IBEX COLLEGE

Department of Hotel Management

Tourism Contribution to Social and Economic Growth of
Gondar City, Amhara Regional State, Ethiopia

Name: Yetnayet Lemma

Id: DHMR//13

Submitted to :M
Submission date: Jan/27/2023

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Table of Contents
ACRONYMS AND ABBREVIATIONS...............................................................................................................3
1. INTRODUCTION.................................................................................................................................4
1.1 Background of the study.................................................................................................................4
1.2 Statement of the Problem................................................................................................................6
1.3 Objective of the Study.....................................................................................................................7
1.3.1 General objective......................................................................................................................7
1.3.2 Specific Objectives....................................................................................................................7
1.4 Research Questions..........................................................................................................................7
1.5 Significant of the study....................................................................................................................7
1.6 Scope of the study............................................................................................................................8
1.7 limitation of the study......................................................................................................................8
2. LITERATURE REVIEW.....................................................................................................................8
2.1 Historical Background....................................................................................................................8
2.1.1 Definition of tourism.................................................................................................................8
2.1.2 Types and Forms of Tourism...................................................................................................9
2.1.3 World Tourism Development................................................................................................10
2.1.4. Tourism in Ethiopia...............................................................................................................11
2.1.5. Tourism in Amhara Region..................................................................................................13
2.2. Theoretical Literature......................................................................................................................13
2.2.1. Economic Contribution of Tourism......................................................................................13
2.2.2 Contribution of Tourism for Social Growth.........................................................................14
2.2.3 Tourism and Poverty Alleviation...........................................................................................14
2.2 Empirical Literature.....................................................................................................................15
.................................................................................................................................................................. 19
.................................................................................................................................................................. 19
.................................................................................................................................................................. 19
Figure 1. Conceptual legal framework......................................................................................................19
3. RESEARCH METHODOLOGY.......................................................................................................20
3.1. Description of the Study Area......................................................................................................20
3.2 Research Method and Design.......................................................................................................20
3.3. Data Sources and Types...............................................................................................................20
3.4 Data Collection Method...........................................................................................................21

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 3.5 Sampling size and technique.........................................................................................................21
3.5.1 Sampling Technique...............................................................................................................21
3.5.2 Sample Size..............................................................................................................................22
3.6 Methods of Data Analysis..............................................................................................................22
3.7 Ethical consideration.....................................................................................................................22
4. Work Plan and Budget Plan...............................................................................................................23
Work plan............................................................................................................................................23
Budget Plan..........................................................................................................................................24
5. Reference..............................................................................................................................................25

ACRONYMS AND ABBREVIATIONS

GDP Gross Domestic Product

NBE National Bank of Ethiopia
WB World Bank
WTO World Trade Organization
WTTC World travel and tourism council
UNESCO United Nations Educational, Scientific and Cultural Organizatio

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 1. INTRODUCTION
1.1 Background of the study

Tourism movements have become considerably widespread among developed countries since the
end of World War II. Although the importance of tourism sector for domestic economies was
recognized by the mid-twentieth century, global investigations aimed at growth and development
often ignored it until 1950s (Crouch and Ritchie, 1999: 138).
Tourism is one of the fastest growing industries that provide services and sales of goods for
visitors who came from outside of the destination area for a period of more than 24 hours and
less than one year (Chris Cooper et.al, 1990). It is strategically important industry that is directly
linked to the long term prosperity of a country. According to World Tourism Organization
(2005), tourism is an activity of human beings moving and staying in places outside their
permanent residence and environment for recreation, business and trade purposes. Now a day,
tourism is increasingly becoming an important economic sector in many developing countries
(UNCTAD, 2007). The industries were one of the major sources of foreign exchange earnings
and the most viable and sustainable economic development option. It contributes 11 percent of
the world GNP. (UNWTO 2005)
According to the data published by World Tourism Organization (WTO), tourism receipts made
up 9% of the global GDP in 2012. In 2014, number of international tourists grew by 4.7% as
compared to the previous year, and it is expected to grow 3-4% in 2015. While it was 20 million
in 1950, the number of tourists has currently exceeded 1 billion thanks to an increase by

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approximately fifty times. Researches signal that the number of international tourists would
reach up to 1.8 billion by 2030 (UNWTO, 2014).
As an internationally traded service, international tourism has become one of the world’s major
trade categories. The overall export income generated by international tourism, including
passenger transport, exceeded US$ 1 trillion in 2010, or close to US$ 3 billion a day. Tourism
exports account for as much as 30% of the world’s exports of commercial services and 6% of
overall exports of goods and services. Globally, as an export category, tourism ranks fourth after
fuels, chemicals and automotive products. (UNWTO, 2011)
Tourism industry is one of the economic activities which have higher capacity to generate
employment and attracting investments and foreign capital. It has also the capacity to generate
direct and indirect effects in the local economy.
Despite its positive endowments and the good growth in tourism over the past decade, it remains
true that Africa’s tourism potential is underexploited and underdeveloped. For example, Africa
attracted fewer than 4% of total international tourists and received less than 2% of international
tourist expenditure in 2002 (WTO, 2002). In sub-Saharan Africa, only South Africa is among the
top40 global tourist destinations and only 13 of the 135 leading hotels of the world are situated in
Africa. (WTO, 2010).
Ethiopia was one of the first African countries to establish a tourist industry. In the 1960‟s,
tourist arrivals grew at the rate of 12 percent a year. When the Emperor Haile Selassie was
toppled and replaced by military regime, Ethiopia‟s tourist sector was on a par with Kenya‟s.
Ethiopia then had actually more to offer than Kenya; both had spectacular scenery and abundant
wildlife but Ethiopia also had historic sites and an identity defined by its own history, culture and
peoples, rather than by colonialism.(Yabiebal, 2010).
In Ethiopia, tourism is one of the focal sectors of five years development plan. The long term
vision of the government is to make of Ethiopia is as one of the top 10 tourist destinations in
Africa by the year 2020 (GTP 2010). The direct receipts from tourists to the Ethiopian economy
in 2005 were estimated to be USD 130 million making tourism one of the top export sectors
(World Bank, 2006). With an emphasis on minimizing the poverty reducing impacts of tourism
(PASDEP, 2006-2010), the importance of involving different stakeholders in tourism
development was receiving more benefit. There was growing recognition that for tourism to
achieve major development impact, volumes of tourists and levels of tourist spending need to
increase and that to ensure tourism growth brings the desired development impact or benefit,
industry structure must be created and stronger linkage to the local community must be
established (Mason, 2003). He also argued that involving local communities in tourism
development is crucial for sustainable tourism development. He further commented that tourism
must involve local communities in terms of economic benefits and decision making. The
involvement of local communities in tourism development may enhance the social acceptance of
policies so that implementation and development may be easier to effect. He also proposed that
tourism should be in a position to share profits fairly with the local communities.
Aref et al, (2009) indicated that local communities are basic elements of modern tourism
development. They have got a key role in tourism development as they are crucial in providing a

