Caribbean Economic Development

CARIBBEAN ECONOMIC DEVELOPMENT ECON 3501

UNIT 9 –TOURISM INDUSTRY: STRATEGY FOR GROWTH AND

DEVELOPMENT

 

 

RESOURCE MATERIALS

 Levitt, Kari; Witter, Michael (1996). The Critical Tradition of Caribbean Political Economy: The Legacy of George Beckford. Kingston. Ian Randle Publishers

 Beckford; George (2000) Persistent Poverty; Underdevelopment in the Plantation Economies of the Third World. UWI Press.

 Todaro Michael & Smith Stephen; C. (2011) 11 th Ed. Economic Development. Pearson Education & Addison- Wesley

 Bhagwati Jagdish (2004). In Defence of Globalization, Oxford University Press

 Blackman; Courtney. (2005). The Practice of Economic Management: Caribbean Perspective Kingston: Ian Randle Publishers

 United Nations- UNDP, Human Development Report. World Bank- World Development Report

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TOURISM

 Tourism is a collection of activities, services and industries which deliver a travel experience comprising transportation, accommodation, eating and drinking establishments, retail shops, entertainment businesses and other hospitality services provided for individuals or groups traveling away from home.

 Tourism is different from travel.

 In order for tourism to happen, there must be a displacement: an individual has to travel, using any type of means of transportation (he might even travel on foot: nowadays, it is often the case for poorer societies, and happens even in more developed ones, and concerns pilgrims, hikers etc.).

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TOURISM

 Tourist – A visitor who travels to a country other than that in which he/she has his/her usual residence for at least one night but not more than one year, and whose main purpose of visit is other than the exercise of activity remunerated from within the country visited.

 Such a definition includes domestic tourists where an overnight stay is involved (Staycation) and domestic excursionists who visit an area for less than 24 hours and do not stay overnight

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TOURISM AND THE CARIBBEAN

 Considering the Caribbean tourism industry, it is well known that the Caribbean is one of the premier tourism destinations in the world.

 Changes in travel patterns, markets and traveller motivations have brought considerable growth and dramatic change to the region’s tourism sector.

 In particular, persistent turbulence in other economic sectors in the region (such as agriculture and manufacturing sectors) has served to enhance the relative importance of tourism as an economic development strategy.

 Therefore, Tourism is increasingly becoming crucial for the economic survival of local economies in most, if not all, islands in the region.

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TOURISM AND THE CARIBBEAN

 In 1970, the Caribbean region hosted around 4 million tourists, more than 30 years later this total reached some 17.1 million, achieving an estimated rate of increase of around 5% per annum.

 Caribbean tourism has weathered the storms of three recessions in the early 1970’s, 1980’s and 2000’s, the oil crisis, the gulf war and the September 11th terrorist attack.

 Tourism is the leading growth sector in most economies, as stagnation persisted in the traditional output and export sectors.

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TOURISM AND THE CARIBBEAN

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 The region has remained the premier cruise destination in the world, with its share of world cruise bed days averaging around 51 percent in the last decade.

 Since 1980, cruise passenger arrivals have grown at an average annual rate of 7% per annum, reaching a total of around 17.3 million in 2004.

 

 

TOURISM AND THE CARIBBEAN

 Tourism represents the biggest industry in the world. The consistent growth of tourists and tourism receipts over the decades since international travel became accessible to the general pubic, has convinced many developing nations that they can profit from tourism.

 Caribbean countries, such as Jamaica and Barbados, have a history of tourism development, and the region as a whole has seen much growth in the sector.

 Even with the global recession of the 1970s and early 1980s, tourist arrivals to the Caribbean rose 52.2% from 1978-1988. Islands that were not apart of this initial surge in tourism are eager to obtain their share of the spoils, and those who are old hands in the industry seek to maintain or surpass their share.

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TOURISM AND THE CARIBBEAN

 However, it is important that the Caribbean not take for granted their portion of the world’s tourists. In 1998, growth to Caribbean destinations was a slow 1.7%.

