The political economy of tourism in the third world

THE POLITICAL ECONOMY OF TOURISM IN THE THIRD WORLD Stephen G. Britton Department of Geography University of Auckland, New Zealand

ABSTRACT When a Third World country uses tourism as a development strategy, it becomes enmeshed in a global system over which it has little control. The international tourism industry is a product of metropolitan capitalist enterprise. The superior entrepreneuria_l skills, resources, and commercial power of metropolitan companies enables them to dominate many Third World tourist destinations. This paper outlines the dynamics of this process, particularly in the context of the South Pacific. Keywords: international tourism, development, developing countries, metropolitan companies, South Pacific.

Steve Britton’s doctoral thesis was on the tourism industry on Fiji. Since completing his dissertation, he has carried out further research on tourism in other Pacific islands and has published articles and contributed chapters to books on this subject. Annals ojTour(sm Research. Vol. 9, pp. 331.358. F’rlnted in the USA. All tights reservxi.

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POLITICAL ECONOMY OF THIRD WORLD TOURISM

L’Economie politique du tour&me du Tiers Monde. Quand un pays du Tiers Monde emploie le tourisme comme stratCgie de ditveloppement, il s’empktre dans un systkme global dont il a peu de contr6le. L’industrie touristique internationale est un produit de l’entreprise capitaliste mCtropolitain. Les talents supCrieurs des entrepreneurs, les ressources et le pouvoir commercial des compagnies mCtropolitains leur donnent la possibiliti: de dominer beaucoup de destinations touristiques au Tiers Monde. Cet article expose les grandes lignes de la dynamique de ce processus, en particulier dans le contexte du Pacifique du Sud. Mots Clef: tourisme international, dCveloppement, pays en voie de d&eloppement, compagnies mCtropolitaines, Pacifique du Sud.

INTRODUCTION A great deal of the literature on tourism’s contribution to development is devoted to narrowly defined cost-benefit analyses, imprecise comments on the sociocultural effects of tourism, or more technical issues such as tourist flow predictions, factors determining hotel location, and the regional impact on tourism expenditures. Clearly such studies are important. However most of this research has a common deficiency. Discussion of tourism is typically divorced from the historical and political processes that determine development (de Kadt 19791. Debate on the advantages and disadvantages of tourism is conducted without regard to those theories of political economy concerned with persistent poverty and the causes of increasing inequality between and within nations. The intention of this paper is to place the study of tourism firmly within the dialogue on development. It is important to investigate why it is that tourism, while bringing undoubted benefits to many Third World countries, frequently also perpetuates class and regional inequalities, economic problems and social tensions. This task requires an understanding of underlying mechanisms inherent both in the tourist industry and Third World economies that make the promotion of tourism a highly ambiguous development strategy. To construct a model of the articulation of international tourism in Third World tourist destinations two sets of factors need to be considered. To understand how the industry manifests itself; and who benefits from tourism development, account should be taken of 332

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economic and political structures within Third World countries. This requires an appreciation of the historical forces that are responsible for the common characteristics of these economies. It is also necessary to analyze the organization and commercial structure of the tourist industry itself, particularly the power and dominance of certain activity components and ownership groups. This essay looks at these issues and elaborates on some general principals with Pacific island case studies. THE STRUCTURE

OF THIRD WORLD ECONOMIES

The past decade has been one of ferment in the field of development theory. In response to weakness in conventional Anglo-Saxon thinking, a school of literature known as “dependency” or “underdevelopment” theory evolved as an alternative means of conceptualizing the nature of the development process in Third World economies (Lehman 19791. While it is incorrect to visualize this literature as a single coherent theory, its general findings can be concisely stated. Third World countries are seen to suffer from a series of common structural distortions in their social and economic organization. The origins of these problems lie in the collective experience of poor countries. Their history has been one of exposure, to one degree or another, to various forms of colonial or imperialist domination. This domination is directly attributable to the global expansion of European mercantilism and then capitalism. Peripheral countries were articulated with the core capitalist economies in such ways that the former had imposed upon them forms of production, social organisation, and trading patterns designed to meet the economic and political requirements of the colonial powers. Because of the pervasive impact that colonial and imperialist institutions had on the periphery, and the extensive economic and strategic gains which accrued to metropolitan powers, the process of industrialization for a few countries and the underdevelopment of the majority can be regarded as part of the same set of processes. As a corollary to being integrated into “spheres of influence,” Third World countries are characterized by forms of “dependent development.” Dependency can be conceptualized as a process of historical conditioning which alters the internal functioning of economic and social sub-systems within an underdeveloped country. This conditioning causes the simultaneous disintegration of an indigenous economy and its reorientation to serve the needs of exigenous 1982 ANNALS OF TOURISM RESEARCH

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markets-or what has been called internal-disarticulation (Quijano 1974: Roxborough 1979:42-69). This internal transformation determined the specific roles and articulation of various modes of production within an underdeveloped country, and by doing so created specialized commodity export enclaves and structural inequality between social groups (Amin 1974, 1976: Wallerstein 1979). It has been this process that led some theorists to define underdeveloped economies as a combination of capitalist and noncapitalist modes of production under the domination of the former (Foster-Carter 1978; Taylor 1979). This internal conditioning also defined the basis upon which a country would be articulated with other economies, particularly the core capitalist countries. Foreign firms, settlers and colonial governments historically determined the role of an underdeveloped country in the international division of labor. The global economy is thus founded on practices governing specialized commodity production, international trade, technology “transfer,” migration and capital flows which largely result from the actions of companies, institutions and governments in the core countries. Furthermore, in the post-colonial era these pressure groups, through their close association with local political and commercial ruling classes, are able in ostensibly independent countries, to encourage decisions over economic policy, commercial practices and labor legislation consistent with their interests. The close liaison with local political groups, one which may persist despite the divergence of national and elite vested interests from foreign parties, is itself largely an historical legacy of the economic, political, and ideological transformation of Third World societies. In a neo-colonial context, it is usually members of the ruling classes who have the power to bargain with foreign industry or government representatives, and to implement policies consistent with these interests. The principal outcome of this internal transformation and external articulation is the removal of part of the economic surplus of dependent social formations by foreigners, and the non-productive, distorted use of much of the remaining surplus by ruling elites. At the same time, the particular allocation of resources internally creates a blocking of potential surplus generation by preventing the exploitation of under-utilized economic resources on behalf of other classes. In summary, “dependency” involves the subordination of national economic autonomy to meet the interests of foreign pressure groups and privileged local classes rather than those development priorities arising from a broader political consensus.

