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Peddling Paradise

Peddling Paradise The Politics of Tourism in Latin America Kirk S. Bowman

b o u l d e r l o n d o n

Published in the United States of America in 2013 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2013 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data Bowman, Kirk S. Peddling paradise : the politics of tourism in Latin America / Kirk S. Bowman. p. cm. Includes bibliographical references and index. ISBN 978-1-58826-897-6 (alk. paper) 1. Tourism—Political aspects—Latin America. 2. Tourism—Economic aspects—Latin America. 3. Economic development—Latin America. 4. Latin America—Economic conditions. I. Title. G155.L3B69 2013 338.4'7918—dc23 2012044451 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5

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3

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Contents

vii ix

List of Tables and Figures Acknowledgments

1

The Puzzle of Tourism in Latin America

2

Keys to Unlocking the Puzzle

13

3

The Tourism Sector: An Overview

31

4

The Politics of Choice

51

5

The Constraints of Structure

77

6

Contrary Cases: Brazil and Argentina in Comparative Perspective

91

7 8

1

A Tale of Three Cities: Buenos Aires, Havana, and Rio de Janeiro

123

Good News, Bad News

155

161 163 173 187

List of Acronyms References Index About the Book

v

Tables and Figures

Tables 1.1 2.1 3.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 5.1 6.1 6.2

Real GDP per Capita in Latin America, 1951 vs. 2010 Dimensions of Successful International Tourism Promotion Potential Positive and Negative Results of International Tourism Externalities Visa Requirements of Latin American Countries for US Passport Holders Las Vegas Room Tax Allocation, July 1, 2007 Tourism and Marketing Resource Growth in Las Vegas, 1970–2007 How Tourism Businesses Think Tourist Taxes Will Be Used, Costa Rica and Honduras, 1997–2000 Tourism Receipts and Expenditures in Latin America, 2000 and 2010 Tourism Endowment in Costa Rica and Honduras Tourism Policy-Choice Rankings of Latin American Countries, 2000–2010 Tourism Performance Index for Latin American Countries, 2008 High-Priority Markets, Predictions, and Actual Performance of the Brazilian Tourism Sector, 2005–2010 Conflict vs. Cooperation in Provincial and National Tourism Policy in Argentina, 1999–2002 vs. 2009–2011

vii

6 23 46 56 61 62 63 65 68 73 89 101 117

viii

Tables and Figures

Figures 1.1 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4.1 4.2 5.1 5.2 6.1 6.2 6.3 7.1 7.2

Cumulative Growth of Real GDP per Capita in Latin America, 1951–2010 Three Pillars of International Tourism The Role of Structure in Tourism Capacity The Role of Choice in Tourism Capacity Outcomes of Structure and Choice for National Tourism Capacity Social Structure, Policy Choices, and Tourism Models in Global Cities Tourist Arrivals to Latin America, 1950–2010 Global International Tourist Arrivals, 1950–2010 Tourist Arrivals to Latin America, 2000 and 2010 Growth of International Tourist Arrivals to Latin America, 2000–2010 Per Capita Growth of International Tourist Arrivals to Latin America, 2000–2010 Per Capita Tourism Receipts in Latin America, 2000 and 2010 Net Tourism Receipts in Latin America, 2000 and 2010 Net Tourism Receipts per Capita in Latin America, 2000–2010 Tourism Revenues in Costa Rica and Honduras, 1979–1997 The Effect of Discrete Unfavorable Structural Events on Tourism The Effect of Sustained Unfavorable Structure on Tourism Tourist Arrivals to Argentina and Brazil, 2000–2010 Cumulative Change in Tourist Arrivals to Argentina and Brazil, 2000–2010 Actual vs. Predicted International Tourist Arrivals to Brazil, 1998–2020 Tourist Arrivals to Rio de Janeiro, Buenos Aires, and Havana, 2000–2010 Cumulative Change in International Tourist Arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010

7 22 25 26 27 28 34 37 38 39 40 41 42 66 69 79 79 93 94 102 125 125

Acknowledgments

Growing up in Las Vegas and having a first career that was associated with tourism, I have remained a careful observer of the industry as I have traveled throughout the world and lived in several Latin American countries. I was puzzled as to why some destinations benefited in multiple ways from tourism and others did not. I believe that this book provides several important answers that are useful for understanding tourism and other issues of comparative development. When I started this project, I did not plan on working on it for over a decade, making thirty-nine research trips, and conducting more than a thousand interviews. Most of that research was exciting and enjoyable because of the support, engagement, hospitality, and friendship offered by so many. Much of the credit for this book and whatever contribution it makes to our understanding of the political economy of tourism in Latin America belongs to others. The project was funded in part by the International Conservation Biodiversity Groups (ICBG) Fiji Program, with funding from the National Institutes of Health and the National Science Foundation. Generous support was provided by the Center for International Business and Education Research (CIBER) at Georgia Tech, the Georgia Tech Foundation, the Ivan Allen College, the Sam Nunn School of International Affairs, and the Alfred P. Sloan Foundation. Thanks to Tony Gallego, Maria Hugee, Stephanie Jackson, Wanda Moore, Vince Pedicino, Ben Powell, and Marilu Suárez at the Sam Nunn School for a range of cheerful and generous support. Outstanding student research was funded by the President’s Undergraduate Research Program at Georgia Tech and provided by Rachel Bankeser, Madeline Cook, and Kristin Lundberg. Ayanda Francis, Tatiana Goldstein, Ashley Olmstead, Cate Powell, and Hether ix

x

Acknowledgments

Scheel also provided research assistance. My 350 study-abroad students in Latin America and Iberia and my research-seminar students at Tsukuba University were excellent listeners and candid critics of percolating ideas and preliminary findings. Mary Axford, Mariana Banús, Paul Barnett, Claudia Bertolo, Alison Bowman, Peter Brecke, Danny Breznitz, Alan Broadbent, the Cersósimo family, Ligia Maura Costa, Michelle Dion, Ximena Espeche, Jeremy Farris, Rosendo Fraga, Chris Gaffney, C. Michael Hall, Rich Harrill, Ronaldo Helal, Evelyne Huber, Steve Kay, Fabrice Lehoucq, Jeff Lesser, William Long, Mariano Masvidal, the Ramón Masvidal family, John McIntyre, the late José Carlos Sebe Bom Meihy, Norberto Pontiroli, Regina Schlüter, Lars Schoultz, Manuel Serra, Terry Snell, Adam Stulberg, Rodolfo and Lolita Stusser, Eduardo Suárez, Gisela Taschner, Zak Taylor, Ricardo Watson, Virginia Webber, Jon Wilcox, Brian Woodall, and many others gave generously of friendship, conversations on tourism, critiques, information, ideas, and meals. Heartfelt gratitude to Lynne Rienner, Shena Redmond, and Lynne Rienner Publishers for a fabulous publishing experience. Sandy Thatcher believed in this project longer than anyone else. Felipe Arocena and Gabriel Di Meglio were always generous when I needed assistance or clarity. I inherited wanderlust from my adventurous late grandmother Ella Carruth. My parents supported and nourished my interest in seeing the world and making comparisons. Micah and Kole were my best traveling companions and provided a lot of laughter and joy during the fieldwork.

1 The Puzzle of Tourism in Latin America

a niche industry that was prominent in a few isolated destinations in a limited number of countries to one of the most important industries throughout the region. International tourism affects growth, distribution, the environment, gender, jobs, regional equality, exchange rates, poverty, transportation, infrastructure, and more. Tourism can transform cities and degrade beaches. In 2012, international tourism will generate US$1 trillion in direct economic receipts globally and US$65 billion in Latin American and the Caribbean (UNWTO 2012). With the rapid growth, importance, and relevance of the sector, the political dynamics of international tourism are increasingly important and provide three fundamental puzzles. The Latin American debt crisis of the 1980s and the ideological ascendance of economic liberalization led to strong pressures throughout the region for privatization and a less active state, and states shed industries and reduced their economic footprint.1 One of the most enthusiastic participants in privatization was Argentina, which in the 1990s privatized utilities, water, petroleum, roads, railroads, subways, mines, airlines, airports, ports, banks, the post office, and pensions.2 Even as adherence to the Washington Consensus and widespread privatization and liberalization curtailed state involvement in running banks, owning utilities, directing industries, and guiding productive sectors, at the same time the World Bank, the Organization of American States, and other international institutions were actively encouraging more state involvement in one of the world’s largest economic activities, tourism.3 Why was the state’s role greatly expanded in tourism in every Latin American country at a time when it was being reduced or eliminated in other economic sectors? This is the first puzzle that the book explores. 1