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good environmental condition for tourists. However, it had been recognized that many tourism
policy develop from central governments with less local involvement and fail to cater for the
sensibilities and aspiration of the community tourists visit (Havel, 1996).
Based on CSA (2007), the Amhara region is estimated to have a population of approximately
17,221, 976 and area of 159 - 123 km2. The region is one of the states in the county with the
highest tourism potential. Some of the features which make Amhara incredibly attractive tourism
resources include historical and cultural endowments, varied and impressive natural sceneries,
unique monolithic churches, archeological sites, the people’s traditional songs and dances,
religious ceremony and rituals. According to ACTB (2011), Amhara region received 70,000
international visitors, and the share of fasil gemb was 35,169 visitor

1.2 Statement of the Problem

Tourism is one of the major sectors in many countries, with the highest growth potential. It is the
world’s largest employer and one among the major source of substantial foreign exchange
earnings (WTO, 2008). According to the estimates from the World Travel and Tourism Council
WTTC, in (2004) tourism generates around 214.7 million jobs worldwide 8 percent of world
employment and accounts for over 10 percent Gross Domestic Product. Because of this, the
industry is regarded as one of the major means through which development of local communities
can be realized (Kibicho, 2003).
Ethiopia is endowed with numerous sites of tourist attractions ranging from physical to cultural
environment that are potentially important for the country’s tourism development. Ethiopia has a
unique feature of land in terms of natural, cultural, historical, and religious tourism assets and
unique biodiversity, it has a big potential for tourism.
However, despite this high potentiality, tourism remains undeveloped due to various reasons.
Ethiopia is earning very much less income than what its neighbors earn out of tourism though
Ethiopia has a much higher potential tourism resource than these resources (Edmunds C 2004).
Ethiopia is characterized by low PCI ($100), severe unemployment, and absolute poverty. To
eradicate or at least to reduce these problems, there arise a need for diversifying the economy
from agricultural sector to the modern sector of industry and service. One of such modern service
sector is tourism that we have high potentiality and that the sector has a high capacity for
creating large number of jobs, income, solve the problems of Bops deficit and boost investment
and development.
However the two opposite sides of Ethiopia, on one hand, a land of beauty with high potentiality
and on the other hand, a country of poor and undeveloped have been experienced a large gap due
to various reasons. Thus, there is a need for the collaborative effort of government, NGOs,
private sector and the local communities to develop the subsector and gain the benefits that are

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attributable to it which can solve or at least reduce the bad features of Ethiopia (Atlabachew T
2010).
The various contributions of the tourism sector are not yet fully studied and not identified by
government and/or other stakeholders in Gondar city. Therefore, the study was focus on
assessing and analyzing the roles of the tourism sector in Gondar city.

1.3 Objective of the Study

1.3.1 General objective

The main objective of this study will be to know the contribution of truism to social and
economic growth in case of gonder city amhara region Ethiopia.
1.3.2 Specific Objectives

 To assess the contribution of tourism to revenue generation and tourist flow to the city.
 To assess the contribution of tourism to employment to the city.
 To identify the bottlenecks of the growth of the tourism sector.
 To identify social participation in tourism
 To assess tourism contribution as a means of income generation.

1.4 Research Questions

1. What is the contribution of tourism to revenue generation and tourist flow to the city?
2. What are the bottlenecks for the growth of tourism sector?
3. What is the tourism contribution for social and economic growth?
4. To what extent is social participation in tourism?

1.5 Significant of the study

Development of tourism sector would lead to economic growth and development through
different directions. The urgent need for poverty assistance in Ethiopia and the substantial
potential economic contribution of tourism in Ethiopian economy justify the interest in
explaining the sector link with economic growth.
This study and its result will help the people of gonder city to be aware of their surrounding and
further improve services and facilities like hotels, resorts, and other tourist attractions. By
conducting this study government and the people will be aware of the contributors and effect of
tourism in the country and to make move of improvement and changes.

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Therefore, the research will have its own importance as it gives ideas for further investigation on
the brunt of tourism sector on the study area economic growth. The study as well will be useful
as it analyses the macro impact of the tourism sector in the study area context and helpful in
suggesting alternative polices that could improve the sector.
Furthermore, this study serves as a reference for other researchers who are interested in
conducting studies on this issue.

1.6 Scope of the study

This study is mainly focused on explaining the contribution of tourism in social and econo,ic
growth of gonder city by using qualitative and quantitative research approach specifically in
gonder fasil gemb area in 2023. This is because the area is a tourist attraction area and many
community members were participating.