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These characteristics of dependent social formations have a considerable impact on the way an industry which has its origins in the metropoles, such as tourism, is integrated into the local economy. Since governments in the periphery are so reliant on strategic (export) enclaves for the economic viability of the State (and their own political legitimacy) the operation and expansion of these typically monopolistic interests occurs in a sympathetic investment environment. The allocation of finance, provision of infrastructure, the orientation of administrative services, licensing procedures, and labor and marketing regulations all proceed in accordance with the requirements of dominant firms (which collectively have been termed “formal” or “upper circuit” sectors: McGee 1978; Santos 19791. A large differential is created between productive resources, public support, and political influence accorded to the strategic industries and the remainder of the economy. The historical advantages held by foreign and local elite owned companies perpetuates a situation where other small scale simple commodity producers cannot evolve to a point where they can effectively compete with the favored firms or benefit from public support services (Bromley and Gerry 1979; Le Brun and Gerry 19751. At the same time, the distortions in the economy, especially the selective allocation of resources, stunted accumulation of productive surplus, and deliberate oppression of labor results in a progressive inability of the economy to meet the food, shelter, social welfare, and employment needs of what becomes an increasingly impoverished, marginalized majority of the population. This often necessitates repressive political responses by governments to counter opposition and maintain access to power. One consequence of these tendencies is that only privileged commercial and political groups in the periphery, along with foreign interests, are in any position to coordinate, construct, operate, and profit from the development of a new industry-such as tourism. In the absence of any concerted government intervention, this situation manifests itself as worsening economic and social inequality. This occurs at four levels: between metropolitan and periphery states; within the periphery between dominant and subordinate classes; between dominant capitalist and petty artisan (simple commodity producer sectors); and between dominant and subordinate enterprises within any one sector or industry. It is in this context that international tourism is generally implanted into a Third World economy.

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THE ORGANIZATION

OF INTERNATIONAL

TOURISM

Undeveloped countries promote tourism as a means of generating foreign exchange, increasing employment opportunities, attracting development capital, and enhancing economic independence. The structural characteristics of Third World economies, however, can detract from achieving several of these goals. But equally problematic is the organization of the international tourist industry itself (cf. Bryden 1973; Hills and Lundgren 1977; Turner 1976; Wilson 19791. Paralleling the growth of mass tourism has been a change in the travel experience format. With the sheer growth in the volume of tourists after 1950, a distinct travel industry evolved to meet the demand for recreational travel. The consequence of this has been that the travel experience has taken on an increasingly standardized form. The introduction of packaged tours in the mid 1960s brought together the conflicting psychological needs of tourists for novelty as well as security in strange environments (Cohen 19721, and the latent tendency for commercial enterprise to reconstitute individual touring into a repeatable and marketable product (Burkhart and Medlik 1974:1871. By incorporating such qualities the package tour substantially reduced the cost of travel, broadened the potential tourist market, and created a new source of surplus generation by giving maximum opportunity for tourism companies to control tourist expenditures. With consistent increases in the volume of tourist travel, and its profitability as a trade, the industry has become more competitive and comprehensive. Three resulting trends within the industry have had important repercussions for the organization and structuring of the industry: greater firm size, increasing horizontal and vertical integration, and the penetration of non-tourism capital (Britton 1982a). The key integrative force within international tourism has become those large companies capable of organizing, co-ordinating, creating and marketing the diverse inputs that constitute the various tourist products available. The links between the components of the tourist industry are directly influenced by this organizational trend. With regard to the spatial expression of international tourism, the most important link is that between the product marketing agencies in tourist source countries, and the tourist facilities in destination countries. The establishment of an international tourist industry in a peripheral economy will not occur from evolutionary, organic processes within that economy, but from demand from overseas tourists and new foreign company 336

