Tourism promotes inclusive economic growth says World Bank Group President Jim Yong Kim

Published on : Wednesday, December 9, 2015

World Bank Group President  Jim Yong KimWorld Bank Group President Jim Yong Kim at the World Bank Group Tourism Forum 2015 Welcomed everyone to the World Bank Group’s Tourism Forum 2015. He also welcomed people watching online, or following on social media.

He said “we’re hosting today’s conference because we’re committed to tackling the world’s toughest development challenges – especially poverty and inequality. All of our resources – our global development knowledge, investment capital, financial expertise and country presence – are devoted to making the world a more just and prosperous place. As I will explain, tourism can play an integral role in helping us fulfill this mission.

We have established two goals at the World Bank Group – to end extreme poverty by 2030 and to boost shared prosperity among the poorest 40 percent in developing countries. The world has made great progress toward ending poverty — there are 1 billion fewer people who live in extreme poverty today than 15 years ago. Yet there are still about 700 million people living on less than $2 a day.

Based on more than 50 years of global development experience, we have a very good understanding of what has worked and not worked, and why, in specific contexts around the world.

We’ve learned that it’s imperative that developing countries take the lead in their development, and that international institutions must collaborate to support them.

We understand that working with partners from the public and private sectors, civil society, and academia, will increase the impact of our work.

And we know what countries must do to achieve their development goals. This strategy can be summarized in three words: Grow. Invest. Insure.

We must promote inclusive economic growth; invest in people’s health and education; and insure against shocks that plunge people into poverty, using expanded social safety nets and taking action against global threats like climate change and pandemics. The evidence shows that tourism is a powerful way to advance along these three fronts.

In many developing countries, tourism promotes inclusive economic growth, creating jobs and attracting foreign investors. Tourism enables people to gain job skills and professional experience, and promotes social mobility. Tourism also drives the development of critical infrastructure, like air and seaports, roads and hotels, which connect economies to global value chains and increase trade. And, when done thoughtfully, tourism can help protect the environment and build buffers against climate change. Bringing together government ministers, private sector CEOs, academics and staff from across the World Bank Group, today’s conference provides the opportunity to share knowledge and identify ways to collaborate on this agenda.

Let’s look at the evidence. Tourism is an important economic engine in many countries. In Kenya, it produces 14 percent of national economic output – and 12 percent of total employment. In the Maldives, tourism makes up more than 40 percent of the economy – about triple what it was 25 years ago – and is a major source of government revenue, helping finance people’s health and education.

Tourism is also a tremendous and growing source of revenue for businesses: In 2013, tourists spent $413 billion dollars in developing countries – about three times the amount of official development assistance that year. In 2015, about 550 million people will travel to the developing world. This year will be the first time in modern history that middle- and low-income countries receive more visitors than the developed world.

Tourism also can promote economic growth that is more inclusive. It’s a strong source of demand for small- and medium-sized businesses, and has impacted multiple areas of economic activity. Every dollar spent on travel and tourism generates more than $3 in spending in other sectors.

The sector is also a powerful job creator, providing livelihoods and pathways out of poverty for millions, across genders, ages and skill levels. Globally, one out of every 11 jobs is linked to travel and tourism. Research shows that tourism has almost twice as many women employers as other sectors. It also employs young people at about twice the rate of other industries. Promoting tourism encourages investments in people that boost shared prosperity; it also fosters social mobility that can have an intergenerational impact.

I witnessed this on a visit to Indonesia in May. I traveled to Bali, where, about 40 years ago, the World Bank Group worked with the government to set up our first sustainable tourism project. It helped build basic infrastructure, including an airport access road and hotel training institute, and created a development area that today consists of 18 hotels and more than 4,200 rooms.

While there, I talked with the adult children of people who had worked in the island’s tourism sector a generation ago. Their parents had used their earnings to send their children abroad for education in places like Singapore. They returned home with new skills to perform higher-value-added jobs in tourism and other sectors.

This transformative impact is one reason Indonesia aims to increase tourism’s contribution to the country’s GDP from 9 percent in 2014 to 15 percent by 2019. This will be a substantial undertaking, requiring significant infrastructure investments to handle millions more visitors each year.

On the public side, the tourist industry needs airports that can handle large planes and advanced air-traffic-control systems that can handle air freight. There must be seaports for cruise and container ships, and roads to enable travel to local attractions. On the private side, tourism creates demand for restaurants and hotels, both in well-known destinations, and emerging markets and fragile countries, where the sector can help governments jump-start business and growth.

