The present global financial crisis, which emanated from the failure of financial system in US and spread to developed and developing economies alike thanks to inter -linkages of economies under liberalization, is threatening the very stability of the world economy. Seemingly, a Great Recession if not a repetition of 1930’s Depression is gathering momentum. As per the IMF the world will likely contract this year in a great recession. It expects global growth to slow below zero this year, the worst performance in most of our life times. Although the conditions of economies in 1930 and now differ widely due to substantial changes witnessed in political, economic, social and technological scenario over the last eight decades, the solution so far tried by various countries through fiscal and monetary polices, more or less on the same pattern adopted in the 30s, has not met with the desired success. There is a pall of gloom and crisis of confidence everywhere. IMF MD told financial leaders recently that “continued deleveraging by world financial institutions combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled.”
The present crisis needs a different approach altogether. It requires a socio economic- educational and cultural approach involving government, financial, social, educational institutions and cultural organizations. The problem can to a great extent be tackled culturally and socially by encouraging tourism both domestic and international. The maxim ‘demand creates supply’ has to be recognized and adopted for implementation by all economies in letter and spirit. Tourism industry can create all round demand and supply will have to be necessarily met.
Tourism can be at local, regional, state and international levels depending on the profile of people. Economies have to be actively proactive in encouraging and supporting each other in developing both national and international tourism. Educational tours, social, cultural and business visits, travels for the purpose of basic and advanced learning in different areas of science, technology and humanities within and outside countries will create demand for all sorts of goods and services. This is the time to organize both at national and international levels seminars, workshops, symposiums etal to understand in depth the causes that led to this deep crisis, the extend of damages inflicted in different economies and arrive at solutions which are easy to implement. The miserable failure of risk management so far understood and practiced need to be revisited, redefined and replaced with simple measures which are intelligible and implementable and finally capable of de- risking institutions and economies.
Domestic tourism subsidized and induced by the governments by offering incentives will encourage travel creating demand for infrastructure like roads,transports, communication, hotels, motels and entertainments. This is the time for Corporates and all types of large scale organizations all over the world toincentivize tours and travels through innovative compensation packages. This will also help inter-alia improve productivity within the organization.
Economies have to open up socially and culturally paving way for economic development. International tourism is the way out. Since exotic financial products introduced have ruined the financial system in many countries starting with US and brought disaster to the real economies through out the world shaking the confidence of people every where, the only pragmatic way to revive the confidence and bring back the people to active and constructive economic activities is through educational tours, social and cultural visits and that is possible only by way of induced international tourism. Understanding the socio, economic. cultural political conditions of different economies by people belonging to different classes / groups will also go a long way in framing and implementing economic and fiscal policies for the future which can minimize damage and maximize gains. People around the world need worldly exposure in these days of global integration and this can be achieved only by encouraging international tourism.
Though the idea may not look impressive and appealing in the present scenario of all round crises, it can turn out to be successful and turn around the economies if implemented with commitment and sincerity. It is comparatively inexpensive, easily implementable and definitely result oriented. Risk if any, is bearable and manageable. Supplies to meet the varieties of demands of tourists which include among other things food, shelter and clothing apart from transportation will automatically give a boost to varieties of economic activities including services. Timing of tourism and meticulous implementation of incentive package will do the trick. The direct and indirect benefits that accrue to the economies out of well managed tourism will be substantial and will turn out to be a boon particularly for real economies consisting of agriculture, manufacturing, exports, imports and services.
The confidence lost has to be regained and for that measures other than fiscal and monetary measures have also to be seriously considered and implemented. The ultimate objective is to achieve economic recovery for the whole world and the activation of tourism industry both domestic and international can be one of the easy options towards this end and it should form part of the stimulus package.
Dr.T.V.G.Krishnan
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