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investment, or from the extension of foreign interests already present in that country. The tendencies towards the concentration and centralization of commercial power within metropolitan tourism capital facilitates the inclusion of Third World countries within international tourism through external commercial controls. More and more frequently, this control is exercised through the agency of the multinational corporation. This influence is manifest in a variety of ways. Since metropolitan enterprises are actually located within the principal tourist markets, they have direct contact with tourists, the first and most influential link in the tourist flow chain lIUOT0 1976:41-6). Given the predominantly packaged nature of tourist travel, tourists may not be certain of the type of holiday they want nor which destination(s) to visit (Burkhart and Medlik 1974:213141. A tropical island holiday for Australians, for example, may be enjoyed in any one of a number of Indian Ocean or Pacific island destinations. The situation puts industry intermediaries between the tourist client and the destination countries in a pivotal position. It allows metropolitan tourism companies to influence the volume of tourist flows to any one destination (where subsidiary tourist companies may be owned). It also encourages foreign interests to become directly involved in the destination country since their capital resources, expertise, market connections. and control over tourist flows give them overwhelming competitive advantages over local tourism operatives. A key mechanism by which metropolitan firms influence tourist flows is their control of international transport. Most tourists traveling to tropical island destinations, particularly in the Pacific, have little option but to purchase the services of metropolitan airline and cruise-ship companies (Hoivik and Heibert 1980:90-l: IUOTO 1976:43-5). In 1978, for example, two foreign airlines, Qantas and Air New Zealand, were responsible for approximately 80 per cent of airline seats on the Fiji sector (Britton 1981) and no island nation owns one of the six cruise-ship companies which ply the Pacific. Regional air carriers which do compete for international tourists (e.g., Air Pacific and Polynesian Airways) have had their operations confined by high operational costs, limited equipment capacity, competition from metropolitan airlines, and interference by foreign management and shareholding interests. Direct pressure by metropolitan governments also ensures protection for their national flag-carriers (Britton 1982b; Kissling 1980). Foreign airlines are thus particularly effective in influencing the direction of tourist 1982 ANNALS OF TOURISM RESEARCH

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flows, especially with their ability to: offer discount concessions to tour companies for any one destination; to vary the allocation of seating on scheduled flights; to discriminate against stop-over tourists: to overfly intermediate destinations: and to promote or demote a destination by changes to market advertising. This latter factor, tourism promotion, is a vital element in the dynamics of the tourist industry. Tourist destinations are usually founded on some unique environmental or cultural features. The attractions of Tahiti’s impressive volcanic islands and Polynesian culture are a case in point. The presence of such attractions, however, is not necessarily a sufficient basis upon which to create a successful tourist industry. Along with transport linkages, accommodation provision, and fare costs, the image or perceived attractions of a destination are the critical factors in directing tourist flows (Medlik and Middleton 1973; Middleton 1979; Schmoll 1977). Effective international tourist promotion, however, is undertaken by few components of the industry. Tourism as an industry is not a single, functional entity in the conventional sense. Rather it is a variety of activities or components which taken together form the tourism product group. The most important of these components are metropolitan airline, tour wholesaling, and hotel chain companies. It is these sectors which most influence tourist movements and undertake the most extensive advertising campaigns. Of the services located at the tourist destination, advertising is most successfully undertaken by those larger companies able to absorb the high costs, and those which have direct sales and marketing links in the tourist source countries. Invariably these conditions mitigate against small scale operators who have limited resources, limited experience and few connections within the industry. In a context of increasing competition, as during depressed market conditions, the advantages accruing to the larger companies become even more apparent (EIU 1976:28-301. This situation has several important repercussions. Foreign companies greatly influence the image of a destination country through advertising. This leads tourists to perceive the host country in terms of this image and the nature of the hotel accommodation, tourist shopping, select cultural attractions, and other tourist services which are publicized. All too often this results in tourists having unjustified expectations of a destination which are unable to be fulfilled (Britton 1979; Goonatilate 1978:5-6; IUOTO 1976: 103-51. Marketing strategies, tourist expectations, and the transportation modes used by airline and wholesale tour operators, all help 338

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influence the type of tourist product that is created in underdeveloped countries (Medlik and Middleton 1973:3 11.More importantly, the extent to which metropolitan firms promote a destination, the more incentive there is for these firms to ensure the stability and viability of their operations through direct commercial participation within the destination. In addition, because of the inability of agricultural and manufacturing producers in most underdeveloped economies to guarantee the quality and continuity of supply of inputs appropriate for international luxury standard tourist facilities, there is a strong reliance on imported supplies for both the construction and operation of destination tourist facilities. This is especially true in the Pacific where few countries have recognizable secondary manufacturing sectors (Ward and Proctor 19801. Even in Fiji, one of the largest Pacific island economies, 53 percent of hotel food purchases, 68 percent of standard hotel construction and outfitting requirements, and over 95 percent of tourist shop wares were supplies by imports (Britton 1982b; Varley 1978:65-801. Foreign tourism companies also monopolize industry managerial expertise, marketing skills, financial resources, and intra-industry contacts (IUOTO 1976:36-64,70-1,77-B). The apparent market competence of these metropolitan companies renders them “natural” recipients of destination government aid, co-operation and subsidization (Hiller 1977:116). From the perspective of a nascent Third World industry, integration with foreign tourism capital appears both beneficial and necessary. Furthermore, capital intensive tourist plant and infrastructure, particularly the forms operated by multinational corporations, are often those encouraged by international agencies. The World Tourism Organisation. International Monetary Fund, United Nations, World Bank and UNESCO, among others, set the parameters of tourism planning, promotion, identification of tourism products, investment and infrastructure construction policies often in conjunction with metropolitan tourism companies (Lanfant 1980: 15.23.25-3 11. A series of feedback loops is thus evident within the international tourism industry. The promotion and advertising strategies of metropolitan tourism corporations plays a significant role in shaping tourist expectations. Tourists expect and appreciate the type of tourist product and travel experience that suits the priorities of tourism firms. These priorities in turn are the key determinants of the type of tourist facilities developed in Third World tourist destinations. These are often luxuriously appointed, capital and energy intensive hotel resorts: the type that poor countries can least afford to build and operate because of their import requirements. Not 1982 ANNALS OF TOURISM FULSEARCH