1.7 limitation of the study

A major challenge is that the respondents may not be answer the questions and it will results in
lower response rate than the desired response rate and in additional lack of time and limiting
access to data were the constraints. Absence and in consistency of data figures in different source
has created a limitation to relay on small sample. The data after 2013 also could not be accessed
or found.

2. LITERATURE REVIEW
2.1 Historical Background
2.1.1 Definition of tourism

Tourism is the act of travel for the purpose of recreation and business, and the provision of
services for this act. Tourists are persons who are "travelling to and staying in places outside
their usual environment for not more than one consecutive year for leisure, business and other
purposes not related to the exercise of an activity remunerated from within the place
visited"(UNWTO,2011).
Today, many researchers believe that tourism is recognized as one of the world’s huge industries
that influence economic, cultural, social and environmental sections of human life. For example,
Chris et.al, (1990) proved that travel and tourism currently account for more than USD 3 trillion
in spending annually and creating source of revenue for about 7.6% of the world’s total
employment. Likewise, the United Nations World Tourism Organization (2008) forecasts that
international travel will double by 2020 and it is changing rapidly when nature, heritage, and
recreational destinations become more important and as conventional tourism is forced to meet
tougher environmental requirements.

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2.1.2 Types and Forms of Tourism

Countries tourism resources can be broadly classified into natural tourism resources such as
fauna, land escape and lakes and non-natural tourisms resources such as historical places,
cultural heritages, and museums. There exist more than twenty tourism types having a great
advantage to economic growth. Some of the common types are listed as follows:
2.1.2.1 Inbound tourism
Inbound tourism has gained popularity and so has the number of inbound tourists who may be of
different types (Chaudhary, 2009):
 In bound international tourist: a tourist who spend the nights in a place outside his/her
country of residence.
 In bound domestic tourist: a tourist who spend the nights in a place inside his/her country
of residence but outside his/her usual environment.
 Same day visitor: a visitor who does not spend the night in collective or private
accommodation in the place or country visited.
 Inbound international same day visitor: a same day visitor who does not spend the night
in the place visited, which is outside his /her country of residence. 8
 In bound domestic same day visitor: a visitor who does not spend the night in the place
visited , which is inside his/her country of residence but outside his/her environment.

2.1.2.2 Out bound Tourism

Out bound tourism consumption comprises the consumption of resident visitors outside the
economic territory of the country of reference and provided by non-residents. It does not include
goods and services acquired for or after the trip within the country of reference (chaudhary,
2009).

2.1.2.3. Ecotourism
This is responsible travel to natural areas that conserves the environment and improves the well-
being of local people (TIES, 1990). According to Clare Gunn and TurgutVar (2002), ecotourism
is about uniting conservation, communities, and sustainable travel. This means that those who
implement and participate in ecotourism activities should follow certain ecotourism principles.
Some of these principles include things like building environmental and cultural awareness and
respect, providing financial benefits and empowerment for local people, promoting moral and
ethical responsibilities and behavior by all players, etc.

2.1.2.4 Cultural tourism

Cultural tourism (or culture tourism) is the subset of tourism concerned with a country or
region’s culture, especially its arts. It generally focuses on traditional communities who have
diverse customs, generally unique form of art and distinct social practices, which basically

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distinguishes it from other types/forms of culture. Cultural tourism includes tourism in urban
areas, particularly historic or large cities and their cultural facilities such as museums and
theatres. It can also include tourism in rural areas showcasing the traditions of indigenous
cultural communities (i.e. festivals, rituals), and their values and life style. It is generally agreed
that cultural tourists spend substantially more than standard tourists do. This form of tourism is
also becoming generally more popular thought Europe (Chaudhary, 2009).
Cultural tourism gives visitors the opportunity to understand and appreciate the essential
character of a place and its culture as a whole. This includes history and archaeology, people and
their lifestyle (including the ways in which they earn a living and enjoy their leisure), cultural 9
diversity, arts and architecture, food, wine and other local produce, social, economic and political
structures, and landscape of the area.

It gives access to information, experience and activities which can help the visitor feel involved
with a place, its people and their heritage. Creating a relationship between the visitor and the host
community is an important feature of cultural tourism. Concepts of sustainability, authenticity,
integrity and education are as central to cultural tourism as they are to ecotourism. Not all
cultural products will be tourist attractions. The ability to attract visitors depends on the extent to
which they meet, or are able to meet certain criteria. According to Chaudhary (2009), the
following are the criteria necessary for tourist attractions in a given place or region: Perceived
quality of the product, awareness of being a tourist attraction, market awareness of the product,
customer service attitude - provides level of facilities and services that meets the needs of its
visitors, sustainability, extent to which the product is perceived as unique or special, extent to
which the product is perceived to provide a pleasurable experience and an enjoyable way for
customers to spend their leisure time, development and presentation to realize this potential,
community support and involvement, management commitment and capability.

2.1.3 World Tourism Development

WTO (2002) affirmed that tourism has internationally been known since 1950. According to
Richards, and Hall, (2000) now a day’s tourism is the largest and fastest growing business
creating new jobs both in urban and rural areas. This is because the industry does not require
long term trainings. Timotity (2003) proved that because of the increasing and fast growing of
tourism, currently, there are more than 650 million international tourism arrivals in the world
which will be more than 1,600 million by the year 2020 Likewise, Ashley and Mitchell, (2007
p.1) found that now a days, at local and national level, it is being seen as a generator of foreign 8
exchange but also considered as a tool for poverty reduction that is included in the poverty
reduction strategies of more than 80% of the low income countries.
Table 2.1. Income from International Tourist (in billion USD)
1999 2000 2006 Growth rate

World 264 474 733 177 percent

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 High income countries 221 352 511 131 percent

Developing countries 43 120 222 416 percent

Source: world tourism organization (2008)

