Final answer:
Inbound foreign tourism acts as an invisible export because it generates income for a country through the spending of foreign currency by tourists, akin to income from exports without the physical movement of goods. However, management and profit distribution within the tourism sector determine its overall impact on local economies.
Step-by-step explanation:
Indeed, inbound foreign tourism does act as an invisible export. In economic terms, exports are usually goods and services sold to outside countries. In the case of tourism, although nothing tangible leaves the country, the influx of tourists results in foreign currency being spent on services such as hotels, transportation, and entertainment. Hence, it contributes to the country's income just like traditional exports would.
When tourists from the U.S. travel overseas, they spend money in foreign economies. This represents a flow of income from the U.S. to the visited country. The money spent by tourists can be seen as equivalent to that country exporting goods to the U.S., without the physical movement of merchandise. However, the overall impact on local economies varies, depending on how well the tourism industry is managed and where the profits from tourism are concentrated.
For example, while tourism in Australia contributes significantly to the country's income, it's also essential to ensure that this income benefits the local communities and doesn't just flow back to foreign investors or stays in the hands of a wealthy elite. The issue of 'multiplier leakage', where profits leave the area, can undermine the potential benefits of tourism for local economies.