The impact of tourism on Local Economic Development (LED): an analysis of the Vaal Triangle region
De Bruyn, Chané
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Across the world high poverty and unemployment rates prove to be two of the most pressing issues faced in the modern world. This is no different for South Africa. The country is plagued by significantly high poverty and unemployment rates, contributing to a dwindling economy. However, tourism has been cited as a possible solution to alleviate poverty and unemployment as it could lead to the creation of numerous direct and indirect linked jobs. Numerous international organisations such as the UNWTO and WTTC propose tourism as key factor for driving socioeconomic advancement, across the world and especially for developing countries. It is reasoned that if tourism is implemented and managed correctly, the industry has the potential to increase economic growth, improve education, food security and as a result contribute to alleviate poverty. Furthermore, it could even contribute to environmental protection and awareness. With this being said, the industry is often over-looked in its potential to contribute to economic growth and development. Furthermore, research on the impact tourism has on local economies, especially in South Africa, has been limited. It is for this reason that this study aimed to achieve the primary objective to determine the impact of tourism on local economic development (LED), by analysing the Vaal Triangle region in Gauteng, South Africa. In an effort to achieve the aforementioned primary objective, various theoretical and empirical objectives were developed. This study employed a mixed method approach, which strengthened the study. The quantitative part of the study consisted of a pooled panel analysis, where annual data from 2001 to 2016 from the Vaal Triangle were analysed. Two models were used and tested, where model one consisted of economic growth as the dependent variable and tourism trips, tourism spending and the hospitality sector as the independent variables. The second model consisted of economic development as the dependent variable and tourism trips, tourism spending and the hospitality sector as the independent variables. The various statistical techniques employed to analyse the aforesaid data included descriptive analyses, correlation analyses, unit root tests, Granger causality tests, the Johansen Fisher panel co-integration test as well as the FMOLS and DOLS tests with certain diagnostic tests. The qualitative part of the study included the use of semi-structured, in-depth interviews that were held with various key stakeholders of the tourism industry within the Vaal Triangle. This was done in order to gain a deeper understanding of what tourism operators in local regions perceive as potential areas for development as well as what obstacles they encounter and the support they need in order to grow as a tourism industry. The stakeholders included owners of various tourist attractions in the Vaal Triangle, members of the business chamber as well as managers at hotels and resorts in the Vaal Triangle. The results from the quantitative part of the study proved to be influential and supportive of the theory surrounding tourism and its potential in economies. The descriptive analysis provided graphical diagrams of the various variables used, to showcase the trends and behaviour of these variables. The correlation analysis also suggested that all of the variables are indeed correlated. The unit root tests that were conducted suggested that there was a long-run relationship present in both models. As a result, the Johansen Fisher panel co-integration test was utilised with the aim of determining the impact of tourism on LED. The Johansen Fisher panel co-integration test provided validation that there is a long-run equilibrium liaison between economic growth and tourism as well as between tourism and economic development. With the confirmation of a longrun equilibrium present in both models, the study proceeded to determine the magnitude of this long-run relationship. The FMOLS and DOLS results concluded that the tourism industry could contribute between 1,37 to 2,62 per cent to economic growth and further contribute between 0,87 and 1,34 per cent to the economic development of regions. This indicates that tourism does have the potential to decrease unemployment and furthermore contribute to alleviate poverty and improve the standards of living for people in local regions. The result from the qualitative part of the study provided more insight regarding the tourism industry in local regions. In the case of the Vaal Triangle, the respondents were of the opinion that the region is rich in various cultural, social and natural resources that are underutilised in their potential for tourism. In addition, the responses gained further showcased that a lack of cooperation and inadequate infrastructure seem to be the largest obstacles in the development of the tourism industry of the Vaal Triangle region and that more government support is needed. Overall the study found that tourism does have a significant, positive impact on economic growth and development in local regions and as a result could significantly impact LED. Therefore, when it is developed and managed in a sustainable manner, it could be used as a tool for combatting unemployment and poverty and in so doing enriching the lives of communities. It should, however, be noted that government support, community involvement, adequate infrastructure, public-private sector partnerships and the protection of local resources are imperative to ensure the successful development of the tourism industry in any region.