Global tourism industry deserves coordinated export strategies, aid boost, ITC-UNWTO report says

14 September 2015
ITC News

The huge potential of the tourism sector for inclusive growth and job creation, particularly in developing countries, justifies a greater share of trade-related development assistance. That’s one of the main messages of a new report by the International Trade Centre (ITC) and the World Tourism Organization (UNWTO) called ‘Tourism and Trade: A Global Agenda for Sustainable Development’.

Just 0.78% of Aid for Trade disbursements went to tourism in 2013, even though the sector accounts for 6% of developing countries’ exports and around 4% of gross domestic product (GDP) in low-income countries. More Aid for Trade funding should be allocated to the sector, ITC and UNWTO say in their joint report, and tourism projects should be bigger.

The study, which will be launched on 14 September during UNWTO’s General Assembly meeting in Medellin, Colombia, underscores the importance of tourism to sustainable development. The report finds that the sector may not be able to reach its full potential to deliver sustainable and inclusive growth without strong, coordinated action around tourism export strategies that take full account of the different policy frameworks governing the flows of travellers, services, goods and foreign direct investment. The report illustrates the importance of trade, investment and visa policies to tourism from two perspectives – the tourist journey and the tourism value chain. Another key finding is that open trade policies cutting across a wide range of sectors – not just transport and the hospitality industry – can facilitate tourism. These sectors range from financial and insurances services to make it easier for tourists to access local currency or their own bank accounts, through to health, education, and communications.

In recent decades, tourism has enjoyed rapid expansion and geographic ‎diversification, becoming one of the fastest-growing economic sectors worldwide. The tourism industry now ranks fourth among worldwide export sectors – behind only fuels, chemicals and food – and accounts for fully 30% of global services trade. UNWTO says domestic and international tourism expenditure generated US$ 1.5 trillion last year, adding 10% to global GDP and representing one out of every 11 jobs worldwide.

Tourism is the top export of about a third of developing countries, which play an increasingly important role in the sector. Emerging and developing economies register 45% of all international tourist arrivals today, and this share is forecast to reach 57% by 2030. Tourism is an important driver of economic growth in these countries and is employment intensive, with linkages into many other parts of the economy. The industry also contributes directly to poverty reduction – notably among women.

‘Tourism has, therefore, a key role to play in maximizing the contribution of trade in services to development, job creation and the achievement of the 2030 Sustainable Development Agenda and the proposed Sustainable Development Goals,’ the ITC-UNWTO report says.

That means tourism – which ‘appears to be highly under-represented in Aid for Trade flows’, according to the report– requires a bigger piece of the Aid for Trade pie. And tourism projects, which receive about US$ 500,000 on average, well below the amount spent on projects in most other sectors, must be more comprehensive, reflecting the industry’s full value chain.

‘Increased coordination among donors and implementing agencies can help to design and implement more comprehensive tourism projects that are more effective in enhancing tourism’s contribution to sustainable development,’ the report says. ‘It is in this context that ITC and UNWTO have entered into a strategic partnership in order to aggregate the two organizations’ resources and competencies, to share perspectives in the process of rethinking a joint approach to Aid for Trade in tourism, and to generate greater donor interest in funding tourism activities for the benefit of developing countries.’

‘We need to put more trade in the tourism community and more tourism in the trade community so that the two synergise their actions for sustainable, inclusive growth,’ said ITC Executive Director Arancha González. ‘This ITC-UNWTO report does just that.’