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Posted: December 3rd, 2022

HOW DOES TOURISM CONTRIBUTE TO POVERTY REDUCTION AND DEVELOPMENT IN NEPAL?

HOW DOES TOURISM CONTRIBUTE TO POVERTY REDUCTION AND DEVELOPMENT IN NEPAL?

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EXECUTIVE SUMMARY
Poverty eradication is a priority in sustainable development goals. According to the UNWTO, tourism is an essential catalyst for poverty eradication. Multilateral agencies such as the World Bank and International Monetary Fund and United Nations Development Programme upholds tourism as a catalyst to eradicate poverty. The pro-poor tourism approach strives to change the narrative by ensuring the local people directly benefit from the tourism activities in their community. Past studies suggest that domestic and inbound tourism reduces absolute and extreme poverty. The research’s primary objective is to examine the impact of tourism on poverty eradication and development in Nepal. The study will utilize a quantitative method to collect secondary data from various data sources, including tourist sites and government records. Analysis of Variance (ANOVA) is essential in understanding a relationship between the two main variables. The research shows that tourism has a positive impact on rural communities. It transforms their economic status and provides new sources of income. Future studies should extend the data collection for a decade or more and utilize primary data to determine if tourism impacts poverty alleviation and development. Developing countries can develop better mechanisms to improve the ability to eradicate poverty and stimulate economic development.

TABLE OF CONTENTS
INTRODUCTION 6
1.1 Background and problem statement 6
1.2 Overview of the literature 9
1.3 Research objectives 11
1.4 Research questions 11
METHODS, DATA AND ANALYSIS 11
1.5 Data collection: 12
1.6 Data analysis 12
DISCUSSION AND IMPLICATIONS 13
1.7 Addressing research questions 13
1.7.1 Impact of Tourism on Income Levels 13
1.7.2 Impact of Tourism on the Creation of Jobs 13
1.7.3 Impact of Tourism on Diversifying Income 14
1.7.4 Impact of Tourism on Revenue and Development 15
1.8 Implications for practice 15
1.9 Limitations 16
CONCLUDING REMARKS 17
REFERENCES 18
APPENDIX 19

