Tourism and Poverty Reduction: Evidence from Tanzania

The paper examines the contribution of tourism towards poverty reduction in Tanzania for the period 1985 to 2015. Time series analytical method has been used in the analysis of data, by using vector error correction model and Granger causality tests, to examine the long run and causal relationship between tourism development and poverty reduction in Tanzania. The empirical results indicated a long-run relationship between tourism and poverty reduction also the Granger causality tests suggest unidirectional causal relation running from tourism earning to poverty reduction. Tourism as an industry can play very important roles in economic development including improved livelihoods and socio-cultural development that are critical for poverty alleviation. Therefore, in order to alleviate poverty in Tanzania through tourism, there is a need for more government regulating mechanism, aggressive promotion strategies, enhancement of skills and knowledge of the tourism sector, increasing effort in conserving and preserving heritage sites, and improvement of infrastructures and facilities.