TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL MARTINA SHAKYA

Presentation at 4th Responsible Tourism in Destinations Conference, Muscat, Oman 10 October 2010

Contents:
Background and Context Objectives & Methodology Research Results Conclusions & Recommendations

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Share of Developing Countries in World Tourism

BACKGROUND AND CONTEXT
International Tourist Arrivals (million) 1990
World

Market Share (%) 1990 100 28.6 2000 100 35.2 2005a 100 40.3

Average Annual Growth (%)

1990-2000 2000-2005a

2000 689 243

2005a 808 326

439 126

4.6 6.8

3.3 6.1

Developing Countries Among these: 50 LDCs High-income and other countries

2.9

6.4

9.5

0.7

0.9

1.2

8.4

8.2

313

446

482

71.4

64.8

59.7

3.6

1.6

Source: UNWTO 2006, a preliminary estimate.

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Economic Contribution of Tourism (2007):

T & T Demand Market Share

GDP Contribution

Employment Contribution

Export Contribution

BACKGROUND AND CONTEXT

% of total world T & T Industry GDP T & T Economy GDP T & T Economy T & T Economy Jobs (% T & T Visitor Exports (% of demand (% of total GDP) (% of total GDP) Jobs (000) of total employment) total exports)

World
LDCs:1 Bangladesh Cape Verde Cambodia Maldives Nepal Senegal Sierra Leone Tanzania HICs:2 France Germany Spain United States

100 <1 <1 <1 <1 <1 <1 <1 <1 5 7 4 24

3.6 1.5 10.9 9.3 31.1 2.7 3.3 3.3 4.1 4.1 2.9 6.8 3.8

10.4 3.9 19.2 20.3 61.2 6.4 7.6 6.6 9.4 10.9 10.0 18.2 10.2

231,222 2,024 16 1,108 57 500 157 65 680 3,349 4,261 4,046 15,040

8.3 3.1 17.5 15.8 52.9 5.0 6.3 5.2 7.4 13.2 10.8 20.0 10.3

6.4 0.6 46.1 24.2 66.0 12.3 15.0 20.7 27.4 8.5 4.0 20.2 8.5

T&T = Travel & Tourism. 1 Least Developed Countries, according to UN classification (UNCTAD 2007). 2 High-Income Countries; according to World Bank classification (World Bank 2007).

Data Source: WTTC 2007 (estimates based on tourism satellite account methodology.)
TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010 4

Tourism and the Millenium Development Goals:

BACKGROUND AND CONTEXT UN 2001: Canary Islands Declaration on Tourism in the Least Developed Countries UNWTO 2005: UNWTO Declaration Harnessing Tourism for the Millennium Development Goals Concerns about risks and negative side-effects of tourism Lack of standardized methodology to measure developmental impacts of tourism

BUT:

=> Tourism has not yet been given sufficient recognition by international development agencies
(German aid organizations: 1-2% of the project portfolio)
TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010 5

Tourism and rural development Important questions:

What are the impacts of tourism on destination communities, especially with regard to human capital (labor, employment, education and skills)? => Scrutinize skeptical arguments in the debate on tourism and development

OBJECTIVES & METHODOLOGY

Does tourism contribute to reducing regional disparities, or does it further aggravate spatial imbalances? Under which circumstances, and how, should government and nongovernmental, national and international actors promote tourism development in rural areas of the developing world?

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Tourism and rural develpment Theoretical considerations

Assumptions: Immobile primary offer (tourism assets) promotes development of secondary offer (tourism infrastructure); Backward and forward linkages promote the establishment of new regional centers; Spatial distance less important in tourism. Counter-arguments / critique: Tourism competes with other activities for scarce resources; Pronounced demand fluctuations and seasonality; Establishment of enclaves; Distance also an obstacle for tourism. ...