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Peddling Paradise

Ministries of tourism were created in numerous Latin American countries and expanded in others with the hope of capturing more of the US$919 billion in annual international tourism expenditures in 2010 (UNWTO 2011: 4).4 Tourism revenues could help solve balance of payments crises, create millions of new jobs in the hemisphere, bring new development to previously ignored regions, increase foreign investment, and more, and all without smokestacks. Tourism institutions were created or strengthened, grandiose plans were announced, airports were constructed and modernized, country brands were formulated, teams of tourism officials were sent on the international tourism fair circuit, and expectations were raised in every country in the hemisphere. Never before had every Latin American country simultaneously and publicly proclaimed a single industry as a national priority. Tourism was a boom industry that would deliver. And boom it did, with international tourist arrivals to Central and South America growing from 9.7 million in 1990 (UNWTO 2001: 16) to over 31.4 million in 2010 (UNWTO 2011: 4). Today, many years into the era of international tourism in Latin America, some countries have succeeded in harnessing the sector while others have failed, and failed miserably. The variation in performance is perplexing, as some of the countries with the greatest tourism advantages in cultural and natural endowments performed poorly in international tourism promotion, while other countries greatly exceeded expectations. For example, Brazil should be the greatest tourism success story in Latin America. Brazil is endowed with a long coastline of picturesque tropical beaches and multiple world-class tourism icons such as the Corcovado Christ statue, Sugarloaf, Carnival, Ipanema, Copacabana, Iguazú Falls, the Amazon, and others. The World Economic Forum’s 2008 Travel and Tourism Competitiveness Index ranks Brazil number one in the hemisphere and number three in the world for natural and cultural resources for tourism (Blanke and Chiesa 2008). With this endowment of cultural and natural resources, Brazil should be one of the top destinations in the world. Brazil has a global reputation for fun, soccer, sunshine, samba, and beautiful people. And Brazil was a democratic, industrial, diplomatic, and economic success over the past decade, which led in November 2009 to an Economist cover story, “Brazil Takes Off,” featuring a photo of the famous Christ statue rising like a rocket. Brazil should have benefited more than any Latin American country from the rapid growth of international tourism since 2000. Brazil announced international tourism promotion as a national priority, established a standalone tourism ministry in 2003, placed high-profile officials in charge of national tourism promotion, and announced ambitious official plans to multiply the number of international visitors to Brazil and create millions of new jobs. Yet international tourism in Brazil stagnated and underperformed, with international tourist arrivals actually falling from 5.30 million in 2000 to 5.16 million in 2010, even at a time when international tourist arrivals expanded globally by some 35 percent. The “marvelous city” of Rio de Janeiro, Brazil’s

The Puzzle of Tourism in Latin America

3

world-class tourism destination, also experienced an unexpected decline in the annual arrival of international tourists, from 1.8 million to 1.6 million over the same time period.5 Why did Brazil perform so poorly? Close your eyes and think about Costa Rica. What do you envision? Now think about Honduras. Are your thoughts similar? For many people, Costa Rica has established a brand image as a peaceful, safe, and environmentally creative country—and a beautiful and exotic tourism destination. Honduras, on the other hand, has an international image more often associated with poverty, gangs, or coups, or with being in need of assistance from church groups. It is no surprise then that Costa Rica received over US$2 billion in 2007 in international tourism revenues, or US$451 per capita, while Honduras received US$557 million in international tourism revenues, or a mere $78 per capita (UNWTO 2008). This is true even though Honduras possesses greater tourism endowments than Costa Rica (Bowman 2002: 237). What accounts for the different levels of success in Costa Rica and Honduras? Why some countries underperform in tourism arrivals and receipts while other countries perform much better than expected is the second puzzle this book explores. Not only has there been tremendous variation in aggregate growth of tourism and tourism receipts in Latin America, but the models of tourism and distributional effects also vary significantly in the region. Some countries and cities feature an enclave tourism model with high levels of leakage, meaning that most of the receipts of tourism immediately escape back out of the country and do not benefit the local population, while other countries and cities have a more integrated and inclusive tourism model with much better distributional and social effects. Why do some countries and cities have inclusive tourism while others feature disarticulated or enclave tourism models? This is the third puzzle the book explores.

Puzzle one: Why did the states of Latin America become so actively involved in the tourism sector in the past two decades? Puzzle two: Why are there such widespread performance differences across the region in attracting international tourists? Puzzle three: Why do some countries and cities follow an inclusionary tourism model with better distributional effects, while others follow an enclave model with far fewer positive distributional benefits?

Tourism and State Capacity An important part of the answer to all three puzzles and a featured topic of this book is the role of the state at both the national and the city level.6 I use the role of the state in promoting international tourism and in shaping the effects

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Peddling Paradise

of that tourism as a quasi-laboratory to understand state capacity and development. I propose that state capacity, or the absence of it, largely determines the percentage of people in poverty, the long-term rate of economic growth, the state of healthcare, the security of citizens, and the quality of life of the inhabitants of Latin America. Indeed, the range of levels of state capacity is a principal reason for the significant disparities in levels of development in the region. Why are some Latin American countries capable of achieving certain stated goals, overseeing new economic activities, regulating industries, and delivering programs to citizens, while other Latin American countries flounder and rarely achieve announced goals or policies? Why do the citizens of some countries have access to sufficient calories while the citizens of others go hungry? Why do the poorest citizens receive much better healthcare in some countries than in others? Why do some countries have much higher economic growth rates than others? The answers to all of these questions include state capacity, and this book uses international tourism promotion as an entry point to better understand state success and failure. My own epiphany on state capacity and development began with the simple ringing of a telephone in 1995 in Costa Rica, where I was doing dissertation fieldwork. I answered the phone in my apartment, but soon realized that the caller could not hear me. After a few minutes of failing to establish a working connection, I faced one of the worst Latin American nightmares—dealing with a state-owned utility. I was aware of the conventional wisdom. Stateowned and -managed utilities in Latin America were rent-seeking, inefficient, and unresponsive dinosaurs shielding lazy and incompetent unions from the forces of progress. I had lived in Honduras for several years and spent many unpleasant and unproductive hours dealing with nationalized utilities and other state services. I knew that once the bureaucrat pulled out the large lined folio where all bureaucratic activity is carefully recorded by hand, my day was shot. I had heard the stories of poor Argentines waiting thirty-six years for the state telephone company to respond to requests for service. My initial reaction was the fear that I would need to change apartments, as it would take months to get the phone repaired and I needed a phone for my research. I borrowed a neighbor’s phone and dialed the number for telephone repair. Unexpectedly, I found myself speaking with a pleasant woman who seemed eminently professional, interested in customer service, and empathetic with my situation. Although it was late in the afternoon, she assured me that someone would come to my apartment the next morning to resolve the communication problem. She asked if I would be home at 7:45. I had a good laugh trying to determine if I should set the alarm and get up early. I was sure there was no way anyone would show up at 7:45 in the morning in response to a complaint about a telephone. I was awakened the next morning at 7:40 by a loud metal clink coming from the front gate and the familiar Costa Rican greeting of “upe.” Not one but

The Puzzle of Tourism in Latin America

5

two telephone technicians were waiting outside. They were skilled, professional, polite, service-oriented, and efficient. Within minutes of testing the phone with some instruments, they announced that the line was fine, but the telephone was malfunctioning. One of the technicians went to the van, returned with a new telephone to replace the damaged one. After a simple installation, the technicians asked if they could help with anything else, and they were gone before 8:00. The service was free and I was not even charged for the new phone. The whole episode was foreign to my experience in Honduras and the conventional wisdom that accompanied the privatization propaganda of the early 1990s.7 Could a Latin American government enterprise or agency be relatively efficient and exhibit capacity? Is state capacity the misunderstood and little-studied key to understanding development differences between Costa Rica and Honduras? Why are some countries more capable than others? Contrary to popular perception—and the perception of many of my students when they first study Latin America—government and development performance in the region varies tremendously, both across countries and over time. A trip from Managua, Nicaragua, to San José, Costa Rica, will reveal significant differences, as will a journey from Buenos Aires, Argentina, to Asunción, Paraguay.8 This wide difference in long-term performance shapes and impacts the living conditions and opportunities of hundreds of millions of people. Despite the general regional economic trends in import substitution industrialization from the 1940s to 1970s, the crisis of democracy in the 1960s and 1970s, the debt crisis of the 1980s, and economic liberalization in the 1990s, all aspects of development performance vary significantly across the region. One clear example is long-term economic growth, which is one of the most studied topics in social science. Why have some Latin American countries experienced relatively healthy average economic growth rates over the past six decades while others have experienced economic stagnation?9 Long-term economic growth rates are an excellent example of the medium- and long-term variability in performance across the region. Table 1.1 presents per capita gross domestic product (GDP) data for eighteen Latin American countries in 1951 and 2010. In 1951, Bolivia and Venezuela were squarely in the top half of per capita income in the region. By 2010, they had both fallen dramatically in relative terms. Conversely, in 1951, Brazil, the Dominican Republic, and Panama were among the poorest countries in Latin America, but by 2010 these three countries had experienced such long-term growth that they ranked in the top half. The lesson is clear: long-term development varies widely in Latin American countries, and that variation has a substantial effect on the citizens of these countries. The long-term successes and failures of Latin American states to guide economic growth are presented visually in Figure 1.1. The differences are dramatic. Brazil, the Dominican Republic, and Panama are the clear success stories for the

6

Peddling Paradise

Table 1.1

Real GDP per Capita in Latin America, 1951 vs. 2010 1951

2010

Real GDP per Capita (US$)

Rank

Real GDP per Capita (US$)

Rank

Percentage Change, 1951–2010

1 6 16 7 11 5 15 14 9 10 12 4 13 18 17 8 3 2

12,338 3,743 8,325 12,527 7,534 11,502 10,506 6,240 6,168 6,089 3,578 11,940 2,289 10,850 4,069 7,411 11,718 9,071

2 16 9 1 10 5 7 12 13 14 17 3 18 6 15 11 4 8

125 14 380 289 192 234 489 201 114 121 52 206 9 548 134 144 123 56

Argentina Bolivia Brazil Chile Colombia Costa Rica Dominican Republic Ecuador El Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela

5,480 3,297 1,737 3,221 2,580 3,440 1,785 2,069 2,880 2,758 2,360 3,899 2,105 1,675 1,733 3,038 5,256 5,823

Source: Heston, Summers, and Aten 2012.

region. Chile, Costa Rica, Ecuador, and Mexico fall in the second tier, with real per capita economic growth of greater than 200 percent over the period. Seven countries—Argentina, Colombia, El Salvador, Guatemala, Paraguay, Peru, and Uruguay—had disappointing cumulative real growth of between 100 and 200 percent over the six decades. These slow-growth countries have lost considerable economic ground in the region, resulting in unsatisfactory standards of living for their citizens. Bolivia, Honduras, Nicaragua, and Venezuela are the truly spectacular failures, having inched forward by a cumulative growth total of between 9 and 56 percent over more than half a century.10 While there are discussions about the correlates of economic growth and the precise role of state capacity in development, there can be no debate that these states have failed their people and that state capacity for growth has been unacceptably low. Growth is not the only determining factor for quality of life. The distribution of total income, as well as education, healthcare, transportation, housing, security, and other state-influenced outcomes, are also important. Like income, the capacity of the state in these and other areas varies widely in the region (see Bowman 1997). While many authors have uniformly painted state capacity in the region with a negative image, the evidence suggests that performance is varied, and Latin America has more success stories than suggested by the conventional wisdom.

