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There is a marked geographic pattern amongst the various European nations, with a clear inflow of foreign currency from the northern urban-industrial economies to the alpine or southern European economies. In southern Europe, the economy is generally rural based and less prosperous. This illustrates a supplementary advantage that is often claimed to be associated with tourism development, namely that it can be a medium for redistribution of economic wealth from the richer to the poorer areas.
A second advantage of tourism is its capacity to attract inward investment to finance capital intensive projects. Although the industry is still dominated by small-scale local firms, the trend is towards greater levels of globalization. Due to the march of the globalization forces, the organization of world tourism has undergone major changes and we now witness the emergence of large-scale inter and multinational operators, each capable of moving significant volumes of investments to new tourism destinations.
These firms are distinctive not just because of the manner in which they have extended their horizontal linkages where firms merge with, or take over, other firms operating in the same sector, but especially through the development of vertical linkages in which, for example, an airline purchases or develops its own travel company and takes on the ownership of new hotels. The Grand Metropolitan group, for example, has interests in international hotels, holiday camps, travel agencies, package tours and restaurants.
For developing nations like India, the role of foreign investment in initiating a turn around in the tourism industry through hotel and resort construction can be an essential first step out of which an indigenous industry may eventually develop. When considering the numerous places to visit kerala may benefit much from such an approach. Without foreign investment, start-up capital may not be found locally and although profits from foreign-owned firms will tend to leak out of the local economy, local taxation on visitors and their services may provide the necessary funding to assist in the formation of new indigenous firms and the development of key infrastructures (roads, water and power supplies) around which further expansion of tourism may then be based.