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How to contribute to local economic development from tourism

We often talk about how tourism drives the economy globally. According to the WTTC, the industry accounts for 12% of the world’s GDP and generates 1 in 10 jobs, and is expected to continue growing at a rate of 6% in the next ten years. These figures reflect the increase in trips: last year alone, the number of international trips exceeded 1,400 million according to the UNWTO.

Beyond looking at global trends, it is also important to ask ourselves what is the effect of tourism on local economies and communities. The data suggests that tourism does not always have positive and equitative effects in the territories where it takes place. Several studies argue that the indirect benefits of tourism do not usually lead to an improvement in the quality of life of the inhabitants and that its economic benefits are concentrated in a few places. This reality generates a two-fold challenge for the industry: being able to turn tourism activity into positive effects for the local population and take tourism where it doesn’t take place or it is barely developed.

At the FiturNext Observatory, this year we focus on observing, analyzing and disseminating best replicable practices in tourism that contribute to address this challenge. Practices that promote local economic development.

Key areas to contribute to local economic development

The World Bank defines local economic development as the process in which diverse stakeholders in society work together to improve conditions for economic growth and job creation. We find references to local economic development in responsible tourism, which seeks to benefit local communities, and inclusive tourism, which focuses on creating and distributing benefits to the poor population.

At the FiturNext Observatory we want to move beyond responsible, inclusive or sustainable tourism. We promote best practices that decentralize and distribute the benefits of tourism to the territory. That is, practices that positively affect communities which did not participate in tourism before or did so in a minor capacity, while offering them ways to get involved in decision-making processes.

We identify three key areas to contribute to local economic development from tourism. When analyzing replicable practices that address this challenge, we examine which of these areas they touch upon using specific indicators for each one:

Decentralization of tourism and community tourism. Decentralization increases the decision-making capacity of the local population, drives the creation of self-managed supply networks and benefits communities as a whole, as it creates new opportunities for local entrepreneurship initiatives and jobs.

Opportunities for local entrepreneurship initiatives. Training and supporting local entrepreneurship initiatives enables the distribution of economic benefits to local families and entire communities. Thus, they are empowered to become part of the consumption and service provision ecosystems for the tourism industry.

Inclusive employment and social equity. Creating jobs for the local population is the
easiest and most basic way to provide opportunities for people in situations of
vulnerability or minorities.

Why is local economic development important for tourism?

Beyond having positive effects for communities, local economic development brings a lot of value for destinations and businesses in the tourism industry.

First, local economic development takes tourism to areas where it is not yet developed. Therefore, new destinations emerge and others that used to have very little activity get more visitors. These flourishing destinations hold many opportunities for companies in the industry that already work in the area or want to establish themselves there, from hospitality to tour operators, transport companies or others.

In addition, working with sustainable tourism initiatives that support local enterprises or are a source of employment for minorities positions companies in the industry favorably towards their clients. This positioning can contribute to attracting a greater number of travelers, increasingly willing to contribute to the destinations they visit and the communities that live there.

How you can join the #FiturNext community

We invite you to follow the latest FiturNext news by subscribing to our newsletter. In January 2020, we will announce the best practices selected in the FiturNext 2020 challenge that you can adopt in your company or destination, in addition to our Fitur 2020 program on innovation and sustainability in tourism.

Follow the news and post in #FiturNext