Economics of Travel

Tourism enhancing social progress

March 10, 2025

Travel & Tourism is one of the most transformative sectors in the global economy, accounting for 10.3% of global GDP and providing over 330 million jobs as of 2019. Beyond its economic contributions, the sector serves as a powerful catalyst for enhancing social progress and uplifting communities worldwide. Through its ability to generate jobs, foster innovation, and improve infrastructure, the sector significantly impacts quality of life indicators, including healthcare, education, access to basic needs, and opportunities for marginalized populations.

Climate resilience directly contributes to the stability of tourism destinations. By implementing measures to mitigate and adapt to climate change, destinations can protect their natural resources, which are often the primary attractions for tourists. For instance, destinations like Puerto Rico and the Philippines have developed sophisticated resilience strategies that include climate risk assessments, biodiversity conservation plans, and hazard mapping.1,2 These measures help preserve beaches, forests, and other natural assets that are crucial for tourism.

Travel & Tourism is one of the most transformative sectors in the global economy, accounting for 10.3% of global GDP and providing over 330 million jobs as of 2019. Beyond its economic contributions, the sector serves as a powerful catalyst for enhancing social progress and uplifting communities worldwide. Through its ability to generate jobs, foster innovation, and improve infrastructure, the sector significantly impacts quality of life indicators, including healthcare, education, access to basic needs, and opportunities for marginalized populations.

Tourism as a driver of social progress

The relationship between tourism growth and social progress is well-documented. The Social Progress Index (SPI), which evaluates countries on dimensions such as Basic Human Needs, Foundations of Wellbeing, and Opportunity, shows a significant correlation between increased Travel & Tourism GDP and improvements in SPI scores. Countries like Cambodia, Rwanda, China, and Sri Lanka have seen annual tourism growth rates exceeding 8% between 2011 and 2020, accompanied by significant SPI improvements above the global average.

How SMEs can improve social impact:

  • Focus on sustainability: SMEs should align their offerings with sustainable practices, as eco-tourism and conservation-driven models are increasingly attracting both tourists and investors.
  • Leverage local culture: Promoting local heritage and community-based tourism can create a unique value proposition while directly benefiting local populations.
  • Build resilience: Diversifying revenue streams and collaborating with public and private stakeholders can help SMEs withstand global shocks, such as pandemics or economic downturns.

For example, Cambodia, where Travel & Tourism contributes to over a quarter of GDP, has heavily invested in infrastructure and connectivity. These investments have created jobs, enhanced access to education and healthcare, and improved basic services. Similarly, Rwanda's focus on sustainable tourism has demonstrated dual benefits: conservation efforts, such as gorilla repopulation, and community development initiatives that uplift local livelihoods.

Case studies of tourism empowering communities

  1. Rwanda's Sustainable Tourism Model
    Rwanda exemplifies how conservation-focused tourism can create positive social outcomes. The country has invested heavily in high-value tourism permits, generating over $18 million annually. This revenue has supported gorilla conservation, increasing their population from 254 in 1981 to 600 today, and funded local community development. By creating jobs in wildlife tourism, Rwanda has enabled local communities to benefit directly from conservation efforts.
  1. Cambodia’s infrastructure investments
    Cambodia has leveraged tourism to develop its infrastructure, including roads, airports, and basic services. These improvements have enhanced accessibility, created opportunities, and led to better healthcare and education facilities. Tourism has also supported cultural preservation and contributed to poverty alleviation in rural areas.
  1. Tanzania’s protected areas and Kilimanjaro tourism
    Tanzania, home to a vast array of protected areas, showcases how tourism can benefit local communities. Revenue from Mount Kilimanjaro alone supports initiatives in education and employment, with the region achieving the highest literacy and school enrolment rates in the country. Around 28% of tourism revenue in the area funds poverty reduction programmes, providing sustainable livelihoods for thousands of locals.

Enhancing quality of life through tourism

The benefits of tourism extend beyond direct GDP contributions. It has a profound multiplier effect, creating jobs across supply chains in sectors such as agriculture, retail, and construction. For every direct job in Travel & Tourism, nearly two additional jobs are generated indirectly. This ripple effect significantly enriches local economies and enhances quality of life.

In Costa Rica, for instance, sustainable tourism has been integrated into national development strategies. Tourism hubs in the country score higher on SPI indicators like access to healthcare, clean water, and education than surrounding areas. Similarly, Malaysia’s Homestay Experience Program has uplifted rural communities by creating income opportunities while preserving cultural heritage. Hence, as the sector recovers post-Covid-19, there is a unique opportunity to harness its potential to drive sustainable development, promote inclusivity, and support vulnerable communities.