CPU COLLEGE OF BUSINESS AND INFORMATION TECHNOLOGY

DEPARTEMENT OF MASTERS OF BUSINESS ADMINISTRATION

PROPOSAL ON “THE ROLE OF TOURISM IN ECONOMIC

Submitted by

Itafa Misganu

ID no. EMBA/806/12

Submitted to Dr. Habtamu .E

Addis Ababa, Ethiopia,

Feb, 2020

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 ABSTRACT

RECENTLY, TOURISM HAS GAINED SIGNIFICANT STRIDES AS A POVERTY

REDUCTION STRATEGY FOR LOW INCOME NATIONS, INCLUDING ETHIOPIA.

HOWEVER, DESPITE ITS HUGE POTENTIAL THE TRAVEL AND TOURISM MARKET

HAS YET TO DEVELOP TO A POINT WHERE IT CAN MAKE A SIGNIFICASNT

CONTRIBUTION TO ETHIOPIA’S ECONOMIC GROWTH. THEREFORE, THE

OBJECTIVE OF THIS STUDY IS WILL EXAMINE THE TREND AND CONTRIBUTION OF

TOURISM SECTOR TO THE ETHIOPIAN ECONOMIC GROWTH. IN ORDER TO ASSESS

THE CHALLENGES THE SECTOR FACES AND ASSISTS POLICY MAKERS AND

PLANNERS TO UNDERSTAND THE SAME TO DESIGN APPROPRIATE POLICIES. THE

STUDY WILL EMPLOYED DESCRIPTIVE RESEARCH DESIGN, AND USED

SECONDARY DATA THAT WERE COLLECTED FROM THE MINISTRY OF CULTURE

AND TOURISM, NATIONAL BANK OF ETHIOPIA, MINISTRY OF TRADE, AND OTHER

SOURCES RECORDS AND DATA.

The finding or results will shows tourist prefer Ethiopia for enjoyment trip, and also the

economic activities performed by the Ethiopian government to attract foreign direct investment

(FDI) is encouraging visitors for business visits. On the other hand, even though Ethiopia is rich

in historic, cultural and landscape it is one of the least visited country in the world, and the

contribution of the sector to the GDP is very insignificant compared to other sectors in the

economy. Also the employment rate in this sector is very low.

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 1. Introduction

1.1 Background of the Study

According to international 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).

In recent years, tourism business development has been the focus of study and research. In the

analysis of tourism, economists emphasis the economic effects of tourism on the economy. The

speedy growth of tourism causes an increase of household income and government revenues

through multiplier effects, improvement in the balance of payment, and growth of tourism

industry. Hence, the development of tourism has usually been considered a positive contribution

to economic growth (Khan et.al., 1995; Lee and Kwon, 1995; Lim, 1997)

Though it is believed that the growth of tourism contributes to the growth of household incomes

and government revenues, available empirical evidences on the link between tourism industry

and economic growth has not yet been clear. Therefore, it is necessary to examine whether

tourism growth actually caused the economic increase or, alternatively, did economic expansion

strongly contribute to tourism growth instead.

1.2 Statement of the Problem

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Economic growth is the most powerful instrument for reducing poverty and improving the

quality of life in developing countries. Economic growth occurs whenever people take resources

and rearrange them in ways that are more valuable. Like other sectors of the economy, tourism

brings in foreign exchange which can be used to import capital goods in order to produce goods

and services, leading in turn to economic growth. Ethiopia’s travel and tourism market has

enormous potential. The country not only offers the usual African game and cultural experiences

to visitors, but also a rich array of historical and ecological sites that set it apart from most of its

neighbors. However, despite its huge potential, the travel and tourism market has yet to develop

to a point where it can make a significant contribution to Ethiopia’s economic growth. While

tourist numbers are rising, growth in arrivals and tourism expenditure are by no means

commensurate with the potential of the country’s attractions. By recognizing the role of the

tourism sector in the country’s economy, the government of Ethiopia has given due attention to

the sector and The Ethiopian tourism sector doesn’t play important role as much capacity we

Ethiopian have even we compare with Kenya we are late and we can’t generate good income

from this sector because of different problems like infrastructural, knowledge, less government

attentions etc.

1.3. Conceptual Framework

In this, part of thesis I will try to focus 0n the major responsibility of governmental organization

for tourism development, the role of tourism for economic growth and the stack holders role

Mainly. Public organization in the town and the rural areas societies & there are different

stakeholders with which it works. There are some private organizations like hotels and related

establishments, local guides giving tourism Service and some private training institutions in the

town that have some roles in tourism Industry. In addition there are some government Bureaus,

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public training institutions and media that have horizontal relationship with the office. Beside

this, there are host communities living around the attraction who have some Responsibilities in

tourism development and role of tourism in economic growth. Visitors are also stakeholders with

some specific roles and responsibilities in tourism role for economic growth of the country.

Some bottlenecks impede the collaboration among the stakeholders. These and the rest main

points are will be investigated.