 In order to ensure continuing success in the tourism industry, islands of the Caribbean need to aggressively pursue a strategy of sustainable tourism development.

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TOURISM AND THE CARIBBEAN ECONOMIES

 The Caribbean is recognized as one of the most tourism dependent regions in the world. With the exception of Puerto Rico, Trinidad and Tobago and Haiti, the Caribbean islands are highly dependent on tourism as a source of foreign exchange.

 Tourism is the single largest earner of foreign exchange in 16 out of the 28 countries in the Caribbean. In 1999, Tourism and the Travel industry attracted 41% of all capital investment that entered the Caribbean.

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TOURISM AND THE CARIBBEAN ECONOMIES

 The great importance that tourism plays in the Caribbean economy is reflected in the number of people employed by and the income generated from the industry.

 It is estimated that the tourism industry directly and indirectly employs one in four people in the Caribbean and generates about $2 billion a year in income for the region.

 Caribbean tourism employs more than 2.1 million people directly and indirectly, with the figure rising in some of our countries to as much as 25 per cent of the workforce. This makes tourism the biggest employer after the public sector.

 However, many of these jobs are seasonal and very low-paid, while the money generated by internationally funded projects fails to reach locals. In fact, only 15 percent of the Chinese-funded Baha Mar construction project in the Bahamas found its way to local laborers.

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TOURISM AND THE CARIBBEAN ECONOMIES

 In land-based tourism, the total number of persons employed is often more than the total number of hotel rooms, leaving on average 1:3 employee room ratio.

 In Jamaica, for example, the industry directly employs more than 30,000 people and generates $1.2 billion per year in income.

 Due to tourism, most of the Caribbean islands economies are export- oriented, making their economies and their expenditures dependent on external consumers, which hold a relatively high share of the regional GDP.

 Visitor expenditure in Anguilla, for example, represented 74.77 % of its GDP in 1998.

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TOURISM AND THE CARIBBEAN ECONOMIES

• Likewise, an examination of statistics from the World Travel & Tourism Council (WTTC) reveals that many Caribbean states rely on tourism in much the same way.

• Using the WTTC formula for total economic impact of tourism: (direct impact of travel and tourism plus indirect economic impact of investment) for the year 2012, the over-reliance is staggering. Jamaica (27.4 percent of GDP), St Lucia (39 percent of GDP), Barbados (39.4 percent of GDP), The Bahamas (48.4 percent of GDP), and Antigua & Barbuda (77.4 percent of GDP) provide a good sample of the regional trend.

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TOURISM AND THE CARIBBEAN ECONOMIES

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TOURISM AND THE CARIBBEAN ECONOMIES

 The Caribbean share of world tourism arrivals is triple that of South America and Western Asia.

 Based on tourism receipts, Latin America and the Caribbean ranked eleventh in the world in 2000, and according to the Caribbean Tourism Organization (CTO) its 34 member states grossed US$19 billion from tourism.

 The Caribbean share of world tourism arrivals is 36.5% with growth rate of 9.3%. Cuba, Dominican Republic, and the Mexican Caribbean area have largely led growth.

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TOURISM AND THE CARIBBEAN ECONOMIES

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 Unlike other industries, the tourist industry products are consumed at the place of production.

 As a result, marketing and consumption of such products is largely based on the perception and wants of the tourist, which do not always reflect the realities and availabilities of the islands.

 To attract tourists, the images of the islands are transformed into “exotic” and relatively unspoiled lands with a slower pace of life, thus allowing for tourism in the Caribbean to be based on Sun, Sea, Sand and Sex.

 

 

TOURISM AND THE CARIBBEAN ECONOMIES

 Tourism is important to the economies of the Caribbean and has been one of the major economic development drivers providing investment, employment and foreign exchange earnings for most of the Members of the Caribbean Community.

 Furthermore, while most of our countries experience a deficit in trade in goods; this is offset by a surplus in trade in services, fueled mainly by receipts from tourism and travel-related activities.

 During 2008-2009, for example, the deficit in trade in goods averaged 3.1 billion Euros. In that same period, the surplus generated from tourism and travel related activities averaged 2.5 billion Euros.