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surprisingly, since such facilities are best planned, constructed, and managed by those tourism firms with international experience, there is every incentive for metropolitan corporations to invest in, and of course profit from, Third World tourism. This is particularly evident in the hotel sector (IUOTO 1976:42). Many, especially the small, underdeveloped countries participating in the international tourist trade are thus obliged to accept a high degree of foreign ownership, retention of tourist receipts in the metropolitan countries and leakage of foreign exchange earnings (Hills and Lundgren 1977; Hoivik and Heiberg 1980:81; IUOTO 1976:64-1001. Foreign control does not simply mean direct ownership or sufficient shareholding to maintain a predominant managerial influence. Many foreign investors in Third World tourism, especially in hotels, prefer contractual arrangements with indigenous, or other foreign, parties. Management contracts give foreign tourism companies effective corporate control and profits without the risk of committing large sums of capital to build a resort complex. Whatever the form that “ownership” takes, there is likely to be a high level of expatriate management and control of key sectors of periphery tourist industries. In Fiji over 70 percent of tourist expenditures are lost to the country to pay for imports, profit expropriation, and expatriate salaries (Central Planning Office 1976:1691. This is exacerbated where long-distance tourist travel to Third World destinations is commonly undertaken as a package tour, since it is this organizational form that best allows foreign companies to benefit from tourist expenditures (IUOTO 1976:105151. It has been found (ESCAP 1978:401, for instance, that where tour packages consist of a foreign air carrier, but include local hotel and other group services, destination countries receive on average only 40-45 percent of the inclusive tour retail prices paid by the tourists in their home country. If both the airline and hotels are owned by foreign companies, a mere 22-25 percent of the retail tour price will be forwarded to the destination country. In Fiji, a minimum 40 percent of total tourist expenditure is retained in the metropoles just in the form of transport fares (Britton 198Oc:257-6 1). The reduction of the travel experience to a relatively standardized product can also put a destination into a vulnerable market position. A country’s tourist product may be easily substituted by foreign companies and tourists for that of an alternative destination (IUOTO 1976:101-3). One of the characteristics of tourism, especially in tropical island regions like the South Pacific, is that a multitude of destinations selI an essentially undifferentiated product (Medlik and Middleton 1973:301. With foreign companies mainly 340

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responsible for advertising, international transport, global wholesaling of tours, and international hotel chains, no one tourist destination is able to gain satisfactory control over the viability of its own tourist facilities. This confinement of tourists (and their expenditures) to a formalized travel experience has its parallel in the spatial organization and social separation of tourist services within the destination country. Many tourists are unable to fully enjoy their holiday except from a base of familiarity provided by western type hotels, transport modes, food stuffs or shops. As a consequence tourism tends to manifest itself as an enclave industry. On the one hand, tourists confine their social interaction to other tourists or locals who behave most like westerners. Interaction with other locals and hotel staff is conducted in a manner consistent with stereotypes held by both groups (Cohen 1972; Nettekoven 1974). On the other hand, the luxurious, langorous surroundings of tourist accommodation and transport, as well as the prodigious expenditures of tourists, creates physical and economic barriers between visitors and hosts: barriers which are often reinforced by colonial legacies regarding expatriate-host behavior and income differentials (Goonatilate 1979:6-g). This appearance of tourist enclaves is accentuated if tourist services are clustered in space. This is evident in Tahiti (Robineau 1975:67-741, and in Fiji where 95 percent of all tourist expenditures occur in the Lautoka-Suva tourist belt on the main island of Viti Levu (Britton 1980a). In the Cook Islands virtually all tourist spending occurs on the island of Rarotonga Apart from factors internal to the organization of the travel experience, this clustering in space of tourism facilities has, at least in several Pacific island destinations, clearly discernable colonial origins. In Fiji, four such influences are evident: the internal and external orientated colonial transportation infrastructure: the distribution and structural characteristics of the colonial urban network the restricted distribution and availability of freehold land: and the presence of foreign companies which have diversified into tourism (Britton 1980a 1980b). In physical, commercial and socio-psychological terms, then, tourism in a peripheral economy can be conceptualized as an enclave industry (Figure 1). Tourist arrival points in the periphery are typically the primary urban centers of ex-colonies, now functioning as political and economic centers of independent countries. Within these towns are located the national headquarters of foreign and local tourism companies and retail outlets of travel, tour, accommodation, airline, bank and shopping enterprises. If on 1982 ANNALS OF TOURISM RESEARCH

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POLITICAL ECONOMY OF THIRD WORLD TOURISM

Figure 1 An Enclave Model of Third World Tourism

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1982 ANNALS OF TOURISM RESEARCH

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package tours, tourists will be transported from international transport terminals to hotels and resort enclaves. The transport, tour organization and accommodation phases of their itineraries will be confIned largely to formal sector tourism companies. Tourists will then travel between resort clusters and return to the primary urban areas for departure. While resident in the resort enclaves, tourists will make brief excursions from their “environmental bubbles” into artisan and subsistence sectors of the economy for the purchase of shopping items, entertainment, and sightseeing. The impact of colonialism on the national distribution of periphery tourist facilities has its corollary at the international scale. Historically most small island tourist destinations were previously integrated into the international economy to provide supplies of raw materials to colonial powers. The encouragement of tourism by governing elites in the periphery is likely to be in response to contradictions caused by this selective development of their export dependent economies. Tourism, particularly as a foreign exchange generator, may help alleviate highly restricted income generating capacities in these economies while, at the same time, continuing to serve the economic interests of foreign capital and national elites. Foreign penetration of the periphery was, and is, highly selective, leading to particular transport network patterns. With technological revolutions in transport as the basis of mass tourism (EIU 19781,those peripheral economies with appropriate colonial infrastructrure legacies (e.g., Kenya), or those located on new transport networks established by metropolitan enterprises (e.g., Fiji, Bali) were most likely to be incorporated into the international tourism trade. In summary, the organization of international tourism can be conceptualized as a three-tiered hierarchy. At the apex are metropolitan market countries in which are located the headquarters of those transport, tour, hotel, and tourism supplying companies which dominate the lower levels of the industry hierarchy. At the intermediate level, in the tourist destinations of the underdeveloped countries, are the branch offices and associate commercial interests of metropolitan firms operating in conjunction with their local tourism counterparts. At the base of the pyramid lie those small scale tourism enterprises of the destination country which are marginal to, but dependent upon, the tourist companies of the intermediate level. The repercussions for the internal organization of a peripheral tourist industry are summarized in the schematic model shown in Figure 2. 1982 ANNALS OF TOURISM RESEARCH

