Green Growth and Travelism ‐‐ Letters from Leaders Chapter by Dr Supachai Panitchpakdi, Secretary‐General of UNCTAD Sustainable tourism development – a partnership between the public and the private sectors Recent UNCTAD research and technical co‐operation activities have supported the view that tourism could make an important contribution to broad‐based economic growth in least developed and developing countries, boosting income‐generating opportunities, foreign exchange earnings and economic diversification. This is a relatively new view, as it was not so long ago that in many developing countries tourism was considered a less important or appropriate activity than more traditional activities such as manufacturing and agriculture. This reappraisal of the potential benefits of tourism has come about in part because of the sector’s dynamism: it has become a multi‐billion‐dollar‐a‐day global business. According to the UN World Tourism Organization (UNWTO), the worldwide contribution of tourism to gross domestic product (GDP) exceeds 5 per cent and is estimated to account for 6‐7 per cent of the overall number of jobs worldwide (direct and indirect). Equally importantly, however, the reappraisal has come with a renewed appreciation of the need to have an engaged, ‘developmental state’ working actively alongside the private sector, to enable tourism to deliver more of the positive benefits that are desired and fewer of the negative ones. For tourism to be environmentally, socially and economically sustainable, it is essential to have a partnership between the public and the private spheres. Government’s role includes ensuring that industrial policy, macroeconomic policy, investment policy and other regulations relating to the environment, to labour standards, and to training are in place and harnessed to serve national tourism and development goals, among other things. The relative robustness of the sector in light of the recent economic and financial crisis has reinforced these new views. Despite having been hard‐hit, the tourism sector continues to be extremely dynamic. Demand for tourism services fell abruptly in mid‐
2008, and from mid‐2008 to mid‐2009, all regions, with the exception of Africa, recorded declines in international arrivals. However, the UNWTO reported that tourism 1
began growing again in the last quarter of 2009, and this trend continued in 2010 and 2011. Growth has been especially fast in emerging and developing economies, where the share of international tourism arrivals accounted for 47 per cent of the world total in 2010, up from 32 per cent in 1990. Least developed countries (LDCs) have not been excluded from this boom in tourism. International tourism is among the top three foreign exchange earners for as many as 23 of the 49 LDCs. For seven LDCs, it is their single largest revenue earner, inducing significant income‐multiplier effects. By boosting per capita income, tourism has been a decisive factor supporting graduation from LDC status for countries such as Cape Verde, and Maldives. Three other small island LDCs (Samoa, Tuvalu and Vanuatu) are also regarded as potential graduation cases in light of progress that has been, to a large extent, fuelled by tourism growth. In part, the recovery of global tourism can be credited to post‐crisis recovery measures that some countries implemented to stimulate their economies and restore growth – including fiscal, monetary or marketing support to the tourism sector. Moreover, tourism’s resilience also owes much to a continuation of the trends of south‐south investment and south‐south tourism, alongside the more traditional north‐south tourism of the past. Another reason that least developed and developing countries are looking to tourism is that it can scale up very quickly, even from a low base. In the United Republic of Tanzania, where tourism is a relatively recent activity compared to some of its African neighbours, gross tourism receipts accounted for less than 10 per cent of total export earnings in the mid‐1980s, but by the middle of the current decade had risen to become the country’s top export earner, outperforming other services categories and accounting for over 35 per cent of total goods and services exports. In Tanzania, as with many other developing countries, tourism is promoted for its labour‐generating and linkage‐
creating opportunities especially compared to mining, which offers markedly fewer employment possibilities. 2
Such linkages are not likely to emerge automatically and will require active government support. UNCTAD research conducted as part of a four‐year project examining the development impact of foreign and domestic investment in tourism found many examples where tourism had generated significant linkages that boosted job creation and revenues for local enterprises and suppliers of goods and services, including agriculture. However we also found that much more could be done in terms of deepening and expanding these. In some cases, linkages had not developed at all, because of failures in the supply chain or in the necessary supporting infrastructures. The lack of a wholesale market, for example, or limited cool‐storage facilities meant that hotels were unable to buy locally and relied on imported products instead, depriving local producers of the chance to participate in the sector and also requiring costly (and polluting) transport. In other cases, especially with very small scale enterprises, local suppliers were unable to guarantee regular deliveries or reliable quality. Sometimes the 'gap' was more one of information and perception. We found that tourism enterprises were unaware of the potential that could be offered by local communities, just as the local communities were unaware of the needs of the tourism enterprises. There was a clear role for government or an independent agency to help enable these linkages to be made, because they were unlikely to emerge on their own. The