Kwanyoung Lee / Associate Research Fellow, Yanolja Research / [email protected]
Yejin Ahn / Senior Researcher, Yanolja Research / [email protected] 
Hyo Won Yoon / Senior Researcher, Yanolja Research / [email protected] 
 

The importance of the tourism industry in the global economy continues to expand. According to the World Travel & Tourism Council (WTTC), the travel and tourism sector accounted for 10.5% (334 million jobs) of global employment and contributed 10.4% ($10.3 trillion) to global GDP in 2019. Following the COVID-19 pandemic, the contribution of the tourism industry to global GDP showed a rapid recovery, reaching 9.1% in 2023. This demonstrates that tourism has firmly established itself as a major industry driving national economic growth, extending beyond merely providing leisure and relaxation.

Countries that have strategically developed the tourism industry are simultaneously fostering economic growth and regional development, utilizing tourism as a critical element in strengthening national competitiveness. A representative example of this is the four Southern European nations—Portugal, Italy, Greece, and Spain. These countries, once at the heart of the 2010 European debt crisis and referred to as the ‘PIGS,’ have since emerged as key drivers of European economic growth, relying on the recovery of the tourism industry post-pandemic.

Japan’s example also effectively illustrates the potential of the tourism industry. Following the collapse of its bubble economy in the early 1990s, Japan entered a prolonged period of economic stagnation. The country adopted tourism as a core strategy for economic recovery. The Japanese government made multifaceted efforts, including the enactment of relevant laws, business initiatives, and organizational restructuring. As a result, inbound tourist numbers steadily increased from 13.41 million in 2014 to 31.88 million in 2019. Even after the COVID-19 pandemic, the recovery was swift, with numbers reaching approximately 79% of pre-pandemic levels in 2023, and projections for 2024 indicate surpassing the 2019 levels with 33.38 million visitors.
 

In particular, Japan has successfully distributed the tourism demand, which had been concentrated in Tokyo, to regions across the country through regional tourism development. Comparing the visitation rates by prefecture for inbound tourists in 2015 with those of 2011, the share of tourism in areas outside of Tokyo significantly increased. By 2023, many cities saw visitation rates surpassing 30%. This indicates that the tourism industry can transcend being merely a leisure activity and instead play a pivotal role in transforming economic structures, serving as a foundation for sustainable growth. Given that South Korea is also facing challenges such as population aging and the disappearance of rural areas, there are significant lessons to be learned from Japan’s experience.
 

In fact, the research conducted by Yanolja Research on “The Economic Effects and Revitalization Strategies of Regional Tourism” has confirmed that the tourism industry can serve as an effective alternative to alleviate the concentration of tourism demand in the capital region and revitalize local economies. According to the study, a 1% increase in the number of tourists in a region leads to a 0.11% increase in the Gross Regional Domestic Product (GRDP) of provincial-level local governments, a 0.09% increase in the number of total businesses, a 0.15% increase in the number of service-sector businesses, and a 0.11% increase in the number of service-sector employees. In contrast, urban areas such as metropolitan cities and special cities exhibited relatively minimal economic effects.

Thus, this study aims to analyze the economic ripple effects of regional tourism at the level of local governments (cities, counties, and districts) and, through an in-depth review of Japan’s regional tourism revitalization examples, to derive conditions for the revitalization of regional tourism in South Korea. The goal is to explore policy implications for revitalizing local economies and achieving balanced development through the tourism industry.
 

Analysis of the Economic Ripple Effects of Increased Tourism
To conduct a more detailed analysis of the economic effects of regional tourism, this study employed input-output analysis to examine the economic ripple effects resulting from an increase in the number of tourists. The quantification of the economic impact at the level of local governments (cities, counties, and districts) revealed that the positive influence of tourism on regional economic revitalization is substantial. Before presenting the full analytical results, we would like to briefly introduce the concept of input-output analysis, which is widely used in economic impact studies.

Input-Output Analysis is a method used to systematically analyze the impacts of the growth of a particular industry on other industries and the regional economy. In the case of the tourism industry, the consumption patterns of tourists affect a wide range of sectors, including accommodation, food services, transportation, culture, and retail. Therefore, input-output analysis allows for the quantitative assessment of these economic ripple effects. For instance, an increase in the number of tourists in a region stimulates the accommodation sector, which, in turn, generates a chain reaction, boosting demand in sectors such as food and beverage services, laundry, and interior design. Input-output analysis focuses on examining these direct and indirect effects, which can be categorized into three main types of impacts.
 

