tourism as a factor in development cooperation

Tourism as a factor in development cooperation

Gabriel P. Lee

Where there is little or no industrial or The uosition of tourism in national and regional develoDment econo- I I

agricultural base, and no exploitable resource, tourism may make a signifi-

mics has been the subject of much academic discussion in the period

cant contribution to the economy of a since the beginning of independence of developing countries. In more developing country. The EEC provides recent years, following the shocks of increased energy costs, world-wide aid to. developing countries -in three

_-

areas - the southern Mediterranean; inflation, high interest rates, economic recession, rising unemployment

Asia and Latin America; and Africa, the and fears about terrorism and security, a certain return to greater Caribbean and the Pacific. The Com- realism is evident in selected regions of the developing world. mission has produced guidelines for drawing up proposals and a typical

The success of some regions in increasing revenue has been attributed

example is presented in this article. The to several factors including an innovative cooperative attitude towards

EEC also supplies high quality exper- the tourism industry, the inauguration of new air routes. the develoo- tise to help define pc?icy’options &d

1

strategic plans and carry out agreed ment of intra-regional traffic, intense commercially based marketing

programmes. Long-term success is and promotion aimed at the main origin markets and the ability to react more likely for specialized high-income quickly to the movement of exchange rates which, in recent years. has projects. been one of the significant factors at work in international tourism. Keywords: developing countries; tourism; EEC aid

With an expected rise in gross national product (GNP). a real wages rise and a slight decrease in unemployment in industrialized service

Gabriel Lee, FTS, is Deputy Head of economies leading to a continued general economic recovery into 1957,

Division, Development of Commerce (A- international tourism may be expected to continue to grow. As 4), Directorate-General VIII (Develop- ment), Commission of EEC, Brussels, Bel-

developing countries continue the search for new developmental

gium. avenues aside from the traditional areas, bilateral and multilateral donors may be called upon for greater financial and technical support to help develop tourism. A positive response to such a call would be in the interests of and recognize the need for world interdependence, understanding and peace.

Data deficiencies

Strategic planning in any industry is fraught with problems, difficulties and unknowns. Detailed statistical data are generally available on production, exports and imports of physical goods, yet data on most services, including tourism, are sparse, often unreliable and inconsis- tently compiled and interpreted. The international travel and tourism industry has not, in the past, been well served with reliable data and information although some significant improvements have been made through serious study and research by private and public organizations.

Tourism, according to the definition currently accepted by the World Tourism Organisation (WTO) and the Organisation for Economic Cooperation and Development (OECD), includes all journeys of more than 24 h for recreation, business, study or health purposes. Taken in that light, the services sector as a whole (including tourism) is being

0261~5177/87/010002-18$03.00 0 1987 Butterworth & Co (Publishers) !.td

Source: WTO Secretariat. Notes: 1960-83 revised figures, 1984 revised estimates, 1985 preliminary data.

Source: WTO Secretariat. Notes: ‘Data for Taiwan excluded; data for some countries of region include excursionists which tends to inflate totals. DData for Denmark and France 1976-85 have been readjusted in comformity with WTO defini- tions. 1960-83 revised figures, 1984 revised estimates, 1985 preliminary data.

Toourtim as a factor in development cooperation

increasingly recognized as the sector with greatest potential accounting for a higher proportion of output and employment than agriculture and industry combined in most of the industrialized world. For some developing countries tourism, linked to their socioeconomic development, can be a vital force in improvin, 0 the living standards of their

people.

Aspects of international tourism

The 1985 edition of the Regional breakdown of world travel and tourism statistics published by WTO contains a useful historical series reflecting trends in international travel from 1950 to 19SS relating to tourism arrivals and receipts. A selection of these statistics, for certain years. is given below in Tables 1 to 4 to indicate world growth in arrivals and

receipts and regional share variations. From Tables 5 and 6 it may be observed that international arrivals have grown from 214.1 million in 1975 to 325 million in 1985, or by more than 50%. Receipts have grown from $40 700 million to $105 000 million or by a factor of two and a half in the same period. Internal domestic tourism or trips taken within the frontiers of states is estimated at 3 500 million to 4 000 million trips in

the same period. In more recent years (1983-85) the volume of arrivals and receipts has shown consistent growth in overall as well as regional terms. Global tourism has clearly proved its vitality and resistance to inflationary and currency pressures, political instability, unemployment and limitations on purchasing power.

Forecasts to 1990 and 1995

The Economist Intelligence Unit (EN), in a study conducted by Anthony Edwards ‘International Tourism Forecasts to 1995’, forecasts

Table 1. International tourist arrivals.

Year Arrivals Index Annual rate 01 growth

(millions) (1950 = 100) (over previous year) %

1950 1960 1970 1975 1980 1981 1982 1983 1984 1985

25.3 100 69.3 274 173.9

159.7 631 11.6 214.4 847 8.8 284.1 1 123 3.7 287.3 1 136 1.1 X5.0 1 130 0.5 292.3 1 155 -2.2 312.3 1 234 6.8 325.0 1 285 4.1

Table 2. International tourist arrivals by region (x 10’).

