ABSTRACT
This chapter considers the contribution of recreation, leisure and tourism at the international level to a country’s balance of payments. The balance of payments records export earnings and import expenditure. Exchange rates are an important part of the picture. The exchange rate of a country’s currency is inextricably linked with the balance of payments. Changes in a country’s balance of payments may cause changes in the demand and supply for its currency and thus movements in its exchange rate. These currency movements may subsequently cause changes in the patterns of exports and imports which can cause feedback to the balance of payments. The balance of payments is also one of the key macroeconomic variables which government policy makers monitor closely. If the balance of payments should move into an unsustainable deficit, government policy would be changed to address the problem, causing repercussions throughout the rest of the economy. This chapter enables the reader to:
understand the arguments for free trade, the role of the WTO and General Agreement on Trade in Services (GATS)
understand the balance of payments accounts
analyse the contribution of the sector to net export earnings
describe and explain comparative data for balance of payments accounts
understand the significance of exchange rates to recreation, leisure and tourism organizations
distinguish between spot and forward rates of exchange
analyse exchange rate movements
understand government and EC policy in trade and international payments.
