– to promote their selves. This study analyses more

–       AbstractTourism nowadays has become a strong industry which directlyaffects the development and the wellbeing of a country. The impact of tourismis not measured only by visitor export and total spending but also from theopportunities that this industry offers inside the country. Apart of being oneof the strongest sources of income tourism also increases employment,diversifies the economy and helps countries to promote their selves. This studyanalyses more closely of how tourism affects economic stability of Spain,Albania, Montenegro and Italy. The variables analyzed are GDP, Visitor export,Capital investment etc..

. The period of the time when the analysis’s isconducted is from year 1990 till 2016.The result of the analysis is thatcountries with small economic capacity and limited options of developing manyindustries, also with low development of tourism background are directlyaffected from tourism income in generating income. From the study Montenegroand Albania are the two countries in which their economic development isaffected directly and mostly by tourism.-       Introduction     Tourism nowadays has become a strong industry which directlyaffects the development and the wellbeing of a country .The contribution oftourism can be direct contribution and indirect to sales, profits, employment,tax revenues, and Human income.

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Direct effects it is seen within majorenterprises, hotels, restaurants, transportation, entertainment and retail.Indirect effects for business include the supply of all goods and services thatare related to tourism. This means that, through indirect effects, tourismaffects sectors and the rest of the economy (Johnson,P & Thomas,B, 1992).Tourism is a major economic activity and leading to Albania’s economic development.Compared to other years revenues it increased approximately 25 times. This canbe achieved from the revenue from parking, tourist taxes, and entrances tobuildings, selling information etc. Large income achieved through art andculture.

Tourism is often defined as a meeting between different cultures.Tourists come with their habits and local residents indicate the difference.According to (Hjalager, 2006), cultural diversity expands the range of optionsopen to everyone, but is the roots of development, understood not simply interms of economic growth, but also as a tool to achieve an intellectualpleasure, emotional, and moral existence spiritual. 2 Development is “amulti-dimensional process that involves changes major social fabric, popular attitudes,and national institutions, as well accelerate economic growth, reduceinequalities and poverty abdication Infrastructure: The development of tourismoften leads to the construction of new infrastructures. In most cases, isassociated with the transport, building highways, which make travel faster andmore comfortable, but also enables the connection between the cities with therest of the country. Tourism has also affected the frequency of lines bus,shipping lines and airlines (Gartner.W, 1996).

Although in economic terms, itis desirable to have as many tourists as possible; cities are not alwayswilling to accommodate ten times more visitors per day as local residentsduring the summer. Major tourist flows and profit big tourist cities often leadto arising real estate prices, and possibly the creation by the populationspoor feelings of anger towards tourists.  –       Literaturereview 2.1. Definition and conception of tourism Tourism is thepractice or the action taken by those traveling or visiting places ofentertainment purpose and knowledge (Gartner.W, 1996).

To meet the needs anddesires of tourists (tourism demand) according to the purpose of their tripincluded many roles (businesses, public or private offering products andtourism services, hotels, restaurants, sectors can rattle off support, etc.)which in itself constitute tourism industry. So it is seen that any economicactivity of public and private sector work for tourism and tourist serve as asource of income. 2.

2. Tourism is an industry Essentially it includes allactivities and businesses that form the basis of a country’s economy. On theother hand, tourism is the industry because its development it is involved inmany sectors of the economy such as infrastructure, agriculture, services etc.Traditionally, tourism is referred to as an industry that includes:attractions, restaurants, accommodation and transport. However there are othernon-tourism activities of businesses such as bakery, local newspapers,supermarket, and food markets etc.

The activities that form the basis of theeconomy are also participating in this industry (Trehan, 2007). 11 2.3.

Tourism is an economy Tourism can also be called andeconomic sector with the fastest growth, as income from foreign tourist’sflows, and it create jobs(Ashley, 2007).Tourism also provides the basis onwhich communities can regain their pride in heritage as well as quality oflife(Hjalager, 2006).Craftsmanship of traditional handicrafts, ethnic culture,historical rituals, celebrations national events etc., are some examples of”attractions” that are recognized between the interests of tourists.Then challenges remain in developing these elements which are the basis forsecuring, raising an acceptable level of tourists and the core of tourismdevelopment.

