The Impact of Tourism Development on Economic Development: The Case of Zanzibar

Abstract

Tourism is perceived as one of the world’s fastest growing service sectors and a major source of economic development for many, if not all, developing countries. Zanzibar as a developing country and also is a small island which have small economy, its national income depend much on tourism contribution, Therefore this paper aim to examine the impact of tourisms development to the economic development of Zanzibar, using the data based on annual time series from the period 1989–2019 and also employing Vector Error Correlation Model (VECM) to arrive at conclusions from the data in the study area. The study results found a long-run stable relationship among tourism development and economic development of Zanzibar, there is a positive and significant impact that exists between GDP and international tourism arrivals, inflation and government expenditure respectively while only inflation results show positive but insignificant impact. In order to increase the economic development in Zanzibar through the tourism sector, there is a need for the government and other stakeholders of tourism to put much consideration on this sector so as to improve overall development of Zanzibar economy.