Year World Africa North Latin America East Asia Middle South America and Caribbean and Pacific’ Euro@ East Asia

1950 25 282 524 6 ld0 1 535 190 16 839 197 47 1960 69 296 750 14 000 2 705 680 50 351 630 180 1970 159690 2407 27 400 9 248 4 859 113000 1864 912 1975 214 357 4654 29 360 13 603 7 804 153 859 3 520 1 557 1980 284 107 6413 35 376 18 270 19981 195 966 5 821 2 280 1981 287334 7216 35 891 17 596 22 786 195234 6160 2451 1982 286010 6855 34 099 16 645 24 531 194476 6982 2422 1983 292 298 7 126 32 932 18 283 26 947 198 469 6 052 2 489 1984 312289 7620 32 768 19 589 31 509 211 792 6526 2485 1985 325 000 8 000 33 491 20 009 34 000 220 000 7 000 2 500

TOURISM MANAGEMENT March 1987

Tourism IS a fucror in drvelopmrnr cooperation

Source: WTO Secretariat. Notes: 1960-83 revised figures, 1984 revised estr- mates, 1985 preliminary data.

Source: WTO Secretariat. Notes: aData for China incorporated for years 1980-85.

Notes: 1983-84 revised data, 1985 preliminary data

Source: Countries included in each region are given in the WTO publication Regional Breakdown 01 World Travel and Tourism Statistics 198.5.

Table 3. International tourist receipts (excluding international fare receipts.

Year Receipts (x 1 09) Index (1950 = 100) Annual growth rate (46)

1950 2.1 100 _

1960 6.9 329 228 6 1970 17.9 852 6.5 1975 40.7 1 938 20.4 1980 101.4 4 826 21.7 1981 103.0 4 905 1.6 1982 97.4 4 638 - 5.4 1983 97.5 4 643 0.1 1984 100.8 4 800 34 1985 105.0 5 000 4.2

Table 4. International tourism receipts by region (excluding international fare receipts) (current

USS x 106).

Latin America East Asia Middle South Year World Africa North America and Caribbean and Pacific= Europe East Asia

1950 2100 88 668 392 30 890 26 6 1960 8 867 178 1 388 1 064 195 3 918 89 35 1970 17900 400 3 519 1 281 1 100 11200 300 100 1975 40702 1 127 6 410 3 809 2 164 26 363 500 329 1980 101 410 1992 12 342 13 180 7 465 61 654 3 228 1 549 1981 103006 2 160 14 715 14 626 8 859 57 251 3524 1 871 1982 97386 2 150 13740 11 486 9 398 55 560 3 386 1 668 1983 97458 2 108 14 006 10 593 9 821 55 832 3 451 1 647 1984 100800 2071 14 216 11 478 10 602 57156 3733 1544 1985 105000 2150 14710 11 890 11 650 59 000 4 000 1 600

Table 5. Arrivals of international travellers x 103.

Regions 1963 1984 1985 % change 1985/1984

Africa 7 126 7 620 8 000 5.0 Americas 51 215 52 337 53 500 2.2 East Asia/Pacific 26 947 31 509 34 000 7.5 Europe 198 469 211 792 220 000 3.9 Middle East 6 052 6 526 7 000 7.3 South Asia 2 489 2 485 2 500 0.6

World total 292 298 312 289 325 000 4.1

Table 6. International travel receipts ($ x 106) (excluding international fare receipts).

Regions 1983 1964 1985 % change 1985/l 984

Africa 2 108 2 071 2 150 3.8 Americas 24 599 25 694 26 600 3.5 East Asia/Pacific 9 821 10 602 11 650 9.9 Europe 55 828 57 156 59 000 3.2 Middle East 3 451 3 733 4 000 7.2

South Asia 1 647 1 544 1 600 36

World total 97 454 100 800 105 000 4.2

an acceleration in tourism expenditure. including fares, at 7% per year up to 1990 and at 8% annually in the period 199&1995. resulting in real travel spending including fares to $254 x 10’ in 1990 and $367 x 10’ in 1995 in constant 1983 dollars. These figures are estimated to be equivalent to 1.8% of the combined national product of the non- communist world by 1995 (against 1.2% in 1983) and to as much as 10% of world trade. The 1995 figure could be equivalent to 780 million foreign trips and over 5 000 million nights away from home.


Tourism us a facror in development cooperation

The leading tourism origin markets will also change position

significantly bv 1995 and are expected to include Saudi Arabia (in the expenditure category - see Table 7). Long-haul travel (over 1 500 miles) is expected to grow as a result of the rapid rise in travel from Japan and

Saudi Arabia and from all main origin countries. mainly at the expense of their travel to countries with a shared border. The forecast in percentages is shown in Table S.

The growth of long-haul travel from the 20 main origin markets, which together account for about three quarters of total world expenditure, could present opportunities for selected developing

country destinations which can cater competitively to the needs of long-haul travellers in terms of cost and value for money.

As we draw near to the end of the 20th century, world tourism is in full expansion and growth. For countries with few or no economically exploitable resources it can be an important source of foreign exchange. a means of diversifying development for monoculture economies and of direct and indirect employment. Tourism development cannot be

carried out by the private sector alone. It requires infrastructural support from the public sector and the maintenance of security and peace. Unlike visible trade, it is a sector where the decisions of private households play the major role at an early stage in the demand and consumption cycle. With estimates of the share of international tourism receipts held by developing countries as high as 26%, it is natural they should look to tourism as a means of economic development.

