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Can tourism be considered a strategic sector of the world economy ?

Herwig SCHLOEGL - Deputy General Secretary of the Organization for Economic Co-operation and Development (OECD), Paris, France

 

I am delighted to be here for the opening session of the second meeting of the "Sommets du tourisme". The aim of this meeting is to link tourism, sustainable development and economic growth. I believe the work and expertise of the OECD in each of these areas can provide useful insights for the debate. In my remarks today, I would like to address four issues.

• First : tourism is an important and growing sector of the economy.
• Second : managing tourism development is a major policy challenge.
• Third : I would like to suggest and share with you some ideas on the role of governments in tourism.
• Fourth : I will underline the role of the OECD in this process.

Let me develop each of these points in turn.

TOURISM IS AN IMPORTANT AND GROWING SECTOR OF THE ECONOMY

There is no need to stress the importance that tourism can play in bringing together people of different countries and backgrounds, and may promote greater international understanding.

OECD analysis has shown that the economic dimension of tourism is impressive as well. Visitors' expenditures have direct, indirect and induced impacts throughout the economy, in terms of revenues, foreign exchange earnings, employment, value added, investment, production and business opportunities. Tourism contributes to the diversification of the economy and has a significant multiplier effect.

The global market place for tourism is expanding. New tourism destinations appear. In the past 30 years, the tourism industry has grown rapidly, benefiting notably from economic development, the rise in purchasing power and increased leisure time. OECD countries represent about two-thirds of the total tourism market. There is no reason to think that tourism growth will not continue to grow over the coming years.

By their magnitude, tourism activities have great potential for spreading the benefits of globalisation more widely, by reaching different kinds of economies, including the poorest countries and some remote areas where few alternatives for development exist. Tourism has been in recent years one of the fastest growing service activities in the low-income countries.
Moreover, tourism is a main vector for building and promoting the image of a country as a whole.

Studies conducted by the OECD Tourism Committee indicate that tourism is an important generator of jobs in quantitative terms and that it creates jobs for many of those groups that suffer most from unemployment. Tourism, to a more than average degree, employs women, young people, and those with lower education. I need hardly say that access to holidays has become an important factor of development and personal enrichment and thus contributes to people's well being. This is particularly true for young people, for the ageing population and for those with lower incomes.

Tourism activities can significantly contribute to environmental protection and to social, cultural, economic and regional development. Tourism has synergies with traditional acti-vities (agriculture, handicrafts) and is often a development tool for local and rural communities as well as for urban areas (national heritage, cultural amenities). As the natural environment constitutes its basic resource, tourism can, I believe, become an active driving force for sustainable development and can actively influence other industries and businesses to contribute to this objective. We need to deepen awareness of this potential.

MANAGING TOURISM DEVELOPMENT IS A MAJOR POLICY CHALLENGE

Recognising the importance of tourism is one thing. Making a balanced assessment of tourism activity is another. Through its multidisciplinary work, the OECD can look at tourism development from a broader policy perspective, to assist policy-makers

First, all industries create negative and positive impacts. The different types of tourism impacts - environmental, social, cultural and economic - cannot be isolated. The frag-mented nature of the tourism industry augments the risks of unbalanced development of infrastructure and market expansion, which in turn leads to increased pressures on environmental/cultural resources and on the local population. We have to analyse the full picture of tourism's negative and positive impacts to be in a position to suggest policies and measures conducive to sustainable tourism growth. Progress has been made in this direction in many OECD countries. A lot remains to be done.

Second, tourism is obviously closely related to many other industries and services and their underlying policies. Making growth-oriented economic policy for tourism is a challenge that goes well beyond the portfolios of national tourism administrations and requires greater co-operation between tourism and other economic areas. Tourism remains a fragile industry : it is heterogeneous and dominated by SMEs with very diverse growth and profitability. Multi-disciplinary approaches should be promoted to gain a better understanding of what the tourism phenomenon represents and how related policy-decisions affect tourism.

Third, the growth perspectives for tourism are excellent, some would say overoptimistic. Many key issues may affect these perspectives. Globalisation, liberalisation, innovation, new technologies, global warming and demographic changes are among the major developments that will affect all sectors. Potential threats to the growth of tourism, such as health, security, capacity constraints, economic and social problems, should also be consi-dered. All these linkages should be better cross-analysed to increase policy coherence and allow governments to assess the real potential of growth and the policy requirements and to react and adjust their policies and actions.

