The Economic and Ethical implications of Pro-Poor Tourism.

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The Economic and Ethical implications of Pro-Poor Tourism.

Author: Matteo Natalucci 

Date: 20/01/2016

Pro-poor tourism (PPT) is not a specific sector of tourism, but rather an approach aimed at increasing the net benefits for the poor (ODI, 2001). In particular, PPT strategies focus on relative re-distribution of the benefits arising from the tourist industry and unlocking opportunities for the poor (Ashley et Al., 2001). As a matter of fact, tourism is a significant global economic sector accounting for about 9% of the world’s GDP and employing hundreds of millions of people worldwide  (UNWTO, 2012). Specifically, the tourism industry has been growing at 7−12% per year in most developing countries in the last five years (ODI, 2007). Also, tourism constitutes a substantial source of foreign exchange earnings and government revenues for low-income countries. Indeed, tourism has been included in the Poverty Reduction Strategies of more than 80% of low-income countries (ODI, 2007). However, the benefits of international tourism for populations living in LDCs remain at least debatable (Brown and Hall, 2008). The paper will critically discuss the economic and ethical implications of pro pour tourism by presenting both the Modernization and Dependency Theory interpretation of the PPT phenomenon. Also, the essay will combine qualitative and quantitative data to support the theoretical framework arguments. Overall, the paper will support the Dependency Theory position arguing that pro-poor tourism is not yet an effective poverty alleviation and development tool for the Global South.

In order to assess the effectiveness of pro-poor tourism, it is first critical to provide an elucidative definition of the phenomenon. The Oversea Development Institute (ODI) defined it as “interventions aim to increase the net benefits for the poor from tourism, and ensure that tourism growth contributes to poverty reduction” (ODI, 2001, p. viii). Also, it is important to stress the fact that PPT is an approach to tourism rather than a product or sector of the industry (Ashley et Al., 2001). Also, PPT relies on the active involvement of different stakeholders, such as international organizations, governments, civil societies, private corporations and the poor themselves, operating at different levels (Ashley et Al., 2001). Hence, the success of PPT strategies substantially depends upon an effective integration in the decision-making process of stakeholders from the macro to the micro level. Furthermore, PPT strategies go beyond simply promoting community tourism to develop local enterprises and enhance capacity building, but it attempts to spark the participation of ‘the poor’ in the policy and regulation decision-makings process (ODI, 2001). In fact, the ODI divided PPT strategies into three categories: developing pro-poor policies/partnerships/processes; increasing economic benefits for the poor and tackling non-economic impacts (2001). Arguably, as poverty is a multidimensional phenomenon, PPT strategies to be effective would need to address not only poverty alleviation but rather eliminate the underlying causes of the phenomenon.

In the context of modernization theory, pro-poor tourism has been perceived as an effective development tool to reduce poverty, generate foreign exchange, increase LDCs’ government revenues, increase the transfer of technology, attract foreign development capital, reduce unemployment (Shaw and Williams, 1994) and promotes ‘modern’ western values and practices (Mathieson and Wall, 1982). Modernization theory sustains that LDCs will develop as they adopt Global North ‘modern’ practices and values. Indeed, Modernization scholars, inspired by Durkheim’s Functionalism theory, argue that society autonomously eliminates not functional elements (Tipps, 1973). Consequently, they sustain that LDCs’ traditional values and practices are dysfunctional  “old-fashioned ideas” (Rostow, 1960) that need to be substituted with “…wider and consistent social, cultural and political changes” (Hoogvelt, 2001).  Despite Modernization theorists recognize that these changes may cause ‘system-development crises’ (legitimacy, identity, and participation), they consider these minor collateral damages on the road to development (Coleman, 1971). Indeed, modernization theory supporters would positively perceive the expansion of international resorts in the Global South as tools for ‘spreading’ western ‘modern’ values into LDCs societies.

Modernization theory ascribes economic growth to socio-economic development. For instance, Martin Lipset recognized the role of economic development, urbanization, and industrialization in improving LDCs socio-economic development (1960). Moreover, Myrdal applies regional economic development theory, to stress the correlations between tourism and the rising of economic benefits through regional, national and local communities (1957).  Indeed, the ODI quantified the indirect positive impacts of PPT in local economies by about 50% to 90% (ODI, 2007). Furthermore, LDCs have consistently achieved positive net trade surpluses in the tourism sector  (Balaam and Dillman, 2013). For instance, the International Labour Organization ILO reported that international tourism is the third export sector in LDCs, accounting for about a third of all LDC exports (2011). Also, the tourism industry proportion of exports in services accounts for 29% worldwide and 52% for LDCs (UNWTO and EC, 2013). Interestingly, in last two decades, the donors’ community have substantially promoted PPT as a tool for LDCs to maximise foreign exchange earnings (Deloitte et Al., 1999). Indeed, only in 2012, international tourists spent about 386 billion USD in the LDCs, which is about five times the level of foreign development support that these countries have received (UNWTO and EC, 2013). Hence, suggesting a direct correlation between tourism and the creation of economic net-benefits for the poor. Lastly, the circulation of wages in the local economy (the multiplier effect) contributes to reducing poverty. Indeed, Pearce sustains that tourism constitutes a tool of ‘distributive justice’ able to create net-benefits for the poor (1989). For instance, since 1995, in Maputaland (South Africa), the PPT Wilderness Safaris tour operator has contributed to stimulate local’s aggregate demand by about 34% yearly generating a financial injection of over US$35,000 per year (ODI, 2001).