Returning to the main analysis, let us examine in detail the economic ripple effects at the level of local governments (cities, counties, and districts). Table 1 presents the economic impact results for 31 regions out of the 226 local governments that saw an increase in tourism between 2019 and 2023. In the case of Yangyang County, which exhibited the highest tourist growth rate from 2019 to 2023, the production inducement effect increased by 202.7 billion KRW, and the value-added inducement effect grew by 86.7 billion KRW. Additionally, the employment inducement effect rose from 1,194 jobs in 2019 to 3,361 jobs in 2023, marking an increase of 2,167 jobs.
 

A closer examination of the regional employment data from the Statistics Korea Regional Employment Survey reveals that the number of employed individuals in Yangyang County increased by approximately 3,000, rising from 31,000 in 2019 to 34,000 in 2023. Considering that the Gross Regional Domestic Product (GRDP) of Yangyang County was approximately 986 billion KRW in 2019, the production inducement effect exceeding 200 billion KRW due to the increase in tourism has played a crucial role in enhancing local income and generating jobs.

In the other 30 regions, the production inducement effect resulting from tourism in 2023 ranged from as low as 60 billion KRW to as high as 700 billion KRW. The corresponding employment effects in these regions were also substantial, with some areas seeing an increase in employment by nearly 8,000 jobs. These results firmly demonstrate that the tourism industry can be a powerful strategic tool for revitalizing regional economies.

From Capital-centered Tourism to Regional Tourism
As previously discussed, the tourism industry positively impacts the regional economy in various aspects, such as production inducement, value-added creation, and job creation. It holds significant potential to serve as a key driving force for the future of our nation’s economy. Furthermore, with the growing global interest in K-content and Korean culture, South Korea has firmly established itself as a unique and attractive tourist destination like never before. To capitalize on this opportunity, it is crucial to recognize tourism as a core strategic industry and actively leverage the country’s natural landscapes, cultural heritage, and regional characteristics to promote nationwide tourism.

However, in reality, regional tourism demand remains sluggish due to issues such as the concentration of tourism in the capital region and the lack of sufficient tourism infrastructure in other areas. Even ten years ago, Seoul accounted for more than 80% of inbound tourist visits, and in 2023, it still holds the top spot with a 62.7% gap over Busan. In contrast, the visitation rates to the remaining five regions are merely one-fourth of that of Seoul. These figures reflect the ongoing issues of insufficient tourism infrastructure, lack of promotion, and economic imbalance between regions.

What are the conditions required to expand this capital-centered tourism demand to a nationwide scale? To answer this, it is essential to examine the successful cases of regional tourism revitalization in countries such as Japan and derive applicable insights for South Korea.
 

Learning from Japan’s Regional Tourism Revitalizaton
Japan has strategically developed regional tourism to address the challenges of population decline and the concentration of people in the capital region, which has led to concerns about regional depopulation. The introduction of the DMO (Destination Management/Marketing Organization) registration system in 2015, led by the Japan Tourism Agency, played a significant role in establishing a structured foundation for revitalizing regional tourism. By centering tourism strategies around regional DMOs, promoting tourism, and fostering cooperative relationships among stakeholders, Japan was able to identify and manage regional tourism resources, creating specialized tourism cultures for each region.

Another noteworthy aspect of Japan’s tourism infrastructure is that it was designed with the consumer in mind. Starting in 2013, Japan expanded visa-exempt short-term stays for Southeast Asian countries, actively attracting foreign tourists with potential demand for visiting Japan. Additionally, in the 2000s, Japan constructed 22 international airports to improve accessibility to non-capital regions. For regional tourist destinations outside the major tourist hubs, Japan introduced shuttle bus services to regional airports and key train stations in major cities, as well as travel passes to reduce transportation costs, continuously encouraging visits from foreign tourists.

The core of Japan’s regional tourism lies in utilizing the unique tourism resources of each area to offer distinct tourism themes, from which related products and services are developed. For example, Hokkaido is branded as a destination for skiing and winter landscapes, capitalizing on its northern features, while Okinawa is known for its warm southern climate and emerald-colored seas, emphasizing marine sports tourism. Furthermore, Japan began developing wide-area tourism routes in 2015 to expand the regional distribution of inbound tourists, marking the start of a more thematic approach to regional tourism. This initiative helped meet the diverse experience demands of tourists and addressed regional imbalances.

