Business Economics Expanding Economic Prospects

Question: Discuss about the Business Economics for Expanding Economic Prospects. Answer: Introduction The present role of tourism in expanding economic prospects in developing countries presents a paradox. The tourism industry plays a potential leadership role in order to resolve the problem within the industry and the trade community as a whole. There are some broadly cited examples of individual tourism business enterprises as well as companies that collaborate with communities and as a result, they bring economic wealth to isolated areas. This mainly includes local business relationship that initiates for sourcing fresh products as well as crafts. Tourism and hospitality industry is a severely competitive, specialized as well as rapidly developing commercial sector (Mowforth Munt, 2015). Body Components of GDP As we know there are mainly four components of GDP that comprises of private consumption expenditure, investment expenditure, and government purchases of commodities and services as well as net exports. I have analyzed the fact that tourism and hospitality sector will help to add to the economic growth and development. This is mainly because, tourism and hospitality helps to drive foreign trade as well as it encourages investment. I have greatly examined that this industry has a positive impact on every component of GDP. Investment is stimulated by both domestic and global demand for tourism. This in turn drives the improvements of the infrastructures that benefit tourist collectively (Leimbach et al., 2015). I have realized that the growth of this sector will lead to development of bars, retail companies as well as other tourism related trade. The quality of life for local inhabitants will also improve, as they will be able to expand the alternatives accessible to them in their domestic community. I also require emphasizing on the improvement in net exports to the government. Philippines will enjoy higher net exports with a bigger outbound business travel market. Business travel is very important contributor to the financial system of nearly all countries, both developed and developing. Advances in trade mostly generate a broader economic benefit. Private consumption expenditure is also impacted in a positive manner as it generates total revenue that deals directly with visitor exports as well as individual spending of the government. The combined spending by the government that includes both local and regional government in the tourism industry is mainly to promote tourism, organization al services and other communal services (Roxas Chadee, 2013). I came across that with the introduction of the tourism and hospitality sector, the economy of Philippines is benefiting. The Philippines tourism and hospitality industry adds a total of P1.43 trillion to the domestic economy in the year 2015. It is equal to 10.6 percent of the gross domestic product of the country. The Philippines tourism and hospitality industry contributed to more than 1.3 million jobs in the year 2015. This figure mainly reflects service by hotels, airlines, restaurants and travel agents. I have also examined that the rate of employment in the tourism industry is likely to increase by 3.1 percent by the year 2017 and by 2.4 percent per year to 1.65 million employments by the year 2026 (Aguila Ragot, 2014). Direct, Indirect and Induced Contribution to Economic Growth Since Philippine is classified as a lower middle-income country by the World Bank, the government is seeking to increase the contribution to economic growth. The direct contribution of Tourism and Hospitality sector to Gross Domestic Product (GDP) reflects the internal expenditure on tourism as well as the individual spending of the government. The direct involvement of Tourism and Hospitality sector to GDP is computed to be reliable with the output, as articulated in National Accounting of tourism characteristic sector. The tourism characteristic sector mainly includes hotels, airlines as well as travel agents and leisure and amusement services. The direct contribution to GDP is also measured from internal spending by netting out the purchases made by diverse tourism industries (Falk, 2016). In the year 2014, the direct contribution to GDP was PHP533.0 billion or 4.2 percent of GDP. On the other hand, in the year 2015 the direct contribution to GDP was PHP559.0 billion or 4.9 percent of GDP. The prepare that will presented to the government reflects that by the year 2025 the tourism and the hospitality sector will contribute to 5.6 percent pa to PHP964.0 billion or 4.4 percent of GDP. The indirect contribution to economic growth and development includes the GDP as well as jobs that is supported by tourism expenditure spending. This includes an imperative characteristic of both present and future movement that comprises investment activity that includes the purchase of new aircraft and manufacture of new hotels (Hettiarachchi, De Silva Sivashankar, 2015). The collective spending of government also contributes to GDP that helps the tourism industry in various ways. This is mainly because collective spending is made on behalf of the community at large that mostly comprises of tourism marketing as well as security services, promotion and aviation. The last indirect contribution to GDP is due to domestic procured of commodities as well as services by the sectors that are dealing straight with tourists. The induced contribution measures that contributes to economic growth and development that is sustained by the expenditure of those who are directly and circuitously engaged by the Tourism and Hospitality sector. The total contribution of the tourism industry reflected not only the economic activities of directly associated companies but also the wider consequences from investment. I analyzed that the total contribution by the industry is expected to increase by 6.6 percent and it is expected to augment by P2.6 trillion by the year 2026 (Ma rtins Veiga, 2014). Conclusion It can be concluded that investment is stimulated by both domestic and global demand for tourism. The direct involvement of Tourism and Hospitality sector to GDP is computed to be reliable with the output, as expressed in National Accounting of tourism trait sector. I have analyzed that tourism will drive foreign trade in Philippines that will advance the economic growth by lowering prices, generating economies of scale, permitting countries to focus on areas of competitive benefit, encouraging innovation and generating competition. It has also been concluded that the indirect contribution to economic growth and development includes the GDP as well as jobs that is supported by tourism expenditure spending. The Philippines recorded a 9.56 percent growth in foreign arrivals in the year 2013. Private consumption expenditure is also impacted in a positive manner as it generates total revenue that deals directly with visitor exports as well as individual spending of the government. I have also analyzed that in the year 2015 the Philippines tourism and hospitality industry contributed to more than 1.3 million jobs. References Aguila, G. M., Ragot, R. (2014). Ecotourism Industry in Ilijan Batangas City, Philippines: Assessing Its Effects as a Basis of Proposed Tourism Development Plan. Quarterly Journal of Business Studies, 1(1), 24-35. Falk, M. (2016). A gravity model of foreign direct investment in the hospitality industry. Tourism Management, 55, 225-237. Hettiarachchi, I. C., De Silva, D. A. M., Sivashankar, P. (2015). Human Resource Audit for the Sri Lankan Tourism and Hospitality Industry. Tourism, Leisure and Global Change, 2(1), 88-104. Leimbach, M., Kriegler, E., Roming, N., Schwanitz, J. (2015). Future growth patterns of world regionsA GDP scenario approach. Global Environmental Change. Martins, S., Veiga, F. J. (2014). Government size, composition of public expenditure, and economic development. International tax and public finance, 21(4), 578-597. 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