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TOURISM AND THE CARIBBEAN ECONOMIES

 The World Travel and Tourism Council has predicted that by 2021, the direct contribution of travel and tourism to Caribbean GDP will be 16.4bn Euros; its wider economic impact will be 50.83 billion Euros; and its total contribution to employment is projected to be 2.76 million jobs.

 The industry is also forecasted to generate 27.17 billion Euros in export earnings with total investment in tourism reaching 6.o billion Euros or 12.5 per cent of total investment.

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TOURISM AND THE CARIBBEAN ECONOMIES

 The Caribbean tourism industry is the most important economic activity and principal foreign exchange earner for the region.

 It is an effective tool to fight poverty and should be harnessed to better the lives of the region’s poorer communities.

 But there is still a need to increase the awareness of the Caribbean people of the importance of this industry to the economic and social wellbeing of the region.

 Likewise, many Caribbean Governments have yet to recognize the industry’s importance and develop policies that foster its sustainable development.

 Economic Growth – Economic Development – Sustainable Development

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TOURISM AND THE CARIBBEAN ECONOMIES

 Tourism is the main foreign exchange earner for most of the region’s economies.

 The Caribbean earns around $8 billion annually from foreign visitors, amounting to nearly one-half of all its foreign exchange earnings.

 Eleven out of 17 countries for which data is available derive more than one-half of their foreign earnings from tourism.

 The main risk factors in tourism are environmental degradation, crime and tourist harassment (travel advisories), adverse media publicity with over-concentration in the US and western European markets and intensified competition in the industry worldwide as the relative cost of air travel continues to fall.

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COST OF TOURISM

Infrastructure Cost  Tourism development can cost the local government and local taxpayers a

great deal of money.

 Developers may want the government to improve the airport, roads and other infrastructure, and possibly to provide tax breaks and other financial advantages, which are costly activities for the government. https://www.gov.tc/pressoffice/98-public-notice-cruise-ships-exemption- from-statutory-provisions-order-2015

 Public resources spent on subsidized infrastructure or tax breaks may reduce government investment in other critical areas such as Education and Health.

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COST OF TOURISM

Increase in prices  Increasing demand for basic services and goods from tourists will often

cause price hikes that negatively affect local residents whose income does not increase proportionately.

 Tourism development and the related rise in real estate demand may dramatically increase building costs and land values.

 Not only does this make it more difficult for local people, especially in developing countries, to meet their basic daily needs, it can also result in a dominance by outsiders in land markets and in-migration that erodes economic opportunities for the locals, eventually disempowering residents.

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COST OF TOURISM

Economic dependence of the local community on tourism

 Diversification in an economy is a sign of health, however if a country or region becomes dependent for its economic survival upon one industry, it can put major stress upon this industry as well as the people involved to perform well. Many countries, especially developing countries with little ability to explore other resources, have embraced tourism as a way to boost the economy.

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COST OF TOURISM

Seasonal character of jobs

 The seasonal character of the tourism industry creates economic problems for destinations that are heavily dependent on it.

 Problems that seasonal workers face include job (and therefore income) insecurity, usually with no guarantee of employment from one season to the next, difficulties in getting training, employment-related medical benefits, and recognition of their experience, and unsatisfactory housing and working conditions.

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COST OF TOURISM

Pollution  Without viable policies that address the driving forces behind tourist

activities, the Caribbean islands will be unable to pursue a development agenda that meets the needs of the present population and does not compromise the ability of future generations to meet their own needs.

 Though the Caribbean’s environmental problems are not limited to land and coastal resources, the types of tourism pursued in most of the islands have primarily revolved around and affected their land and costal areas.

 In the case of the Caribbean, tourism development policies need to formulate a win-win scenario, where positive links between the environment and development are forged and which can eventually lead to environmental improvements and income growth, a more holistic form of development.

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TOURISM AND DEVELOPMENT

 Tourism has the capacity to play an enormous transformative role in our societies and our economies, creating new entrepreneurs in the industry as well as in other sectors. This requires human resource development through innovative education and training programmes. It also requires specific financial and other facilities to be developed to support the growth of new businesses.