need for an active role by government becomes even more evident with regard to the environmental impacts of tourism. Pressure on land use and waste generation can become significant problems especially for remote or island communities. This is also true for the high levels of water and energy use which the tourism industry is known for. Such use may exceed local sustainable limits and displace other economic and social uses of limited water and energy supplies. Again, strong regulatory and government support will be required to ensure tourism develops in a sustainable manner, consistent with local needs. However this is achieved, it is clear that there will be a role for government to help chart this new course – including to guide the private sector. UNCTAD’s Least Developed Countries Report 2010 argued that the State has an important role to play in guiding, coordinating and stimulating the private sector towards investment in national productive capacity, and this will be even more important if a transformative shift 3
towards a more environmentally sustainable form of economic activity is to be realized. This may require large‐scale investment in renewable sources of energy, for example, which the private sector is unlikely to achieve on its own; or the enforcement of new, more ecologically sensitive building practices and regulations, among many examples. Evidence already exists to show that the redesign of tourism products can help to reduce the negative impacts of tourism operations and activities on environmental resources. For example ecotourism based on small‐scale, community‐led tourism operations, is now estimated to account for as much as 20 per cent of the international tourism market, and some LDCs, such as Uganda and Nepal, are already active in the ecotourism market. Governments have a role to play in setting a favourable policy and regulatory environment for eco‐tourism. The private sector has also come to realize that community buy‐in is essential for eco‐tourism operations in ensuring the protection of natural resources, which most of these activities are based on. Inadequate infrastructure remains one of the biggest impediments to developing the tourism sector, maximizing its benefits and minimizing its negative externalities. Private companies could be more involved in the provision of infrastructure, which should also benefit local communities. Attracting foreign direct investment (FDI) remains an important objective for the sector, particularly in LDCs where domestic resources are often limited, there is a lack of managerial know‐how in the sector and connectivity with the network of international tour operators is generally weak. Investment promotion agencies (IPAs) can play an important role in attracting FDI into the tourism sector. However, the private sector should not be relied upon for "public good" types of investment. Also, the typical focus on foreign investment tends to neglect the essential role that is played by domestic investment. Domestic investors should be given an equally high priority, including by offering prospective entrepreneurs not only managerial training but also access to finance, because it is typically extremely difficult for small or new enterprises to access capital at internationally competitive rates, placing them at a further disadvantage compared to international firms. Encouraging the domestic sector is important in its own right, to contribute to national goals of job‐
creation, economic diversification and broadening the economic base. However it is also 4
necessary as a complement to foreign investment and to help countries realise the benefits of FDI. UNCTAD research found that while many countries expend considerable efforts in attracting FDI, they are much less likely to put in place the flanking policies that will help them to get the fuller benefits from it, once it arrives (see UNCTAD 2007, 2009 and 2011 reports ‘FDI and tourism – the development dimension’). The mainstreaming of tourism into national development and economic policymaking through a comprehensive national tourism strategy should include the involvement of all stakeholders, including local communities and the local private sector. The National Services Policy Reviews undertaken by UNCTAD, such as for Nepal and Uganda, assist countries in developing an integrated and holistic approach to tourism development. International organizations are also committed to support States and the private sector through capacity building. Such activities are one of the steps towards local ownership of sustainable tourism development. One example involves UNCTAD and the International Trade Centre (ITC), which have joined forces to strengthen capacities in the tourism sector of Benin. Thanks to a pilot project targeting three communities, Benin can now count on a pool of tourism officials, from the public and the private sector, knowledgeable of sustainable tourism concepts, having benefited from concrete technical assistance activities. In another current project, UNCTAD and other UN agencies are working with organic agriculture producers and tourism enterprises in Laos to help promote more sustainable agriculture and strengthen the new sector's links with tourism. A related objective is to boost Laos’s profile and tourism "offer" in the increasingly competitive tourism market. Bolstering the role of sustainable agriculture can even have wider macroeconomic effects on top of the obvious environmental benefits, including for example reducing the country's reliance on costly imported inputs such as fuel and petro‐chemical based pesticides, all of which must be paid for in a foreign currency and which can have important implications for the balance of payments. This project is shortly to be rolled out in a series of other countries, and it reflects the way that the UN can 'work as One' to help developing countries put in place a more sustainable form of tourism. Ends 5