Apparently, according to modernization theory scholars, pro-poor tourism actively contributes to poverty alleviation in the Global South. However, PPT is substantially influenced by the approaches of international tourists in LDCs.  In 1992, Oppermann explored the use of tourism as a tool for regional development in Malaysia (1993). He divided tourist in ‘active’ (those who stayed more than four places) and ‘passive’ (those who visited at a maximum of four locations) (Oppermann, 1993). He finally discovered that ‘active’ travellers contributed substantially to regional development while ‘passive’ tourist tended to strengthen existing spatial disparities (Oppermann, 1993). Accordingly, tourists who visit mainly resorts in LDCs would not contribute to poverty alleviation but rather strengthen existing inequalities. Indeed, as Western multinational corporations own the majority of Resorts, the direct revenues generated by the tourism industry are often transferred out of LDCs to the Global North economies as repatriated profits (UNEP, 2009). For example, in Costa Rica, foreign enterprises own about 65% of all the resorts and hotels (UNEP, 2009). Also, the UNEP reported that around 70% of all the income generated in Thailand In 2009 by tourists ended up leaving the country (UNEP, 2009). This suggests interesting ethical conundrum regarding the pro-poor tourism phenomenon. Indeed, a number of tourists may travel to LDCs with the hope of indirectly contributing to poverty reductions; yet, as long as they will remain in western owned resorts they are unlikely to make a positive impact on the poor. Indeed, even the most optimistic projections show that PPT local earnings are equivalent to only 10-25% of company turnover (ODI, 2001). Arguably, the best solution to promote PPT would be to promote and support the establishment of locally owned touristic enterprise. However, the majority of international tourists demand ‘luxury’ services such as air conditioning or western consumer goods which local entrepreneur can not afford to purchase (Mowforth and Munt, 2009). Consequently, western owned resorts possess a substantial competitive advantage over locals’ tourism enterprises that seriously undermines PPT initiatives effectiveness.

In the second half of 20^th century, scholars such as Komilis (1994) and de Kadt (1979) began to question the role of tourism as a poverty alleviation tool. For instance, De Kadt examined the net-benefits posed by PPT where the multiplier effects are lower than leakages externalities (1979). Also, Komilis contested the effectiveness of using tourism as a tool to enhance regional economic development in peripheral areas (1994). In fact, he sustained that PPT initiatives were underpinned by the imbalanced relationship between central and peripheral countries (1994).

Dependency theorists perceive international tourism as a form of neo-colonialism used by the Global North countries to perpetuate its pattern of dependency over developing countries (Oppermann, 1993). Also, Oppermann sustained that international tourism reinforces existing socio-economic regional disparities within LDCs, through its: “enclavic structure and its orientation along traditional structures” (Oppermann, 1993, p. 540). Indeed, the dependency theory ascribes the development of ‘core’ (Global North) countries to the exploitation of the ‘periphery’ (Global South) (Hoogvelt, 1997). So, the development brought by tourism in peripheral countries depends upon events in the core countries (Britton, 1989). For instance, Britton sustained that both the flow of tourists from the ‘core’ to ‘peripheral’ countries and the management of the tourism industry was subject to various ‘control mechanisms’ imposed by Global North institutions (Britton, 1989). Consequently, the development of PPT industry in ‘peripheral’ countries was directly interconnected and dependent upon events in the ‘core’ countries (Britton, 1989). As a matter of fact, PPT enterprises substantially depend upon foreigner’s donors funding. For instance, both the Uganda Community Tourism Association (UCOTA) and the Community Based Tourism Association (NACOBTA) rely heavily on foreign donor funding (respectively for 99% and 45% of total their funds) (ODI, 2001). Consequently, changes in donors’ priorities will have a direct effect on PPT agents. Also, western tour operators are of the most influential agent in the tourism industry. Indeed, due to their substantial financial resources and industrial leverage, western tour operators have a critical role in determining the occupancy rate of hotels and geospatial distribution of tourist flow in periphery countries (Shaw and Williams, 1994). Arguably, as western tour operators are driven by profits, generating from commissions on tours sales, it is highly unlikely they would favour ‘low cost’ PPT resorts owned by locals to the detriment of  ‘luxury’ international hotels.

Structuralist theory, grounded on dependency theory principles, sustains that current tourist destinations in the LDCs serve as ‘pleasure peripheries’ for ‘core’ countries (Balaam and Dillman, 2013).  Under this paradigm, pro-poor tourism could be perceived as a mere tool to further Global North interest in its ‘pleasure peripheries’. As a matter of fact, local political and economic elites (comprador bourgeoisie) are the ones who benefit the most from the economic wealth generated by the tourism industry (Balaam and Dillman, 2013). This comprador bourgeoisie represents Western interests in the peripheries and constitutes an obstacle to PPT and poverty alleviation as it drains the economic benefits arising from the tourism industry. For instance, an ODI report revealed that in the Humla region of Nepal about seven people earn nearly 40% of the estimated total local income generating from tourism (ODI, 2001). Also, this condition present profound ethical and social concerns as it directly causes an uneven distribution of wealth that sparks income inequality and class conflict in LDCs.

In conclusion, pro-poor tourism is not yet a successful poverty alleviation and development tool for LDCs. Indeed, exogenous structural dynamics and dependency power relations limit the agency of the poor in the Global South. Despite PPT is generating a substantial amount of income in the LDCs, this income does not produce relevant socio-economic net-benefits for poor as they are ‘leaked’ to Global North tourism agents. Also, PPT initiatives still lack effective integrations of the poor in the decision-making process. The paper confuted Modernization theory ‘optimistic’ vision of pro-poor tourism as a tool for poverty alleviation by qualitatively and quantitatively assessing of PPT tourism initiatives and highlighting its main flows such as revenues leakage and income inequality. All in all, the paper supported the Dependency theory position arguing that pro-poor tourism is not yet an effective poverty alleviation and development tool for the Global South because of the structural exogenous dynamics and dependency power relations that limit the agency of the poor. 

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