Tourism has a significant impact on both local and national economies and is a key focus in IB Geography, particularly within Option E: Leisure, Tourism and Sport. Tourism can act as a powerful driver of economic growth, especially in regions with limited industrial development. However, its economic impacts are complex and can create both benefits and challenges.

One of the most important economic benefits of tourism is job creation. Tourism generates employment in hotels, restaurants, transport, entertainment, and retail. These jobs may be direct, such as hotel staff or tour guides, or indirect, such as construction workers and food suppliers. In many developing countries, tourism provides employment opportunities where few alternatives exist.

Tourism also contributes to income generation and economic growth. Tourist spending increases demand for goods and services, stimulating local businesses. At a national scale, tourism contributes to Gross Domestic Product (GDP) and can become a major source of national income. For some countries, tourism is one of the largest export sectors, earning valuable foreign currency.

Another key economic impact is infrastructure development. Investment in airports, roads, water supply, and communication networks is often driven by tourism growth. While these developments are designed to support tourists, local communities also benefit from improved access to services and facilities. In IB Geography, this is often seen as a positive multiplier effect of tourism.

However, tourism can also create economic leakage. Leakage occurs when money spent by tourists leaves the local economy, often because foreign-owned companies control hotels, airlines, or tour operations. Profits may be transferred overseas rather than reinvested locally. This reduces the long-term economic benefits of tourism for host communities.

Tourism can increase regional inequality. Economic benefits are often concentrated in specific tourist areas, such as coastal resorts or major cities, while rural or inland regions receive fewer benefits. Property prices may rise in tourist areas, making housing less affordable for local residents. Seasonal tourism can also create unstable employment, with jobs available only during peak periods.

In IB Geography, students are expected to recognise that tourism economies can be vulnerable. Heavy dependence on tourism makes economies sensitive to global events such as economic recessions, political instability, or health crises. Sudden drops in tourist numbers can lead to unemployment and economic decline.

Despite these challenges, tourism can support diversification in some economies by encouraging the growth of small businesses, crafts, and cultural industries. When well managed, tourism can contribute to long-term economic development.

Overall, tourism impacts local and national economies by creating jobs, generating income, and supporting infrastructure development, but it can also increase inequality, leakage, and economic vulnerability. Effective management is essential to maximise benefits and reduce risks.

RevisionDojo helps IB Geography students analyse tourism’s economic impacts clearly, balancing benefits and challenges in confident, exam-ready explanations.