Some tourism is feasible for almost all developing countries including domestic tourism and business tourism. For other developing countries,

with few if any developmental options, a significant level of tourism may be regarded as necessary.

Tourism in the European Economic Community (EEC)

Tourism is estimated to account for more than 4% of gross domestic

Table 7. Leading tourism origin markets.

Ranklyears Expenditure including fares

1983 1995

Nights spent abroad

1983 1995

1 FR Germany 2 USA 3 UK 4 Japan 5 France 6 Canada

FR Germany Japan USA UK

Saudi Arabia France

FR Germany USA UK

France Netherlands

Austria

FR Germany USA UK

Japan France

Netherlands

Table 6. Forecasted short, medium and long-haul travel.

Distance travelled

Expenditure (excluding fares)

Trips abroad Nights abroad

1983 1995 1983 1995 1983 1995

To neighbouring

countriesa 36.8 28.0 79.7 72.7 42.6 33.4 Other short/

Notes: medium haul 26.2 27.1 14.2 18.8 30.1 33.7

Yihared border or divided by narrow strip of sea. Long haul” 37.0 49.9 6.1 8.5 27.3 bOver approximately 1 500 miles.

32.9

Source: Total 100.0 100.0 EIU. 100.0 100.0 100.0 100.0


Toururn as a facror in drrelopmcnr cooperarion

product (GDP) and more than 7% o f private final consumption in the Community of Ten. The accession of Spain and Portugal. both countries with highly developed tourism industries. v:ill further enhance the importance of the sector.

Tourism has enjoyed rapid expansion in the Community of Tuelve in the past 10 to 15 years with expenditure and revenue from international tourism increasing more than six-fold in the last 1-t years. These expenditure and revenue figures are higher for the UK and Greece.

Tourism is also significant as an element in the balance of payments of the EEC accounting for an average of 5% of credits and 4% of debits of goods and services of the Twelve. For some member states the credit figures are much higher - Spain 2O.S%, Greece 18%. Portugal 13.3% and Italy S.7%. Tourism makes up a large part of the services sector, and in this connection negotiating an agreement on international trade and services within the GAIT (General Agreement on Tariffs and Trade) would be significant development.

Direct employment in tourism in the Community is estimated a* five million people and indirectly at between 10% and 12% of the Community work force.

Another measure of the size of the tourism industry in the Community is the number of people who leave on vacation each year - about 1SS million persons from a total population of 328 million. Europeans predominantly choose their own countries (67%) as their destination. 20% choose another member state, 10% another European country, and only 3% choose to visit another continent. The automobile remains ihe leading means of transport at 68% while travel by train (14%) and air (13%) are practically at the same level. Over 60% of vacationers take holidays in August (34%) and July (2S%).

The Community tourism ‘product’ is particularly rich in its diversity, natural attractions, historical and cultural heritage and the preservation and development of its potential is a preoccupation of member states and the Commission of the EEC.

The EEC and the Third World

Since the signing of the Treaty of Rome in 1957, the EEC has played an increasingly active and influential role in cooperation with developing countries. The member states of the Community spend in the region of $12 000 million a year between them on bilateral and multilateral aid for developing countries. Of this amount about 10% is administered by the Community itself. However, the Community, in its triple capacity as policy maker, trade negotiator and donor, has built up over the years a system of cooperation with the whole of the developing world.

The LomC convention is perhaps the most developed aspect of the Community’s development cooperation policy. Nevertheless, the Com- munity, through a wide range of trade and aid measures. is now present in the Mediterranean, in Asia and Latin America as well as the 66 LomC Convention countries of Africa, the Caribbean and Pacific (ACP).

South Mediterranean countries JSEM)

The Community operates a series of trade and cooperation agreements with the countries of the southern Mediterranean which provide for access to the Community market - more or less duty free for industrial goods and at preferential rates for agricultural products - development


Tourism as a factor in det~eiopmenr cooperarion

aid of over 1 000 million ECU for the period 19S7-86 and institutions for dialogue between the partners. 1vhile the tourism sector is important

as an earner of foreign exchange. in employment and economic diversification for several of the countries of this region. it has not been a priority in the context of development programmes financed by the Community. However, selected infrastructure projects. training and studies in support of the tourism sector have been undertaken.

Asia arid Latin America (A LA)

The Community has also gradually built up its cooperation with the countries and regional organizations of Asia and Latin America. The range of cooperation instruments includes non-preferential trade and cooperation agreements, a generalized system of trade preferences, food aid and financial and technical cooperation to finance rural development, regional integration. emergency aid, trade and services. Community aid to Asia and Latin America is now beginning to reflect a more equitable allocation both geographically and in terms of percen- tage of resources available. A small budget is made available for the promotion of trade and services including tourism, and selected tourism programmes are either being financed and executed or under definition and study, for countries and regional organizations of Asia and Latin America.

Africa, Caribbean and Pacific (ACP)

Despite the Community’s increasin, 0 involvement in Asia and Latin America and the south Mediterranean, the LomC Convention is, perhaps, its most fully developed cooperation policy. In terms of aid the European Development Fund (EDF) provides grants and soft loans and the European Investment Bank (EIB) provides loans for national and regional development programmes. The trade terms include duty free and quota-free access to the EEC for almost all ACP exports, and funds for the development of trade and services including tourism.

