Economics and Tourism Development: Structural Features of Tourism and Economic Influences on its Vulnerability

To a large extent, economic factors explain the global growth of the tourism industry, the concentration of tourism in high-income countries, and the high degree of cross-border tourism between higher income countries themselves. This is discussed. In doing so, shortcomings of tourism statistics reported by the World Tourism Organisation are examined. These statistics can be quite misleading as a means of identifying the relative importance of tourism to different nations. This is shown by rank correlations and conceptually. Economics not only influences the geographical spread of tourism but it is a major determinant of market structures in the tourism industry. These industrial market structures, such as those involving monopolistic competition, combined with high overhead costs experienced by pivotal sectors of the modern tourism industry, make this industry highly vulnerable to sudden declines in demand for its services. These supply-side vulnerability factors are additional to those that contribute to volatility in the demand for tourism itself. Combined supply-side and demand factors have, in particular, made the international tourism industry highly vulnerable to shocks, such as terrorist attacks, unexpected political events and so on. Economic analysis can enhance our understanding of the factors involved.