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INTRODUCTION
1.1 Background and problem statement
Poverty eradication is a core agenda among developing countries. To underscore the urgency of poverty eradication, the issue was number one in the millennium development goals. The international community and the United Nations agreed that poverty was a major hindrance in society (Ambelu et al., 2018). The United Nations World Tourism Organization adopted a pro-poor tourism approach as a key driver to sustainable development and poverty eradication. UNWTO reports show that by 2015, little progress was made by countries in eradicating poverty (Gantait et al., 2018). The reports appreciate that developing countries had made milestones in achieving sustainable development and poverty eradication. That is why poverty eradication is still a priority in sustainable development goals (Hipsher, 2017). The prioritization of the pro-poor approaches is crucial in ensuring that communities can experience better opportunities when they embrace tourism activities.
Tourism growth forecasts are essential tools for poverty alleviation. According to the UNWTO, tourism is an essential catalyst for poverty eradication. It offers host communities employment, including opportunities to sell their products and diversify their income (Kim et al., 2016). It empowers the economic status of women, men, and youth. Multilateral agencies such as the World Bank and International Monetary Fund, and United Nations Development Programme uphold tourism as a catalyst to eradicate poverty (Lasso & Dahles, 2018). Past studies in Asia, Europe, and the United States show that tourism boosts foreign income, facilitating economic development (Lasso & Dahles, 2018). It is no doubt that proper planning and management can lead to enormous contributions that will stimulate local growth and development.
Nepal is a landlocked Himalayan country bordering India and China. Cultural and natural diversity are tourism assets. 83 percent of the country is comprised of mountains that can attract tourists to mountaineering, rafting, cycling, wildlife, trekking, and bird watching (Llorca‐Rodríguez et al., 2017). Nepal is one of the developing countries that can benefit from tourism activities. The country had a GDP of $29.813 billion, according to 2019 financial reports. It recorded over 1.1 million tourists in 2019, a 2.1 percent increase from the previous year (Llorca-Rodríguez et al., 2020). Nepal’s Tourism Revenue records that the tourism sector had reached $724 million in 2019.
The statistics demonstrate that the country has the potential to stimulate the local economies. While a large percentage of the revenue goes to the investors and tourism organizations, they have little impact on the local people (Medina‐Munoz et al., 2016). The pro-poor tourism approach strives to change the narrative by ensuring the local people directly benefit from the tourism activities in their community. Pro-poor tourism allows tourists to explore communities’ lives, including traditions, food, culture, and arts (Medina‐Munoz et al., 2016). Tourism focuses on developing people living in rural areas. Statistics show that over 86 percent of the Nepal population lives in rural areas.
Sirubali village is one of the popular tourist sites in Nepal. It is 1,700 meters above sea level and thus conducive for local and international tourists. Visitors can arrive at the village by bus and trekking the mountainous region (Oviedo-García et al., 2019). The village first received 16 Belgian tourists in October 1997. Research shows that the tourist’s income stimulates the economy, empowers the economy, and importing goods (Oviedo-García et al., 2019). Since 1997, the village has constructed additional lounges, invested in the transport system while providing more job opportunities to the locals. The interaction with the tourists provide opportunities to empower the communities by raising their economic status (Oviedo-García et al., 2019). The case study of Sirubali village is an example of the impact of tourism on poverty reduction and development.
Tourism during the Pandemic
The COVID-19 pandemic has affected the tourism activities in Nepal. When the pandemic hit various parts of Asia, Europe, America, and other parts of the world, countries closed their borders (Ponce et al., 2020). The World Health Organization encouraged nations to close their borders to avoid tourism activities. The effect was evident in Nepal since tourists from other countries could not visit the place (Ponce et al., 2020). Local tourists could not visit the rural areas and other tourist areas in Nepal. The effect undermines the livelihood of communities that depend on tourism activities. Communities relying on the revenue from tourist activities are desperate since, even after the borders’ opening, the tourism industry is still struggling to recover (Ponce et al., 2020). Communities are desperate since the effects of the pandemic led to the loss of jobs and revenue. The effects can undermine the future of tourism activities.
