The tourism industry as an alternative approach for income resourses: A prospect of Saudi Arabia

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Introduction:

Globally, Tourism sector has evolved rapidly and is emerging as a main sector to stabilize the economy of many countries. This industry in peak season provides the individuals with employment opportunities as well as helps the developing country to generate income. In 2014, the Tourism sector created a total of 7.5 trillion dollars along with 277 million employment opportunities all over the world. It is predicted that by the year 2025 the sector will create 11.3 trillion dollars of revenue and 357 million employment opportunities globally (Alhowaish, 2016). The word tourism refers to “a set of activities carried out by a person traveling to a place outside his/ her usual environment for at least one night, but less than a year, and whose main purpose of travel is other than the exercise of an activity remunerated from within the place visited” (UNWTO as cited in Ali, 2018, p. 417). In other words, tourism means to move around any country or city for a night or more due to comfort or leisure.

The tourism sector as compared to other sectors of the country has a positive impact on the economy. The revenue generated from the tourism sector unswervingly impacts the economic growth as well as financial development. Economic growth and financial development are interrelated. Hassan et al., (2011) states that they are associated in a way that a 10% financial development is regarded as a 2.7% economic growth in the country (as cited in Yenişehirlioğlu & Bayat, 2019). Moreover, a positive correlation between financial development and tourism revenue is also investigated in many studies. For instance, Kumar and Kumar (2013) determined that the tourism functions had an effect on financial development. Furthermore, financial catastrophes were also addressed in the tourism sector. This explain that there is an association between the two variables. The association between economic growth and financial development has been pointed out in many studies. Similarly, the importance of establishing a financial mechanism to have a rise in the economic growth of the country has also been highlighted in many researches. Moreover, studies have investigated about the relationship between the two and found that financial interference with the economy such as financial developing can ultimately generate economic advantages (Ibrahim, 2013). 

Saudi Arabia is among those countries who is diversifying its economy, the Kingdom is developing the tourism industry as an alternative sector for the economy. The Kingdom is famous for pilgrimage for Muslims which includes Hajj and Umrah. The potential for Saudi Tourism is Makkah and Medinah as Muslims from all around the world visit these two places more as compared to other cities of the country. However, the country needs to develop good tourism techniques and activities to shift the economy from oil to tourism (Ali, 2018). The country has the second largest oil reserve in the world but it wants to decrease the dependency of the economy on oil reserves which the country is trying to achieve according to the Vision 2030. It is crucial for Saudi Arabia to invest in the sector to get a good financial return through the increase of tourism activities (Yenişehirlioğlu & Bayat, 2019).

Research Questions:

  • How can Saudi Arabia benefit financially through the development of Tourism industry?
  • What is the significant impact on financial returns due to the investment in Tourism industry of Saudi Arabia?

Research Objectives:

  • To investigate the financial benefits of developing Tourism industry in case of Saudi Arabia.
  • To determine the significant impact on financial returns due to the investment in Tourism industry in Saudi Arabia.

Literature Review:

Saudi Arabia’s economy is dependent on petroleum based products but the global prices of these products are decreasing with every passing day. This is impacting the total GDP of the country that needs to improved rather than decreasing. The contribution of oil based products to the Saudi economy in terms of budget income (92.5%), GDP (55%) and export revenues (97%). Since the independence, the country has been dependent on the oil industry but there has been a little rise in the prices of oil (9%). The contribution of Tourism to the Saudi economy was 65.2 billion dollars in 2016 along with producing 603,500 employment opportunities (Ali, 2018). The transition from petroleum based economy to a Tourist economy can benefit Saudi Arabia in many ways, for instance, a total of 7,613.3 billion dollars’ worth of GDP was generated globally along with 108,741,000 employment opportunities all around the world (Ali, 2018).  Many countries in the Gulf region are dependent upon oil industry but they see tourism industry as a source of income creation but also a means to transition the economy towards the industry and tackle unemployment problems (Alhowaish, 2018). There many kinds of tourism industry in the world, one of the main types is the cultural tourism that is concerned with the motivation of tourists to visit locations that have many cultural sites (Sherbini, Aziz, Sidin & Yusof, 2016). Saudi Arabia is among those countries that has potential to evolve the heritage sites in the country which would attract many tourists and would prevent the country against whims of fluctuations in prices and demand of oil industry (Lakshminarayanan, 2019).

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