The financial resources in support of the conventions. which have a duration of five years, were as follows:

0 LomC I (1975-30) - 3 450 million ECU; 0 LomC II (1981-55) - 5 700 million ECU; and 0 LomC III (198690) - S 500 million ECU.

Because living standards have not improved, particularly in Africa, despite substantial development assistance over the years, some criticism has been levelled against development cooperation as a whole. Insufficient food production, the advance of the desert and low investment are widely seen as three causes of continued hardship and poverty. The negotiators of Lomb III devoted much attention to these prqblems and their concerns are reflected in greatly expanded and innovatory undertakings in the fields of agriculture, rural development and food self-sufficiency, in a new section on drought and desertification control, and in an enlarged chapter on investments. A new facility has been created for refugees and a new chapter provides for cultural and social cooperation of which tourism is a fundamental part.

The LomC Conventiorl

Whereas in LomC I and II tourism \vas hardly mentioned, pa;t II -The areas of ACP-EEC cooperation - title VI ‘Development of Trade and

TOURISM MANAGEMENT March 1987 7

Tourism as u factor in development cooperdon

Services’, articles 95-100 of LomG III make special mention of tourism as an integral part of cooperation in trade and services. Since tourism is a sector which particularly lends itself to regional cooperation, it is also included in the ‘Regional Cooperation’ chapters (title VII) and in ‘Social and Cultural Cooperation’ (title VIII) as well as the provisions relating to least developed, landlocked and island ACP States.

A partner with the EDF in financial cooperation with the 66 signatory states of the ACP is the European Investment Bank (EIB) which concentrates on productive programmes and projects in industry, ago-industry, energy, mining. transport and communications and tourism.

The key articles (97, 98 and 100) of Lom6 III, relevant to tourism, are quoted below for the benefit of readers not familiar with the convention

of LomC III.

Article 97

Action for the development of ACP trade and services shall include specific co-operation in the field of tourism. The purpose of such co-operation shall be to support the ACP States efforts to improve services in this industry. Particular attention shall be given to the need to integrate tourism into the social, cultural and economic life of the people in accordance with articles 116 and 117. Article 98

Provision of financial and technical co-operation, in accordance with the procedures and regulations laid down in the Title III, Part Three, of this Convention, may be applied to tourism development measures at both national and regional levels. In addition to the main guidelines set out in Articles 95 and 96 and to the provisions for the development of small and medium-sized enterprises and artisanal activities set out in Article 67, these measures shall cover, inter alia, the following areas:

l development, rehabilitation and maintenance of tourism facilities, such as sites and monuments of national importance;

Table 9. Revenue from expenditure on international tourism in EEC member states (current ECU x 10’).

EEC member state WE= 1970 1975 1980 1984

Source: Eurostat. Notes: aR = revenue; E = expenditure.

FR Germany R 1 297 2 387 4 501 6 970 E 2734 7 201 14 500 17 692

Belgium/Luxembourg Fi 340 698 1 305 2115 E 461 1137 2 355 2 404

Denmark R 307 601 961 1 639 E 267 521 1 121 1 559

Greece R 194 505 1243 1 678 E 55 125 222 431

France R 1 269 2714 5 928 9644 E 1 o&1 2481 4 325 5413

Ireland R 174 210 417 609 E 94 168 419 522

Italy R 1 603 2 646 6 406 10 931 E 710 745 1 371 2 669

Netherlands R 419 894 1 197 1 948 E 592 1 343 3 359 3 834

UK R 1014 2 167 4 959 7 046 E 897 1 632 4 589 7 807

Spain R 1 681 2 808 4 992 9 668 E 136 310 663 1 067

Portugal R 151 290 823 1211 E 134 208 209 264

Total R a 470 15 920 32 733 53 659 E 7 187 15 872 33 353 43 762

a TOURISM MANAGEMENT March 1987

Tourism as a facror in development cooperation

0 training in specific skills in tourism planning and development:

0 marketing, including participation in international fairs and exhibitions. promotion and advertising:

l research and development activities related to the development of the tourism industry;

0 collection, analysis, dissemination and utilization of quantitative and qualitative tourism data;

0 intra-ACP co-operation in the field of tourism.

Article 100 In addition to the appropriations which, within the framework of the national indicative programmes referred to in Article 115, may be allocated by each ACP State to the financing of operations to develop the fields referred to in Articles 95 to 99, the contribution of the Community to the financing of such operations, where they are of a regional nature, may amount, within the framswork of the regional co-operation programmes referred to in Article 112, to a sum of 60 Million ECU.

It was clear from the beginning of negotiations for Lomb III that ACP states wished to include “specific cooperation” in the field of tourism, that such cooperation should be designed to support the ACP states own efforts and that particular attention should be given to integrating tourism fully into the social, cultural and economic life of the people.

Given the importance of tourism within the Community itself, its rapid growth and its contribution to European integration. there were no major obstacles to acceptance of the significance of tourism in many ACP states and its potential as a unifying force for greater integration, particularly in regions such as the Caribbean, the Pacific. the Indian Ocean and parts of Africa.

