Case study of a national tourist industry

Vietnam is located in south east Asia. It has land borders with China, Laos and Cambodia. The capital of Vietnam is Hanoi, but its principal city is Ho Chi Mich City (formerly Saigon). Vietnam is the 13th most populated country in the world with over 90 million citizens. In 2008 its GDP was $241 billion and its GDP per capita of $2,800. It is one of the fastest growing economies in the world with growth exceeding 6% in 2008.

Vietnam has had quite a turbulent history. Vietnam officially declared independence from France in 1945, but the French influence in the country lasted until 1954. In the same year, South and North Vietnam divided. The north was led by Ho Chi Minh and backed by China, the south was backed by the US. War broke out between the north and south in the 1960's. American involvement escalated during the war, ending with their departure in 1973. The south was then defeated in 1975 and the country has been united under communist rule ever since.

Despite its rapid growth, the majority of Vietnamese still work in the primary sector (55.6%). The main crops in Vietnam are rice, coffee, soybeans, peppercorns, rubber, fruits and cashew nuts. Despite the primary sector being an important employer, the secondary sector generates the most income (nearly 43%). Vietnam has become an important offshoring location because of its cheap labour and growing market.

However, as tourism grows the service sector is going to see a growth in terms of employment and income.
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As the graph below shows, Vietnam has seen a massive increase in international tourists, peaking at nearly 4.5 million in 2008. The are many reasons for this increase in tourism, but some of the main reasons include:
  • Improved transportation (especially air travel, which is the main way most tourists arrive - see pie chart below)
  • Deregulation. Vietnam still has a Communist system, but the ruling party has allowed greater private ownership.
  • Relaxed immigration. Visas are still required, but these are now a lot easy to obtain.
  • Better image. The war has been finished over 30 years and now tourists are saying much better things about Vietnam.
  • Better advertising at home and abroad.
  • Investment in hotels and restaurants
  • Exchange rate (once you are in Vietnam it is still a relatively cheap place to visit).
  • Excellent human and physical attractions (see below)
  • Saturation of neighbouring countries like Thailand and Malaysia.
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Vietnam sees tourism boom - BBC article



  • Hoi An: a beautiful town situated on the mouth of the Thu Bon River. It has Dutch, French, Japanese, Vietnamese and Chinese influences and has been designated a UNESCO world heritage site.
  • Hue Citadel: Built in the early 19th Century the citadel was damaged during the war, but is being rebuilt and can be visited by tourists. It too has also been designated a UNESCO world heritage site.
  • My Son: The old Cham capital is located in Central Vietnam. It was damaged during the Vietnam war but has been designate a UNESCO world heritage site and is been rebuilt and protected.
  • Cu Chi Tunnels: Used during the Vietnam war by the Vietcong, these tunnels along with others up and down the country can be visited by tourists.
  • Con Dao Prison: Used by the French and the Vietnamese, this once notorious prison has now been turned into a museum. It is situated on the beautiful and remote Con Dao Islands.
  • Ho Chi Minh Mausoleum: Like Lenin and Mao, Ho Chi Minh was embalmed after his death. You can now visit his embalmed body in Hanoi.
  • Temples: A number of religions are practiced in Vietnam including Catholicism, Buddhism and the unique Caodaism. Each religion has its unique temples which can be visited. e.g. Temple of Literature and Cao Dai Temple.
  • Food: Vietnam has fantastic food e.g. Pho and Spring Rolls. Tourist visit to try the food and learn how to cook it.
  • Halong Bay: Thousands of limestone karsts situated off the coast of North Vietnam in the South China Sea. Halong Bay has been designated a UNESCO world heritage site.
  • Phu Quoc Island: A beautiful island off the south coast, this has become one of Vietnam's premier tourist destinations.
  • Mekong Delta: Formed at the mouth of mighty Mekong River, this depositional landform has become a popular tourist destination with people wanting view the deltas traditional way of life.
  • Central Highlands: The heart of Vietnam's coffee industry, the central highlands also has stunning scenery and beautiful waterfalls.
  • Fransipan. This is Vietnam's tallest mountain and found in the north of the country. The surrounding area has both beautiful scenery and unique tribes, both of which tourists enjoy to visit.
  • Lang Co Beach: A beautiful spit in Central Vietnam that has a peaceful lagoon behind it.
  • Mui Ne: Probably Vietnam's most popular beach destination, the area also has impressive sand dunes and is popular with kite surfers.
  • Whale Island: Near central Vietnam, Whale Island has become an exclusive beach retreat which is great for diving.
  • Wildlife: Vietnam has incredibly diverse animals, ranging from primates, to large mammals, to reptiles and amphibians e.g. tigers, elephants and dugongs.
UNESCO: The United Nations Educational, Scientific and Cultural Organisation was established on 16 November 1945. Its purpose is to promote peace and security by promoting international collaboration on science, education and culture. One thing that it does do is designate and places that have scientific or cultural significance. In 2010 there were 915 designated sites around the world.

