The Effect of Foreign Tourism Development on Poverty in Iran

Abstract

Poverty is a global issue of high importance for both developing and developed countries. The first step in tackling poverty is to identify the impact of economic policies on poverty indicators. In this direction, the purpose of this study is to measure the effect of foreign tourism development on poverty reduction using SAM fixed price multiplier approach. For this purpose, 2011 SAM, 2018 foreign tourist receipts, and three poverty indicators: head count ratio, poverty gap, and (FGT) have been considered. The results indicate that the arrival of foreign tourists through the production growth channel reduces poverty in Iran and reducing poverty of rural households is greater than urban households. Results also show that the highest share in sectoral poverty reduction based on the three poverty indicators is related to the agricultural sector (based on the census poverty index), hotels and restaurants, and manufacturing, and transportation (based on the poverty gap index and the FGT indices). Whereas the least reduction in poverty occurs in the financial, insurance and education activities. Any policy making in the direction of tourism development is considered as a suitable socio-economic achievement.

Keywords

• tourism
• social accounting matrix
• fgt
• poverty gap
• head count ratio