Guidelines for sectoral proposals in tourism

In order to assist developing countries in drawing up requests and proposals for financing of programmes in the field of tourism, the Commission has outlined basic but non-exhaustive guidelines to assist in this process. Similar guidelines exist for all major sectors of development cooperation.

By way of background some useful data and information is already published by such organizations as WTO, OECD, the European Travel Commission (ETC), PATA and its chapters as well as airlines and travel organizations including those of developing countries themselves, their regional organizations and national tourism boards. For a start the international significance of tourism should be understood - 325 million international arrivals and an estimated revenue of $105 000 million excluding air-fares in 1985, and a growth rate faster than world trade in goods, despite circumstances which are not always favourable.

At the national and regional levels it is important to identify tourism’s performance as an earner of foreign exchange, as an employer, and as a means of achieving economic diversification. The supply situation should be spelled out in detail together with data on existing and future potential demand. The degree of tourism’s integration with other sectors of the economy is vital especially for agriculture, industry, construction, small and medium sized enterprises, handicraft production and marketing. The public-sector and private-sector mix should be identified as tourism cannot be carried out by the private sector alone - it requires infrastructural support, both produced (public services,

TOURlSM MANAGEMENT March 1987

Tourism as a factor in development cooperarion

water, electricity, banks, etc) and non-produced but often publicly managed (beaches, scenery, mountaLts, lakes, historical sites). Social and cultural aspects, as well as the identification and preservation of tourism assets and heritage. must be given prominence.

It is difficult to be too precise about the form typical proposals should take because no two developing countries or regions are the same in all relevant circumstances and conditions but the following may serve as a general guide.

Chapter 1 - project summary

(1.1) (1.2)

(1.3)

(1.4)

(1.5) (1.6)

(1.7)

Background and purpose (or objectives) of the project. Principal resources to be deployed (finance, people, equipment,

etc). Cost of programme and financing plan (sources, amounts.

terms). Means of implementation (contracts, supervision. monitoring,

control). Implementation schedule (duration, reporting, responsibility). Main effects anticipated (tangible economic, financial, social, cultural, environmental, etc). Type of financing (grants, loans and terms).

Chapter 2 - background and purpose of the programme (2.1) General background

0 justification of choice of tourism sector vis-a-vis other priorities, and 0 reference to positions elaborated during programming of National

Indicative Programme or Regional Programme between Commis- sion and ACP governments concerned.

(2.1.1) The tourism sector in the national (or regional economy):

Table 10. % share of tourism in the balance of payments (% of current balance totals broadly defined=).

EEC member state ClDb 1970 1975 1980 1984

FR Germany C 4.2 2.7 2.7 2.6 D 10.6 9.0 a.5 7.2

Belgium/Luxembourg C 1.0 2.5 2.0 2.1 D 3.8 4.1 3.4 2.5

Denmark C 6.9 6.1 5.5 5.8 D 5.4 5.1 59 5.1

Greece C 17.6 17.2 20.6 la.0 D 3.0 2.9 2.6 3.1

France C 5.4 4.1 1.2 4.6 D 4.7 40 3.1 26

Ireland C 11.6 6.6 56 4.3 D 4.8 4.7 4.2 3.2

Italy C a.7 7.2 a.5 a.7 D 4.0 2.0 16 2.0

Netherlands C 2.8 2.5 17 1.8 D 3.9 3.9 4.8 3.9

UK C 3.3 4.0 4.1 3.9 D 3.2 2.9 4.2 4.4

Spain C 34.3 25.1 20.5 20.8

Source: D 2.5 2.1 30 2.1

Eurostat. Portugal C 8.9 12.0 16.7 13.3 Notes: D 5.6 5.4 2.7 2.3

=The current balance broadly defined lists all goods. services and income traded during a Total C 5.6 4.7 4.7 4.9 given period. D 5.1 4.8 4.6 4.1 DC = credit: D = debrt.

10 TOURISM MANAGEMENT March 1987

Tourism as a fdcror in development cooperation

0 contribution to GNP. balance of payments, employment and multiplication:

l role in external trade, earnings. and imports created by tourism: l leakage factors, product ownership;

l income generation, distribution, and economic diversification; 0 investments in sector (domestic/ov,erseas) and yields to government

in taxation; 0 major sectors dependin, 0 on tourism (transport. building industry,

infrastructure, agriculture); 0 degree of self sufficiency attained in financial and human terms; and 0 transport access, by air/sea/land, frequency, origin. and access

agreements in negotiations.

(2.1.2) The sector in the national plan:

l review of major obstacles of plan and significance of tourism within plan (resources allocated over past three years and future plans);

0 existing economic and social impact of tourism and future plans; 0 type of tourism to be fostered (volume, level, type, mass or

selective) and market segments sought;

0 cooperation between public, and private sectors and their respective roles;

l level of dependence of country/region on tourism; 0 sensitivity to social and political factors, cultural, environmental,

ecological; and

0 who has overall responsibility for planning, control. development, marketing - organization and management.

(2.1.3) The programme/project to the national/regional indicative programme (sixth EDF):

0 is the project consistent with programme? 0 integration with other parts of programme and effects: and 0 does it fit within objectives of recipients.

(2.1.4) The programme/project and other donors:

0 other donors contributing to sector(s), volume, commitment; and 0 current and future plans of other donors (loans, grants, technical

assistance (TA), etc).