The Puzzle of Tourism in Latin America

Figure 1.1

7

Cumulative Growth of Real GDP per Capita in Latin America, % 0 1951–2010

600

Percentage

500

400

300

200

100

Pe ru Ur ug ua y Ve ne zu el a

M ex ico Ni ca ra gu a Pa na m a Pa ra gu ay

az il

Ch

Br

Bo liv ia

ile Co lo m bi a Co Do st m a in Ri ica c a n Re pu bl ic Ec ua do El r Sa lva do Gu r at em al a Ho nd ur as

Ar

ge nt in a

0

Source: Heston, Summers, and Aten, 2012.

Recent research also indicates that state capacity is heterogeneous and fluid within states. Brazil might have tremendous levels of state capacity in public university education or trade negotiations and diplomacy, and much lower levels of state capacity for citizen security, transportation, and tourism. States can simultaneously have strong and weak institutions, as Steven Levitsky and Maria Murillo (2005) so compellingly demonstrate for the perplexing case of Argentina. A state might also exhibit significant capacity in regard to tourism promotion, and considerably less capacity in other domains. State tourism promotion is multifaceted and complex, and the range of important conditions for success make it a particularly useful and focused lens for understanding capacity in general. State capacity and good government have recently emerged as focal points of development, reaching a peak with the World Bank’s spotlight on the topic in the 1997 World Development Report. Yet despite a scholarly lineage that dates at least from Max Weber, “there is little research on how to go about getting state capacity,” and there are few comparative studies that seriously

8

Peddling Paradise

take politics or power relations into account (Heredia and Schneider 2003: 1). Those studies that do exist often focus on bureaucratic structure and nuts-andbolts reform, and not on outcomes. Patterns of tourism growth and distribution within countries depend significantly on the constraints of existing social structures and the choices and policies that countries make within those structures. The combination of structure and choice explains the success of a country like Costa Rica or a city like Buenos Aires, the unmet promise of a country like Brazil or a city like Rio de Janeiro, and the mixed success of a country like the Dominican Republic or a city like Havana. The state itself is part of the structure that constrains or empowers tourism at the subnational level, and the effect of structure and choice on tourism growth and distribution at the city level is one of this book’s topics. There is a real paucity of comparative political studies of Latin American tourism. While other sectors such as banking, computers, agriculture, mineral extraction, manufacturing, and even entertainment have an important comparative political literature, I could not find a single comparative article in a major Latin American or comparative politics journal that addressed comparative tourism in the region.11 The state’s role in promoting international tourism is, at its core, a question of politics, for it deals directly with the generation and distribution of a number of scarce resources, including land use, taxes, revenues, concessions, foreign direct investment, exchange rates, the allocation of security, access to beaches and other natural resources, road and infrastructure construction, the location of airports, and so on. Moreover, because of collective action issues, the state (or city or regional government) almost always plays the lead role in tourism destination branding and international tourism promotion. The role of the state is crucial for any sustained success in this industry, regardless of the type of economic or political regime. This study systematically examines the role of the Latin American state in managing multiple facets of international tourism, which in turn can tell us much about state capacity.

Outline of the Book This book examines international tourism promotion to resolve our three puzzles and to explore dimensions of state capacity in Latin America. Four empirical chapters primarily address issues of choice (the role of the state in attracting more international tourists and tourism spending) and of structure (equity, class, race, human capital) that shape the types of tourism featured in a country. Chapter 2 presents the theoretical and methodological blueprint for finding the answers to our three puzzles. This study employs an unusual research design of prospective comparative process tracing, in which the cases are

The Puzzle of Tourism in Latin America

9

selected at the beginning of the research period (2000) and studied over a decade. I review the literature and theories of state capacity, with an emphasis on recent research on state innovation. State capacity not only explains why some countries are better than others at generating international tourism revenues, but also explains the distribution of those revenues, the impact on the environment, the sustenance of local culture, and many other tourism externalities. Chapter 2 presents a framework of four components of state strength that help evaluate state success and failure. These four components in turn generate a conceptual model for destination capacity based on two dimensions, structure and choice, with a slightly different model for local tourism capacity. Finally, I present two theories that help explain and predict when states are unlikely or likely to make radical and bold policy changes for tourism ministries and international tourism promotion—the paradox of plenty theory and the prospect theory. Countries with substantial mineral or petroleum exports, such as Bolivia, Chile, Ecuador, Mexico, and Venezuela, will be caught in the paradox of plenty and are unlikely to make international tourism a long-term priority in practice. Destinations that suffer from a severe economic crisis and are in what prospect theory refers to as the “domain of losses” become risktakers and establish the most creative and innovative tourism institutions, as documented in Chapter 7. Chapter 3 presents a brief historical overview of the tourism sector in Latin America and solves the first puzzle: Why did the role of the state expand significantly in tourism at the same time that the role of the state was declining sharply in other economic activities? The three most important elements of the multifaceted answer are the growing size and importance of tourism on a world scale, tourism-specific collective action problems that only the state can solve, and the emergence of nation and destination branding as an important element in the increasingly competitive tourism market. A table of distributional externalities is presented and the ramifications are detailed. Chapter 4 analyzes state capacity and choice. State capacity in an area as complex and competitive as international tourism requires sustained treatment as a priority. In the late 1990s, all Latin American countries announced tourism as a national priority, yet in reality many policymakers were not serious about developing the sector. Some Latin American countries, such as Paraguay, have a rhetorical commitment to international tourism, claiming publicly that tourism is a national priority but displaying scant evidence of any actual interest or commitment in the sector. In contrast, a larger number of governments have a hollow commitment to tourism, such as Brazil and Chile. In these cases, there is both a rhetorical pronouncement of tourism as a national priority and a shell of policies and actions to deliver on the promise, but the capacity is hollow because the policymakers’ commitment is woefully incomplete and partial. In these cases, hopes are raised but follow-through is disappointing. And finally, there are a limited number of countries, such as Argentina and Costa

10

Peddling Paradise

Rica, that have a holistic commitment to tourism. In these cases, the policymakers’ commitment is observable across the range of conditions necessary for facilitating tourism success. What root causes lead to these variations in commitment to publicly stated priorities? Chapter 4 presents many answers to this question, but two explanations are the most compelling. First, I show how the paradox of plenty explains and predicts hollow tourism priorities. Mining and shipping copper or oil is relatively easier than implementing and following through with the complex and interdependent tasks of holistic commitment that are necessary to succeed in international tourism. And second, I show how Latin American states are poor multi-taskers, and how a continual focus on a crisis, such as national security issues, can undermine efforts for a sustained campaign in international tourism promotion. Chapter 5 explores the constraints of structure in regard to tourism capacity. The structural variables that matter include the challenges of federalism, human capital, inequality and poverty, legal authority, and security, and the negative consequences of distrust between the public and private sectors in Latin America. Unfavorable structural conditions constrain policy choices and both the types of tourism and the location of that tourism. The exclusive and enclave tourism that results exacerbates the inequality and social problems, reinforcing the exclusionary tourism. I have created a quantitative state tourism capacity index from the raw data presented in the World Economic Forum’s 2008 Travel and Tourism Competitiveness Index. My capacity index produces tourism competitiveness scores and rankings for Latin American countries that are adjusted for natural and cultural endowments. This new index allows for verification of some of the qualitative and observational findings. Chapter 6 presents a comparative historical analysis of Brazil and Argentina. Tourism was declared a Brazilian national priority in 1995 and President Luis Inácio “Lula” da Silva campaigned in 2002 in part on a promise to create a standalone tourism ministry and to greatly increase the number of tourists visiting that captivating country. The first decade of the twenty-first century brought a global tourism boom of historic proportions that resulted in significant growth in Latin America as a whole and in South America. Brazil experienced unprecedented democratic, economic, and reputational success. Brazil hosted the Pan Am Games in 2007 and was awarded the 2014 World Cup and the 2016 Olympics. Yet international tourist arrivals declined over the decade. Why? Tracking national efforts, policies, and performance in Brazil from 1995 to 2010 and contrasting them with efforts, policies, and performance in Argentina generates compelling explanations. Choice, structure, tourism, and tourism branding are not merely important at the national level, but are also important at the subnational level. City tourism is one of the most dynamic and growing sectors of international tourism. Cities can develop unique brands that are not as dependent on price

