1. Understanding Poverty
BRIEF May 14, 2025

Tourism and Competitiveness

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  • The tourism sector provides opportunities for developing countries to create productive and inclusive jobs, grow innovative firms, finance the conservation of natural and cultural assets, and increase economic empowerment, especially for women, who comprise the majority of the tourism sector’s workforce (54 percent in 2020)

    Why is the WB supporting sustainable tourism?

    • Increase in revenues from tourism: foreign exchange, investment and fiscal revenues
    • Stimulate MSME growth with spillovers and linkages to domestic sectors e.g. handicraft, retail, horticulture
    • Improve social wellbeing of communities, women and disadvantaged groups
    • Prevent environmental degradation from tourism and drive tourism revenue to preserve natural and cultural assets and adapt to climate change
    • MORE AND BETTER JOBS & GROWTH

    In 2024, tourism accounted for 10 percent of the global economy, contributing US$10.9 trillion to global GDP. The sector supported 357 million jobs worldwide, approximately one in every ten jobs, highlighting its central role in the labor market. International visitor spending also surged, reaching US$1.9 trillion.

    Tourism has a long value chain and when effectively managed, jobs, value and positive impacts can be created at each linkage. Tourism can expand markets for existing and new products and services that directly impact the poor and isolated communities. If developed sustainably, the sector can also be a force for biodiversity conservation, heritage protection, and climate-friendly livelihoods, making up a key pillar of the blue/green economy.

    The tourism value chain includes many sectors
    Jobs, values and impacts are created along each step of the value chain

    Tourism Value Chain Figure infographic


    World Bank Tourism

    However, realizing this potential requires thoughtful management and strategy. Not all types of tourism deliver the same jobs or economic opportunities; while some tourists spend heavily in local communities, others may spend little and burden local authorities to provide water, power, and waste management for an expanded seasonal population. The sector’s social and environmental risks must be mitigated to ensure tourism delivers sustainable and inclusive growth and maximizes its net-positive benefits.

    Naturalist Local Guid With Group Of Tourist In Cuyabeno Wildlife Reserve Ecuador

    Naturalist local guide with group of tourist in Cuyabeno Wildlife Reserve Ecuador. Photo: Ammit Jack/Shutterstock

  • Tourism Framework

    World Bank tourism projects are designed based on a common understanding of the tourism economy, shown in Figure 1. The tourism economy in a destination is a result of the interaction of three key drivers: the demand for tourism, supply of tourism services, and value of tourism assets. Each of these are influenced by regulatory and policy frameworks that in turn result in economic, social and environmental impacts which need to be managed proactively to sustain the tourism economy.

    Figure 1. Tourism Economy Impact Framework 

    Tourism Framework infographic

    The connection between the drivers of the tourism economy and tourism impact, illustrates the dynamic relationship between tourism’s impacts and the tourism economy, highlighting the delicate balance between economic, social, and environmental elements and tourism development.

    Tourism and Competitiveness Theory of Change

    WB tourism projects also work from a common theory of change. Theory of Change helps to understand why and how change happens, so that development programs can fully harness the sector’s development potential. The World Bank Tourism TOC includes three important components shown in Figure 2.

    • Intermediate and long-term outcomes: these are the overall objective of the project which often include increased visitor spending, job creation, improved firm productivity, and enhanced community benefits and landscape protection.
    • Development challenges: these are challenges that may hinder successful tourism operations, and include market information gaps, limited destination access, weak tourism-related institutions, a weak private sector, underdeveloped or deteriorating tourism assets, and limited community inclusion.
    • Enabling policies: to address these challenges, 20 of the most used and effective policy interventions have been identified. These are categorized based on responsible actors—either tourism stakeholders (light grey) or other responsible agencies (dark grey).

    Figure 2. Tourism Theory of Change 

    Tourism Theory of Change infographic

  • Examples of WB Tourism projects:

    • In Indonesia, a US$955m loan supported the Government’s Integrated Infrastructure.  Development for National Tourism Strategic Areas Project. This project was designed to improve the quality of, and access to, tourism-relevant basic infrastructure and services, strengthen local economy linkages to tourism, and attract private investment in six selected tourism destinations. Project interventions resulted in almost $900 million in private sector investment in these six areas, over 11,000 hotel rooms being added, and upskilling of over 83,000 tourism professionals. Additionally, 18,000 participants from 75 tourism villages set up community-based tourism attractions to benefit from tourism expenditure. An initial impact assessment by the National Planning Agency of Indonesia reveals an increase of 27.5% in job opportunities in these six destinations, and jobs created for over 975,000 people.
    • In Madagascar, a series of projects totaling US$450m in lending and IFC Technical Assistance have contributed to the sustainable growth of the tourism sector by enhancing access to enabling infrastructure and services in target regions. Activities under the project focused on providing support to SMEs, capacity building to institutions, and promoting investment and enabling environment reforms. They resulted in the creation of more than 10,000 jobs and the registration of more than 30,000 businesses. As a result of COVID-19, the project provided emergency support both to government institutions (i.e., Ministry of Tourism) and other organizations such as the National Tourism Promotion Board to plan, strategize and implement initiatives to address effects of the pandemic and support the sector’s gradual relaunch, as well as to directly support tourism companies and workers groups most affected by the crisis. 
    • In Sierra Leone, an Economic Diversification Project has a strong focus on sustainable tourism development. The objective of the project is to increase investment, Small and Medium Enterprises (SME) growth, and entrepreneurship in non-mining productive sectors with a strong focus on sustainable tourism. The project has successfully rebranded the country and doubled the number of tourist arrivals despite COVID-19. It has created 17,000 jobs (14,000 across the tourism value chain), and leveraged US$40M in private investment. The project has also supported the reduction in single use plastics, contributed to the development of more circular economy tourism business models, and supported the growth of women- run tourism businesses.  
    • In Pakistan, IDA has financed tourism projects in Punjab and Khyber Pakhtunkhwa provinces to facilitate tourism and promote subnational culture and heritage. The projects aim to address the perception of security, capacity of public sector authorities, skills base of the workforce, community participation in tourism, and provision of connectivity infrastructure. So far, more than 32 tourism and heritage sites have been upgraded through the project, including renovations of museums, signage, and tourism facilities. The projects have also developed eight Destination Management and Investment Plans and pre-feasibility studies, identifying more than 30 investment-ready projects for the private sector in these two region. There have been over 200,000 beneficiaries of the project interventions so far, of which 45,000 are women.

     

    Boy riding bicycle on Bureh Beach in Sierra Leone

    Bureh Beach, Sierra Leone.

    Photo: Louise Twining-Ward

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VIDEO Sep 27, 2022

Launch of Blue Tourism Resource Portal

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