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«Pro-Poor Tourism Poverty Alleviation Techniques of the 21st Century Jessica R. Linder Illinois State University Introduction & Research Questions ...»

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Critique: a worldwide student journal of politics

Pro-Poor Tourism

Poverty Alleviation Techniques of the

21st Century

Jessica R. Linder

Illinois State University

Introduction & Research Questions

Poverty reduction has been a topic of discussion in the global spotlight

for decades and has been looked at through many lenses. The

Sustainable Development Goals 2030 placed special emphasis on

poverty reduction and is a topic of extreme relevance in community

development. Many poverty reduction techniques exist including the widely researched and practiced efforts of microfinance, including microloans, microsavings, and financial literacy education. One highly understudied perspective for reducing poverty, however, has been tourism. Tourism has gained popularity around the world as a way of boosting a country’s economy. There has been a significant amount of research on the economics of tourism, and more recently, its sustainability as an industry, but little research has been conducted on its potential as a tool for development. This study will analyze tourism as a tool for development by posing the question, is tourism development an effective tool for poverty alleviation in destination communities? By examining the role of tourism in development and a new strategy called pro-poor tourism, this study seeks to answer that question. This will be followed by a quantitative analysis of tourism leakage and poverty reduction.

Tourism & Development Tourism is a word used often in everyday speech and study; however, it is also a term that can be difficult to define and has no single, widely used definition (Sharpley and Telfer 2015). Two types of definitions exist in the literature, factual definitions and theoretical definitions.

Fall 2014 Jafari (1977) strongly urges that a definition bridging the two categories be used to study tourism and proposes the following definition which

will be adopted in this study:

The study of man away from his usual habitat, of the industry which responds to his needs, and of the impacts that both he and the industry have on the host’s socio-cultural, economic, and physical environment. (quoted in Sharpley & Telfer 2015, 16) There are widely held beliefs, in both government and academia, that tourism is an effective driver of development, both economic and in terms of human development, and is seen as a way of achieving development within tourist destination areas (Sharpley and Telfer 2015). Yet, very little research exists to provide support for this belief.

Development, similarly, has been defined broadly in the literature. Overwhelmingly though, scholars agree that sustainable development has two main tenets. The first is that development “has an economic, a social, and an environmental dimension so that development will only be possible if a sound balance is made between the different components that contribute to the general function of natural environments”; this definition contains the same three dimensions as the definition of tourism. The second tenet of sustainable development is that an obligation exists for the current generation “to leave sufficient social, environmental, and economic resources” for future generations to enjoy (Creaco and Querini 2003, 3). This two-tenet definition of sustainable development will be used for the purpose of this study.

In the 1950s, tourism became involved in the creation of development strategy influenced by modernization theory, the popular development theory of the time (Scheyvens 2013, 119). It was from this perspective that tourism became widely understood as a tool for economic development, a strategy that would later be adapted by many underdeveloped countries. In the 1970s and 1980s, social scientists began to question this rhetoric using the newly popularized theory of 40 Critique: a worldwide student journal of politics dependency. This field of scholars criticized tourism for being “an industry dominated by large corporations which exploit the labor and resources of developing countries, cause environmental degradation, commodify traditional cultures, and lead to social disharmony” (Britton 1982; Scheyvens 2013, 119). Lea (1988) wrote similarly about three primary elements of international tourism saying that there are large companies acting as intermediaries who have control over the global tourism markets, that it creates power imbalances between the First and Third World, and that the Third World finds it very difficult to cut out these intermediary companies (5). Tourism development can come in many shapes and sizes and is often adapted to fit the needs of the economy and/or country in question. The ability to create new economic activity has led many countries to treat tourism development as a main instrument in regional development (Creaco and Querini 2003, 1).

Sustainable development has looked to mainstream destinations first for many years leaving the poor south “at the edge of the picture” and their stories untold, as is true in so many sub-fields of development (Ashley and Roe 2002, 62). Several types of tourism development have emerged keeping the host community in mind.

Ecotourism has a strong focus on the environmental aspect of development and keeps the local people in mind. Community-based tourism initiatives seek to involve local people in the tourism sector and can be used as one strategy of pro-poor tourism (62). Other types of tourism development evolve country specific contexts; for example, ‘empo-tourism’ is a type of development that works to combine tourism with the empowerment of disadvantaged populations in South Africa (63).

Tourism also develops differently in rural environments than it does in urban ones. In all contexts, Marcouiller et al. (2004) said that “there must be a minimum level of economic infrastructure in place in order to capture economic flows”, and some scholars are skeptical of the impact tourism has on poverty alleviation (quoted in Deller 2010, 181). One study looked to tourism in rural America which found that 41 Fall 2014 tourism and recreation activities “tend not to influence changes in the poverty rate (201). Another study by Blake et al. (2008) similarly concluded that “there is little economy-wide research evidence to suggest that tourism does reduce poverty (Blake et al 2008, 108).

Looking to the current literature, it seems that the concept of tourism leakage may hold some of the explanations to results such as these.

Leakage is a concept relevant to many trans-national industries and is an estimate of the amount of revenue generated by an industry that is leaving the local economy, often in the hands of large corporations. Tourism leakage in its most functional form is the revenue from tourism less the retained revenue (Choudhury and Goswami 2013, 70).

Tourism Leakage = Tourism Revenue - Retained Revenue

Retained revenue is the net tourism revenue to the area which is spent only on “local food, items, service, and employment” (Choudhury and Goswami 2013, 70). Tourism leakage has been defined in two different ways, each by a large set of scholars. The first group looks at leakage on an international scale and includes money tourists spend on an international level for services such as airfare and travel agents. The second group accounts for leakage at a local level only including money spent in the country in the leakage calculation (68). Mitchell and Ashley (2007) argues that leakage calculations are often exaggerated and do not accurately represent the situation within the host economy, because they include money that was spent outside of the country and fail to include ‘out of pocket’ spending in the destination.