The growth of tourism cannot be taken for granted everywhere. It will have to compete with other fast-growing services. The developed economies are faced with increased inter-national competitiveness and with important sectoral/industrial and cross-sectoral challenges, which influence and modify the role of central governments in tourism. The worldwide development of the tourism industry will be increasingly affected by economic, environmental and transport policies as well as by emerging systemic risks. Managing the development of tourism is a major policy challenge that requires a broad multi-disciplinary approach, closer intergovernmental co-operation and more analytical and research work addressing these issues.

WHAT ROLE FOR GOVERNMENTS IN TOURISM ?

In most OECD countries, tourism is in principle an area of public policy. However, despite its importance for national economies, its growth potential and its cross-sectoral nature, tourism suffers from a lack of political recognition by governments, particularly in developed OECD countries. I will highlight four main instances where I think there is a specific role for governments to play.

Providing infrastructure and services: Firstly, the overriding concern for governments is to provide a flexible and transparent framework in which the tourism industry can draw up its own strategies. The state is an important service provider and helps to improve the competitiveness of the tourism industry. Obvious examples of such services are education and vocational training systems, maintenance and development of efficient and secure public transport systems and preservation/valorisation of the natural and cultural heritages. These are areas where governments and the tourist industry can join forces, and this is indeed done in many of our Member countries. Good infrastructures and services will be key to sustaining the economic growth and environmental quality of tourism.

Integrating tourism concerns in other policies: Secondly, the growth of tourism, the complexity of the phenomenon and the increasing number of stakeholders require better integration of tourism with other policies. Tourism policy should become an important part of a growth-oriented economic policy. The linkages between tourism and related policies - consumer, environment, SMEs, transportation, regional, statistics, investment or labour market - should be better integrated, particularly in areas where governments can correc-t/avoid market failures.

Improving regulation and law enforcement: Thirdly, appropriate government regulation and effective enforcement serve the interests of the sector. Such regulation can take a wide range of forms. For example, some governments have established staggered holidays and school vacations with the aim of preventing undue concentration of tourist flows. An easing of administrative formalities, such as visa regulations, is another example. There are important rules for protecting consumers and providing legal redress in case of disputes. Regulations promoting the safety and well-being of tourists can play a critical role in establishing an environment in which tourism can flourish. Ensuring that tourists do not test the limits of hospitality by engaging in illegal behaviour is also a necessity, not only for the well-being of other tourists but also for that of the local population. Partnerships between government and the private sector can jointly develop rules so as to avoid undue burdens on the sector. Voluntary initiatives by the industry should be encouraged.

Statistics, research and development: Fourthly, the role of the state in tourism will be increasingly judged on its ability to provide industry and other levels of governments with the information they need to draw up their own strategies. The OECD, together with the United Nations, the World Tourism Organisation, Eurostat and the private sector, has developed a conceptual framework the "Tourism Satellite Account" to measure the economic importance of tourism in the economy. The OECD has developed in parallel a specific mo-dule to measure employment in tourism industries. These tools can be instrumentals in providing governments and industry with data and analysis that support the development of best tourism policies in each country. Active tourism policies can maximise the positive effects of tourism for the benefits of the whole community and minimise significantly the negative impacts. Today, the role of the state in tourism is changing. In developed economies, the focus is on better integration of tourism policy in the overall policy framework and on strengthening public-private partnerships. For governments, it represents a difficult multidisciplinary policy challenge. Although tourism is driven by the private sector, governments shape the operating envi-ronment, provide much of the infrastructure, encourage innovation and research and development and are responsible for public goods such as the natural and cultural resources required by consumers and the industry.

WHAT ROLE FOR OECD IN TOURISM ?

The OECD functions as a permanent intergovernmental conference, dealing with a large number of issues. The main task of the Organisation is to seek policy-relevant information and identify best practices in all areas of public policy, and to analyse the results in order to assist Member and non-member countries in making appropriate policy choices so as to further economic and social progress.

Tourism policies play an important role in the establishment of a framework conducive to sustainable development of the industry for the benefit of the economy and society as a whole. Efficient tourism policies can make a contribution to social stability and higher quality of life, mutual understanding and education, and are development tools servicing both Member and non-member countries.

Better integration of tourism policy considerations in OECD work will serve the strategic objectives of the Organisation and will further the mission of the OECD and its Member governments. The work of the Tourism Committee needs to be viewed from a broader, multidisciplinary perspective. The OECD can help Member countries adjust their policies and actions to support sustainable growth in tourism.

At the OECD, we will therefore continue to examine OECD area tourism policies and to promote greater coherence with other policies. We will pursue the monitoring and analysis of the measurement of the role of tourism in OECD economies, examine the need for such information in the policy decision-making process and for the industry and provide a forum for governments to share experiences and best practices.