The Negative and Positive Effects of Tourism
Submitted by
Arianne Smith
DeVry University
Tourism Management, Warren John Fall 2011

Abstract
The current research paper covers the main effects of global tourism, both positive and negative. International tourism is a significant sector of business. For some countries it is one of the main sources of national income. The most important positive economic effects of tourism are as follows: increase in budget revenues, production expansion, stimulation of investments, and improvement in the population’s welfare. Tourism influences social and cultural lives of people in a positive way by stimulating the development and revival of local cultures and encouraging intercultural exchange.
As the result, the purchasing power of the population increases, and this leads to the general expansion of production.
The economists call this situation a “multiplier effect”. It means that every monetary unit spent in the country by tourists generates a certain number of monetary units through secondary sales (Mason, 2008, p. 53). The amount of new money depends on the intensity of tourism activity in the country and the level of prices. Nevertheless, the effect is always positive. The general scheme of the tourism multiplier effect is illustrated in Figure1 (“Tourism Multiplier Effect”, 2011).

Figure 1. Tourism multiplier effect. The figure illustrates how the development of tourism contributes to the economy of the country.
The economic effects of tourism can be divided into direct and secondary; the latter consist of indirect and induced effects (Stynes, 1997). Direct effects occur in the industries that are directly connected with tourists’ expenditures. Indirect effects occur in the industries that supply the tourism industry. Induced effects are connected with household spending, which increases due to the rise in wages in the industries directly or indirectly connected with tourism (Stynes, 1997).
Another possible economic effect of international tourism is stimulation of domestic production. This effect can be well exemplified by Cuba’s experience. During the period from 1990 to 2002, the percentage of domestic