1.4. Objective of the Study

1.4.1 General Objective

The overall objective of the study is to examine and analysis the trend and contribution of

tourism sector to the Ethiopian economic growth.

1.4.2 Specific Objectives

1. Analyzing the patterns and trends of growth of tourism sector

2. Assessing the contribution of tourism sector to the GDP of Ethiopia.

3. To identify the bottlenecks of the growth of the tourism sector

1.4.3. Significance of the Study

The cause behind to conduct this research is to evaluate the role of tourism sector would lead to

economic growth and development through different directions. The urgent need for poverty

reduction in Ethiopia and the substantial potential economic contribution of tourism in Ethiopian

economy justify the interest in explaining the sector link with economic growth. Therefore, the

research will have its own importance as it gives ideas for further investigation on the growing

tourism sector on Ethiopian economic growth .The study as well is useful as it analyses the

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macro impact of the tourism sector in Ethiopian context and helpful in suggesting alternative

polices that could improve the sector.

1.4.4. Research Questions /hypothesis

This study will conduct to generate research data that answer the following research questions:

1. To what extent tourism has significance for Ethiopian economy?

2. What are the tourism challenges that should be solved related to infrastructure?

3. What is the role of society for Ethiopian tourism development?

1.4.5. Scope, and Limitation of the Study

The study planned to will conduct using economic growth and show the relationship of economic

growth and tourism sector has in Ethiopia, however due to data and inconstancy, input was may

not found for the defined variables.

In addition, limiting access to data were the constraints. Absence and in consistency of data

different source has created a limitation to relay on small sample. Due high inconsistency of

data from different organization the researcher has preferred to use data from Ethiopian Ministry

of Culture and tourism (MOCT) statistical office.

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 LITERATURE REVIEW

This section will organized in two major sub sections: theoretical literature and empirical

findings. The theoretical literature sub section will explores the theories, concepts and definitions

related to the Tourism sector. The empirical finding sub section will examines recent empirical

findings on the tourism sector.

2.1. General Overview of Tourism Sector in Ethiopia

2.2.1 History of Tourism Sector in Ethiopia

In this topic the following and the rest points will rise 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

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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

Research Design and Methodology

3.1 Research Design

The study will employed descriptive research design.

3.2 Sources of Data

The study will used secondary data source obtain from Ministry of culture and Tourism

(MOCT), National Bank of Ethiopia (NBE), United Nations Educational, Scientific and Cultural

Organization (UNESCO), World Bank (WB), World Trade Organization (WTO) and Central

statistics authority (CSA). The study also uses information’s extract from magazines, books,

publications, and other periodical reports of government institution and other sources.

3.3 Data Analysis Method

This research will makes use of descriptive method for data analysis, which will based on

secondary data’s. Method like statistical tables, averages ratios, line graphs and percentage, are

used.

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3.4 Validity and Reliability of Data Gathering

The secondary data will collect and analyze, are data’s collected from internal source and

external source. Which are survey results of those organizations.

3.5 Ethical consideration

Efforts will be made to make the research process professional and ethical issues. 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 fully acknowledged

3.6. Organization of the Thesis

The thesis will organize as follows: Chapter Two deals with the review of some selected

literatures. Chapter Three provides the Methodology used in this study. Chapter Four, deals with

the brief presentation on the existence, and contribution of the tourism sector, as well as other

findings on tourism. Lastly, chapter Five will summarizes the study and shows concluding

remarks and draws policy implications.

Cost budget

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no Item Unit of measure Amount Unit cost Total cost
1 Stationary material

Pen Pack 7 4 28

Paper pack 1 230 230

Highlight marker unit 3 20 60

printing Per page 160 0.60 96

Photo copy Per Page 80 0.50 40

Printing cost Within min 0.8 GB 180 144

Internet cost
Total 280
4 Miscellanies expense 10 15 150
Total 150
5 Transportation Trip /km 18 trip 8/aver 144

Telephone Etc Air time 5 cards 25 125

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 Time schedule

No Activity/tasks Feb Mar Apr May Jun

1 Questioner

preparation and

problem identification
2 Research design

3 Data analysis

4 Literature review

5 Writing proposal

6 data collection

7 Data processing

& editing

8 Data interpretation

9 Computer writing and

deep checking
10 Submission and

presentation

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REFERENCES

Balaguer and Cantavella-Jorda (2002)

Balaguer, J. and M. Cantavell-Jorda, 2002, “Tourism as a Long-run Growth Factor: The

Brau et al. (2007) “Estimating the Impact of Tourism on Economic Development

Brau, R., A. Lanza, and F. Pigliaru, 2003, “How fast are the Tourism Countries Growing? The

Burr, Deborah. 1994. “A Comparison of Certain Bootstrap Confidence Intervals in the Cox

Model.”

Chen, L. L. and J Devereux, 1999, “Tourism and welfare in Sub-Saharan Africa:

Choe, J. I., 2003, “Do Foreign Direct Investment and Gross Domestic Investment Promote

Clare Gunn and TurgutVar (2002)

Cunado and Garcia (2006)

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