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Figure

A Stswtual

2

Model of Third World Tourism

CORE TOURIST INDUSTRY SECTORS

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Foreign companies determine the organization and operation of tourism, both internationally and in the dominant sectors of the periphery, through a series of “system determinants.” With their command over resources and location within tourist markets, metropolitan companies provide the most vital services such as package tours, international transport, marketing, communications facilities (ticketing and reservations), international class hotel chains, and financial services (travelers checks, insurance). For tourist services located at the destination, foreign firms are essential suppliers of duty free goods, food, drink, management services, hotel construction materials, hotel furniture, kitchen and refrigeration equipment, and a myriad of other products. Local counterparts to foreign firms, where they exist, will also predominate in the accommodation, tour, travel agency, and wholesaling sectors. The likelihood of cooperative enterprise between foreign and local elite groups is encouraged by the fact that, apart from expatriates, members of the local elites are often the only persons in the host society that have any appreciation of the recreational and lifestyle . requirements of usually white, affluent, overseas tourists. Various commercial practices or “mechanisms of control and dominance,” ensure that the interests of foreign and, secondly, local dominant capitalist firms are promoted within the hierarchy. Such mechanisms may be control over tourism technology (especially communications), industry expertise, product pricing and design, franchise rights to imported goods and commercial advantages from economies of scale and consequent bargaining power. Influence over these facets of the industry allows dominant sector tourist firms to subordinate, or penetrate, the spheres of operation of small scale retail and artisan enterprises. Enterprises of the third, lower, tier of the industry are likely to be involved in tourism in several ways. They may provide services outside the commercial interest or competitive capacity of dominant sector firms. Options here would include handicraft production and petty transport services (taxis, rickshaws). Alternatively they may provide services similar to those offered by dominant sector firms. But because of their small scale, limited access to key inputs, and entrepreneurial inexperience, services of poorer quality, more limited appeal and low cost are provided. Such activities would involve budget accommodation, localized tours, village organized tourist attractions, and the retailing of cheap souvenirs. Enterprises involved in either of these types of activities are severely limited in their capital accumulation potential given the market in which they are forced to operate. The third possibility is 1982 ANNALS OF TOURISM RESEARCH

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Figure

3

The Generalized Distribution of Tourist Industry Expenditure

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to provide services which complement tourist facilities and attractions controlled by other (dominant) enterprises. Possibilities here would include acting as shopping guides, or the retailing of dutyfree consumer goods supplied by large wholesaling and importing companies. Invariably, however, the pricing and franchise rights accompanying these products will restrict profits. Another avenue would be the “professional native” function of locals as guides and dance troupes for tours, hotels, and cultural display centres. Again, the renumeration for such activities will be limited, in this case by the contract conditions imposed by the companies owning the performing environment. The ultimate consequences of this system is that while all participants in the industry hierarchy profit to a degree, the overall direction of capital accumulation is up the hierarchy. The distribution of tourists’ expenditures will parallel the capacity by dominant and petty enterprises to control tourist movements and cater to tourist demands. For any one destination country the size of the sector-al flows will vary considerably depending, among other things, on the distance (time/cost) of travel between the metropole and the periphery, the type and extent of tourism ground plant, and the type of tourist attractions available. Not all tourist destinations have duty-free shopping, for example, whereas other destinations may have extensive handicraft industries (Figure 3). 346

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At the risk of oversimplification, it can be said that at the international level this industry structure ensures that Third World destinations have a largely passive and dependent role in the international system. Foreign multinational companies directly serve, and partially create, the demand and the means by which tourists consume Third World tourist products. Destination countries on the other hand are the recipients of tourists. They provide the environmental attractions, novelty and superficial rationale for an overseas holiday. The central problem, then, for Third World destinations is the essentially inequitable relationships inherent in this international system (Goonatilate 197817-21; Hoivik and Heiberg 1980:88-911. Immobile tourism facilities in tourist destinations rely on foreign corporations to supply both the bulk tourist environment and the tourists to ensure viability. The flow of tourists to these destinations is achieved by either gaining the cooperation of foreign interests or by national bargaining power over factors affecting the profitability of these foreign interests. For, in the final analysis, metropolitan transport and tour wholesaling companies could seek to direct tourists to alternative destinations. The influence and negotiating power of destination countries is further weakened by the fact that control of a very high proportion of tourist flows is in the hands of a few corporations in each metropolitan market (Britton 1981; IUOTO 1976:102-31. INTERNATIONAL

TOURISM

IN THREE PACIFIC ISLAND STATES

Many of these characteristics of international tourism can be illustrated with Pacific island case studies such as Hawaii and Fiji. But by taking a different range of case studies for comparative purposes, in this instance Fiji, the Cook Islands, and Tonga an additional issue can be explored which is often raised in the development literature. There have been a few Third World countries which did not experience colonialism. There are also a much larger number which, while they were colonies, were only weakly articulated economically with metropolitan powers-although they may have been of some strategic importance. These underdeveloped countries appear to have poorer economic performances than countries which were more fully exploited colonies, especially those with expatriate settler communities. For theorists of the orthodox school this is not surprising. Colonialism may have had its dark side, but on the whole it was an essentially modernizing force. Writers of the dependency school would make a different comment. The degree of 1982 ANNALS OF TOURISM RESEARCH