(2.2) Specific background

(2.2.1) Description of the sector:

0 describe policies of government/regional organization for sector; 0 structure of the tourism sector, ownership, management, leakage

factor; 0 organization, public/private mix; 0 recent developments and trends in sector; 0 main ‘products’ in sector, tourism assets (cultural, historical, sports,

health); l main markets (domestic, regional, international), recent trends,

main market segments; l level of human capacity in sector (levels of training and develop-

ment); 0 main institutions responsible for sector and degree of self-

sufficiency; and 0 overseas representation, cost and benefits.


Fourism m a facror in development cooperarion

(2.22) Description of the area (of project).

(2.2.2.1) General description:

l administrative location of project, physical and geographical scope; 0 sub-divisions (national/regional);

0 connections with other regions, major towns, etc; 0 degree/levels of development, income, literacy, health.

(2.2.2.2) Physical description:

0 climate, soil, vegetation. communications, natural assets, facilities, languages, main cultural assets, social conditions.

(2.2.2.3) Population, sociocultural aspects, employment:

0 number and distribution by area;

0 density, demographic trend; 0 family size, head of family, status of women, youth; 0 migration, scale, source, origin, destination, duration. effects; 0 employment, type, duration, availability, male/female; 0 communal facilities; and 0 sociocultural, family organization, collective bodies, types of

hierarchy, training, income/expenditure decisions.

(2.2.2.4) Situation of tourism in country/region:

0 supply - types of accommodation, number of tourist rooms/beds,

investment plans; 0 ownership and types (family, public/private enterprises); 0 areas actively used for tourism (coastal, inland, etc): 0 type of tourism fostered; 0 tourism yields, revenue, size, profitability, access to finance; l seasonality of tourism, plant, infrastructure, communications: 0 linkages to other sectors (agriculture, food, artisan, ShlE, services).

Support services for tourism:

l infrastructure, roads, access, transport, communications, distribu-

tion; 0 government financial/non-financial support, incentives, grants/

loans; l training, promotional, research, marketing institutions; l degree of self-sufficiency (materials, supplies, management,

marketing); 0 planning/control, research/development, reservations systems; and 0 product development, adaptation, preservation of environment,

wildlife, culture.

Demand:

l main sources of tourism revenue (domestic, regional. internation-

al); l main markets overseas and relative importance of each; 0 recent arrival statistics and trends, occupancy levels. fluctuations; l motivation for visiting country/region, average stay. expenditure,

etc; 0 market development plans, resources, deployment. target groups; 0 attitude of visitors towards destination (host population, costs,

hospitality, etc;


Tourism as a factor in development cooperarlon

@ presence of representation in markets of origin, cost and benefits; and

l main competitive destinations.

(2.3) Basis of project:

0 results of previous projects, evaluation of previous projects (quantified);

l needs identification, what are precise needs?

0 studies, research of problem areas; and 0 attitude of recipients to project including private sector, resources

available from local sources.

(2.4) Overall programme/project design:

0 objective - quantified and qualified; 0 main beneficiaries and institutions and their contribution; 0 reasons for choice of approach proposed; and l specific project control and execution responsibilities.

Chapter 3 - programmeiproject details

(3.1) Execution of project:

0 project inputs, financial, human/institutional, equipment: l capital costs, operating costs by major items (EDF, local, others); l breakdown between local and imported elements;

0 how far can local resources be used to meet needs; l details of technical assistance required, cost, duration, espertise; l form of contracts and timetable for take-over by local staff; 0 means of implementation, schedules, timetables, payments; and l organization and management of project, terms of reference.

(3.2) Post projects provisions and evaluation:

l organization and management; l personnel; 0 results obtained; l summary of costs; and l follow-up organization, definition of new needs.

Chapter 4 - anticipated effects

(4.1) Benefits claimed for project. Tangible results (output) and immediate objectives to be realised:

l net effect on national/regional income; l net gain to employment; 0 net effect on nationaVregiona1 budgets; and 0 impacts on balance of payments, export revenue, additional

imports.

(4.1.1) Backward and forward linkages to other complementary economic sectors (eg agriculture, transport).

(4.2) Social and cultural effects - are social and cultural effects compatible with those of the country/region (both positive and negative effects should be mentioned).

(4.3) Economic effects:


Tourism a3 a j&for in developmenr cooperation

l post implementation, assessment of project in terms of viability of policy and operations, technical/institutional;

0 can institutions survive on own resources in future? anu

0 economic internal rate of return (EIRR).

(4.4) Financial effects:

0 rate of financial return (FIRR); and

0 can beneficiaries continue to support activities?

(4.5) Environmental, ecological, physical and attitudmal effects:

0 the project’s physical effects; and l the attitude of government, institutions and population to future

developments.

Selected examples of tourism and related programmes

Two Community institutions, the Commission and the European Investment Bank (EIB) are already supporting aspects of tourism development in developing countries, of a national or regional character, where some priority is given to that sector by national or regional authorities. The EIB provides loan finance for hotel development and enterprises, particularly the small and medium, while the Commission, through the EDF, provides grant finance and soft loans as well as technical assistance for a range of activities as outlined earlier. Similar support may be provided to countries of the south and east Mediterranean (SEM) and Asia/Latin America (ALA) as well as the ACP, within the limits of vehicles, now expanded and resources available.