Honeypot location: A destination that attracts a large number of visitors. Hoi An has become a honeypot location. This brings both benefits in terms of jobs and income, but can create inflation and overcrowding.

Hoi An
Hoi An

Ho Chi Minh Mausoleum
Ho Chi Minh Mausoleum

Halong Bay
Halong Bay




  • It is estimated that the tourism sector employs about 250,000 directly and 500,000 indirectly.
  • In 2006 the tourism industry generated $2.4 billion (3.9%) of GDP. This figure was up from 1.2 billion in 2000.
  • Transport upgrade. Ton Son Nhat airport in Ho Chi Minh City and Noi Bai airport in Hanoi have both been rebuilt.
  • Increase in air routes. As well as the state owned airline, Vietnam Airlines other international airlines like, United Airlines, Lufthansa and Air France fly to Vietnam.
  • The Reunification Express (trainline) is also been upgraded along with Highway 1 running the length of the country.
  • Economic leakage. Many tourist developments e.g. Sheraton and Hyatt Hotels are partly owned by foreign companies. This means that some profits leak overseas and are not reinvested in Vietnam.
  • Inflation. The increased demand created by tourist can create rapid inflation. The value of land can go up, along with transport and even food.
  • Small businesses find it hard to compete with large TNCs, often causing local businesses to go out of business and increasing economic leakage.
  • Pressure on services. New resorts, restaurants, golf courses, etc. can put a huge strain on the local infrastructure. This can cause congestion, black-outs. etc.
  • Seasonal employment. Like El Salvador, Vietnam has a dry and wet season. Many tourist choose to visit in the dry season, meaning that many people lose their jobs during the wet season.


  • Important cultural locations like Hue Citadel, My Son and the Temple of Literature are being afforded greater protection as more tourists visit.
  • Some minority cultures are being promoted e.g. Cham and M'Nong. It is possible to visit their villages, sample their food, by their crafts and even try and learn their languages.
  • Tourism is encouraging greater entrepreneurship and improving language skills e.g. tour guides and taxi drivers.
  • New services are built and developed which benefits tourist and local residents alike e.g. golf courses (Song Be) and hospitals (FV Hospital)
  • Money is spent on improving and building museums which protect cultural heritage e.g. War Remnants Museum and Ethnology Museum.
  • Infrastructure improvement like new roads, new water treatment facilities, new electricity plants can be used by tourists and residents alike.
  • A big worry in many developing tourist destinations is the growth of sex tourism, especially amongst the recruitment of young boys and girls.
  • Sometimes the tourist industry can outgrow safety regulations and accidents can happen such as the tourist deaths in Halong Bay with the sinking of a tourist boat.
  • Privatisation of land. As tourist resorts are built, beaches and forested areas become privatised reducing access to local residents.
  • Rapid economic development can lead to a polarisation of citizens economic status. The economic divide can cause an increase in crime e.g. bag snatching.
  • Westernisation. The arrival of tourists can cause a decline in local cultures e.g. loss of language, food and clothes.
  • Rural-urban migration. People can be drawn towards areas where investment and growth is taking place. This can lead to core and periphery areas and also rural depopulation.


  • Greater protection of the environment. Vietnam is considered a country of biodiversity. It has leopards, elephants, tigers and even the highly endangered Javan Rhino. With tourist interest new national parks are being created e.g. Cat Tien National Park and being protected more.
  • Demining. The growth of tourism has seen areas be demined making areas safer for tourists and local residents alike. One demining charity operating in Vietnam is MAG.
  • Nearly 80% of international tourists visiting arrive by air. This is going to cause an increase air pollution and contribute to global warming.
  • Tourist development can often lead to deforestation and damage to sand dune systems. Vietnam has seen massive growth along the coast near Mui Ne and Hoi An.
  • Pollution. An increase in hotels and tourist facilities can cause water, air, noise, visual and water pollution


  • The government is seeing an improvement in its international standing. Vietnam has recently hosted the APEC summit and became a member of the WTO in 2007.
  • The government will see an increase in tax revenue and a reduction in unemployment.
  • As more Vietnamese are exposed to Western influences and ideas there might be a greater call for political reform. Vietnam currently has a one party system.
  • The government will have to balance growth with inflation and attempt to ensure that infrastructure developments keep up with growth.
Vietnam Airlines looks to expansion - BBC News

Vietnam Plans New Rail Link - BBC article

Gary Glitter arrested in Vietnam - BBC article

Vietnam inflation rate hits 13.9% - BBC article

Vietnam tourist boat sinking kills 12 in Halong Bay - BBC article

FDI: Foreign direct investment is money spent in a country by a foreign company or country. Countries try and attract FDI by setting up enterprise zones, low tax rates, relaxed planning, etc.

Economic leakage: Money that is generated in a country, but then leaves the country. This normally happens when there are a large number of TNCs, removing money and sending it back to their home country.

Infrastructure: A country's or business's basic underlying structure and framework e.g. the buildings, transport and electricity and water supply.