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WORLDTOURISM

penetration by foreign capital, or conversely, the extent of a colony’s incorporation into the global capitalist economy, is the most important cause of structural distortions. A form of economic growth (not “development”) is encouraged which, through “spin-offs” and “trickledown effects,” marginally improves absolute per capita standards of living. But it does so in a way that overwhelmingly transfers the great proportion of accumulated capital and welfare benefits to local ruling classes and foreign interests. Coming back to the original point, those countries weakly integrated with imperialist spheres of influence (usually resource poor or very isolated economies) suffer in a paradoxical way. Because they have not been the recipients of much foreign capital and technology, they are unable to undergo even a distorted dependent capitalist form of economic transformation. They remain, to all intents and purposes, marginal to the world economy. Certain Pacific island countries fall into this category. Most Pacific microstates have been colonized in one form or another, but many have offered little return to their colonial overseers except as military bases, atomic bomb sites, or transport and communications nodes (Cohen 1977). Some have been suppliers of primary commodities (copra, sugar, tropical fruits) or minerals (nickel, phosphate) for metropolitan countries. In general, however, the bulk of microstate populations have remained in semisubsistence activities (Ward and Proctor 1980). By selecting three Pacific island countries which represent different degrees of incorporation into the world economy, one can demonstrate several important attributes of the international tourist industry. In particular, the relationship between colonialism and the development of tourist facilities can be investigated. Such a relationship may not be relevant to all Third World tourist destinations. Nor is the ensuing discussion implying a single-variable explanation of why tourism development occurs. Nevertheless, the historical experience of Third World countries generally, and the case studies in particular, are fundamental to understanding the nature and viability of their tourist industries. Fiji is a classic example of a structurally dependent economy (Britton 1980b; Rokotuivuna 1973; Samy 1978). Linked through merchant capital in the early nineteenth century to the expanding economy of England and her Australasian colonies, Fiji became a supplier of industrial raw materials. In 1874 the island group was annexed and became a British colony. From that time on the country’s economy was largely controlled by Anglo-Australian industrial interests (e.g., Colonial Sugar Refining Co., Emporer Gold 348

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Mining Co., and Cope Allman Ltd) and Australasian mercantile companies (e.g., Bums Philp South Seas Ltd. W.R Carpenter Ltd. and Union Steamship Co.). At the granting of Independence in 1970, overseas companies held 94 percent of the total paid-up share capital in Fiji, and were responsible for 75 percent of total gross fixed capital formation in all industries. The Cook Islands share some of Fiji’s colonial experience. This island group was a protectorate of Britain from 1888 until 190 1 when colonial responsibility was transferred to New Zealand and the country became a territory of New Zealand. In 1965 limited selfgovernment was granted but the country remains in reality a tropical extension of the New Zealand economy. The Cook Islands is within the New Zealand currency sphere, islanders have New Zealand citizenship, the New Zealand Government controls the islands foreign affairs and underwrites its budget. The Cook Islands, like Fiji, has a small but active and well represented expatriate European community. The economy since the midnineteenth century has been dominated by New Zealand mercantile trading and transport companies (Bellam 198 1; Gilson 19801. But the Cook Islands have never attracted much foreign investment and the New Zealand Government prohibited the establishment of a viable expatriate planter class. To encourage some degree of financial self-support, the New Zealand administration in the 1930s established a series of citrus fruit schemes. These eventually became the basis of a fruit juice processing industry after a New Zealand company constructed a juicing plant. This remains the only significant productive sector in the Cook Islands. Tonga has had an altogether different history. The country escaped direct rule by a colonial power although British and German rivalry last century led to Tonga becoming a British protectorate. Political and commercial ties to both of these metropolitan countries have remained. Rather than having an imposed colonial administration, the islands of the Tonga group were unified under rigid monarchic structure (Hau’ofa 1978; Marcus 19811 which sheltered the country from outside forces. As a consequence, the monetization of the economy has been very limited. What commodity exchange relations that did develop were largely between a noncapitalist subsistence economy linked to foreign merchant interests trading in copra Since the most recent change at the head of the monarchy, Tonga is being coaxed more into the world economy. While the capitalist sector is still rudimentary, it is being expanded by the State and local entrepreneurs who are mostly members of the ruling noble families. Other im1982 ANNALS OF TOURISM RESEARCH

349

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Table

1

The Composition of Tourism in Fiji, The Cook Islands, and Tonga Fiji 1977 Accommodation Sector No. of accommodation units No. of hotels (and rooms) No. of motels (and rooms) Guesthouses and others (and rooms) Av. enterprise turnover ($1 No. of foreign owned units (and rooms) % of foreign owned units [and rooms) No. employed

Cook Islands 1979

97 61 (3351) 18 (256) 18 495,625

(292)

35 3,180

(621

Tourist Shopping Sector No. of enterprises No. of foreign owned enterprises Est. no. employed full time

153 10 926

Handicraft Sector Est. no. sector enterprises Est. no. employed

570 972

Total number of tourist enterprises (excluding taxis and handicraft vendors)

296

27 2

16 (1221

5

(381

21 42,592

(1541

-

(25371

46 16 353,564 771

19 3 (2031

164,638

34

Tour and Travel Sector No. of enterprises No. of foreign owned enterprises Av. enterprise turnover ($1 Est. no. employed full time

Tonga 1979

2(190) 11 244

-

(581 290

7 2 62.850 27

14

(104)

