What is the Importance of Tourism to Country's Economy?

As an industry the impact of tourism is manifold. Tourism industry nourishes a country’s economy, stimulates development process and restores the cultural heritage.

This industry enjoys a major advantage over other industries that of having a unique product which might differ from state to state. For example, Goa is renowned for its sunny beaches and colonial charms, palaces which are reminders of princely era.

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Tourism Earns Foreign Exchange:

During the 1960’s great emphasis was placed on tourism as a source of foreign exchange earner. Tourism is the one industry that earns foreign exchange for country without exhausting natural resources and without actually exporting any material goods.


The income from tourism has tended to increase at a higher rate than merchandise export in a number of countries. There is now almost a continuous flow of income from richer countries to the not-so richer and developing ones, raising the latter’s export earnings and rate of economic growth.

For example in countries like India and Spain, tourism is the single largest earner of foreign exchange. According to official Spanish sources, in 1981 there were more visitor arrivals in Spain (40 million) than the actual population of the country (36 million). Tourism is thus the most important source of income for many countries.

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Tourism Helps in the Development of Infrastructural Facilities:

Development and improvement of infrastructure facilities is another important benefit offered by the tourism industry. Infrastructural facilities such as airport, roads, water supply and other public utilities may be widely shared by the other sectors of the economy.


Development of new infrastructure and improvement in the existing infrastructure may confer benefits upon the resident population which they may have not enjoyed otherwise.

Further­more the provision of infrastructure may provide the basis or serve as an encouragement for greater economic diversification. A variety of secondary industries may be promoted which may not serve the needs of tourism.

Thus, indirectly, tourist expenditure may be responsible for stimulating other economic activities of a country.

Tourism Helps in the Balanced Regional Development of a Country:

Tourism development greatly benefits the underdeveloped regions of a country. These economically backward regions mostly have places of high scenic beauty, which if developed for the tourism industry, will help to bring a lot of prosperity to the local people.


Money spent by tourist helps to improve the health of every business in that region. For example, road constructed for use by tourists provides local people access to the market centers as well.

Earlier, there were many backward areas but due to tourism development, these places got international recognition.

For example, Khajuraho, a few years back was considered a remote and unknown small village, but today, it is an internationally famous tourist place of interest and also generates employment to hundreds of local people in hotels, restaurants, travel agencies, handicraft shops etc. Without tourism development Khajuraho would have remained a remote and unknown village till today.

Tourism Helps in Generating Employment:

Tourism industry is a highly labour intensive service industry that generates employment for highly skilled, semi-skilled and unskilled labors in sectors like hotels, restaurants, travel agencies, tourism offices, shops etc.

One additional room in a hotel helps at least 8 to 9 people in getting jobs. Not only that, tourism creates employment outside the industry as well, for example the basic infrastructure like roads, airport, water supply etc.

Provided by construction industry creates jobs for thousands of both skilled and unskilled workers.

Tourism Helps in Preserving Cultural Heritage:

Tourism remains basically a cultural phenomenon. Tourism has always stood as a unique vehicle for cultural promotion. In the past, travel was based on cultural interest.

Even today large number of people travel to foreign countries to know about their culture and tradition. Tourism indirectly preserves environment by discouraging large scale industrialisation in places where natural beauty has to be kept intact.

It thus, helps a country to restore its ancient monuments and archaeological treasures. Most of the developing countries which possess an ancient civilization can benefit greatly from tourism. Tourists visiting these countries have a great urge to become acquainted with ancient civilizations.

As a result of cultural shopping, which forms an important part of any tourist itinerary, local handicraft is still surviving. Tourism has also given a new lease of life to the traditional customs, costumes, festivals and dances which generates employment for the weaker section in the remote areas of the country.

Hence, tourism can contribute unique benefits to a nation by exploring its cultural heritage and can serve indirectly to improve the individual cultural levels of both national and foreign tourists.

Tourism Helps in Maintaining International Peace and Understanding:

Tourism plays an important role in promoting international goodwill. It creates awareness and appreciation of other countries’ culture and tradition and makes possible cultural exchange and enrichment.

Tourism can be a vehicle for international understanding by way of bringing diverse people from different cultures and traditions face to face.

The best way of getting to know another country is to go there and when vast number of people travel, the prejudices, barriers and suspicions that exists between different countries breakdown the narrow, rigid boundaries that keep people away from each other, naturally tend to shrink and a positive move towards better international understanding begins to operate.

Tourism can greatly enrich and promote friendship between different countries in the world.

Tourism, thus, develops not only the economic condition of a country by earning foreign exchange for it, but also plays a vital role in its social, cultural and regional development and in promoting goodwill and friendship among all nations of the World.


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