Tourism effects…Financial Leakage

| June 21, 2013
Kieran Etoria-King

Kieran Etoria-King, Social Commentator

In other Caribbean news…Mention the Caribbean to anyone and their first thought is most likely to be of white-sand beaches, palm trees, and relaxation.

In the eyes of the world, the Caribbean is a holiday destination, and with good reason. The region hosts over 10 million tourists per year, and hoards over 50% of the worldwide cruise holiday market.

However, controversy has often arisen over how beneficial this actually is to the economies and cultures of these small, island nations.

The Dominican Republic, for example, is far and away the most popular tourist destination in the Caribbean. In 2012, the country welcomed over 4.5 million visitors. For comparison, Cuba and Jamaica, its nearest competitors, brought in 2.84 million and 1.99 million respectively.

But what is really notable about the Dominican Republic’s visitors is how many of them come from Europe and even further afield, and what this indicates.

Only 222,000 of Jamaica’s tourists last year came from Europe, while Puerto Rico, which welcomed over 1.3 million holiday makers, saw only 26,000 from Europe. The Dominican Republic, however, brought in over 1.1m Europeans – making up nearly a quarter of its total visitors. This is because the country has become a particularly cheap destination.

On the surface, this sounds like great news for Dominicans. More visitors should mean more money, right? Unfortunately, this is not necessarily true.

The controversy surrounding Caribbean tourism, along with tourism in developing countries worldwide, revolves around the fact that the majority of the money which tourists spend on their holidays in fact ends up leaving the destination country – by the time foreign owned airlines, tour operators and resorts (usually based in the countries the tourists come from) have taken their share.

Photo courtesy

Photo courtesy

The host nation is left with, according to the UN Environment Program, only about 20% of the original income. This is known as financial leakage.

The effects of cheap holidays trickle down, and while the American and European owned companies reel in the profits, local workers are paid small wages and local businesses are usurped by walled-in resorts which import their own staff.

Despite having by far the largest tourism industry in the Caribbean and one of the largest in Latin America, 31% of the Dominican Republic’s inhabitants live below the poverty line and unemployment stands at nearly 13%, and this is in the Caribbean’s second largest economy.

This does not even touch on the arguments raised by some that large influxes of white middle-class visitors dilute and neutralise the rich indigenous cultures of countries like the Dominican Republic, Jamaica, and Trinidad & Tobago.

Of course, this is not to dismiss the benefits of tourism to the economies of small, developing countries. Most of the Caribbean is blessed with the assets to attract tourists and their wallets, but one only has to look at the Dominican Republic’s neighbour Haiti to see how vital tourism is to countries like those in the Caribbean.

Left behind by the boom of the 80’s and 90’s, Haiti is now the poorest country in the Western Hemisphere and among the poorest in the world.

This is a compounding issue which only serves to worsen itself. Who wants to visit such a poverty stricken, unstable part of the world? – but it stems from the fact that without the foreign investment brought by tourism, Haiti’s infrastructure has been allowed to rot.

People from first world countries such as the US, Canada and the UK are used to a certain level of comfort and convenience, and they expect this to continue when they go abroad.

This means that when foreign companies set up hotels and resorts in a less developed country, they have to invest in the infrastructure of the country so that it can support the needs of the visitors.

Jamaica and the Dominican Republic have benefitted from modern roads and highways, airports, ports and agriculture as a result, while in Haiti it can still take several hours to travel a few kilometres and most cities and towns do not have regular electricity.

It is easy to complain about the negative impacts of tourism in the Caribbean, but the fact is that even accounting for the effects of financial leakage, the industry brings a great deal of investment to the region’s economies.

The worldwide economic crisis has of course caused something of a decline in tourism, but holidays remain the Caribbean’s largest ‘export’. Perhaps that is a blessing.

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Category: Business, CariBusiness, Travel & Leisure

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