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Economic and Social Impacts of Tourism in Canada

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1. Introduction

Tourism is regarded as among the most beneficial sectors to the economy of Canada (Holden, 2008). It employs many Canadians and creates billions of income each year; and has been able to create 653400 jobs and generation of income of at least $70.8 billion in 2007. However, tourism’s contribution to GDP in Canada varies from year to year but generally comprises 2 per cent of the GDP. This paper provides a report regarding social and economic impacts of tourism in Canada.

Social and economic factors have been observed to have the direct impact on tourism. Their effects on tourism have been significant with regards to income generation and number of tourists that visit tourists’ sites in Canada. This paper provides a review of economic and social impacts of tourism in Canada.

1.1. Rationale and Significance

This paper provides an objective quantification of economic and social impacts of tourism in Canada by use of survey data obtained from tourism spending by Canadians and foreign tourists. This is because understanding economic and social impacts of tourism provides a basis for creating solutions to challenges faced by the tourism sector in Canada.

1.2. Plan of the Work

This paper provides a technical explanation for economic and social impacts of tourism in Canada. This is followed by a proposal of solutions to economic and social impacts of tourism in Canada. A short conclusion follows which involves the overall significance of the findings and presentation of major findings of the study.

1.3. Scope of the Project

This project involves a definition of economic and social impacts of tourism in Canada and methods that are important in the study and presentation of the findings. The main area of focus of these impacts will be Canadian tourism sector.The definition of economic tourism is mainly restricted to travelers to assist them in enjoying participation in tourism events, as well as those who take part in social activities such as sports.

1.4. Method

The approach for analysis involves the use of survey data and quantification of economic impacts by use of written sources and facts relating to social and economic impacts of tourism in Canada. This is followed by presentation of results relating to the findings of research and how results can be useful in understanding economic and social impacts of tourism.

1.5. Tasks

This paper involves an argument of economic impacts of alternative allocation of resources, policies and development proposals. The economic analysis is mainly used in assessment of merits of specific alternatives. Economic effects of resource allocation are compared with alternatives such as extraction of resources or manufacturing. It also involves an evaluation of impacts of alternative tourism development such as methods of emphasizing outdoor recreation and convection facilities.

1.6. Problems

There are a number of problems which may not make this project successful. These challenges may also make the results of the research less reliable. For instance, it will be difficult to communicate the results of the findings in a manner that is understandable to the audience when terms such as direct and indirect effects are used. There is a need in clarification of certain terms such as measures of jobs, sales incomes and measurements of units. For instance, there is difficulty in knowing whether income is only wages and salaries and does not include proprietor’s income, rent and profit.

1.7. Initial List of Resources

Brunt, P., & Courtney, P. (1999) . Host perception of socio-cultural impacts. Annals of Tourism

Research 26 (3): 493-515.

 This book provides an exclusive review of policies and actions that have a direct effect on tourism. It provides dependence factors such as origins and destinations that have a direct impact on tourism. It provides a guide for decision makers in terms of understanding the effects of actions on the tourism sector and other sectors of the economy.

Cook, R. A., Yale, L. J., & Marqua, J. J. (2006) . Tourism: The business of travel. (3rd ed.) .

New Jersey: Prentice Hall.

This book provides an evaluation of economic impacts of variations in the supply of recreation and tourism services. It involves a study of supply changes such as creation of new facilities, closure of current facilities and expansion of current facilities.

Cooper, C., Fletcher, J., Fyall, A., Gilbert, D., & Wanhill, S. (2008) . Tourism: Principles and

practice. (4th ed.) . New Jersey: Prentice Hall.

This book provides an evaluation of principles towards management of tourism and the impacts of these principles on the tourism sector. It also includes an evaluation of changes in population, marketing activities and changing demands on income generated by tourism.

2. Economic Impacts of Tourism in Canada

 There are many economic impacts related to tourism. These include contribution to sales, profits and jobs and improvement of and generation of revenues (Fakiyesi, 2008). Direct impacts are observed in primary tourism sectors such as lodgings, restaurants, transport sectors and retail trade.

The direct impact brought by tourism involves the generation of income which improves economic condition of a country. For instance, when 100 tourists visit a country each spending $ 100 per day, the result is that a total of $10000 is spent per day in an area. If this is sustained over 100 days, the region will accumulate a million dollars that would be distributed to economic areas such as lodging, restaurants and retail trade across the sectors in proportion of how the visitors spend their incomes (Cooper, Fletcher,  Fyall, Gilbert, & Wanhill, 2008).

A section of this earning would go into covering costs of goods purchased by tourists that are not made in regional areas. Tourism is a labor and income intensive sector and results into high proportion of sales that bring incomes and creation of jobs.

There are other types of economic impacts that are brought by tourism in a country. They include changes in prices. This is where costs of housing and retail are inflated in an area on a seasonal basis. During inflation of these charges, more income is generated, and the economy of a country improves.

Tourism also has an effect of causing changes in quality and quantity of goods and services by leading to a variety of goods and services in an area. It also results into changes in property and other taxes that cover local services that are either lower or higher during tourist activities. In certain situations, taxes collected from tourists can result into reduced local taxes for schools and roads. In certain situations, local people may be taxed to cater for added infrastructure and costs.

There are also economic and social impacts of tourism in an area that are either positive, or negative such as traffic congestion that results into an increase in costs of moving for individuals and businesses. It also ensures an improvement in amenities that attract tourists and inspires retirees to participate in other businesses, in an area.

