The impact of tourism on poverty in South Africa

Abstract

This paper evaluates the potential impact of tourism on poverty in South Africa on the basis of recent survey data on international tourism spending patterns. It looks at three scenarios, using an applied general equilibrium model. The main finding is that the poor benefit very little in the short term from additional tourism income. A further finding is that domestic and international tourist expenditure affect the economy differently; both markets are therefore important. In essence, the research confirms that tourism receipts can be used as a tool to alleviate poverty, but in South Africa this must be supported by policies that focus on the labour market and human resource development.

Keywords:

• tourism
• poverty
• applied general equilibrium (AGE) modelling
• South African tourism industry

JEL classification:

• C68
• D31
• D58
• I32
• L83
• O24
• O50

Notes

¹ORANI-G (‘G’ stands for 'generic') is a version of ORANI which serves as a basis from which to construct new models. It has been applied to many countries, including China, Thailand, Korea, Pakistan, Brazil, the Philippines, Japan, Ireland, Vietnam, Indonesia, Venezuela, Taiwan and Denmark (Horridge et al., 1993). See for example www.monash.edu.au/policy/oranig.htm. For a more detailed exposition of the modelling approach followed in UPGEM, see Horridge et al. (1993) and for an application see Van Heerden et al. (2006).

²With comparative statics two different outcomes are compared, before and after a change in some underlying exogenous parameter (Mas-Colell et al., 1995:24; Silberberg & Suen, 2000). The model in its present form is also capable of long-term comparative statistics.