Types of support available

Essentially support may be provided in the following categories:

l

a

a

l

l

l

a

infrastructure - roads, feeder rural roads, ports, airports, landing

strips; communications/development-telecommunications, transport, air, sea, rail; rehabilitation and maintenance - hotel development, wildlife conservation and preservation, sites and monuments of national

historical importance; human resources - development, education and training in specific skills in tourism planning and development, institutional development; product development - definition of product, creation of new products, adaptation of existing products, preservation and development of cultural, ecological, environmental aspects and heritage; market development - definition and execution of national, regional and international marketing and promotion plans and objectives, representation and participation at specialized trade fairs and exhibitions including specialized literatljre; research and development - activities, studies related to the development of the tourism industry, statistics, impact studies, data collection, analysis, dissemination and utilization of quantitative and qualitative nature; and


Tourism us u factor in development cooperation

0 intra-developing countries cooperation - cooperation among developing countries including regional integration.

Above all the Community is prepared to assist developing countries to

establish, at the outset, coherent policies and strategies for the sector consistent with supply, demand and resource factors, through specialized advisers and technical assistanct.

Aside from investments by the EDF and the EIB or global loans to development banks for on-lending, most programmes and projects financed to date fall into the following categories:

LomC I (EDF 1)

l Tourism planning, marketing and promotion

l Hotel development l Development studies 0 Tourism development

(loans) l National plans l Technical assistance, and

training

Lome II (EDF 5)

0 National parks and wildlife conservation and management

l Human resources development

l Risk capital/hotel development

l Technical assistance l Development feasibility

studies l Marketing, promotion,

literature l Integrated programmes

involving people/product/ market development and integration

l Supply, demand studies

Integrated programmes

Only in recent years have selected integrated programmes concerned with the tourism product - linkages with productive sectors. education and training, installation of data and information systems. marketing and promotion - been presented. Not unusually these have come from the Caribbean region, where tourism is the leading industry. employer and earner of foreign exchange, and the Pacific, where several of the small island states remain heavily dependent on tourism as one of few sectoral development options. In addition research and planning studies have either been completed for other regions (SADCC) or are in the course of execution for the Indian Ocean Commission (IOC). Further programmes are under study for individual African ACP states arising either out of allocations from LomC II or the more recently programmed LomC III resources.

Selected ueful services available

Perhaps one of the most useful services in support of tourism which the Community can immediately render to its partners in developing countries is the provision of high quality expertise to help countries define policy options and strategic plans, as well as helping in the execution of agreed programmes. This system has worked well in the Caribbean and is about to undergo the test in the Pacific region. Such expertise must be highly mobile, competent and effective in analysis of supply and demand, programme definition and execution, and may be used to tackle such areas as:


Tourism as a factor in developmenr cooperar~on

0

a a a l a a a

a

policy definition for the sector and analysis of economic significance of tourism: organization/marketing and audit studies; preparation of action plans;

preparation of programmes and projects for donor consideration; liaison with ministries, tourism boards, airlines, tour operators; product and market development programmes; organization of seminars, training workshops and related activities; drawing in specialist high level skills for short assignments and follow up of the results of their work; and generating cooperative efforts among tourism organizations and major donors.

The purpose of such technical expertise is to help governments with limited specialized skills to meet their requests for assistance with urgency and speed at a high level of professional competence, and to lay the groundwork for the realization of practical benefits from tourism in a planned and orderly fashion in the future.

Another area of Community support which has provided immediate and substantial returns on investment for some countries and regions concerns participation at specialized tourism fairs notably in Berlin, London and Paris. The Community finances an annual programme with financial support for space, construction of stands and transport, based on criteria and conditions which are circulated annually to the countries and regional organizations through the delegates of the EEC in the ACP states.

Scope in sectors of concentration and outside

The programming of LomC III resources (the allocation of finance by priority sectors) has now been completed in almost all ACP states. The vast majority of resources (70%~50%) are destined, by agreement between the ACP states and the Community, for programmes in rural development, agriculture, food self-sufficiency and combatting desertification. Support for trade and services including tourism is a minor

part, in financial terms, of ACP/EEC cooperation programmes. Nevertheless there is scope for the application of trade, services and tourism disciplines and skills in support of the sectors of concentration, and in integrating more fully trade and tourism policies and strategies with the overall objectives to be achieved.

Furthermore many countries have shown a preference for trade and services, outside the main sectors of concentration, for operations to be submitted to the EDF and EIB for consideration. These include small and medium sized enterprises support, trade, tourism, diversification of exports, export development of goods and services, the handicrafts sector and training of tourism personnel. Finally some regions of the ACP have already indicated the need for specific attention for trade and tourism in regional programmes yet to be finalized.

Constraints to tourism development

Each developing country should decide the level, volume and type of tourism to be fostered and developed in their territory. This can only be achieved through conscious and constant planning by the governments of developing countries in close cooperation with the main elements of


Tourism as a factor in development cooperation

the industry. Such planning should give priority to the likely impact of tourism as a factor in development as a whole with particular emphasis on the economic and social as well as the cultural, ecological and

environmental aspects. Some countries may have become over-reliant on tourism, others

have not begun to realize its potential. It is a mistake to regard tourism as a panacea for all economic ills of developing countries and over-dependence should be avoided. Planned, coordinated and controlled tourism can be a useful mechanism to assist general economic development and growth. Tourism has the potential to exercise a vast influence on world understanding, peace and prosperity. Allowed to develop in an unplanned fashion, its negative economic and social consequences become evident all too quickly.