Table 2.2. International tourist arrival, 1950-2020 (in millions)

Year Europe America East Africa Africa South Asia

1950 16.8 7.5 0.2 0.5 0
1960 50.4 16.7 0.7 0.8 0.2
1970 113 42.3 5.3 2.4 0.9
1980 186.1 64.4 21.5 7.3 2.2
1990 282.9 93.6 54.9 15.1 3.2
2000 397 131.5 100.1 28.6 5.7
2010 527.3 190.4 195.2 47 10.6
2020 717 282.3 397.2 77.3 18.8

2.1.4. Tourism in Ethiopia

2.1.4.1. Tourism Development of Ethiopia

According to Ayalew (1992), in past periods, merchants played a considerable role for the
introduction of religions to Ethiopia, which contributed a lot for evolution of tourism. The author
proved that the Portuguese’s missionaries and other European came to Ethiopia as easier visitors
when they made explorations to the sources of Blue Nile, ETC (2000) affirmed that Ethiopia has
an enormous potential as a tourism destination with rich collection of historic and natural sites
that distinguishes it from most of its neighbors.
Ethiopia’s territory includes seven UNESCO World Heritage Sites, four important national
parks, a source of the world’s longest river (the Blue Nile), and sites revered among adherents to
Christianity, Islam and Judaism and diverse African traditional societies. Ethiopia has very
distinct cultural and historic products based on (a) ancient Axumite civilizations and the
Ethiopian Orthodox Church; (b) the walled Old City of Harar with its seven gates considered as
the fourth holiest city in Islam; (c) as a cradle of civilization, with fossilized evidence of the
ancestors of homo sapiens as old as4.4 million years B.C., and the much more famous Dinknesh,
or Lucy.(www.tourismethiopia.org).
Though Ethiopia faces an image problem for tourists, it is worth noting that this was not always
the case. Ethiopia was one of the first African countries to establish a tourist industry. Modern

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tourism in Ethiopia can be said to have started with the formation of government body to develop
and control it in 1961.In common with many other countries (notably Morocco, Tunisia, Egypt
and Kenya that also started investing in tourism in the late 1960s), tourism was considered a key
economic growth sector in Ethiopia as early as 1966 when the first Tourism Development Master
Plan was developed. Guided by the plan, the government invested heavily in tourism
infrastructure in the subsequent decade – including establishing Ethiopian Airlines for
international and domestic air access, building airfields around the country at key tourism sites,
building hotels at or near these sites, and establishing a national tourism operation to take tourists
to the hotels and attractions. The main attraction was the “Historic Route” which at the time
(1968-73) Ethiopian Airlines was servicing with seven flights per day. The “Historic Route”
included Addis Ababa, Lalibela, Gondar, Axum and Asmara.(www.tourismethiopia.org)
From 1974, for two decades, the Ethiopian tourism industry suffered from theadverse effects of a
prolonged civil war, recurrent drought and famine, strained government relations with tourist
generating countries, and restrictions on entry and free movement of tourists during the military
government from 1974 to 1991. During this period, apart from periodic upgrades of the
infrastructure (such as airports and roads), there has been little investment and successive
governments have largely overlooked the sector. The tourism sector is in urgent need of
reinvestment, in particular, the cultural and natural attractions, and human resources that form
the basis of the tourism product, have been completely neglected. Linkages to international
tourism networks, both for marketing and research purposes, have also been neglected.
(www.wikipedia.org).
Lack of coordination between stakeholders and the government resulted in poor infrastructure
development and under developed tourist sites as well as a shortage of skilled workers in the
sector. Generally, there was lack of marketing and promotional strategy as well as low awareness
of tourism by local communities. During the last few years, however, tourism has once again
emerged as a growth industry taking advantages of the current peace and stability in the country.
(www.wikipedia.org).

The commission added that Ethiopia has unique natural and cultural historic tourism assets.
Mulugeta (2012) assured this fact that United Nations Educational, Scientific and Cultural
Organization (UNESCO) recognizes seven world heritage sites in Ethiopia (Axum’s obelisks, the
monolithic church of Lalibela, the Castel of Gondar’s, the Valley of Hadar where the skeleton of
Lucy was discovered, Tia’s caved standing stones, and the Semen Mountains). According to
Mulugeta, participatory tourism is the future of Ethiopia. However lack of exposure to tourism
markets is a significant challenge in attempting to carve net market share in the region and
optimize on the rents that can be obtained from these assets. Thus, one can understand the
potential that tourism has in local economic development in Ethiopia.

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2.1.5. Tourism in Amhara Region
As compared to other places of Ethiopia, Amhara region is by far the richest region in natural,
wild life and historical attractions. The region is situated at the heart of the historic route of
Ethiopia. In Ethiopia there are two historic routes. The northern rout compares both Tigray and
Amhara region and most of the tourism sites to this rout are situated in Amhara region.
According to Amhara Region Tourism Bureau (2010), UNESCO has cited the following
attraction in Amhara as world heritage sites, namely, the rock hewn church of Lalibela, the relate
of Ethiopian emperors at Gondar, the Semen mountains National Park which is famous for its
breath taking landscape and also shelter of world’s rare and endemic animal species of Walia
ibex, the red fox and Chelada baboon. Likewise, ACTB (2010) affirmed that there are popular
tourist attraction sites such as the Blue Nile falls locally called ‘tiss esat’ and the nearby bridge
built by king Fasil 300 years ago, the ancient monasteries of lake Tana which are noted for their
traditional music’s, the mummified remains of Ethiopian kings and hand crafts, the replaces and
treasures of the past Ethiopian emperors, numerous other historical church’s and Tigray sites
from early Christianity located throughout the region. The Bureau added that the region’s
endowments in different species of birds, pleasant climate, beautiful scenery and hospitable
people.

