Tourism Is A Purer Form Of Economic Development But…

Tourism is not only economic development, it is as purer a form of economic development as exists.  Economic development is often defined as activities that add value to the local economy or economic base.

It should be widely known by now that tourism is purer because more of the activities involved  bring new money into the community from outside the local economy and tourism is centered around taxable spending not just the value of land purchases and capital construction so often cited as economic development.  Tourism also consumes culinary arts, retail sales, entertainment, nature experiences, heritage, arts, lodging and local transportation and makes those services more viable for local residents to use day in and day out, before and after the visitor has returned home.   Hosting visitors also requires much less and also lighter infrastructure. It can also help sustain a communities unique sense of place and of course the activities also generate local tax revenues for basic services that would have to be fully supported by resident taxpayers if the visitors had not left their taxable spending.

Traditional or supply-side economic development, also known as industrial or business recruitment can also generate economic activity but generally requires much more infrastructure and puts pressure on land use etc. and the impact often isn’t as pure as tourism.

But there are several things that lessen the impact of economic development for either demand-side tourism or supply-side industrial or corporate recruitment.

• When the owners live outside the community, a significant part of the activity leaves before it can have an impact.
• When supplies and services are purchased outside the community, a significant part of the economic activity is lost.
• When commuters are hired to work in the businesses involved, all but their work-side spending leaves the local economy (in Durham work-side commuter spending is about $115 per week.)
• When commercial or adaptive reuse developments siphon tenants from another part of the same community the economic impact is largely neutralized.

Far too many involved in economic development, either through ignorance or negligence, report the gross impact without revealing the real “net” impact from the examples above.  Either way, there is no longer any excuse and both local officials and news media need to hold them accountable.

Beware of any reports that don’t reveal or net out the leakage.  And beware of economic development professionals who neglect to focus on “optimizing” economic development by ensuring as much as possible the hiring of local residents, local purchase of supplies and services and locally ownership of businesses.