The Puzzle of Tourism in Latin America

11

as generic and declining sun and sand vacations. Global-tourism cities also act as gateways to other national destinations, but city-tourism choices and policies are embedded in national policies and actions. Chapter 7 compares and contrasts three global cities—Buenos Aires, Havana, and Rio de Janeiro. The question that drives the chapter is why Buenos Aires and Havana experienced significant increases in international tourism in the past decade even as Rio de Janeiro experienced a decline. Buenos Aires now (and since 2006) receives more international tourists than Rio de Janeiro when Rio is endowed with superior iconic tourism images, year-round temperate climate, and wonderful colonial churches and buildings, while Buenos Aires has only tango and Havana only recently was a dilapidated city. Buenos Aires not only lacks globally recognized iconic images, but also has cold winters and no beaches. And yet Buenos Aires has had an impressive and unexpected increase in international tourists for many years, while tourism performance in Rio has been surprisingly stagnant. Why? The answers to this question reinforce the findings in Chapter 6 using a different level of analysis. The key explanatory factors are the importance of local autonomy and institutions for innovation and creativity, human capital, and class and inequality compositions. Chapter 7 also confirms the expectations of prospect theory. The two cities in the domain of losses are Buenos Aires and Havana. These cities were desperate for foreign exchange and other tourism benefits, and they responded with risky and revolutionary changes in tourism institutions and models. These cities were risktakers, and their ability to embrace risk resulted in creativity and innovation. Rio de Janeiro did not face the grim prospects of the other two cities and remained risk-averse, playing it safe in tourism by clinging to a stagnant and outdated tourism bureaucracy and model. The concluding chapter summarizes the findings and discusses the trajectories and opportunities for state capacity and tourism in the countries of Latin America in the future. This underscores the dynamic relationship between structure and choice. The country that can finally reach its potential as a tourism star is Brazil, given appropriate shifts in structure and bold policy choices that are very different from choices in the past. In the past decade, under presidents Fernando Cardoso and Lula, Brazil experienced historic positive shifts in the structural variables of tourism state capacity, such as inequality, poverty, class, crime, and human capital. If Brazil can continue to deepen these historic changes and further alter the structure, and if policymakers can make the correct though often difficult choices, the country could dramatically alter its tourism performance and enhance the benefits in this decade of golden opportunity that features the World Cup in 2014 and the Olympics in 2016. International tourism is a trillion-dollar industry that all Latin American countries have publicly identified as a national priority. State capacity is the reason why some countries are more successful than others in achieving their stated objective of harnessing tourism for national development. This book

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Peddling Paradise

examines the relationship between state capacity and tourism, and provides important lessons for tourism policy, state capacity, and sector innovation at both the national and the local level.

Notes 1. Formally detailed by John Williamson as the Washington Consensus in 1989. 2. As Harvard economist Dani Rodrik summarized: “‘stabilize, privatize, and liberalize’ became the mantra of a generation of technocrats who cut their teeth in the developing world and of the political leaders they counseled” (2006: 3). 3. Tourism statistics are historically weak and there is much debate as to whether tourism is the world’s largest industry (CTCC 2008; Goldstone 2001: chap. 3). 4. Up from US$525 billion in 2003 and excluding international passenger transport expenditures. 5. E-mail communication from RioTur, the official tourism entity of the city of Rio de Janeiro. 6. This study examines tourism in Latin America from a comparative political economy perspective, which attempts to explain the variation across a range of cases of economic policies and economic outcomes using political variables. The motivating questions of comparative political economy are why some countries implement different economic policies and have different economic institutions and why some countries and some people are wealthier than others. Comparative political economy is the intersection of comparative politics and economics and employs comparative methods. International political economy, in contrast, is the intersection of international relations and economics and is concerned with global systems of power and how political forces shape systems through economic interactions and how global systems conversely affect political structures. 7. The experience also helps to explain why most Costa Ricans (90–92 percent in 2003) are opposed to electricity and telephone privatization, and privatization is off the table even under administrations that favor privatizing utilities (Harris 2003). 8. There is also tremendous variation within regions and countries, for example Brazil. 9. Economists have not reached a consensus on the correlates of growth, but a considerable body of recent research points to the capacity of the state to establish institutions and an environment for long-term economic success, and in the past two decades international tourism promotion has been a crucial tool as Latin American countries seek generate and sustain economic growth and jobs. A significant body of work exists on economic growth, and a healthy debate exists over whether human capital (Barro 1991), investment (Levine and Renelt 1992), institutions (Acemoglu, Johnson, and Robinson 2005), geography (Herbst 2000; Sachs 2001), innovation (Breznitz 2007), and many other causes are principal determinants. 10. The variation in growth has also exacerbated inequalities between countries. In 1951 the richest per capita economy was 3.3 times richer than the poorest. In 2010 the richest per capita economy was 5.5 times richer than the poorest. 11. I could find only two published articles in Latin American and comparative politics journals over the past decade.

2 Keys to Unlocking the Puzzle

ing political puzzles of international tourism in Latin America. This chapter presents the definitions, assumptions, cases, methods, theoretical foundation, and conceptual models that make up the roadmap for resolving and explaining those puzzles.

Definitions International tourism. A visit to another country that includes spending a night in lodging. Crossing the border to buy prescriptions or dance for a couple hours and then returning home does not count. These activities are not tourism but rather referred to as excursionism. State capacity. Defining state capacity is not easy, as the term is used in many different ways. For some international relations scholars, state capacity is the maintaining of a monopoly on the means of organized and legitimate violence within a given territory, while for some economists, state capacity is the ability to tax and protect property (Cárdenas 2010). Barbara Geddes (1994) defines state capacity as the ability of state agencies to be effective in delivering infrastructure and production, and this results from merit-based and technically proficient professional bureaucracy that is shielded from partisan pressures. Atul Kohli (2010) defines state capacity as the ability to deliver growth, distribution, or some combination. I define state capacity as the ability to formulate goals and policies for an improvement in the well-being of the inhabitants and to

13

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implement those policies to such a degree and over such a period of time as to largely achieve those goals. If a country announces that international tourism will be a national priority, state capacity would be demonstrated by the formulation and implementation of policies that result in a significant increase in the number of international tourists.

Assumptions The benefits of tourism have been contested for many years (Honey 1999; Liu 2003). Industry supporters have countered with multiple studies and reports arguing that tourism can reduce poverty and help protect the environment (Salvat 1998; UNWTO 2002b). In many respects, the debate about whether or not tourism is good or bad for a country is akin to the ongoing agitation as to whether or not globalization is a force for good or evil, and whether or not countries should embrace or resist globalization. This type of thinking misses the point entirely. As I will show in Chapter 3, international tourism generates multiple potential externalities. For example, tourism can either empower women with new opportunities or lead to sexual exploitation of young girls. Tourism can enhance local agriculture through ecotourism and an emphasis on local foods and customs, or it can undermine local farmers by importing food along with tourists. Tourism can increase or reduce regional inequalities. In the absence of state leadership and regulation and enforcement, the externalities are nearly always negative. With sufficient state capacity and suitable policies, the externalities can be demonstrably positive. While tourism has dimensions that cut across economic, social, environmental, cultural, distributional, and other domains, this book largely focuses on growth.1 Class, ethnic tension, crime, human capital, and inequality are also important elements, for they both shape and limit the state’s tourism policy options and are themselves altered by tourism policies and practices. These structural variables are also major themes throughout the book. I assume that every Latin American country has sufficient local cultural and natural tourism endowment to enable it to develop a better-performing international tourism market. While it is true that some countries are more richly endowed than others with beaches, pleasant weather, easy access to markets, and historical and colonial architecture and landmarks, it is also evident that destinations like Las Vegas and Hong Kong have created dynamic tourism markets with fewer endowed resources. Globalization and the rapid and cheap exchange of information, people, goods, and services over the past two decades have led to a dramatic increase in international tourism, and all countries had the opportunity to take advantage of the boom decades in international tourism. Arrivals of international tourists grew by 55 percent from 1990 to 2000 (from 435 million to 674 million international arrivals) and

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15

another 39 percent from 2000 to 2010 (to a total of 940 million international arrivals) (UNWTO 2012). Over the twenty-year period, international tourist arrivals more than doubled. Affordable airfare, an expanding middle class in Asia and Latin America,2 and other factors result in more and more people traveling outside their home countries. And with the information and business opportunities provided by the Internet, the Patagonia of Argentina and the Mosquito Coast of Nicaragua are no longer limited to a relatively few intrepid explorers, but are mainstream destinations that can be easily researched from home. Globalization both boosted the market and provided a new toolbox for Latin American countries to brand themselves and share in the tourism bonanza. Some countries were faster and more innovative than others in publicly announcing the national policy of attracting more tourists, but by the late 1990s tourism was a publicly expressed national priority in every country in the region. This book explores why some Latin American countries and cities succeeded with their stated objectives and others failed.