Overview of the literature
The tourism sector has been managed for foreign exchange purposes rather than pro-poor development strategies. According to UNWTO (2017), countries should start focusing on pro-poor approaches to improve people’s livelihoods and eradicate poverty (World Tourism Organization, 2017). The pro-poor approaches are critical in enhancing the benefits that communities in rural areas receive due to tourism activities. According to Oviedo-García et al. (2019), the Dominican Republic’s tourism activities have failed to eradicate poverty or stimulate the economy. The study suggests that additional measures are necessary to embrace pro-poor tourism strategies. One of the few studies suggests that rural areas’ poverty levels remain high in areas with tourism activities.
On the other hand, Llorca-Rodríguez et al. (2020) carried out a study in 60 countries between 1995 and 2014. The results of the study suggest that domestic and inbound tourism reduces absolute and extreme poverty. The study is an elaborate examination of how tourism activities can change rural areas’ economic dynamics (Gantait et al., 2018). The rural areas can change the economic dynamics, but the quantitative study still calls for additional research.
Kim et al. (2016) carried out a study in 69 developing countries from 1995 to 2012. The results of the study suggest that tourism has heterogeneous effects on poverty levels. It argues that income per capita is a great determinant of eradicating poverty. Medina‐Munoz et al. (2016) carried out a study on the sustainable approach of tourism in poverty alleviation. The study findings suggest that poverty alleviation depends on voluntary social responsibility initiatives and the tourism organizations’ size.
Ponce et al. (2020) collected data from the Central Bank of Ecuador and the National Survey of Employment, Unemployment, and Under-Employment of the National Institute of Statistics and Census (INEC). The data shows that a 1 percent rise in tourism activities reduces poverty levels in Ecuadorian cantons by 4.1 percent (Hipsher, 2017). The impact on the cantons’ local communities is a unique study that other researchers should focus on. A study on the cantons shows the dynamics that can change, leading to the eradication of poverty. The data shows that the cantons record more development, including infrastructure and amenities that support tourism activities.
Ambelu et al. (2018) carried out a study to investigate the role of tourism activities in reducing poverty and improving food security. The study findings suggest that tourism activities can combat food security in rural areas. The study shows that communities can embrace diverse mechanisms to eradicate food security problems. Lasso and Dahles (2018) carried out a study on Komodo Island, Indonesia. The study shows that tourism transforms traditional incomes to tourism-based income. It shows that the island people gave up fishing activities to sell souvenirs to tourists (Hipsher, 2017). The study provides an insight into the local communities that they should care about the changes in tourism activities.
Llorca‐Rodríguez et al. (2017) show that tourism in Peru affects poverty eradication. It suggests that tourism activities cannot eradicate extreme poverty. It suggests that additional measures should be taken to exploit the full potential of tourism. Gantait et al. (2018) show that tourism activities can effectively reduce poverty levels if adequate measures are taken. Hipsher (2017) finds that tourism activities in mainland Southeast Asia create livelihood opportunities for rural communities. The creation of livelihood opportunities is an important opportunity for the region’s communities (Hipsher, 2017). The region experiences better opportunities that stimulate growth and enhance development. The developments are critical in creating the livelihoods of poor locals.
1.4 Research objectives
The primary objective of the research is to examine the impact of tourism on poverty eradication and development in Nepal.
1. To examine the impact of tourism on income levels in Nepal
2. To investigate the impact of tourism on the creation of jobs in Nepal
3. To examine the impact of tourism on diversifying income sources in Nepal
4. To investigate the impact of tourism on revenue and development in Nepal
1.2 Research questions
1. What is the impact of tourism on income levels in Nepal?
2. What is the impact of tourism on the creation of jobs in Nepal?
3. What is the impact of tourism on diversifying income sources in Nepal?
4. What is the impact of tourism on revenue and development in Nepal?

