An analysis into the relationship between tourism development and economic growth in South Africa amid the COVID-19 pandemic

Kanyenze, Ropafadzo

An analysis into the relationship between tourism development and economic growth in South Africa amid the COVID-19 pandemic

Thesis / Dissertation

2024

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

The introduction of the COVID-19 and the start of the global pandemic dealt a blow to the global economy and resulted in the death of millions across the globe. The rapid spread of the COVID-19 virus not only put a severe strain on the healthcare sector but also on the global economy. The introduction of the pandemic saw the global economy experience a combination of both demand and supply shocks. The spread of COVID-19 and the measures put in place to contain it directly impacted production and disrupted global value chains. The pandemic additionally caused a reduction in global demand. With many economies across the globe experiencing contractions and economic growth experiencing a slowdown during the time, many governments sought the means to alleviate the effects of the pandemic while also sparking economic growth. This paper argues that the tourism sector potentially holds the key to igniting economic growth and uses South Africa as a case study to do so. It has previously been argued that the tourism industry is one that holds the potential to be a great contributor to economic growth and this has been somewhat supported within the literature. Following the hypothesis that tourism can be a great contributor to economic growth, this paper assesses how policies aimed at improving South Africa's Tourism industry amid the pandemic affects economic growth. The results of this study reveal that the policies associated with the Tourism Sector Recovery Plan manage to generate positive economic benefits within the tourism sector which then generated positive spillover effects throughout the economy as a whole, with output from each sector increasing as well as employment increasing. The implementation of each of the three policies namely, Corporate Support, Business Enablement and Tourist Experience resulted in a positive direct impact, indirect impact, and induced effects on the tourism industry and the economy as a whole. Moreover, each of the three policies under the Tourism Sector Recovery Plan managed to stimulate demand for commodities throughout the economy while creating jobs and resulted in increased output levels in the tourism sector and the economy. However, the percentage in output was modest. Despite the modest changes in output, many small to medium enterprises within the tourism sector and the economy at large greatly benefitted from the introduction of each policy.

Keywords

Economic Development

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