 While tourism undoubtedly offers great opportunity, it is a highly competitive industry. Therefore, our entrepreneurs need to respond creatively not only to new and emerging tourist centers, but also to provide innovative products for traditional markets.

 Today, our countries are paying greater attention to strengthening linkages between tourism and other sectors of the economy, such as, Agriculture, Health, Education, Sports, Culture and the Natural Environment.

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TOURISM AND DEVELOPMENT

 For Caribbean tourism to become even more competitive, investments in the industry must be increased.

 We must continue to seek private sector local and foreign direct investments in the industry, including from our European partners. We must continue to seek, equally, to provide access to financing on reasonable terms for the industry.

 The public sector must continue to facilitate investments, marketing and other initiatives necessary for the survival, growth and expansion of the industry. It is only through continuous retooling, expansion , partners, to provide support for the industry.

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TOURISM AND DEVELOPMENT

 We need to find ways to support people who are involved directly or indirectly in the sector – be they Caribbean entrepreneurs or community-based groups –in order to enable them to take advantage of the opportunity to deliver new and exciting tourism-related services that will not only offer more choice to the consumer, but also ensure that local communities share more equitably in the wealth that tourism brings.

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TOURISM AND DEVELOPMENT

 Tourism in the Caribbean provides opportunity in many areas, including enhanced capacity to address unemployment, and rural poverty reduction, for example, through sport, culture and heritage tourism.

 There is also significant opportunity to be derived from downstream activities of time-specific events, such as Carnival and Jazz festivals, as well as cultural art forms, such as Reggae, Ripsaw (rake & scrape), Soca and the Steel Pan.

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TOURISM AND DEVELOPMENT

 The most important economic feature of activities related to the tourism sector is that they contribute to three high-priority goals of developing countries: the generation of income, employment, and foreign-exchange earnings.

 In this respect, the tourism sector can play an important role as a driving force of economic development. The impact this industry can have in the different stages of economic development depends on the specific characteristics of each country.

 Given the complexity of tourism consumption, its economic impact is felt widely in other production sectors, contributing in each case toward achieving the aims of accelerated development.

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TOURISM AND DEVELOPMENT

 A major difficulty in defining the boundaries of the tourism sector is to ascertain what investment costs should be ascribed to the development of tourism.

 Although not treated by international agencies as a “sector” in national accounting terms, tourism entails a collection of goods and services that are provided specifically for visitors and would not have been provided otherwise.

 Because of its interdependence with other sectors of the economy, it is difficult to analyze and plan for tourism. The lack of reliable statistical data hampers identification of the mechanisms by which tourism generates growth, as well as its potential for development.

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TOURISM AND DEVELOPMENT

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 Yet, in those instances where analysis has been carried out and research has preceded planning, tourism’s priority in competing for scarce investment funds has been established. In these cases, long-term programmes for tourism development have been designed.

 Nature and heritage tourism development has investment needs that differ, in certain respects, from traditional tourist hotel development.

 There may be a greater need to improve access to the attraction site or facility, and for a mode of development that does not interfere with a sensitive habitat or historic area.

 

 

TOURISM AND DEVELOPMENT

 Most of the Caribbean is struggling with problems associated with development, and these have been particularly exacerbated by the tourism industry.

 At the same time, however, international development agencies and experts argue that tourism will contribute to Caribbean development.

 The immediate need of Caribbean governments to generate foreign exchange, mainly through tourism, often leads to policies that compromise the environment, and which adversely affect the island populations, the supposed beneficiaries of these policies.

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TOURISM AND DEVELOPMENT

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 The islands are struggling with pollution to coastal waters, the loss of productive reef and sea grass ecosystems, excessive erosion and sedimentation, overexploitation of coastal resources, and a reduction in drinking water quality and quantity.

 These problems are largely due to development policies that concentrate on the short-term economic gains and ignore the role that the environment plays in attracting tourist to the islands.

 

 

NEXT UNIT…

 Creative Industry

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