7 1 83,500 50

7

1 75

ND ND

18

120 ND

40

39

ND: No data available Sources: Fieldwork 1977, 1980

portant sectors of the economy, particularly finance, merchant trading, transport and communications, are in the hands of Australasian companies or a few expatriates. The economy is still very much reliant on its coconut and other agricultural products. Tourism is actively encouraged in each of these countries. The range of the industry’s contribution to Gross Domestic Product is from 6.1 percent in Tonga 13.5 percent in Fiji, and 21.7 percent in 350

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the Cook Islands (1975-78). Tourism receipts in 1979 as a proportion of commodity export receipts are 43.4 percent, 59.0 percent, and 16 1.3 percent in Tonga, Fiji, and the Cook Islands, respectively. Gross 1979 tourism income in the three countries was $3.9 million for Tonga, $5.4 million for the Cook Islands, and $105 million for Fiji. It is this last set of figures which is important for this analysis. There are significant differences in the composition and organization of tourism in these countries (Table 1). Tourist accommodation is the largest source of industry revenue in each country, but the type of accommodation varies considerably. Fiji offers all the facilities commonly associated with luxury resort holidays. Large hotels dominate the accommodation scene, although budget motels, guesthouses, and other lodgings are available. Accommodation in the Cook Islands is split between three hotels (including one large international resort) which provide 62 percent of available rooms, and several much smaller motel enterprises. In Tonga by contrast, there is a proliferation of motels and even smaller guesthouses. Only one hotel provides tourists with basic international standard accommodation. This variation between destinations is reflected in differences in the average turnover of accommodation enterprises. Fiji hotels have gross sales levels ten times greater than their Tongan counterparts, with Cook Islands enterprises holding an intermediate position. This pattern is related to the extent of foreign ownership of tourist accommodation. In Fiji a third of the hotels are overseas owned. There are two foreign owned hotels in Rarotonga (the two largest1 and none in Tonga. In both Fiji and the Cook Islands, foreign companies control a majority of the tourist rooms available. Overall, foreign companies have a greater presence in Fiji, a foothold in the Cook Islands, and are mostly absent in Tonga. The size of non-accommodation enterprises are again generally largest in Fiji and smallest in Tonga. There are also differences in the facilities available to tourists. Fiji has a very important tourist shopping sector, as does Rarotonga relative to its size. Tonga has comparatively little tourist shopping but, like Fiji, has an extensive handicraft sector. These differences in tourist plant are associated with different types of tourists. Fiji taps the whole range of markets, from the wealthiest to the most budget minded tourist. The Cook Islands attract a narrower, less affluent clientele, mostly from New Zealand. A large proportion of Tonga’s air arrivals are backpackers and other low spending tourists, with the biggest market being cruise-ship passengers. It was stated above that where foreign enterprises were present 1982 ANNALS OF TOURISM RESEARCH

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POLITICAL ECONOMY OF THIRD WORLD TOURISM

Table 2 The Distribution of Tourist Receipts by

!3ectorsand Ownership Categories ($000~ Gross Retail Turnover) Enterprise

Travel

Ownership

and

category

Accommodation

Tours

Handicrafts

Tourist

All

Shopplng

Sectors

Percent

FIJI 1977 Foreign

20.808

8.350

-

18.128

47,287

65.6

4.85 1

154

450

10.467

14.5

3.52 1

382

585

6.506

10.993

15.3

13

67

627

12

719

1.0

140

53

24

2.563

3.6

72.048

100.0

European

5,012

Indian Flyan Other

2.347

Total

31.720

Foreign

2.350.0

242.5

European

431.6

190.4

Cook Islander

166.3

7.0

Other llnc.

178.2

1,419

13,789 COOK ISLANDS

Total

3.128.1

150.0

European

34.0

Tongan

151.0

Other (Inc. Govt) TOti

Sources:

Fieldwork

1977.

1979 65.0

2.657.5

51.2

1.398.0

1.970.0

37.7

225.0

400.3

7.7

125.0

303.2

5.8

-

1.659.5

5.227.5

100.0

-

75.0

225.0

7.9

-

439.9 TONGA

Foreign

25.120

1979

15.0

49.0

1.7

965.0

359.0 -

590 -

500.0

1.465.0

51.1

1.150.0

524.5

590

600.0

2.849.5

100.0

25.0

1,125.5

39.3

-

1980

in a destination country’s tourist industry they would be the most successful and conspicuous companies. This is demonstrated in Fiji and the Cook Islands (Tables 1 and 21. Moreover, while in Fiji over 65 percent of total tourist receipts go to foreign companies, this proportion is 51.2 percent in the Cook Islands, and 7.9 percent in Tonga (Table 2). There is a direct parallel between the extent of a country’s historical structural conditioning as a colony and the presence of foreign capital. The more structurally dependent a country is, the greater likelihood there will be of that country having basic infrastructure upon which a tourist industry could be based. Fiji’s tourist industry evolved in the 1940s and 1950s from the colonial construction of ports, roads, government accommodation, and, most importantly, airport facilities that enabled the colony to become a key refueling stopover for international air carriers (Britton 1980al. Fiji also had a vigorous expatriate community which lobbied the colonial government for the promotion of expatriate commercial interests, 352