2.2. Theoretical Literature

2.2.1. Economic Contribution of Tourism
Currently, the tourism sector is frequently justified on the bases of its potential contribution to
economic growth and development. Specifically, it is widely assumed that tourism can help to
eliminate the widening economic gap between developed and less developed countries and
ensure the steady acceleration of economic and social development, in particular in developing
countries (WTO, 1980 cited in Sharpley and Telfer, 2006).
Tourism accounts for more than twice as much as cash moving from rich to poor countries than
governments give in aid. In 41 of the 50 poorest countries in the world, tourism constitutes over
5% of GDP and/or over 10% of exports (Ashley and Mitchell, 2005). Thereby the tourism sector
is important to Africa for a number of reasons. First, even though Africa contributes little to
global tourism figures, tourism contributes significantly to African economies. By 2003 tourism
accounted for over 11 % of total African exports - and 20% to 30% of exports for most countries
that exceed the modest threshold of half a million foreign visitors a year. Second, African
tourism is also growing fast. In 1980 tourism represented 2% of African exports of goods and
services and now it is at nearly six times this level. Africa's global market share is increasing - a
rare bit of good news for the continent's trade performance. The tourism sector is remarkably free
of the price supports seen in agriculture and tariff controls of trade in manufactures. Third,
tourism matters all across Africa. Fourth, success stories exist where African countries have
graduated from Least Developed Country status from the platform of a strong tourism sector is
evident - as evidenced by Mauritius and Botswana (Ashley and Mitchell, 2005).
Another excellence of tourism is its spillover effect on countries economic growth and
development. The importance of tourism to a country's economy can be measured by looking at

13
the proportion of national income created by tourism commonly known as tourism income
multiplier (TIM). In an economy with a low proportion of leakages, such as low tax rates or low
import levels, TIM will be high and tourism may in total contribute a great deal more income
than that originally spent by the tourists themselves (Holloway, 1989).

2.2.2 Contribution of Tourism for Social Growth

Tourism contributes to a mutual understanding and respect between peoples and societies.
Archer, Cooper and Ruhanen (2005) drew attention to the fact that differences in nationalities
and cultural behavior among visitors and hosts were able to stimulate a great mutual
understanding. Tourism motivates local people to preserve their culture and heritage, and
promotes social stability through the realization of positive outcomes for the local economy.
They further highlighted that tourism can encourage the preservation of ancient cultures and
ways of life. Social benefits include the maintenance of traditional cultures, increased
intercultural communication and understanding, improved social welfare, quality of life,
improved shopping and increased recreational opportunity.
Murray (2009), has brought together a range of common positive tourism impacts relating to the social
well-being of the community as the stimulation of infrastructure development (roads, communications,
healthcare, education, public transport, access to drinking water), increasing local or regional safety and
security, the facilitation of workforce development (e.g. rights and conditions), the promotion of civic
pride (in community, culture, heritage, natural resources and infrastructure), increasing awareness that it
may be mutually beneficial to all stakeholders in the community, the potential creation of new
opportunities and the broadening of idea horizons, the promotion of cultural understanding, the
preservation of cultural and social heritage and local languages or dialects, the support and preservation
of local and unique crafts and skills, the creation of a sense of wellbeing, the promotion of greater cross-
institutional understanding, the further appreciation of cross-stakeholder goals and agendas, the building
of skills and influence, the stronger enforcement of government policy (national, regional and local),
further skills enhancement (training; such as administrative, service industry, maintenance, guiding, etc.),
the building of capacity both collectively and individually, the development of empowerment
(gender and community; social, financial, etc.)

2.2.3 Tourism and Poverty Alleviation

By analyzing a wide number of case studies in different developing countries, WTO (2004) has
identified seven different ways of addressing poverty through tourism. These can be applied in
almost every country, provided a number of issues are suitably addressed. The first way is
simply through the employment of the poor in tourism enterprises. This can occur in small as
well as large enterprises and in rural and urban areas. Policies that encourage the employment of
local people are more likely to open up opportunities for the poor. The advantage of addressing
poverty through existing tourism enterprises is that it enables the poor to benefit from the
entrepreneurial skills and market access of others, and can potentially reach quite large numbers
of people.
The Second is through the supply of goods and services to tourism enterprises by the poor. This
can happen at various points in the tourism supply chain, including the choice of products

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featured by tour operators as well as goods and services provided to hotels, such as food,
handicrafts, building services at the construction stage, and so on. The advantage in the
supplychain approach is that this can make use of existing skills in poor communities.
Third, through direct sales of goods and services to visitors by the poor. This is about the
informal economy, and includes stalls selling food and handicrafts, pottering, some forms of
transport, and informal accommodation. The informal sector is hugely important in many
developing countries and this can be one of the most direct ways of getting visitor spending into
the hands of the poor. However, it is characterized by chaotic trading conditions and over supply.
Fourth, there is the process of supporting the establishment of tourism enterprises by the poor.
These may be micro, small and medium sized enterprises (MSMEs) or community based
enterprises. Compared with working in the informal economy, this is about helping poor
communities develop something for the longer term, and about placing power and control in
their hands. Some of the challenges are access to capital, acquisition of skills, property rights and
legal recognition, etc.
Fifth, is through a tax or levy on tourism income or profits with proceeds benefiting poverty
reduction programs. .This has the advantage of enabling resources to be channeled to the most
needy people and communities without requiring their involvement in tourism activity either
directly or indirectly. The approach can be at a national level, or at a local level. There are a
number of examples showing how this can work quite well at a local level – such as negotiating
concessions with tourism enterprises involving a proportion of income per bed night being given
to the local community.
However, approaches involving taxes and charges have to be treated with caution in order not to
deter investment and income flows in the long term. The sixth way has some similarities with the
previous one but here we are talking about voluntary giving by tourism enterprises and tourists.
This may include payments into general charities and programs, such as HIV/AIDS programs, by
tourists and tour operators, or more specific support for projects in destinations visited. Many
tourism enterprises are engaged in supporting social programs in their neighboring communities.
Funds from tourists may be collected in the country of origin or in the destination, through
voluntary supplements or invitations to donate.
Although these approaches can generate worthwhile resources that can be directed to needy
causes, it is important to be sensitive in promoting this type of activity and to avoid token
gestures. Finally, poor communities can benefit from investment in infrastructure stimulated by
tourism. This is about the provision of roads, energy supplies, sanitation, clean water and
telecommunications, on the back of tourism investment. Careful planning in such situations is
clearly very important and local communities should be involved from an early stage.