Cases and Scope This project began with a diverse and crowded field of five randomly selected cases, each requiring significant fieldwork: Argentina, Costa Rica, Cuba, Honduras, and Uruguay.3 Dozens of interviews were conducted in each of these cases, including in all of the ministries of tourism.4 Private sector tourism interest organizations, tour and hotel operators, taxi drivers, tourists, and ecotourism operators were also interviewed in each of the five countries except Cuba, where interviews included the proprietors of dozens of family-owned restaurants (paladares) and guest houses (casas particulares), and regional tourism authorities in Havana, Cienfuegos, Trinidad, Matanzas, and Santa Clara. As I interviewed in the five countries, I found convincing reasons to conduct fieldwork in additional countries, so I added Chile and Paraguay.5 Further research convinced me that Brazil was the key country for understanding state capacity and tourism promotion, in large part because of that country’s incredibly high levels of cultural and natural tourism resources and a positive global image. I believed that analyzing this important case would help answer many questions about state capacity and tourism promotion. This required learning enough Portuguese to conduct interviews and multiple trips to Brazil. The more I learned about Brazil, the more fascinating and crucial the case became, and it deserves and receives the attention of most of Chapter 6. After completing several rounds of interviews in Buenos Aires, Havana, and Rio de Janeiro for a focused comparative exploration of those three marvelous cities (Chapter 7), I discovered that Barcelona and Valencia in Spain were explicit models for leveraging major events to rebrand cities and spur increases in tourism, and

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so I made two research trips to Spain. In the end, a wide range of interviews, from ministry officials in capitals to family-owned ecotourism businesses in the farthest reaches of some countries, were conducted in eight Latin American countries, Spain, and Fiji.6 Field research was conducted during forty trips to the target countries over the period 1995–2011 and involved over a thousand interviews.7 Because Latin American countries continually adjust many of the institutional elements of tourism ministries, sometimes building new ministries, often changing the source and amount of budgets, and even formally dividing tourism responsibilities between domestic and international promotion, this book does not attempt to catalog and describe the regions’ national tourism authorities. These descriptions would be already obsolete in some cases before the book was published. Good books, working papers, and theses and dissertations describing the history of tourism and tourism promotion already exist for most Latin American countries. The INCAE business school series has excellent working papers on tourism policy and development for all of the countries of Central America (for example, Inman and Segura 1998). For Brazil, there are excellent theses on foreign tourism potential (such as Dixon 2006), books on national tourism (such as Ruschmann 2002), and studies on the history and potential of tourism in cities such as Rio de Janeiro (Jordan 2002). The substantial descriptive case literature allows me to focus on the comparative analysis and the research puzzles. In addition to fieldwork and the use of primary and secondary sources, nontraditional methods of fieldwork were employed. I joined two LinkedIn and two Tripatini digital discussion groups on tourism and branding in Brazil. One of those groups, “Tourism in Brazil,” had over 300 tourism scholars, writers, government officials, and entrepreneurs as members. They constantly provided data and discussion and questions, and were enthusiastic responders to e-mail interviews. This virtual fieldwork strengthened my understanding of a complex country and a complicated tourism dynamic. The combination of the large number of cases for fieldwork and the constant change in tourism ministries and policies in these countries shapes the goals and format of the book. Obviously, the study is wider than it is deep, and I will not present an in-depth account of the tourism industry of any single country. State tourism promotion will be used as a way to enter and inform existing debates on state capacity, such as the paradox of plenty, issues of inequality, bureaucracies, and federalism.

Methods and Findings This study is likely to be seen by some as methodologically backward. The traditional political science study starts with some theoretical expectations,

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17

develops hypotheses, and then selects cases with known or suspected variance on the dependent variables, collects data, and conducts fieldwork to test those hypotheses. My study started with fieldwork in ten countries and during that process connected patterns and observations with existing theory. The methodology is best described as a prospective comparative process tracing a ten-year period whose cases were selected before the variance in the dependent variable (international tourism performance) occurred.8 The cases were selected in the period 1995–2001 and the variance or change in the cases occurred from 2000 to 2010. When Albert Hirschman was asked how he came to hold the unorthodox views he proposed in The Strategy of Economic Development, he replied: “I went to Colombia early in 1952 without any prior knowledge of . . . development. This turned out to be a real advantage. . . . [I later] discovered I had acquired a point of view of my own that was considerably at odds with current doctrines” (1958: 88). This story is only partially true for Hirschman, but is a very accurate account of my experience with my first book, Militarization, Democracy, and Development (2002). I gained a point of view about the relationship between militarization and development by living in Central America for a decade before I entered graduate school, and then for another year at the beginning of my doctoral program. I believe that this inductive approach served me well, and I wanted to replicate the process as much as possible. In this tourism study, I did not have any formally established hypotheses when I started fieldwork. Of course, there has been a conscious and subconscious dialogue between this inductive probing and the prevailing theories and studies that I had been exposed to since I began graduate school in 1992, but I was committed to conducting the fieldwork without trying to prove or find evidence for any ex ante hypotheses.9 This study is the result of a long gestation period and plenty of percolation. In essence, I have observed tourism, tourism branding, and institutional capacity for much of my life. I was born and raised in Las Vegas, a fascinating city that created a world-class tourism destination in the middle of a desert, and my first career was associated with its tourism industry. Since then, I have observed the industry when I travel, and a short section on tourism appeared in my first book. I began formally studying tourism ministries more than a decade ago. This decade-long period of reflection and gestation yields some important benefits to the project. New cross-national datasets of national tourism performance and capacity are now available, which adds an independent external check to the conclusions and findings in this book. Moreover, it took nearly a decade of study for me to fully realize two crucial pieces of the capacity puzzle. The first is the importance of pockets of capacity where a state may have high levels of capacity in some domains and low levels of capacity in others. I was slow to fully understand that, and it took a rereading of Judith Tendler (1997) and Steven Levitsky and Maria Murillo (2005) for

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that to sink in. The second piece, which came as an epiphany as I was interviewing in Rio de Janeiro, was that a state might give many signs and declarations that a policy is a priority, when in fact it is not really a priority at all. Countries from Brazil to Chile to Venezuela may have slick and impressive press conferences announcing international tourism as the national priority, when the evidence clearly shows that the commitment is lukewarm at best. As part of any assessment of state capacity, we must ascertain a state’s true goals and priorities. This book provides insights about development, as well as generalizable findings on state capacity, policy constraints, and national and subnational relations. The research also generates important policy implications for tourism promotion in Latin America and beyond. The fieldwork, observations, and research led to the conviction that the keys for understanding state capacity and success in tourism are the social science dimensions of social structure and political choice. Structure and choice are two of three broad determinants of tourism. Although international tourism has been growing in Latin America since 1950, I focus on the 2000–2010 period in this book for a simple reason. In the last half of the twentieth century, many policymakers of Latin America, such as those in Brazil, focused their attention on industrialization and other matters and left tourism almost entirely in the hands of private enterprise (ECLAC 2009: 131). By 2000, all of the countries of Latin America had publicly proclaimed tourism to be a national priority, and national tourism authorities were functioning throughout the region.

State Capacity, Politics, and Tourism: Literature and Theory For many decades, research on international tourism paid little attention to state capacity or politics, and was focused on public policy and planning without any theoretical argument for why one destination was more successful than another. While L. K. Richter’s (1983) claim that tourism research neglects politics is decidedly less accurate today than it was two decades ago, the relationship between political variables and tourism is still not fully understood. The research on the empirical correlates of tourism demand is extensive, based almost entirely on increasingly sophisticated quantitative research. In 1994, Geoffrey Crouch reviewed eighty-five empirical studies on tourism demand and concluded that the results varied substantially. In the two decades since, hundreds of additional journal articles and books have examined tourist arrivals as dependent variables. There is no consensus from the quantitative literature on what causes tourism demand, though the most common causal variables are population, income of origin countries, price, tastes, marketing,

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19

and habit persistence (Song, Witt, and Li 2009: chap. 1). Political explanations are largely absent from these studies. As states and cities have played an increasingly central role in tourism activities, qualitative tourism scholars have become increasingly focused on politics, bureaucracies, and state capacity (Dredge and Jenkins 2007; Hall 2008). David Airey and King Chong (2011) and Anne O’Brien (2011) provide exceptional case studies of the state, politics, and tourism development in China and Ireland. These two studies make a compelling case that the capacity and politics of the destination matter for success or failure. The quantitative research on demand, the case studies on politics and tourism in specific destinations, and the general literature on politics and tourism make considerable contributions to the literature, but lack any shared theoretical orientation and provide few generalizable political lessons about why some destinations succeed while others fail. The great lacuna in this literature is structured comparative historical research that could provide the methodology and evidence to gain a greater comparative understanding of the relationship between politics and tourism. State capacity itself is often praised but little understood. The conviction that the state plays an essential role in development and that the state is more than the sum of its parts undergirds this study. The work of Alexander Gerschenkron (1962) and Albert Hirschman (1958) posits that successful growth in developing countries results from an active role of the state. Since the early 1960s, an impressive and eclectic array of comparative social science research has featured the state as an important actor for development, punctuated by the work of Peter Evans, Dietrich Rueschemeyer, and Theda Skocpol (1985).10 Successful development is often associated with professional bureaucracies, expert change teams, insulation, state autonomy, and embeddedness. Following Max Weber, many scholars conceptualize the key for state capacity as flowing from administrative capacity, a merit-based professional bureaucracy, policy coherence, and an esprit de corps in the public sector (Geddes 1994; Grindle 1996; Heredia and Schneider 2003; Weyland 2002; Woo-Cumings 1999). Peter Evans (1994, 1995), Judith Tendler (1997), and Atul Kohli (2004) examine a range of successes and failures in state activities. Evans describes the differences between predatory states such as Zaire, where the logic of state activities and interests undermines national development and encourages individualistic plunder, developmentalist states such as South Korea, where the state is a successful promoter and partner in national development, and states in-between, such as Brazil and India, where the state is sometimes predatory and sometimes developmentalist. Tendler explores state programs in Brazil to understand why the state exhibits considerable capacity in some programs and little capacity in others. She concludes that successful state activities share four traits: workers in the programs show high dedication to their jobs, the government feeds the dedication of these workers with public demonstrations of