Look at the country of Georgia. Its rates of poverty and unemployment rose to about 20 percent after the shocks of war and the global financial crisis, but tourism is helping the country make a comeback. We’ve invested $200 million to help economically distressed rural regions preserve their rich cultural heritage, restore municipal infrastructure, build destination management skills, and develop strategies for expanding the visitor market and attracting investment. We’re also supporting the construction of a new terminal at Tbilisi airport and investing in new hotels through our private sector arm, the International Finance Corporation, or IFC.

In addition to driving inclusive growth and investment, tourism can help protect people against climate change. We recently released a report concluding that global warming could impoverish up to 100 million people over the next 15 years because of its impact on livelihoods and the transmission of disease. In Paris last week at the climate change negotiations, many political leaders were committed to taking unprecedented action to move toward low-carbon economic growth.

In this new green economy, the United Nations has identified tourism as one of the 10 sectors that will play an increasingly important role. By reducing carbon emissions and helping protect natural assets like rainforests that remove greenhouse gasses from the atmosphere, a greener tourism industry can help mitigate the most harmful effects of climate change. Natural assets that contribute to the growth of ecotourism – like wetlands, mangrove forests, and beaches – provide a natural buffer against climate shocks, including hurricanes and floods. Recognizing this, the UN recently named 2017 the International Year of Sustainable Tourism for Development.

In many developing countries, tourism provides a powerful economic reason to preserve wildlife and biodiversity. In Tanzania, where tourism accounts for at least 10 percent of GDP, natural assets like the Serengeti and its wildlife, Mount Kilimanjaro, and the beaches of Zanzibar serve as primary attractions. We’re helping the government build on these solid foundations by providing $180 million for projects that improve the regulatory environment for tourism investments, protect animals from poaching, manage pressure on water resources, and increase tourism’s economic benefits for local communities.

Despite all this evidence, there’s no guarantee that tourism will promote inclusive growth or investments in people, or insure against climate change. But, working together, ministries of finance, tourism, public works and transportation, energy, the environment, culture and education can build a supportive and sustainable policy context for the industry’s development. This whole-of-government approach is needed to attract the foreign investors, domestic businesses, and international partners needed to deliver on the industry’s promise. The public and private sectors must work together to ensure tourism consumes scarce resources like water and energy sustainably, and does not damage the environment.

The World Bank Group has extensive experience helping clients and the private sector manage these challenges. Until recently, our actions reflected the complexity of tourism development, sometimes resulting in progress that was slow and disjointed. Now, because of our new structure and some great work on the part of our staff, we’ve simplified the way we do business.

Key parts of the organization have come together as the Sustainable Tourism Global Solutions Group to develop and execute projects in an integrated fashion. They represent the full range of tourism’s needs, drawing members from all parts of the organization, including the IFC and Multilateral Investment Guarantee Agency. Our country directors, who play important roles in project selection and delivery, will be critical to the group’s success.

The group has identified six priorities:

First, enable countries to access market growth through competitive regulatory structures and realistic development strategies;

Second, provide finance for public investment to increase capacity and connectivity;

Third, support targeted private sector investments that provide necessary and appropriate visitor infrastructure and facilities;

Fourth, build countries’ capacity to manage sustainable destinations;

Fifth, ensure that tourism delivers jobs and incomes to communities;

And sixth, ensure that the World Bank Group becomes a thought leader in finding solutions to tough tourism development challenges.
This approach has been shaping our work in India, a country with unrivaled potential for tourism growth, based on 5,000 years of rich cultural history, 30 UNESCO World Heritage sites, and 200 million skilled craftspeople. Our program brings together the national and local governments in an effort to generate the private investment needed to unlock this potential. We’re helping coordinate development plans, restore cultural and natural heritage sites, connect local labor and manufacturers to tourist demand, and develop new tourism products — such as the so-called “Buddhist Circuit,” a route that allows travelers to follow in the footsteps of the Buddha.

I’ve studied Buddhism, and I’m reminded today of the Buddha’s words, quote: “To walk safely through the maze of human life, one needs the light of wisdom and the guidance of virtue.” End quote. In order for tourism to flourish, we will need the “light of wisdom” from all of you here today. And we will also need the “guidance of virtue,” which for us means how we can ensure that the growth of tourism reduces extreme poverty, boosts shared prosperity and social mobility, and preserves the planet for future generations.

The benefits of tourism stretch far and wide. Tourism allows us to share humanity’s most valuable cultural and environmental treasures with the world. Tourism enables us to teach skills and provide jobs. And tourism is a force for social justice because it creates opportunities for young people who grew up in poverty to do so much more in life — for themselves, and for their children, as I witnessed so powerfully in Bali. Tourism can be a driver of social justice because it helps end extreme poverty and boost shared prosperity. Thank you for all that you do, and I look forward to hearing more about how we can work together for greater impact in the future. Thank you very much.”

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