2.2 Empirical Literature

Tourism is considered as an important and integral part of their economic growth and
development strategies as it serves as a source of scarce financial resources, job creation, foreign

15
exchange earnings, and technical assistance (Sinclair, 1998; Dieke, 2004). The available studies
on this area are reviewed below. Using Spain’s economic data, Balaguer and Cantavella-Jorda
(2002) examine the role of tourism’s in long-run economic development. The hypothesis of
tourism-led economic growth was confirmed by applying co-integration and causality tests. The
results indicate that, at least, during the last three decades economic growth in Spain has been
sensible to persistent expansion of international tourism. The increase of this activity has
produced multiplier effects over time. External competitively has also been proved in the model
to be fundamental variable for Spanish economic growth in the long run. Finally, they concluded
that earnings from international tourism affect positively the Spanish economic growth.
Kreishan (2010) conduct a research on the causality relations between tourism earnings and
economic growth (GDP) for Jordan, using annual data covering the period1970-2009. The
Granger causality test is used to investigate the direction of causality between tourism and
economic growth. The findings of the study showed that there is a positiverelationship between
tourism development and economic development in the long-run. Moreover, the Granger
causality test results revealed the presence of unidirectional causality from tourism earnings to
economic growth. The study appears to support tourism led-growth (TLG) hypothesis for Jordan,
which suggest that government should focus on economic policies to promote international
tourism as potential source of economic growth in Jordan.Durbarry‟s (2002) study on Mauritius
also supports the hypothesis of tourism-led economic growth.Other similar works by Tosun
(1999), Guduz and Hatemi (2005) and Zortuk (2009) have also found empirical support for the
tourism-led growth hypothesis in Turkey.
Eugenio-Mart´ın et al. (2004) investigate the relationship between tourism and economic growth
for Latin American countries (Costarica ,Panama, Mexico, Elsalvador ,Chile and Honduras)
from1985 through 1998. They employed a panel data approach and the Arellano-Bond
estimatorfor dynamic panels. The countries are decompose into three different groups according
to GDP per capita, They obtain estimates of the relationship between economic growth and
growth in tourists per capita conditional on main macroeconomic variables. The empirical results
show that tourism development can contribute to the economic growth of medium or low-income
countries, while such a role is unclear for developed countries. Based on their findings, they
argue that low-income countries need adequate levels of infrastructures, education and
development to attract tourists. On the other hand, Medium-income countries need high levels of
social development like health services and high GDP per capita levels. Similarly, Skerritt and
Huybers (2005) investigate the effect of International Tourism on GDP per capita of 37
developing countries. The results indicate that tourism positively affect economic development
in these countries.
Similarly, employing the convergence approach based on Barro and Sala-i-Martin (1992) type
analysis, Proenca and Soukiazis (2005) examine the impact of tourism on the per capita income
growth of Portuguese regions and draw the conclusion that tourism can be considered as an
alternative solution for enhancing regional growth in Portugal, if the supply characteristics of this
sector are improved. While Cunado and Garcia (2006) also find some evidence of conditional
convergence toward the African regional average (for Benin, Cameroon, Cape Verde, Djibouti,

16
Egypt, Ghana, Kenya, Mali, Uganda, and Zimbabwe) and the U.S. (for Cape Verde, Egypt,
Mauritius, Seychelles, and Tunisia), the coverage given to the contribution of tourism has been
scant.
Brau et al. (2007) set out to empirically investigate the observations made by Lanza and Pigliaru
(2000). They employ panel dataset of 143 countries, 14 of which are classified as „small tourism
countries‟ (17 countries are classified as „tourism countries‟; 14 of them are also classified as
small). They try to evaluate the relative growth performance of these 14 countries by regressing
economic growth on a set of dummy variables identifying groups of countries (OECD, Oil
producers, LDCs, Small) and different control variables. The results indicate that tourism
countries grow significantly faster than all the other sub-groups considered in their analysis.
Almost half of the 29 countries classified as „microstates‟ are heavily dependent on tourism. The
authors conclude that small tourism countries perform much better than other small countries. In
their findings, smallness can be bad for growth, while the opposite is true when smallness goes
together with a specialization in tourism. Although these findings are useful they cannot be
considered definitive as the models do not include controls for factors that are considered
important in the endogenous growth literature, such as investment and human capital (though
they do include controls for some other factors, such as openness to trade and initial income
levels).
Hazari and Sgro (1995) developed a growth model in which they model tourism as an added
component to the domestic aggregate demand. Furthermore, they model the foreign supply of
capital and the growth in export as dependent on tourism growth. They concluded that tourism
has a positive impact on the long-run growth of the economy.
This is generated by tourism acting as a timesaving device, which allows the domestic
population to consume now rather than later. They found that growth in tourism facilitates
foreign capital inflow, thereby reducing the need for high domestic rates of saving and capital
accumulation.
The literature in Africa is scanty. According to Fayissa et al. (2007), there are only few empirical
studies that investigate the contributions of tourism to economic growth and development for
African economies. Some of the available empirical evidences on the continent are presented as
follows: Using a panel data of 42 African countries for the years that span from 1995 to 2004,
Fayissa et al.(2007) try to explore the potential contribution of tourism to economic growth and
development within the conventional neoclassical framework. Their findings show that receipts
from the tourism industry significantly contribute both to the current level of gross domestic
product and the economic growth of sub-Saharan African countries as do investments in physical
and human capital. They argue that African economies could enhance their short-run economic
growth by strategically strengthening their tourism industries.
Spenceley and Seif (2003) conducted a research on strategies, impacts and costs of pro-poor
tourism approaches in South Africa. This paper describes strategies devised by five private sector
tourism enterprises in South Africa to address poverty and development issues in neighboring
communities. The authors focused on both economic and non-economic impacts of the sector.