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respect and admiration, workers carry out a larger and more varied set of tasks than normal (often voluntarily), and the behavior problems of the workers are kept under control by the state’s messages to the public and customization of work. Kohli methodically compares four countries over the twentieth century and asserts that industrial development is impossible without the active involvement of the state. Cohesive capitalist states require a strong state that is insulated from elite interests, organized with a meritocratic and professional bureaucracy, able to use nationalism to overcome fragmentation, forges cooperation with business and investors, and intervenes heavily in the economy. Despite the impressive array of scholarship that documents the potential positive role of the state in successful development (Chalmers Johnson’s 1982 work on Japan is the exemplar), the 1980s and 1990s were marked in Latin America with the dominant view that the private sector was naturally and obviously a more capable and efficient engine of development in most spheres. Bloated and ineffective state agencies, state industries, and bureaucracies were associated with the “lost decade” and the failure of Latin America to keep pace with the Asian Tigers. Anyone who thought that the state could deliver services or contribute to development was “a perfect idiot” (Mendoza, Montanera, and Llosa 2001). Privatizations of industries, pensions, services, and other activities swept the region, and the invisible hand of the market was relied on as never before to channel investment and provide competitiveness and rationality to commercial and public activities. This first phase of reforms led to a reduction in civil service employment, with quite dramatic downsizing in some cases (Schneider and Heredia 2003). The transition to democracy and free markets in Latin America in the 1980s and 1990s resulted in many failures and few successes. The large number of policy failures—dismal economic growth rates in the 1990s when compared to the 1950s–1970s, increased inequalities, stubbornly high poverty and unemployment, and privatization scandals—led to a large number of new assessments of state capacity for the region. While some scholars have concluded that there is something malignant about Latin American culture that impedes development (the most recent and sophisticated version comes from Forrest Colburn [2002]), others are beginning to reassess the potential positive role of the state. Given the failures of neoliberalized Argentina and Bolivia in the 1990s, the emphasis will likely continue to shift away from the view that all state activities are wasteful and inefficient and that privatization inexorably leads to better services and living conditions. International financial institutions such as the World Bank and scholars from many disciplines have produced an impressive number of studies on state capacity in the past decade. Many former proponents of privatization such as the World Bank now pay increased attention to issues of good governance and corruption and realize that state capacity is a crucial dimension of sustainable development (World Bank 1997). The long-term logic of reform has evolved into a two-phase proj-

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ect. The first generation of reforms would prune back the wasteful reach of the state, while a second generation of reforms would rebuild high-capacity, wellpaid, and professional state functions. This should, following the Weberian paradigm, enhance state capacity in education and social policy, the judiciary, and regulatory functions. There is no single recipe for economic development, and the Washington Consensus and international financial institutions need to be more flexible. The most exciting recent work on state capacity accepts that the state plays an important role in development, and focuses on the role of the state in driving innovation in an era marked by intense competition, technology, and globalization. Danny Breznitz (2006, 2007) compellingly argues that globalization does not handcuff small states and limit developmental options, but rather has brought new opportunities for states to positively shape development and innovation. While he looks at the high-tech sector in Ireland, Israel, and Taiwan, his findings have informed research on tourism innovation in the developing world. C. Michael Hall and Allan Williams (2008: 89–91) make several direct connections between Breznitz’s findings on the state and high-tech innovation in their study on tourism innovation. They conclude that, first, the need for state action for innovation is greater in developing than in developed countries, as the state is needed for catching up. This follows the long line of research flowing out of Gerschenkron that deals with the long-term advantages of first innovators. The advantages of early innovators in tourism are significant. Costa Rica gained a considerable advantage over the rest of the Central American isthmus by being the first country of the region to holistically pursue tourism promotion and country branding. Not only is the brand, investment, and infrastructure (including airline routes) advantage significant for pioneer countries in tourism, but in addition many tourists to the developing world are repeat visitors or select their destinations based on recommendations from friends and family. Second, the relationship between the private and the public sector is crucial for both investment and long-term innovation success. Private-public partnerships and cooperation are particularly important in tourism, where in most countries the state brands, regulates, and coordinates, while the private sector operates and owns most hotels, agencies, restaurants, and destination activities. Private-public cooperation is historically quite limited in Latin America. The most successful destinations have robust private-public institutions, and the distrust and confrontational nature of private versus public in Latin America is one explanation for the overall underperformance of tourism in the region. Third, state decisions toward developing leading national companies, sometimes referred to as “national champions,” have long-term consequences. For tourism, countries must embrace tourism as a national champion industry for the commitment to be sufficient for significant gains. The fourth and final key finding with application for tourism promotion from Breznitz’s work is the importance of the state in managing and enhancing specific relationships

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between local and foreign companies for information and innovative capacities. For tourism this is crucial in direct foreign investment, airline and cruise-ship arrivals, travel agents, conventions, and multiple other domains that require a successful relationship between domestic and foreign firms. For example, local firms are often franchisees of international brands. These can be particularly useful in the tourism arena, as the international brand and reservation centers of Melia or Marriot deliver tourists to destinations with their hotels, even though those hotels are often local franchisees. International tourism performance is based on three pillars as shown in Figure 2.1—endowment, structure, and choice. Natural and historical endowment is essentially fixed, and includes such elements as beaches, mountains, flora and fauna, waterfalls, weather, historical churches, distance from major markets, and the like.11 Elements of structure can change but require long periods of time, and include such variables as class, human capital, inequality, security, and national infrastructure. Finally choice comprises elements that states can address relatively quickly. As natural and historical endowments are essentially fixed, the research largely centers on structure and choice. Social structure refers to a destination’s patterned social relationships and includes inequality, human capital, ethnic and religious tensions, gender exclusion, crime, and the like. Structure shapes the type of tourism a country pursues, from enclave to integrated. Choice refers to the policies and actions taken by governments, ministries and agencies, and private sector associations that determine the growth or absence of international tourism for a destination. Evelyne Huber assesses state capacity or strength with reference to Latin America, conceptualizing state strength broadly as the ability to achieve four

Figure 2.1

Three Pillars of International Tourism

Endowment • Fixed • Natural and historical tourism attractions, distance from tourists

Structure

Choice

• Slow change • Class, inequality, human capital, ethnic/religious tension, security

• Rapid change and effect • Policies, priority, resources, autonomy and creativity of tourism authorities, public-private partnerships

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23

goals: “(1) enforcement of the rule of law throughout the state’s entire territory and population (legal order); (2) promotion of economic growth (accumulation); (3) elicitation of voluntary compliance from the population over which the state claims control (legitimation); and (4) shaping of the allocation of societal resources (distribution)” (1995: 167). There are two useful ways to organize these four goals to further understand state capacity and tourism. The first is to use these four indicators to produce Table 2.1, with accumulation and distribution as dimensions of successful tourism promotion, and with legal order and legitimation as important facilitating conditions for both accumulation and distribution. Why are legal order and legitimation important facilitating conditions? The effect of legal order on accumulation is clear. The greatest threats to tourism are issues of crime and security (UNWTO 2002a: 10). High-profile crimes, CNN stories of riots, or national crime warnings lead to swift and dramatic declines in tourism and tourism revenues—the most recent countries to suffer dramatic declines in tourism due to widespread media reports on crime have been Mexico and Venezuela. The widespread perception of violent crime, corrupt police, and arbitrary justice negatively impacts all of Latin America, but is particularly acute in countries such as El Salvador, Guatemala, and Honduras. The effect of the legal order on distribution is perhaps less obvious, but just as important. In many Latin American countries in recent years, the legal order has been spotty, and the police have withdrawn from marginalized areas of the country to focus limited law enforcement resources on privileged sectors. These sectors include urban areas, elite neighborhoods, business interests, and often established tourist sectors. It is unfortunate that an increase in tourism can and often does result in reduced security for the citizens, as the police forces are redeployed away from citizens and to tourist zones. Tourism can result not only in deterioration in the distribution of the legal order, but also in deterioration in the distribution of tourism revenues. While tourism can be an engine of growth in poorer regions of a country, this benefit is often

Table 2.1

Dimensions of Successful International Tourism Promotion Accumulation

Distribution

Components

International tourist arrivals Gross revenues Gross revenues per capita Net revenues per capita

Facilitating conditions

Legal order Legitimation

Reduce leakages Empower small businesses Develop clusters (synergies) Improve environment Invigorate local culture Reduce regional inequalities Legal order Legitimation

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unrealized because the poorer regions of the country experience high crime rates and lack legal resources. Even a country with a relatively strong legal order, like Costa Rica, contains areas with minimal police presence. One of these is the Caribbean province of Limón, an area with tremendous unrealized tourism potential and empty inns and restaurants due to high-profile criminal activities. The sustained image of crime can significantly reduce current and future tourism performance in places like Rio de Janeiro. Alberto Espinosa, president of Mexico’s largest business association, Coparmex, asserted that the perception of high rates of violent crime cost Mexico 24 million international tourists and US$800 million in lost revenues from 2006 to 2011.12 Even a single highprofile security event can significantly reduce tourist arrivals. In January 1996, a single kidnapping of a German tourist and her Swiss guide in Costa Rica by an armed group along the Nicaraguan border generated a flurry of negative media exposure, after which tourism to Costa Rica from parts of Europe plummeted for several years. The role of legitimation as a facilitating condition is less direct. Voluntary compliance and a perception that the state is legitimate are crucial for both accumulation and distribution. For accumulation, the state must solve the collective action problem and coordinate the promotion of brand identification. This requires the compliance of elites to collect room or other tourism taxes in order to pool resources. If the business community believes that tourism taxes or other revenues for promotion will be plundered or siphoned off to other state functions, they will work to stop enabling legislation or refuse to pay even if the tourism tax legislation is passed. For the distribution dimension, the role of legitimation is very different. Civil society is weak throughout Latin America. Consequently, the role of the state in organizing tourism clusters and involving various sectors in tourism planning and benefits is greater than in places like Las Vegas or Scotland that have thicker networks of business organizations and community groups (Madeiros de Arujo and Bramwell 2002). It is an unfortunate paradox that the role of the state is most important where it is weakest. The problem with this configuration of Huber’s four elements of state strength for tourism in Latin America is that distribution and legal order are not always priority goals in the region but rather are structural conditions that shape the choices of the state and restrict the types of tourism that a destination pursues. A more useful conceptual model of state tourism promotion using Huber’s four pillars of state capacity results in a more practical, two-dimensional conceptual model based on choice and structure. In macro terms, the type and amount of tourism that a destination (country or city) develops are a combination of choice and structure. The interaction between agency/choice and social structure in shaping social and political phenomena has long been recognized in social science (Giddens 1984; Lewis 2002; Sibeon 1999), and the importance of both of these dimensions is explicit

