Tourism Revives Stagnant Regional Economies

“A 1% Increase in Tourists Boosts Regional GDP by 0.11%”

Tourism: A Key Driver of Regional Economic Revitalization, According to New Report

A new report has proven that tourism is not merely a leisure activity but a powerful catalyst for revitalizing local economies. On February 25th, Yanolja Research released a report titled “Revitalizing Local Economies through Activation of Regional Tourism” highlighting tourism as a crucial strategy for boosting regional economic growth and addressing the looming threat of rural depopulation. The report offers quantitative analysis at the municipal level and examines successful cases of regional tourism revitalization in Japan, demonstrating that tourism is a real economic engine for local communities.

According to the report, the increase in tourist numbers has an immediate and significant impact on local economies. A study of 31 municipalities that experienced an influx of tourists between 2019 and 2023 revealed that the production-induced effect of this influx ranged from 60 billion KRW to 700 billion KRW, with employment generation effects reaching as high as 8,000 jobs.

Notably, Yangyang County in Gangwon Province emerged as a "game-changer" in its local economy, driven by a rise in tourism. The county saw a production-induced effect of approximately 317.8 billion KRW, value-added effects of around 135.4 billion KRW, and an employment creation effect of 3,362 jobs. Considering that Yangyang's Gross Regional Domestic Product (GRDP) was only 986 billion KRW in 2019, this shows that tourism has generated nearly half of the county’s economic value. With an increase in tourism, the accommodation and food industries thrived, boosting service-sector employment and revitalizing local businesses. The report emphasizes that a 1% increase in tourists leads to a 0.11% increase in GRDP and a 0.15% rise in service sector employment, underscoring that tourism is a practical solution to alleviate the concentration of economic activity in the Seoul metropolitan area and revitalize local economies.

[The Economic Impact of tourism in Yangyang County]

Japan's Experience: Leveraging Tourism for Regional Balance

In Japan, tourism was adopted as a major strategy to overcome economic stagnation in the 1990s. In 2015, the Japanese government introduced the Destination Management Organization (DMO) system, promoting region-specific tourism strategies that helped shift tourism demand away from Tokyo to the regions. By developing unique tourism content, revitalizing regional airports, and expanding visa-free entry policies, Hokkaido became a winter tourism hub, while Okinawa developed into a center for marine sports. These efforts successfully increased tourism to regional areas, with visits to major cities rising by more than 30%, making it a celebrated example of balanced regional development.

Shifting Focus from the Capital Region to Local Areas

In contrast, South Korea remains heavily dependent on the Seoul-centered tourism structure. In 2023, more than 80% of foreign tourists visited Seoul, leaving regional cities far behind, with a significant 62.7% gap between Seoul and Busan. Regional areas continue to face challenges in attracting tourists due to infrastructure deficiencies and limited marketing efforts. However, given the global popularity of K-content and abundant regional resources, activating regional tourism is an opportunity South Korea cannot afford to miss.

Lee Kwanyoung, Associate Researcher at Yanolja Research, commented, “Just like Japan, South Korea should establish regional themes and strengthen inter-local government cooperation through the DMO system. By enhancing accessibility through the revitalization of regional airports and developing tourism packages, tourists will spread beyond the capital area and explore destinations nationwide.”

The report further underscores that tourism is not only a tool for economic revitalization but also a sustainable solution to the challenges of population aging and regional depopulation. To fully harness the potential of tourism, the government must elevate the sector to a core national industry. It is also essential to foster public-private partnerships to improve transportation infrastructure and develop regionally specialized content, ensuring the long-term success of local economies.