17
Further more, they evaluate the impact that pro-poor tourism (PPT) strategies have on the live
lihoods of the rural poor. The research output supports a number of critical issues such as market
access (strength of existing economic elites and location of poor people), commercial
sustainability (attractiveness and quality of product, marketing and cost benefit), policy
framework (land tenure and government attitudes) and implementation issues (skills and capacity
gap, communication and collaboration and meeting expectations). They concluded that the most
significant benefits to the poor clearly arise from direct employment within the tourism industry.

Luvanga and Shitundu (2003) examined impact of tourism on poverty alleviation in three tourist
areas of Tanzania. They concluded that tourism has high potential for poverty alleviation.
However, they noted that there are policy issues that need to be addressed for the sector's
effective contribution towards that goal
Tsega (2008) using panel data set for the period 1995-2005 for forty-two African countries find
that there is a positive correlation between economic growth and tourism sector. According to
her findings the tourism sector contributes significantly to the economic growth of the countries.
On the other hand economic growth is vital for the development of tourism sector.
World Bank (2006) conducted a research for government of Ethiopia entitled Ethiopia towards a
strategy for pro-poor tourism development. By collecting quantitative data on tourism-centric
locations, the organization conducted a comprehensive work in the country. Under the objective
of responding to the government of Ethiopia request to define a strategy for tourism growth that
commensurate with its vision for tourism, they report that the industry is under–performing
relative to its tremendous potential value of its cultural heritage as an anchor for a tourism
industry. They argued that this is attributed to weakness in Ethiopia’s image, market presence
and penetration resulting in a demonstrable weak demand for its products; a severely
undervalued cultural and natural resource base; uncompetitive supplier and support services.
Finally, absence of efficacy coordinating and communicating governance framework to guide
and integrate the many stakeholders at both the national and sub national levels is also
considered as one among the many factors for the low performance of the industry.
Yabibal (2010) using a panel data of 40 countries identify main determinants of tourist flows in
Ethiopia. The study showed that the lagged tourist arrivals are a statistically significant
determinant of tourist flows in Ethiopia in addition to per capital income of sending countries,
CPI ratio of Ethiopia and Kenya, urbanization rate and distance from Addis to capital cities of
the sending countries.
Though Tourism is viewed as an engine for economic growth, little has been done in developing
countries especially in Ethiopia. The limited studies were focused mainly on analyzing
determinants of tourist arrivals on the country, challenges and opportunities. Moreover, the
available empirical studies focus on analyzing the relationship between tourism development and
economic growth conducted by employing different methods especially researches conducted in
Ethiopia mostly employed a panel data approach.

18
 From the above review on empirical works, the researcher concludes that tourism and economic
growth are somehow linked positively, but it is difficult to generalize global or regional findings
to a single country. Hence this study will try to fill the gap by trying to find the link between
economic growth and tourism sector in Ethiopia using a time series approach and its contribution
for the growth of the country’s economy.

Tourism contribution

Economic growth Social growth

Employment Development of Preservation of Improve

creation infrastructure local custom understanding
and
Growth in
income Social stability

Figure 1. Conceptual legal framework

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3. RESEARCH METHODOLOGY
3.1. Description of the Study Area
Gondar city administration is a city in Amhara national regional state of Ethiopia. And located
on the Southern shore of Lake Tana and the source of the Blue Nile (Abay) river. The city is
sited 567km north-west of Addis Ababa along Addis Ababa- Dejen- Debremarkos-Bure road and
465km Addis Ababa-Dejen-Motta road.

According to the classification used in Ethiopia, the climatic condition of the city is characterised
as Woina Dega climatic zone. The mean annual ambient temperature of the city is between 18°C
and 24°C. The absolute maximum temperature usually occurs from March to May and the
minimum temperature also occurs from June to November. Average annual rainfall is about 1308
mm (ibid).

The total population of the city is around 288,384 for the year 2009. The data also revealed that,
the city has 47,720 households with an average family size of 5 persons. The average growth rate
of the population is around 4.1%. Of the total population 51.5% are female while the rest are
male. Recently, Gondar is restructured as a metropolitan’s city to make administrative effective
and efficient by merging the previous 21 kebeles of the city into 12 city kebeles, 11 rural kebeles
and 1 satellite kebele. City wise affairs are administered by mayors and other related city cabin
members and council (WTB 2007) The economic sector of the city is mainly composed of
industry, trade, service, tourism and urban agriculture. The economic contribution of the service
sector to the city is also significant next to industry and trade.

3.2 Research Method and Design

In order to analyze the research question of this study, I will use more of descriptive research
design. There are two basic research methods, the qualitative and quantitative methods. Preferred
methods for this study will be both the qualitative and quantitative design that the study allow for
the in depth analysis of the problem statement. It will create discussions between the respondents
and the researcher which allow gaining insights and direct understanding from the respondents.
The combination of these two methods has overcome some of the limitations of using only one
of the methods. As the purpose of the study is to assess the role of tourism on social and
economic development of Gondar city, qualitative and quantitative methods will be used for
elaborated results using questionnaires and interviews.