OBJECTIVES & METHODOLOGY

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Gatlang (non-tourism village, n=70)

Thulo Syabru (tourism village, n=51) Shaktikhor (non-tourism village, n=61)

OBJECTIVES & METHODOLOGY

Rasuwa Chitwan

Sauraha (tourism village, n=77)

Total sample size: n = 259 41% tourism households 58% non-tourism households

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Economic role of tourism in the case study villages:

Gradual development of tourism since the 1970s Up to 36% of households economically involved in tourism Tourism enterprises: lodges/hotels, restaurants/tea shops, handicraft production, home stay accommodation, retail shops, travel agencies, etc. Most tourism businesses owned and operated by local residents (family businesses) Tourism employment: guides, porters, vendors, drivers, cleaners, kitchen staff, dancers/singers/musicians, etc. Annual tourism income: 65% of households total cash income Monthly income range: US$ 5-8100 (season), US$ 0-2200 (off-season)
9

RESEARCH RESULTS

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Seasonal Calendar, Thulo Syabru (case study data):

Tourism is a seasonal activity

2
Seasonality Index
Ratio of actual to average monthly arrivals; index value 1 is equivalent to an average 38,640 tourist arrivals/month in 1998

RESEARCH RESULTS

0 Data Source: MCTCA 2005

Seasonality of tourism in Nepal is pronounced; Farm-related activities are seasonal, too. Tourism helps to utilize labor more efficiently and creates income in months with low farm income.
10

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Tourism is exposed to pronounced demand fluctuations

90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1996 1997 1998

Chitwan National Park

12,000 10,000 8,000 6,000 4,000 2,000 0

Langtang National Park

RESEARCH RESULTS

International Tourist Arrivals, 1996-2006

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1999

2000

2001

2002

2003

2004

2005

2006

Source: MCTCA (several years)

Empirical results:

Tourism households were significantly more affected by economic shocks than non-tourism households 1996-2006; However, tourism households judged development trends more positive than non-tourism households in the same period!
11

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Tourism is crowding out farming and increases economic dependency

Empirical results: RESEARCH RESULTS
Dependent variable: Independent variables: Tourism
(0=non-tourism households; 1=tourism households; beta1 (standardized)

No. of economic activities 0.384** 0.302** 0.528** 0.273

Share of non-farm income (%) 0.252** 0.377** 0.488** 0.232

Geographical location (0=mountains;

1=lowlands); beta2 (standardized)

R R2

Impact of tourism and geographical location on economic diversification; multiple regression analysis. Source: own survey 2006 (n=259), ** Significance (two-tailed): p=0.001.

Share of farm income negatively correlated with no. of economic activities Tourism reduces households economic dependence by promoting diversification
12

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Tourism mainly offers unskilled jobs and does not promote upward economic mobility
Empirical results: RESEARCH RESULTS

Share of tourism income positively correlated with households educational expenses; Formal education level significantly higher among tourism households:
% Tourism households (n = 107) % Non-tourism households (n = 151) % All (n = 258)

Highest educational attainment: Never attended school Primary (grade 1-5) Lower secondary (grade 6-7) Secondary (grade 8-10) Secondary with SLC Higher secondary (grade 11-12) Tertiary education Total:

6 17 13 29 7 18 11 100

11 34 12 23 5 9 5 100

9 27 12 25 6 13 8 100

Highest school education in household (source: own survey 2006)

Chi-square independence test: U = 17.029 (p = 0.009); contingency coefficient: C = 0.249 (p = 0.009).
TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010 13

Conclusions:

Tourism has promoted development of tourism infrastructure, jobs and employment in Nepals rural periphery Tourism has a positive impact on household assets, especially on human capital (labor, education, knowledge & skills) Promotion of local economy: backward & forward linkages (opportunities for suppliers, increased local purchasing power) Spatial distance no general obstacle (trekking tourism!) but influences intensity and quality of tourism development

CONCLUSIONS & RECOMMENDATIONS

14

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

Policy Recommendations:

Many reasons for the promotion of tourism as a strategy of rural development in LDCs and other low-income countries Priority: promotion of new destinations and tourism products in remote areas through an integrated approach

CONCLUSIONS & RECOMMENDATIONS

=> Tourism for Rural Poverty Alleviation Programme, Nepal (2001-2007)

Intervention areas:

Improvement/extension of physical, social and financial infrastructure; Capacity development for communities, government institutions (national, regional, local) and the private sector; Concerted marketing of sustainable, rural tourism products.

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

15

Thank you for your attention!

TOURISM, RURAL DEVELOPMENT AND HUMAN CAPITAL IN NEPAL I MARTINA SHAKYA | RTD4 MUSCAT, OMAN | 10 OCTOBER 2010

16