Impact analysis involves an analysis of direct impacts, indirect impacts and induced impacts of tourism in an area. The total sum of impacts brought by these types of impacts is referred to as total economic impacts (Cook, Yale, & Marqua, 2006). Direct impacts involve changes in production in relation to immediate changes in tourism expenditures. This can be in a case where an increase in the number of tourists staying in a hotel results into increased yields of sales in the hotel sector. Additional hotel sales and related changes in hotel charges for employees’ dues, taxes and supplies are direct influence of tourism spending.

Indirect impacts, brought by tourism, include changes in production that result from a number of re-spending activities of the hotel industry in related industries that supply products and services to these hotels. Indirect impacts in hotel sales that are brought by tourism include changes in jobs, and income in the supply industry in Canada. This links hotels of various degrees to other economic sectors in the region.

Tourism also results into induced effects that involve changes in economic activities as a result of individual spending of income from tourism spending. For instance, tourism supports hotel and linen supply industries directly or indirectly when income is spent in the local region for housing, food, transportation and other products and service needs. The impacts of sales and incomes from household spending include increased wages, salaries, as well as proprietor’s income.

Tourism has the capacity to impact directly or indirectly on every sector of the economy, in one way or another through direct and indirect effects (Brunt & Courtney, 1999). The extent of secondary effects is dependent on the propensity of individuals and businesses to purchase goods from regional suppliers. Induced effects are mainly observable when an employer in an area closes his operations. It does not only result into direct impacts on supporting industries, but the entire economy is affected as a result of reduction in income within the household in an area. Retail organizations are forced to shut down, and there is an increase in leakage of money in the region as consumers seek goods and services from other regions.  Impacts of a similar kind are observed when there is an increase in jobs.

Final demand is also affected by tourism. These include sales of goods and services to the final consumers of goods and services. Generally, final consumers of goods and services are individuals. Spending by the government is also considered a final demand.

3. Social Impacts of Tourism in Canada

Tourism has great social impacts on the surrounding communities. It is regarded as both a source of international amity, promoter of peace and a way of destroying and corrupting regional cultures (Holden, 2008). It is also considered a source of environmental destruction, intrusion into people’s privacy and dignity.

Some of the positive impacts of tourism include development of positive attitudes of indigenous people towards each other and enabling people learn about their culture, and reduction of negative perception and development of stereotypic ideas. It also encourages the development of pride, understanding and tolerance of one’s cultures and improvement of satisfaction and interaction.

Social contacts during tourism activities with regional communities result into mutual understanding, tolerance, learning, awareness, bonding, and liking between tourists and local communities. Residents get the information relating to the outer world without the need to leave their homes, and visitors are able to learn about culture of the people they have visited. Regional inhabitants are able to benefit through contribution of the tourism industry in improving social infrastructure such as schools, health care facilities, transport and communication systems, internet cafes. When the local culture is the basis for attracting tourists into a region, it ensures local cultures are preserved in case such cultures were on the edge of extinction.

Tourism also has a potential to increase hostility, tension, and suspicion. An argument that tourism is an essential force for ensuring peace in a region is exaggerated. Generally, little evidence can be used to show that tourism has contributed to uniting world populations together. Social and economic tourism are factors of the levels of incomes generated by visitors to the host communities. In more than half of all package-inclusive tours, at least 80% of travelers’ fees are spent on airlines, foreign organizations and hotels, and little go to businessmen and employees.

On the contrary, large hotels and restaurants do not use regional foods to satisfy tourists, and they do not employ regional staffs in the senior managerial posts, resulting into inability of local farmers to reap the benefits of their operations.

Tourism also has the potential to affect cultural changes (Fakiyesi, 2008). When a resource is successfully developed, there are plenty negative impacts that can arise. These impacts include overdevelopment, conflicts with regional communities and artificial modernization. While the culture of a group of people may be preserved, when it is presented to tourists, it is possible to dilute or destroy it the culture. The objective is to ensure tourism is promoted in an area so that, it benefits the local people trough generation of income and creates respect for the regional culture and tradition.

Local ecology is also affected both positively and negatively by tourism. Tourism has the potential to grow into a mass-tourism resulting into mass consumption, pollution and inadequate resources. On the contrary, from the ecological perspective of tourism it is usually more acceptable and advisable in comparison to other industrial processes as it does not have any impact on the environment. However, it does not have an impact on the lives of people in the local communities such as creation of pseudo conflicts. In other regions, other industries have a negative impact on the environment in comparison to tourism.

4. Solutions to Economic and Social Impacts of Tourism in Canada

The following solutions and proposals have been made in order to counteract the challenges faced by Canadian tourism industry. There are many natural resources and cultural diversity, in Canada; and there is a need to develop more tourist attractions and alternative sources of income to improve the economy and to ensure preservation of natural resources in the country.

In addition, the stakeholders in tourism industry should create programs that enable awareness and effects of tourism especially in terms of social effects of tourism. This will ensure host communities preserve regional values and ensure their cultural heritage is not eroded.

Sustainability of destinations and social lives of communities can be improved at an early stage of tourism development, by creation of policies and practices that ensure social and economic impacts of tourism are averted at the maturation of the industry.

Tourism industry also needs to encourage participation of host communities as a pre-requisite to tourism development process and enable host communities have control over the resources of the community.

5. Conclusion

This paper has indicated social and economic impacts of tourism development on communities in Canada and the findings resulted into the following conclusions.

Tourism in Canada is composed of both natural and cultural resources that have the capacity to attract a large number of tourists and have impacts on communities in Canada. Furthermore, tourism has the capability to bring social and cultural changes in host communities such as improvement of living standards and improvement of social lives. However, there has been little research regarding social impacts of tourism due to the difficulty in measuring the extent of the impacts. The impacts have been observed to have a high potential to threaten development of tourism, due to measures and policies that are not usually implemented to address negative impacts.

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