METHODS, DATA AND ANALYSIS
The study will utilize a quantitative method to collect secondary data from various data sources, including tourist sites and government records. The purpose is to examine the causal relationships and find patterns (Lasso & Dahles, 2018).
The data collection method will apply quantitative methods in data collection procedures. It will utilize a questionnaire to collect data from the rural communities and officials on tourism. The questionnaire will be designed using a Likert scale to collect appropriate data from the target audience.
Research Design
The study utilizes a descriptive research design. The descriptive design is critical in understanding the impact of tourism on poverty reduction and development. The description provides an analysis of the relationship between the variables (Llorca‐Rodríguez et al., 2017). It provides a better understanding of the scenario using the descriptive research design.
1.3 Data collection:
The data comprise secondary data from tourist sites and government records in Nepal. The materials available in the public domain are crucial in establishing patterns that can demonstrate the impact of tourism on poverty eradication and development. The data collection focuses on collecting data about the progression of tourism activities in Suribari village in Nepal.
A questionnaire will be prepared and shared with various participants. The participants will answer the questions and ask for help if they experience difficulties. Research Helpants will be critical in distributing the questionnaires.

1.4 Data analysis
Analysis of Variance (ANOVA) is essential in understanding a relationship between the two main variables. It helps establish the relationship between the independent and dependent variables. It comprises ordinal and nominal variables (Llorca‐Rodríguez et al., 2017). ANOVA is essential in examining equality among group means, controlling type 1 error rate, and it is more powerful than other data analysis methods.
DISCUSSION AND IMPLICATIONS
The research shows that tourism has a positive impact on rural communities. It transforms their economic status and provides new sources of income. The rural communities in Nepal have job opportunities for selling souvenirs to tourists.
The implication shows that the Nepal tourism board and government should improve its measures to tap more potential in the tourism industry. Some of the efforts are to ensure the local communities can benefit from the tourism revenue (Oviedo-García et al., 2019). The research indicates that other developing countries should embrace elaborate measures to tap the tourism industry’s benefits.
1.5 Addressing research questions
1.5.1 Impact of Tourism on Income Levels
The findings demonstrate that tourism affects the host and rural communities’ income levels living in the tourism areas. One of the sources of income is the opportunities to sell local food and wares. The opportunities to sell various products revitalize the economy in rural areas. For example, data from Suribari village in Nepal shows that local people host the tourists (Oviedo-García et al., 2019). The tourists pay for lounging, which is critical in boosting the income levels of the communities. Tourists provide local communities with a source of income that is critical in transforming lives and eliminating poverty. Data from the studies show that communities living in tourist areas earn income more than one dollar a day (Ponce et al., 2020). The increment in income allows the community to surpass the global poverty line.
1.5.2 Impact of Tourism on the Creation of Jobs
The data from the research suggests that tourism affects the local communities positively through the creation of jobs. The tourism sector creates various institutions or hotels that require a workforce. The job opportunities include chefs, guards, drivers, and cleaners (Ponce et al., 2020). The tourists also require guides who can take them to historic sites in Nepal. The host community benefits by serving their local delicacies. The opportunities help the communities to generate revenue (Gantait et al., 2018). The revenue is crucial in the eradication of poverty. In the absence of tourism activities, the local people would not find opportunities to generate another income source. However, the findings suggest that the largest percentage of tourism revenue goes to other people, such as tourist companies, not host or rural communities (Gantait et al., 2018). The challenge requires the government to develop mechanisms to address the weaknesses. Similar challenges are evident in other developing countries across Asia and Europe.
1.5.3 Impact of Tourism on Diversifying Income
The tourism sector has a great impact on women and minority groups in society. Data from Suribari village shows that the region has transformed as a result of tourist activities. Other villages that were in the same caliber as Suribari in 1995 are below the poverty until today. The diversification of income is possible since other companies that support tourism activities invest in the region (Hipsher, 2017). The investments provide an opportunity for the country to experience better income opportunities. The diversification of income in rural areas is a great determinant of the ability to overcome poverty. Diversification of income has been occurring since there is a generational shift in the economy. The people who were young when the tourism activities began are now adults who have observed the shift to tourism activities. The local people are striving to learn various skills that will enable them to tap the resources available through tourism activities.
1.5.4 Impact of Tourism on Revenue and Development
Tourism activities create attractive tourist destinations. The aspect is a great determinant of revenue and development in the local communities. Economic benefits are crucial in the development benefits in Nepal rural areas. Nepal’s rural communities create a brand that attracts international attention (Lasso & Dahles, 2018). The approach is crucial in developing the area and allowing the government to collect more revenue. Findings suggest that the revenue collection from the tourism department in Nepal is on the rise.
UNWTO shows that areas with tourism activities require various developments that are positive to a country or region. The developments include accommodation for visitors, road and water systems, cultural activities, recreational and sporting activities. Tourism is a great contributor to the growth and development of various regions in Nepal (Lasso & Dahles, 2018). The Nepal government’s role is to develop better mechanisms to tap additional resources that can boost the economic development of the rural region. Additionally, tourism attracts potential investors who buy land and provide employment opportunities to the local communities.
1.6 Implications for practice
The research has implications for policymakers, scholars, and students. The study results show that policymakers should develop better mechanisms to ensure local communities receive the benefits of tourism activities. Some of the policies include ensuring investors in the tourism industry channel a certain percentage of the local communities’ revenue. The policies will help rural communities to realize better opportunities in the tourism industry.
The research has an impact on scholars who will utilize the research findings to carry out additional research. Scholars will use the research findings to learn more about the impact of tourism on Nepal’s poverty reduction and development. Scholars will also learn that they should invest more resources in the research studies. The scholars will strive to address the inconsistencies in the previous research. Further studies will address the gaps in the current research studies.
The study’s findings will motivate students to gain insights into the impact of tourism on poverty alleviation and development. The research will help students in their research tasks. Students will need to learn the various aspects of collecting data in isolated rural communities in the future. For example, the data collection limitations will stimulate the students to learn how to collect data from the community.
1.7 Limitations
The study had various limitations, including small sample size. The data for the research was collected for a period between 2018 and 2019. Future studies should extend data collection for a decade or more. The data will show if tourism has an impact on poverty alleviation and development. Another limitation of the study is focusing on one village. The research on Suribari village cannot provide an elaborate picture of the impact of tourism on local communities. Another limitation of the study is the use of secondary data. Using secondary data is a hindrance to realizing actual data from the local communities. For instance, visiting the local communities and collecting information using observation methods, focus groups, or structured questionnaires can provide accurate data about tourism’s impact.
Further studies should focus on collecting data from the communities over a long period. The collection of data for three years can demonstrate if the communities are experiencing a shift in the local communities’ economic status (Ponce et al., 2020). One of the major limitations is the lack of elaborate data that can help determine the critical patterns to governments and tourism stakeholders. The information will help understand how governments can play a role in boosting local people’s ability to eradicate poverty and enhance development.
CONCLUDING REMARKS
Tourism has significant impacts on the revenue of a country. It creates job opportunities and provides development opportunities. The major question is whether tourism activities can alleviate poverty and spur development in developing countries. A study of Nepal shows that tourism impacts poverty alleviation since it creates employment opportunities and increases revenue. Studies suggest that developing countries can develop better mechanisms to improve the ability to eradicate poverty and stimulate economic development.

