IGCSE Travel and Tourism Practice Exam

What does 'export leakage' refer to in tourism?

1. Tourism-related revenue being sent abroad

2. Local resources being diminished

3. Tourists bringing foreign goods into the country

4. Negative environmental effects

The correct answer is: Tourism-related revenue being sent abroad

Export leakage in tourism refers to the situation where a portion of the revenue generated by tourism activities is sent abroad, rather than remaining within the local economy. This often occurs when foreign-owned companies operate in a destination and repatriate their profits to their home country, or when tourists spend money on products and services that are imported rather than locally sourced. In this context, the significance of understanding export leakage is crucial for policymakers and stakeholders in the tourism industry, as it highlights the importance of fostering local businesses and ensuring that tourism spending benefits the local economy as much as possible. Encouraging tourists to engage with local services and products can help mitigate the effects of export leakage, ultimately supporting sustainable tourism development. Other choices do not accurately capture the concept of export leakage: diminished local resources relate more to sustainability issues; tourists bringing foreign goods into the country generally does not pertain to how tourism revenue is extracted from the local economy; and negative environmental effects are distinct from the economic implications of export leakage. Therefore, the focus on tourism-related revenue being sent abroad encapsulates the core idea of export leakage.