2.4. Importance of tourism With the onset of the newmillennium, tourism is becoming a primary industry for its importance in manycountries( Ritchie,B. ,Burns, P., Palmer,C , 2005).Formation of the concept oftourism as an industry, economic sector, or activity is very important infinding new ways for the tourism development process and economy so long aspossible. Especially rural communities, often consider tourism as a substantialpart of their economic, but current challenges facing quite significant –       Methodology  As stated in theintroduction, the thesis is divided in two main parts. The first part of thethesis it is focused on qualitative analyses as well as giving descriptivegraphical situation of tourism impact on economic stability.

A comparisonbetween Albania, Montenegro, and Spain is made chosen purposely to bedeveloping and developed countries. The graphic analyses consist in thecomparison of these countries in six variables which are GDP, Export ofvisitor, Employment, Capital Investment, Leisure Travel and Internal Travel.The time period chosen for conduction of this comparison starts at 1990 till2016 and the data’s are taken on annually base. The graphic analysis aims toshow the trends of tourism of these six variables for developing countries suchas Albania and Montenegro and for the developed countries such as Spain andItaly. The selection of the countries was made based on their touristicposition and historic and their geographical position which is nears eachother. The second part of the analysis consists in the conduction of a simpleVAR analysis to prove the main objective which is that tourism has an impact oneconomic stability of these four countries mentioned above.

After selection ofvariables and selection of the data from KNOEMA website there was run aregression for developing and developed countries. The variables chosen for VARanalysis are: -GDP: Gross Domestic Product). 21 -Export ofvisitors: (Spending within the country by international tourists for bothbusiness and leisure trips, including transportation spending). -Capital investment: Capital investment refers to fundsinvested in a firm or enterprise for the purposes of furthering its businessobjectives.

 -Consumer PriceIndex: (Consumer price index (CPI) measures changes in the price level of amarket basket of consumer goods and services purchased by households). -Employment on tourism –       Conclusion    The mainobjective of this thesis is to identify the impact of tourism on economicstability. Through a literature review, descriptive and graphical analyses andthrough a simple VAR analysis, this study answers this question in twoperspectives: From graphic analysis: Making comparison between four countriesSpain, Italy, Albania and Montenegro and for the five factors taken into toanalysis should be concluded that regarding: a) Visitor export where in ageneral summary seems to have higher trend in all the countries in the firstdecade that is being analyzing.

The country with higher trend negative andpositive remains Albania and where is clearly seen that there are higher trendof visitor export in developing countries rather than in developed ones. b)Total contribution of tourism on GDP where for the last five years we can saythat countries that dominate are Montenegro and Albania which year by year aretrying to increase tourism sector. At contrary for Spain and Italy for the lastfive years tourism has been a sector with less significant trend in totalcontribution to GDP. c) Regarding total contribution of tourism on employmentAlbania is the country with the highest positive and negative increase ingrowth of tourism direct and total contribution to employment. This means thatfor developing countries tourism plays an important role regarding employmentgrowth rate. 35 d) The decreasing trend of leisure travel has decreased throughyears. After the first decade none of these countries have had a significantincrease in leisure traveling and tourism spending inside the countries. Thisis a negative trend which can vary from many factors.

The most importantfactors which caused these low increases of leisure travel are related toeconomic difficulties which most of European and broader countries havesuffered. e) Taking into consideration only the last five years it is seen thatdeveloped country such as Spain has not had an increase in internal travelingwhile Italy and Montenegro (developing) seems to maintain an average increase.As in other factors of tourism Albania (developing) still seems to have thehighest increase in percentage also for internal traveling also for the lastyears and there is a trend of growing year after year. f) According to thisgraphic the most notable capital investment real growth is for Albania for thefirst decade and there is also very obviously seen a decrease of real growthfor all the countries in the second decade.

Albania and Montenegro are the onlycountries which still have an increase for the last three years in whichMontenegro seems to have the highest rate. The factors after this increase arerelated with the expansion of these two countries with tourism. The results ofa simple VAR analysis which can be concluded that countries with small economiccapacity and limited options of developing many industries, also with lowdevelopment of tourism background are directly affected from tourism ingenerating income. This was proved through VAR analysis in which visitor exporthas significant effect on developing countries but the effect was shown afterthe third year.

While for developed countries visitor export had no significanteffect.