Conditions for Revitalizing Regional Tourism in South Korea
South Korea, too, needs to offer region-specific experiences through systematic policies and public-private cooperation, generating nationwide tourism demand based on these efforts. To achieve this, it is essential to assess the current status of South Korea in terms of tourism governance, policies, infrastructure, tourism products, and services, evaluate its potential, and then set realistic goals to ensure continuous monitoring and execution.

1. Strengthening Tourism Governance
First and foremost, the government must elevate the tourism industry to a national strategic sector through the highest decision-making body, and encourage inter-regional cooperation centered around regional DMOs (Destination Management Organizations) and local governments. To facilitate this, the government should secure nationwide momentum through meetings chaired by the President, continuously reviewing tourism agendas to solidify tourism as a core industry. Moreover, regional DMOs must play a central role in fostering cooperation among local tourism stakeholders, acting as a bridge for collaboration between central and local governments. DMOs should establish and implement tourism policies tailored to regional characteristics and actively communicate the region’s needs to the government, ensuring ongoing dialogue.

2. Promoting Regional Linkage Tourism
From a policy perspective, the activation of regional linkage tourism should be a top priority. Currently, tourism in South Korea is concentrated in a few regions such as Seoul and Busan. To overcome the phenomenon of tourism demand being concentrated in certain areas, it is essential to develop regional tourism hubs across different zones. Drawing from the “Hub-and-Spoke” model, which is a regional tourism activation strategy where a strategically positioned hub city fosters the growth of surrounding smaller cities, South Korea can establish tourism hubs to encourage the development of neighboring areas, or spokes. Developing tourism hubs based on the unique resources of each region not only provides tourists with new experiences and expands their choices but also introduces previously overlooked attractive small towns. This can stimulate visitors’ interest and encourage repeat visits.

3. Improving Regional Transportation Infrastructure
From an infrastructure perspective, it is essential to provide convenient transportation options to regional areas throughout the entire journey of foreign tourists, starting from their arrival in the country. First, by revitalizing regional airports, the concentration of travelers at capital region airports should be alleviated, improving foreign tourists’ accessibility to regional areas. Additionally, there is a need for convenient transportation infrastructure to reduce the travel burden to regional tourist destinations. Introducing tourism passes and shuttle buses can help ease the mobility challenges faced by foreign tourists and encourage visits to regional areas.

4. Development of Region-Specific Tourism Products
Each region must establish unique themes based on its available tourism resources and develop corresponding tourism products and services. The key is to move beyond the tourism patterns centered on Seoul, Busan, and Jeju, and provide differentiated experiences for each region. To achieve this, the government and local governments must lay the foundation for tourism development, while private enterprises should establish collaborative frameworks to offer creative products and services.

Conclusion
Today, the tourism industry has evolved beyond a mere leisure activity to become a core strategy for revitalizing regional economies and achieving balanced development. As examined in this study, the increase in the number of tourists leads to various economic ripple effects, such as production inducement, value-added creation, and job expansion, and plays a crucial role in alleviating the economic concentration in the capital region.

However, to maximize these effects, tourism development strategies that reflect regional characteristics and continuous policy support are essential. As demonstrated by Japan’s experience, activating regional tourism requires the concurrent establishment of systematic governance, infrastructure improvements, and the development of region-specific tourism content. This approach enables the provision of unique and differentiated tourism experiences, which can help spread the flow of tourists from the capital region to all parts of the country.

South Korea must also actively pursue differentiated regional tourism strategies to strengthen its global tourism competitiveness. It is necessary to move beyond the tourism patterns centered around the capital region, disperse tourism demand nationwide, and expand the overall size of the tourism industry. For this to happen, public-private collaboration is crucial, with the government, businesses, and local communities working together to foster the tourism industry as a national growth engine.

Tourism offers a significant opportunity to revitalize regional economies and improve the quality of life for local residents. Through sustainable tourism development and innovative strategies, tourism can contribute to the overall economy of South Korea. Continued in-depth research and policy efforts are necessary to ensure that tourism plays a substantial role in the country’s economic growth. As South Korea stands at the threshold of becoming a global tourism powerhouse, we must turn the potential of the tourism industry into reality, with this study marking the starting point.