Tourism differs considerably from other forms of international trade. Unlike visible trade it is not transported or exported overseas. It is a sector where the individual or head of household plays a major role in consumption decisions and because of this it is more fic!<le and more immmediately sensitive to social and political disturbances than visible trade. As a result, countries or regions often suffer a sudden substantial decline in arrivals and revenue because of the absence of mechanisms to at least minimize the adverse effects of such situations.

Several factors contribute to the absence of advanced development of tourism in developed as well as developing countries. First. there are those who seriously doubt the economic benefits which can flow from tourism. Such doubts may be based on political, social, economic or even ideological considerations and are often reinforced by attitudinal problems which point to the socially damaging results of tourism, the low proportion of expenditure retained in the country, its effect on local wage structures, seasonality aspects, absence of deep linkages with other productive sectors of the economy and so on.

Second, the structure of the industry is often such that the tourism product and its management is, to a greater or lesser degree, under the control of expatriates or non-nationals which in turn may result in serious leakages of valuable foreign exchange earnings if not closely monitored and controlled. The same situation exists for many other sectors of industry. In the final analysis, a balance must be struck between costs and benefits in tourism as in any other sector. It is true tourism does not feed people directly but it is an outlet for food products and often earns the foreign exchange necessary to pay for essential food imports.

Third, the high cost of imports of construction materials, food itself, technology, managerial expertise, training, infrastructural development , incentives and grants are often cited as reasons for not diversifying the economic structure of many countries through tourism. Against this must be balanced the benefits to be derived in potential revenue, employment creation, a balance of payments contribution and the attraction of specialized skills. Some countries and regions have a strong propensity to import in any case because it provides more revenue than exporting and is an apparently easier option.

Fourth, an apparent over-dependence on tourism in certain countries is often the result of limited alternative developmental options such as the absence of a diversified range of raw materials, the absence of agricultural land or other factors. In such situations tourism may present an option through which even micro states or larger monoculture


Tourism as a fucror in development cooprrarwn

economies can diversify by effective use of the natural or man-made resources at their disposal. Given acceptable conditions tourism earnings can increase before the level of dependence becomes a cause of major concern.

Fifth, while the social, cultural, environmental and ecological effects of tourism can be detrimental. in developing as well as developed societies, if allowed to go unchecked, they generally arise in conditions of mass tourism, In the planning, development and marketing cycle, the peak levels of tourism flows can be determined beyond which the benefits accruing in terms of revenue and job creation can no longer be justifiably pursued. The answer for many developing countries may be to concentrate on selective high-income tourism in segments which best correspond to available product supply such as wildlife or photographic tourism, sports, cultural, health, religious or historical tourism. and youth, senior citizens or specialized convention tourism.

Some conclusions

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

18

In international terms, tourism is recognized as a major industry with receipts estimated at $105 000 million, excluding fares, and arrivals of 325 000 million in 1985. Growth has been reasonably consistent and is forecast to accelerate 7% per annum up to 1990 and 8% in the period 1990-95, including fares. Tourism also makes up a large part of the total services sector. Long-haul travel is expected to grow from the 20 main origin markets, which together account for about three quarters of total world expenditure. This may represent an opportunity for developing countries. Some tourism is feasible in almost all developing countries whether domestic, regional or international. For other developing countries, with few developmental options, a significant level of tourism may be regarded as necessary. In the European Community, tourism accounts for 1% of GDP, 7% of final private consumption, 5% of credits and 1% of debits in the balance of payments. For Spain the credit is as high as 20.8% and for Greece 18.0%. Europe has a vast reservoir of experience and competence in all aspects of tourism development. The Community plays an active and influential role in cooperation with developing countries in Asia, Latin America. the south and east Mediterranean and Africa, the Caribbean and Pacific. Support for the tourism sector is fully recognized in the LomC III Convention for ACP states and in arrangements with other regions but has not assumed a significant place in the hierarchy of economic priorities of the countries themselves (except in selected cases) in competition with other more pressing needs.

In development terms, support for tourism is most likely to be successful where programmes are fully integrated into the social, cultural and economic life of the people and directly linked to other priority productive sectors. While it is difficult to be precise about the form of typical requests for the financing of non-exhaustive guide framing proposals.

The support available

prbgrammes and projects, a general but may serve to help developing countries in

from the EEC to help developing countries


Tourism us a factor in development cooprrarron

in their own efforts in the tourism sector. ranges from infrastructure to human resources, product and market development including research and development and the preservation of resources.

(9) Among the most useful services which the EEC can provide is professional high-level technical expertise stretching from the policy level to the urgent and speedy definition and execution of strategies leading to the realization of practical benefits from tourism.

(10) Tourism requires the same attention, support and planning as has traditionally been applied to agriculture and manufacturing industry. It is not the sole concern of the private sector but also requires governments and regional organizations to perform essential functions which cannot be carried out by other agents.

(11) Given their share of international tourism, it is natural for developing countries to look to tourism as one of the means of economic development.


tourism as a factor in development cooperation

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