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in the political economy of tourism. The structural components of tourism capacity are those relatively constant variables that shape the types of and locations of tourism that a destination can most easily pursue. The role of structure in state tourism capacity, as shown in Figure 2.2, is the topic of Chapter 5, and a fuller explanation is presented there. Structure is composed of two of Huber’s state capacity pillars—distribution and legal order. Distribution is composed of such elements as class cleavages, inequality, human capital, and ethnic or other societal cleavages. Legal order is comprised of justice and criminality, legal security for investment, and levels of corruption. The overall structure in a destination can be favorable for tourism capacity, limited for tourism capacity, or unfavorable for tourism capacity. These structures shape the tourism product and distribution in a powerful way. Where structure is favorable, tourism tends to be inclusive, with international tourists participating with local tourists and citizens, with small local businesses benefiting from tourism, and with tourists eating local foods. In destinations with highly unfavorable structural conditions, tourism can still flourish, but in the form of enclave tourism, in which tourists are physically and culturally separated from the cities, the people, the local food, the small businesses, and the streets. There is also a middle range that I call disarticulated tourism. The role of choice in state tourism capacity, as shown in Figure 2.3, is a topic of Chapter 4, and a fuller explanation is presented there. Choice is composed of Huber’s final two state capacity pillars—accumulation and legitimation. Accumulation refers to state capacity for generating international tourism and is composed of the ease of entry for tourists, the nurturing of innovative, creative, and autonomous state and local tourism authorities, and sustained prioritization of the sector. Legitimation refers to the voluntary compliance and support of the population and private sector and results from prior state successes, public-private cooperation, and transparency. Where states proclaim Figure 2.2

The Role of Structure in Tourism Capacity

Structure

Legal Order

Distribution

class

inequality

human capital

ethnic/ religious tension

crime

investment security

corruption

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Figure 2.3

The Role of Choice in Tourism Capacity

Choice

Legitimation

Accumulation

ease of entry

innovative bureaucracy

sustained priority

prior state success

publicprivate cooperation

transparency

tourism as a national priority but their choices reveal an absence of actions necessary to succeed, destinations have rhetorical tourism capacity and international tourism underperforms. Where states proclaim tourism as a national priority but their choices reveal limited actions necessary to succeed, destinations have hollow tourism capacity. Where states proclaim tourism as a national priority and their choices confirm that priority, destinations have holistic tourism capacity. These two dimensions, structure and choice, combine to produce nine types of tourism capacity at the national level, as presented with examples in Figure 2.4.13 While there are many similarities between national and local tourism authorities, there are important differences. At the national level, the interests of more powerful ministries such as foreign affairs or defense can crowd out the national commitment to tourism. This does not happen at the city level, where the tourism ministry is relatively more important. Additionally, the local tourism authority can be either constrained or empowered by the national tourism ministry, particularly in countries with rigid and hierarchical bureaucratic traditions such as Brazil. An extensive examination of global cities is presented in Chapter 7, and the relationship between structure and choice in those cities is previewed in Figure 2.5.

Theories to Explain and Predict Change in Tourism Capacity The components of the structural pillar, such as crime and inequality, predict and explain why some destinations exhibit the suboptimal enclave model of

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Figure 2.4

27

Outcomes of Structure and Choice for National Tourism Capacity

Choice (Accumulation and Legitimacy)

Structure (Distribution and Legal Order)

Low: Rhetorical Capacity

Medium: Hollow Capacity

High: Holistic Capacity

Favorable: Inclusive Tourism

Hollow Inclusive Rhetorical Inclusive Capacity (United States)

Holistic Inclusive Capacity (Chile, Uruguay, Argentina pre-2001)

Capacity (Argentina post2001, Costa Rica)

Limited: Disarticulated Tourism

Rhetorical Disarticulated Capacity (Paraguay)

Hollow Disarticulated Capacity (Brazil, Mexico)

Holistic Disarticulated Capacity (Cuba)

Unfavorable: Enclave Tourism

Rhetorical Enclave Capacity (Haiti)

Hollow Enclave Capacity (Honduras, Venezuela)

Holistic Enclave Capacity (Dominican Republic)

tourism while other destinations feature a more inclusive tourism model with positive tourism externalities. This is both understandable and regrettable, as it is both a difficult but long-term benefit to ameliorate structural conditions as part of a more inclusive tourism strategy. What is less intuitively understood is why some destinations that announce a commitment to tourism subsequently follow through with strong pro-tourism policies and even innovative institutions while policymakers in other destinations display little or no enthusiasm for the international tourism sector even after publicly embracing the sector. Two sets of theories help explain and predict this variance in policies, the paradox of plenty theory and prospect theory. These theories will be revisited in more detail in later chapters, but it is useful to introduce them here. The paradox of plenty, also known as the resource curse, stems from the warning from Adam Smith about men who love to reap without having to sow. Terry Karl (1997) and other political scientists have examined the effect of easily extractable resources such as oil and minerals on economic development and government policies. Countries with huge resource benefits such as Nigeria

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Figure 2.5

Social Structure, Policy Choices, and Tourism Models in Global Cities

Choice

Structure

Weak Bureaucracy: Failed Policies

Weberian Bureaucracy: Stagnant Policies

Favorable: Inclusive Tourism

Buenos Aires

Limited: Disarticulated Tourism

Unfavorable: Enclave Tourism

Entrepreneurial Bureaucracy: Innovative Policies

Havana

Rio de Janeiro

and Venezuela often exhibit poor long-term economic performance. The range of negative consequences of the resource curse includes overvalued exchange rates and wages, insufficient taxation, revenue volatility, excess debt, and misuse of human resources. Put simply, countries exporting billions of dollars of easily extractable commodities are not likely to put in the long-term commitment and hard work required to develop a world-class competitive tourism industry. The evidence strongly supports this predicted outcome. Kurt Weyland (2002) applies powerful cognitive theory to explain the rather unexpected behavior of both policymakers and the public in regard to harsh structural adjustment programs in Latin America. The most fundamental findings of this theory are that individuals behave as risk-seekers when they perceive themselves to be in the domain of losses and, on the contrary, behave as risk-avoiders when they are situated in the domain of gains. This theory predicts and explains certain tourism policies in some destinations. In specific, in the face of an extreme economic crisis, such as the “special period” in Cuba in the early 1990s and Argentina in 2000 to 2004, policymakers behave from the perspective of the domain of losses and are risk-seekers. Not surprisingly, Buenos Aires and Havana chose very unorthodox and bold tourism policies that resulted in the most creative and innovative tourism policies in the region. The next three chapters present the pillars of choice and structure more systematically and in greater detail. They are followed by two comparative

Keys to Unlocking the Puzzle

29

historical chapters, focused at the country level and the city level respectively, that confirm the choice and structure pillars of tourism and the theoretical utility of the paradox of plenty and prospect theory.

Notes 1. While not a subject of this book, I have also written on the relationship between state capacity, tourism, and the environment (Bowman 2011). 2. I would define “middle class” people as precisely those who travel for pleasure and can pay for their lodging. 3. These were among the countries I visited regularly during study-abroad programs and other academic activities. 4. Most of the interviews of government officials were with lower- or mid-level bureaucrats. I discovered that ministers and high-level bureaucrats supplied little useful information and were trained to say positive things. Lower- and mid-level bureaucrats were much more candid, and I always offered assurances of anonymity to encourage frank answers and protect them. 5. Paraguay because it was the one country that simply did not seem to want tourism, and Chile because it appeared to underperform even though it is often regarded as possessing high levels of state capacity. 6. Fiji was added because a twelve-year research grant took me there often, because my research there included tourism, and because my experience there greatly enhanced my understanding of the role of state capacity in environmental tourism (see Bowman 2011). 7. Nine visits to Argentina, seven to Brazil, two to Chile, five to Costa Rica, four to Cuba, five to Fiji, two to Honduras, one to Paraguay, three to Uruguay, and two to Spain (Barcelona and Valencia). Formal interviews with multiple national-level tourism officials were conducted in Argentina, Brazil, Chile, Costa Rica, Fiji, Honduras, and Uruguay. Regional tourism officials and one national-level tourism official were interviewed in Cuba. Tourism officials from eight provincial tourism ministries were interviewed in Argentina, and multiple city-level tourism officials were interviewed in Barcelona, Buenos Aires, Rio de Janeiro, and Valencia. More than a thousand formal and informal interviews were conducted in these ten countries with hotel association officials, private sector tourism board personnel, tour operators, hotel managers and owners, taxi drivers, and scholars. 8. Case selection is unusual in this study, as cases are usually selected based on known variance in the dependent variable and the research is usually retrospective (King, Keohane, Verba 1994). My research design follows the inductive heuristic casestudy approach, which employs key cases to establish causal mechanisms and causal paths (George and Bennett 2005: chap. 4; Eckstein 1975), but with a twist whereby the topic and cases were selected before the evidence became apparent and the causal mechanisms and causal paths were observed and tracked as they developed over the following decade. This resolves the potentially serious problem of bias when cases are chosen based on known variance in the dependent variable. 9. My work falls within that eclectic body of work that Peter Evans and John Stephens (1988) denominate the “new comparative political economy.” This body of work shares certain characteristics: (1) it is sensitive to international factors but rejects the idea that external factors determine internal dynamics; (2) the state is an important actor for development—potentially with both negative and positive consequences; (3)

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conflict and alliance among classes or fractions of classes shape historical processes; and (4) long-term processes of change at the macro level are often studied. 10. There are many good works that “bring the state back in”; some examples include Anderson 1986, Evans 1979 and Evans 1994, Hamilton 1982, Krasner 1978, Migdal 1988, and Stepan 1978. There are also many critiques of state-centered research, such as Gibbs 1994 (an excellent discussion is found in the responses section). 11. While it is difficult to create natural and cultural endowment from scratch, endowment can be destroyed or reclaimed. Churches and other cultural resources can be razed and destroyed, and reefs and other natural resources can be trashed. These debilitated resources can also be reclaimed, renovated, and restored. In Chapter 7, I discuss how tourism contributed to the restoration of Old Havana. 12. EFE, “160,000 Businesses Fled Mexico in 2011 Due to Violence,” April 5, 2012, http://latino.foxnews.com/latino/news/2012/04/05/coparmex-160000-businesses -left-mexico-in-2011-due-to-violence. 13. My judgment in placement of countries and cities in Figures 2.4 and 2.5 is based on fifteen years of research and interviews.

