Tourism and economic development are linked by the various ways in which tourism can contribute to the economic development of a tourist destination. This relationship between tourism and economic development is the basis for the dependence of some tourist-based economies on the effects of tourism for their economic development. For instance, tourism provides more jobs for local citizens, helps local citizens start businesses that cater to tourists, leads to the generation of revenue from tourist spending and fiscal policies, and aids in the development of infrastructure.
One of the benefits or links between tourism and economic development is the fact that a vibrant tourist region provides employment for the citizens of that area. Tourism needs a lot of services in order to sustain the industry. For example, the hospitality industry creates jobs for people in businesses like hotels and restaurants. Employment is a macroeconomic factor that contributes to the growth of an economy by providing workers with disposable income and consequently leading to an increase in the Gross Domestic Product (GDP) of the region.
Another way in which tourism and economic development are linked is through the provision of small or micro enterprises for certain citizens. The citizens that might benefit from small businesses linked to tourist include individual or sole entrepreneurs with limited funds and other types of collaborations that do not require a lot of finance. For instance, some people might open a store that mainly caters to the needs of tourists. They could collaborate with local artisans and craftsmen to supply them with handcrafted objects, which they would sell to the tourists as souvenirs.
The store owners will share the profits with the local artisans, or they may buy the objects from them outright. This helps the economy by providing the poorer members of the community with disposable income. Tourists also like to visit places with a rich cultural heritage. Frequently, these places are located in villages that would otherwise not receive much government attention. Due to the significance of the villages, they will receive more attention and more development as a result.
Infrastructure to support the tourist market or trade includes factors like good airports, security, hotels and roads. Such factors help facilitate economic development and might not be as developed if not for their importance to the economy. For instance, a tourist destination that is located in a remote village will need good access roads, which might not be built if not for the tourist interest in the area.