Sindiga (1999) suggested disaggregating the tourism data by sub-sector to get a more accurate picture of spending and leakage citing that, for example, leakage in the beach tourism sector is much higher than the safari sector (Sharpley and Telfer 2015). Ecotourism is the sub-sector of tourism that has the lowest levels of leakage putting emphasis on the local economy. Khan (1997) says that ecotourism cannot completely break the dependent core-periphery relationships 42 Critique: a worldwide student journal of politics present in dependency theory views, but it can “help the Third World be more self-reliant” (990). Choudhury and Goswami (2013) carefully studied a small area and found that just over 50 percent of revenue to the area of study was lost to leakage, which is much lower than the estimates that rise as high as 70 percent leakage rates for developing countries (Khan, 1997). 50 percent leakage, however, is still a concerning number. Their study also recommended focusing on local level strategy to increase the economic impacts of tourism and mitigate leakage.

Pro-Poor Tourism Theories

Development has three main, widely-accepted, parts to it:

environmental, economic, and social. In the 1990s, tourism’s role in the economic part of development began to emerge in the form of a poverty alleviation strategy called pro-poor tourism (Laws 2009, 144).

The term was first used in the literature in 1999, even though the World Bank and UNDP publicly supported the approach as early as 1990 quickly followed by the Organization for Economic Cooperation and Development (OECD) (Scheyvens 2013, 121).

According to the Pro-Poor Tourism Partnership, pro-poor tourism put “poverty at the heart of the tourism agenda” (UK Department for International Development quoted in Nevin 2007, 52). Kakwani and Pernia (2000) more specifically define pro-poor tourism as “tourism projects that ‘enable the poor to actively participate in and significantly benefit from economic activity’” (Laws 2009, 143). Ashley and Roe (2001) say that pro-poor “interventions aim to increase the net benefits for the poor from tourism, and ensure that tourism growth contributes to poverty reduction....” (xiii). They also say that there are three main strategies for using pro-poor tourism: “increasing access of poor to economic benefits, addressing the negative social and environmental impacts often associated with tourism” and overlapping the two by “focusing on policies, processes and partnerships” (Ashley and Roe 2002, 62). Pro-poor tourism stresses that it is an approach to tourism development rather than a sub-sector; “any kind of tourism can be 43 Fall 2014 made pro-poor” and it can be used and applied at any level in any destination or business (Scheyvens 2013, 125).

Pro-poor tourism can be administered both directly and indirectly. The Overseas Development Institute says that pro-poor tourism should be applied on both the micro and macro level of development. They suggest doing this by including larger private sector tourism businesses in pro-poor tourism in addition to focusing on small enterprises by encouraging them to buy local products and hire local people and service providers (Nevin 2007, 52). Developers in this camp of pro-poor tourism want to keep pro-poor tourism from becoming a niche market by making it a mainstream business approach (Ashley and Ashton 2006, 3; Scheyvens 2013, 125). Pro-poor tourism can also happen indirectly when tourism causes gains in overall economic growth and they are “redistributed to the poor via progressive taxation and targeted government spending” (Laws 2009, 144).

Academics have been debating the effects of pro-poor tourism for multiple decades now. Jiang et al. (2011, 1183) found convincing evidence in their study that gross domestic product (GDP) per capita increases as tourism intensity increases. They also found evidence the small island developing states who have higher intensity tourism industries also show less poverty on average. Ashley and Roe (2002,

68) concluded after their research that earnings for the poor do go up small but significant amounts due to pro-poor tourism, but more importantly they cited the finding that pro-poor tourism decreases vulnerability. Research seems to suggest that pro-poor tourism “can play a significant role in livelihood security and poverty reduction” at the local level (Ashley and Roe 2002, 78).

While pro-poor tourism has garnered much attention and been widely used, there are still a fair amount of critics with solid ground on which to stand. There has been little evidence on an economy-wide level suggesting or proving that tourism does reduce poverty; there are also few studies that have been able to quantify interactions between poverty and tourism in any significant way (Ashley and Roe 2002;

44 Critique: a worldwide student journal of politics Blake et al. 2008, 107). Furthermore, Blake et al. (2008, 108) found that some of the tourism receipts in the developing countries utilizing tourism are being spent on imports or paid in wages to foreigners, all of which is money that is considered leakage and has no impact on poverty relief. Scheyvens (2013, 137) acknowledges that “tourism definitely can benefit the poor” but called for further questioning and research to strengthen claims made about the approach. Chok et al.

(2007, 51) points out the pro-poor tourism advocates need to be more realistic when discussing the types of trade-offs required to create tourism that benefits the poor.

Methodology This study will look at two OLS regressions of secondary data for Latin America to supplement the literature review on pro-poor tourism strategies provided above. The first study will look at the relationship between tourism leakage and tourism’s share of GDP of the economy.

The goal of this will be to determine if a growing tourism sector means more money staying in the local economy or leaving it, possibly in the hands of larger companies.

Unfortunately, tourism leakage is extremely hard to measure, so rather than attempting to measure it directly, this study will draw a correlation between the amount of money leaving the economy and tourism. To do this, a ratio of gross national income (GNI), formerly known as gross national product (GNP), to gross domestic product (GDP) will function as the dependent variable. Since GNI is a measure of production by nationals and GDP is a measure of total production within the country, the ratio will communicate whether more money is staying in the country with the locals or is potentially leaving the economy through foreign companies. The higher the GNI/GDP ratio, the more money is staying in the economy with the locals.

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