Factors affecting tourism contribution to GDP

1. GDP or Gross Domestic
Product:
Gross domestic product (GDP)
+Net property income from abroad
= Gross national product( GNP)
- Capital consumption
= Net national product (national income)

2. The macroeconomic role of
tourism
GDP
“ the total value of all goods and services
produced by that economy during a
specific time period, such as one year”.

3. Factors affecting tourism’s
contribution to GDP:
Factor1. The stock of resources
• Natural resources (land, water…etc.)
• Labor sources (human work)
• Capital resources (manmade enhancement
of other resources)

4. Natural resources
For travel and tourism industry, there are
some natural resources that an individual
may make use of them without reducing the
amount available to others, which is called
“zero opportunity cost”

5. Labor sources
Concerning the labor sources, most tourism
activities require a competent labor force,
but there are also many jobs in the industry
may not require a very high level of skills or
qualifications (semiskilled jobs).

6. Capital resources
Finally, for the capital resources, if the
economy has the ability to supply the
investments required for the tourism supply
(infrastructure, hotels, transportations and
so on) this of course will influence the
growth of the industry.

7. Factor 2. The state of technical
knowledge
Many less developed countries have regarded
tourism as an easy industry to develop, because it
demands relatively low technology compared with
many other industries.
It should be mentioned that there are countries that
use the high technology in providing more
interesting attractions such as Disney Land, but
certainly there will always be a place for low-
technology tourism for those who are looking for
natural life.

8. Factor 3. Social and political
stability
Some economists consider it a noneconomic
factor, but in tourism this is a very important
factor. This is because the “consuming tourist”
must go to the “factory” to buy the product, so the
social and political conditions in that “factory”
will directly influence the acceptability of the
industry. We may continue to buy goods imported
from a country that has political problems, but we
will not visit it.

9. Attitudes and habits:
Another major noneconomic determinant is
that of attitudes and habits. The attitudes of
a host population towards tourists are very
effective in the industry. For example: a
purchaser of a pair of shoes does not care
about the attitudes of the workers in the
factory that made them, but a tourist will be
very concerned with the attitudes of those
who supply him services face to face

10. Factor 5. Investment
Economies, which possess a good stock of
resources available for use in tourism, may
have a head start in developing the sector.
An industry, which is both heavily
influenced by fashion trends, and hosts its
customers in its factory, must always invest
to renew its facilities.

11. Problems in measuring
tourism’s contribution to GDP

12. Problems in measuring
tourism’s contribution to GDP
Unpaid services
They are those performed for no payment, or
a payment in kind of in reciprocity. For
example, VFR tourists (visiting relatives
and friends) receive “free” accommodation
from their hosts, if they give their hosts
some presents; there is a true but
unrecorded transaction.

13. Non-accounted services
They are services, which are not accounted for
formally. Non-accounted services are very
common in travel and tourism, particularly in
hospitality, taxi driving, souvenir selling and so
on.