservation, urban growth, and infrastructure overhaul and planning, rural growth, environmental restoration, coastal protection and cultural heritage preservation Couched in more socially and environmentally inclusive approaches today, tourism has a role to play in a greater number of developing economies than ever before and development agencies are progressively becoming involved in this sector However, despite this economic growth, there is no evidence that tourism is contributing to an overall growth in per capita GNP A central issue discussed in this research is whether enough has been done to truly include less developed countries in the value chains that comprise the delivery of tourism products and services In 1979, driven in part by the external debate around tourism and by its own changing approaches to Reconsidering Tourism as a Facilitator for Economic Growth in Less Developed Countries Created by: Mitra Mahmoudi Chapter Presentation of Findings recorded Gross National Product (GNP) per capita as an indicator of General Standard of Living in a country and with the same Economic Classification The research aim is to spark interest in these important elements and to explore new horizons Research aims to reconsider tourism as a facilitator for economic growth in less developed countries We perform regressions analysis on these variables: Geographical Zone, Gross National Product (GNP) per capita as an indicator of General Standard of Living in a Country and Economic Classification of a Country: Exchange Rate = + b*Geographical Zone i + c* Economic Classification i + d* GNP/capita i + *Year2000 i+ *Year 2001 i+ *Year 2002 i+ *Year 2003 i+ Year2004 i + i Table 4.4 Regression output Exchange Numbers Log of Exchanges Standardized Numbers 131027.5** 10.535** 629** (3002.745) (0.66) (.007) Geographical -24857.9 -1.005** -.095** Zone (605.939) (.016) (.003) Same Economic 1709.08 368** 005 classification (1250.954) (.034) 004 Difference in -11545.84** -.258** -018** GNP/capita (864.514) (.024) (.003) -859.788 058 -019** (1616.114) (.043) (.004) -366.369 0.19 004 (1616.114) (.042) (.004) -327.339 149 -009** (1514.37) (0.45) (.0041) -345.45 042 004 (1616.14) (0.45) (0.44) Intercept Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 R-squared Number of Observations -1073.107 016 -037** (1616.114) (.044) (.004) 0.0080 09.1256 0.045 263.332 54.247 263.333 (**=p