REFERENCES
Ambelu, G., Lovelock, B., & Tucker, H. (2018). Empty bowls: Conceptualising the role of tourism in contributing to sustainable rural food security. Journal of Sustainable Tourism, 26(10), 1749-1765.
Gantait, A., Mohanty, P., & Mathew, R. (2018). Tourism-led Poverty Alleviation in South Asia–An Analytical Rapportage. International Journal of Innovative Research & Studies, 8(1), 67-83.
Hipsher, S. (2017). Poverty Reduction, Wealth Creation, and Tourism in Ethnic Minority Communities in Mainland Southeast Asia. International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility (IJSECSR), 2(1), 39-53.
Kim, N., Song, H., & Pyun, J. H. (2016). The relationship among tourism, poverty, and economic development in developing countries: A panel data regression analysis. Tourism Economics, 22(6), 1174-1190.
Lasso, A., & Dahles, H. (2018). Are tourism livelihoods sustainable? Tourism development and economic transformation on Komodo Island, Indonesia. Asia Pacific Journal of Tourism Research, 23(5), 473-485.
Llorca‐Rodríguez, C. M., Casas‐Jurado, A. C., & García‐Fernández, R. M. (2017). Tourism and poverty alleviation: An empirical analysis using panel data on Peru’s departments. International Journal of Tourism Research, 19(6), 746-756.
Llorca-Rodríguez, C. M., García-Fernández, R. M., & Casas-Jurado, A. C. (2020). Domestic versus inbound tourism in poverty reduction: Evidence from panel data. Current Issues in Tourism, 23(2), 197-216.
Medina‐Munoz, D. R., Medina‐Muñoz, R. D., & Gutiérrez‐Pérez, F. J. (2016). A sustainable development approach to assessing the engagement of tourism enterprises in poverty alleviation. Sustainable Development, 24(4), 220-236.
Oviedo-García, M. Á., González-Rodríguez, M. R., & Vega-Vázquez, M. (2019). Does sun-and-sea all-inclusive tourism contribute to poverty alleviation and/or income inequality reduction? The case of the Dominican Republic. Journal of Travel Research, 58(6), 995-1013.
Ponce, P., Aguirre-Padilla, N., Oliveira, C., Álvarez-García, J., & del Río-Rama, M. D. L. C. (2020). The Spatial Externalities of Tourism Activities in Poverty Reduction. Sustainability, 12(15), 6138.
World Tourism Organization. (2017). UNWTO tourism highlights: 2017 edition. Affiliate Members Report.

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