3.3. Data Sources and Types

In this study both primary and secondary data sources will be used. Sufficient and relevant
primary data will be gather from the research site using various data collection methods. For the
analysis purpose, primary data will be collect through questionnaire and interview will
efficiently apply. In addition to the questionnaire and interview, document analysis will be
carried out on available archives, reports, minuet held during meetings and working manuals

20
obtained from gonder city and Tourism office. Further, secondary data will be used for the
literature review section. To this end, official statistics and review of earlier studies on the
contribution of tourism to job creation and income generation in Ethiopia will be collect from
books, journals and internet. If there is data gap and if a need arises to go beyond questionnaire
and interview, and as some of the important information might not be officially available or
revealed, an additional (own) survey in the case study area will conduct to fill in data gaps and
possibly correct or improve upon existing data.

3.4 Data Collection Method

 Survey Questionnaire: The survey will be conducted after thoroughly explaining the
purpose of the interview to the interviewees.

 Observation: helps the research to obtained information that missed another methods it
gives some information.

 Focused group discussion (FGD) method: will be used to get qualitative data using focus
group discussion which is organized from different social segments. A sample checklist,
serving as a guide and consisting of the main points for focus group discussion interviews
will be prepared, pre-tested and adjusted based on prior to full implementation.

Interviews: All the interviews will be conduct by the researcher. Each interview would be
conducted at mutually convenient time and peace and cover questions about social
participation in tourism particularly benefit sharing, and tourism contribution as a means of
income generation and economic growth.

3.5 Sampling size and technique

3.5.1 Sampling Technique

As complete coverage of the population is not possible, a sub set of population will be select.
The reason why sample population will be select for this study is that: first, it will not possible to
cover the list of all tourism stake holders and second, using adequate sample size is advantageous

21
to overcome man power and fund shortage. In the sample selection process, mixed probability
and non-probability sampling techniques will employ. The non-probability purposive sampling
technique will employ for interview and qualitative analysis, whereas stratified probability
sampling technique will use to distribute questionnaire and for quantitative analysis purpose.

3.5.2 Sample Size

After reviewing different literatures for determination of scientifically acceptable sample size,
the study prefer to use the following formula.

N= n

1+n(e)2

Where: N = statistically acceptable sample size

n = Total size of target population

e = level of precision (error level) at 95% confidence level (0.05).

3.6 Methods of Data Analysis

Data gathered through questionnaire and interview will analyze by using statistical package for
social science (SPSS) V 20. Using SPSS is reliable and convenient than the manual system. The
collected data will edit, organize and code through standardize procedure to make it suitable for
analysis. Once the analysis undertaken, the result of the analysis will present in descriptive
statistics formats including frequency, tables, chart, graphs, percentages and ratios.

3.7 Ethical consideration

Efforts will be made to make the research process professional and ethical. To this end, the
researcher will clearly inform to the organization who has provided the required data the purpose
of the study i.e., purely for academic. In addition, the study will be based on their consents. The
researcher will also not personalize any of the findings during data presentations, analysis and
interpretation. Furthermore, all the materials that will be used for this research will be duly
acknowledged.

22
4. Work Plan and Budget Plan

Work plan

Activities Time frame in weeks

Organization the literature 1
Drafting the data gathering tools 1
and pilot testing
Gathering the data 2
Enumerating and organizing the 1
data
Analyzing and interpreting the 2
data
Organizing the report 2
Total number of weeks 9 weeks

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Budget Plan

No Item Unit Amount Unit price Total

1 Stationery Pen No 3 3.50 10.5
Paper Packet 1 100 100
Not book No 1 10 10
Ruler No 1 6 6
Binding No 1 25 25
Total 154.5
2 Communicatio Telephone Three 200
n months
3 Others Internet 100
CD No 3 10 30
Copy Paper 60 0.40 24
Total 154
4 Transportation Student 100 100
Enumerator 150 150
Total 250
5 Contingency 100
6 Total 858.5

24
5. Reference
 Aref and Redzuan (2009) Barriers to community participation forward tourism
development in Shiraz, Iran, Journal of tourism research No, 12 pp, 121-140
 Brau et al. (2007) “Estimating the Impact of Tourism on Economic Development
 Chris Cooper et.al, (1990). Tourism: principle and practice. Long man group limited,
Malaysia pp, 80-89

25
  Fayissa et al. (2007)
 Havel, V.(1996) reflections- what is participation in Havel,v.(1996) the world bank
participation source book, the world bank. Available http://www.world
bank.org/wbi/source book/ sboloo.htm, access date (April 2013)
 Hazari and Sgro (1995), http://www4.fe.uc.pt/ceue/working_papers/ieliassara34.pdf.
 Mason, P. (2003) tourism impacts planning and management. Biddles ltd. London
 Richards, R. and Hall, D. (2000) Tourism and sustainable community development, Rout
ledge, London
 Riccardo Scarpa, 2004, “Tourism and 43 Evidence from Aggregate Country Cross-Data,”
Journal Monetary Economics, 34:143-
 World Bank, (2006) culture and development at the millennium: the challenge and
response. Washington DC
 WTO(2008). Sustainable tourism development guide for local planers. washengeten DC
Wolfensohn,J,D (1996) The World Bank participation source book available
http://www.worl
 WTO (2006) International Tourist Arrivals and marked shares by Regions. Spain, Madrid
 UNCTAD (2007), FDI in Tourism: the development dimension, UNCTAD current
studies on FDI and development No. 4, New York and Geneva, United Nations.
 UNWTO (2005) “Declaration: Harnessing Tourism for the Millennium Development
Goals” New York 13 September 2005.
 Tsega (2008), www.tourismethiopia.org
 Yabibal (2010), www.tourismethiopia.org

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