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including tourisim. With Government endorsement of further foreign investment to alleviate structural problems in the economy, as well as international shipping and air carrier commitments to Fiji, the country was provided with all the prerequisites of a tourist industry (Britton 1981, 1982bl. By the early 1970s Fiji had become one of the most sophisticated and varied tourist destinations in the Pacific. What this case study indicates is that Fiji tourism mirrors the structural characteristics of the country’s neo-colonial economy. In the Cook Islands the prime initiators of tourism development were also external and local European interests, primarily New Zealand companies and expatriates. The industry’s origins in Rarotonga are as recent as 1974, with the New Zealand Government’s construction of an international airport at Avarua as part of an aid program. Given the dearth of productive activity in the economy, the airport was seen as an opportunity to establish a tourist industry. This would help to diversify the economy and decrease its reliance on New Zealand. With a paucity of indigenous investment capital available, it was left to the Government and the European community to establish the industry. The Government, however, was obliged to partially recompense New Zealand for the generosity of its aid. Air New Zealand was given a 2 1 year monopoly over landing rights to Rarotonga. The State did, however, become a one-third shareholder, along with Air New Zealand and the New Zealand Tourist Hotel Corporation, in the Islands largest and most attractive tourist resort. New Zealand and resident European companies, meanwhile, constructed most of the other medium sized hotels and smaller motels and dominated the tour and tourist shopping sectors. The Cook Islands thus resemble Fiji in the extent of foreign commercial involvement but there are important differences. Because the industry is so small on Rarotonga, the New Zealand capital invested in the large tourist resort over-emphasizes the numerical presence of foreign companies. With less than 20,000 tourists a year, Rarotonga cannot support large scale, capital intensive tourist ventures. What is unique about Cook Islands’ tourism is the extent of resident European participation in enterprises which, while adequate for the local market, are small in scale compared to their Fiji equivalents (Tables 1 and 21. There is one other factor which is crucial to understanding the small size of Rarotonga’s tourist industry. Air New Zealand’s landing rights contract discourages other international carriers from flying through the Cook Islands and renders the destination extremely vulnerable to Air New Zealand corporate decisions. On the other hand, the local tourist 1982 ANNALS OF TOURISM RESEARCH

353

POLITICAL ECONOMY OF THIRD WORLD TOURISM

industry is so small, and peripheral to the major trans-Pacific air routes, that it is unable to attract much interest from foreign air carriers in times of serious retrenchments in the international aviation scene. Tonga has been even more isolated from those forces which are so important in creating the conditions for a successful tourist industry. Tourism is being promoted in the Kingdom without most of the prerequisite linkages to metropolitan tourist markets and companies. With no previous colonial agreement, there has been no foreign commitment and little interest in utilizing Tonga’s airspace. Nor was there a significant expatriate community or much indigenous private capital. In an economy with severe foreign exchange shortages and a weak productive base, it has been left to the Tonga Government to promote tourism in an attempt to generate employment and national income (Table 21. Thus the State runs the only international standard hotel, and duty-free philatelic and numismatic sales. Several tour companies, motels and guest houses are run by members of Tonga’s 33 noble families. The striking aspect of the local tourist industry, however, is the importance of handicraft sales to cruise-ship passengers. It is here, and in the operation of small guest houses, that indigenous participation in tourism is very evident. The lessons to be drawn from the Tonga case study are revealing. The country is very reliant on the cruise-ship trade because of the great difficulties encountered in attracting foreign air carriers. Apart from a limited Air New Zealand service, only Pacific island regional carriers fly through Tonga. Because of poor airport facilities, none but small aircraft can land in the Kingdom. Furthermore, these regional carriers from Fiji and Samoa are anxious to promote their home country tourist industries, not Tonga’s. Underlying these problems is the fact that Tonga, as an independent Kingdom, has been relatively free from external penetration of its economy. Tonga cannot be said to be structurally dependent, rather it is simply peripheral or marginal to the Pacific regional economy. There has therefore been little foreign tourist capital to provide international standard accommodation or wholesale tour packages that could be advertised and sold by travel agents and tour companies in metropolitan tourist markets. Nor have local enterprises, because of lack of experience, capital and industry contacts, been able to provide other than budget quality facilities or to market these products effectively overseas. It would seem that Tonga’s tourist industry has paradoxically suffered from the country not being a structurally dependent colony. 354

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G. BRI’lTON

CONCLUSION The international tourist industry, because of the commercial power held by foreign enterprises, imposes on peripheral destinations a development mode which reinforces dependency on, and vulnerability to, developed countries. This is particularly true for small Pacific island economies. This situation results in tourists at a destination being channelled within that commercial apparatus controlled by large-scale foreign and national enterprises which dominate the industry, The greatest commercial gains therefore go to foreign and local elite interests. The majority of locals can only participate in tourism through wage labor employment or small, petty retail and artisan enterprises. Though highly differentiated in their activities, these enterprises have one common attribute. Their income generating potential is severely limited. If destination governments wish to ensure greater and more widely spread benefits from tourism, then the organization of the tourist industry, and the distribution of power within their own countries, requires consideration. The other mechanisms governing the incorporation of Third World countries into the international travel trade has been the historical experience of these countries. The more a Third World country has been dominated by foreign capital in the past, the greater likelihood there is of the prerequisites for establishing a local tourist industry being present. Conversely, where a country has been historically unimportant to metropolitan interests, the lower the probability of a successful tourist industry being established. International tourism is first and foremost a product of metropolitan enterprise and affluence. It is metropolitan tourism capital which is the single most important element determining the organization and characteristics of tourism in underdeveloped countries. 0 0 REFERENCES Amin. s. 1974 Accumulation on a World Scale: A Critique of the Theory of Underdevelopment. New York: Monthly Review Press. 1976 Unequal Development. Hassocks: Harvester Press. BeIlam, M. 1981 The Citrus Colony. Wellington: New Zealand Coalition for Trade and Development. Britton, R 1979 The Image of the Third World in Tourism Marketing. Annals of Tourism Research 6(3):318-29.

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Submitted September 198 1 Revised version submitted January 1982 Accepted February 1982 Refereed Anonymously

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