3 The Tourism Sector: An Overview

They were initially neither tourists in the modern sense nor travelers on something akin to the “Grand Tour” of southern Europe during the mid-1600s to mid-1800s. Rather, they were explorers, naturalists, and missionaries. There are examples of small niche tourism markets in the early twentieth century. Globalization in the late nineteenth century brought British railroads and their soccer to South America, and the “beautiful game” led to the limited growth of sports tourism. Regular matches between the national teams of Argentina and Uruguay resulted in an occasional flow of fans across the River Plate, and the first World Cup, in Uruguay in 1930, brought the global spotlight and international sports fans to Montevideo. Short-duration cross-border tourism sprang up in Mexico as part of the response to legal restrictions on alcohol and other vices in the United States. Tourism in Tijuana initially spiked in 1911 when California prohibited gambling and bars, only to decline in 1914 when Mexico ordered the border closed after the United States invaded Veracruz (Bowman 1994; Piñera and Ortiz 1989: 98). Overnight, tourism flourished in Tijuana with the passage of the Volstead Act in 1919 and the prohibition of alcohol in the United States. Bars and other centers of vice sprouted to lure tourists from California, including the 170-meter mega-bar La Ballena (The Whale). The 1920s were the golden years of tourism in Tijuana, featuring not only prostitution and horse racing, but options for the elegant and refined. The high-end tourism venues included the grand Agua Caliente, which featured a luxurious casino frequented by Jimmy Durante, Buster Keaton, Laurel and Hardy, and many other celebrities; the Patio Andaluz restaurant, where Rita Hayworth was discovered; as well as a greyhound racetrack, a golf course, and a hotel (Espinosa 1990). The passage 31

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of the Twenty-First Amendment in 1931 ended the “Noble Experiment” in the United States and busted overnight tourism along the borderlands. The hotels were soon boarded up, and the ephemeral tourism spike was over (Bowman 1994). Tourism was first used as a national development tool in Latin America in the 1930s when the Argentine government transformed a small village in the mountains into the Bariloche resort to reaffirm sovereignty in the region through a larger permanent population (Schlüter 1998: 216–217). Years later, Bariloche would develop into an important international tourism destination for Brazilians and Northern Hemisphere travelers wanting winter sports from June to September. Business tourism materialized in Latin America after World War II, as trade and various manifestations of the media began to grow. For example, the Rockefellers built luxury hotels in Venezuela to meet the needs of the petroleum business (Ward 2008; chap. 1). Even with these developments, international tourism remained a tiny component of economic activity in Latin America. The United States, Canada, and Western Europe received 23 million of the global total of 25 million international tourists in 1950. A mere 400,000 international tourists visited Mexico and Central America that year, while 500,000 visited the Caribbean and only 400,000 traveled across borders in South America for anything more than a daytrip (UNWTO, Yearbook of Tourism Statistics, 1991: 4–21). Tourism expanded rapidly in Europe and the United States in the 1950s, but did not experience any significant growth in Latin America and the rest of the developing world. One exception was Cuba. Fulgencio Batista seized the government two months before scheduled elections in 1952 and controlled the island until Fidel Castro and his guerrilla army marched into Havana in January 1959. Tourism grew rapidly during those seven years of the Batista dictatorship, under the tutelage of unofficial tourism minister and mobster Meyer Lansky. Lansky himself took control of the elegant Hotel Nacional de Cuba, transforming it into a successful casino operation. Other casinos opened and more mobsters arrived, along with A-list celebrities such as Frank Sinatra, Nat King Cole, Ginger Rogers, and John Wayne. The combination of mobsters and movie stars, sunshine and casinos, and an exotic destination less than a hundred miles from the United States was an alluring brand, and 1.7 million American tourists visited the island between 1950 and 1959 (Schlüter 1998: 218). After the revolution, Castro closed the casinos and expropriated the hotels. Cuban tourism would remain moribund until the 1990s. An important tourism innovation in the small seaside village of Benidorm, Spain, resulted in a significant growth of tourism in Europe and would eventually alter tourism in Latin America. That pioneering trend was all-inclusive packaged tourism, and it transformed Francisco Franco’s Spain in significant ways (Tremlett 2006; Crumbaugh 2009). Long summer holidays

The Tourism Sector

33

for the burgeoning working and middle class in Europe and inexpensive packaged beach vacations on the Spanish Mediterranean combined to create an explosion of international tourists in Europe, from 16.8 million in 1950 to 112 million in 1970. By comparison, Latin America and the Caribbean received a total of only 9.2 million tourists in 1970. The innovative packaged beach vacation would soon be imported to the Caribbean, with the expanding US middle class as the market for tropical enclaves. Just as the small towns of coastal southern Spain were altered in the 1950s and 1960s, many Caribbean beachfront towns experienced a metamorphosis in the last quarter of the twentieth century due to the growth of allinclusive beach tourism. In 1970 a mere 117 individuals lived in Cancún, Mexico. The construction of dozens of all-inclusive hotels only a short flight from large population centers in the United States resulted in a population growth to 40,000 by 1979 and a parallel growth of tourists (Ward 2008: 118). The arrival of Club Med in Punta Cana in the Dominican Republic in 1979 was perhaps the most important development in Caribbean tourism. Club Med and Punta Cana took enclave all-inclusive tourism to a higher level with private construction of an airport and private airplanes to deliver its guests. Initially the all-inclusive concept did not sell well in the United States, so Punta Cana and Bávaro Beach advertised in Europe, where packaged vacations were the norm. Europeans remained the core of tourists to the Dominican Republic for many years (Ward 2008: 164). A large percentage of US tourists to the Dominican Republic in the 1990s were Dominicans residing in New Jersey and New York, who made regular visits to Hispaniola to visit relatives and friends (Schlüter 1998: 219). As shown in Figure 3.1, the rate of growth of tourism to Latin America and the Caribbean grew at extraordinary rates in the 1980s. Sun, sand, and sea, and the associated spring breaks, drinks with an umbrella, surfing, and scuba drove the industry in the Western Hemisphere. Brazil and Uruguay also benefited from beach vacation destinations, Brazil beginning in the 1970s with a chain of casual seaside resorts on the Atlantic Coast and Uruguay with Punta del Este, a glamorous beach resort with casinos and Las Vegas–style entertainment for Argentine elites (Schlüter 1998: 220). The signing of the Treaty of Ouro Prieto in 1994 formalized the Southern Cone Common Market (MERCOSUR) trading bloc between Argentina, Brazil, Paraguay, and Uruguay. This led to an increase in trade, but perhaps more importantly to the elimination of travel restrictions and visa requirements, and a subsequent surge in regional tourism, much of it sun and sea tourism to Brazil and Uruguay. Aside from funding hotels and infrastructure, sun and sea tourism required little national branding or state involvement. Brazil experienced tremendous growth in the 1990s with minimal state activity, leaving tourism almost entirely in the hands of private enterprise (ECLAC 2009: 131).

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Figure 3.1 Tourist Arrivals to Latin America, 1950–2010 !

Millions of International Tourists

80! 80!

Caribbean! Caribbean!

South America America!!

Central America and Mexico! Mexico!

70! 70! 60! 60! 50! 50! 40! 40! 30! 30! 20! 20! 10! 10! 0! 0! 1950!! 1950

1960!! 1960

1970!! 1970

1980! 1980!

1990! 1990!

2000! 2000!

Source: UNWTO, Yearbook of Tourism Statistics, 1991, 2011.

Sun, sand, and sea tourism and the generic beach vacation began to fray around the edges and, while remaining significant, stopped growing in the 1990s. Mexican policymakers chose to base tourism on enclave (integrated) beach resorts and not on Mexico’s rich cultural heritage (Schlüter 1998: 219), which was a short-term success but with an upper limit. Rapid growth in tourism to Mexico ended in 1995, with total tourist arrivals remaining roughly constant for the following fifteen years even as global tourism continued to rapidly expand. Tourism fell in many Caribbean countries such as the Bahamas and the Cayman Islands over the same period. Competition became increasingly intense, with aggressive marketing and pricing in the cruise industry and new beach destinations in Costa Rica, Cuba, and Nicaragua. The percentage of travelers who preferred dependable, well-trod destinations declined, while the percentage of travelers who wanted to venture to something beyond the orchestrated enclave grew (Plog 2001: 23). Tourists increasingly select destinations based on something more than distance and price of beach vacations; they want to experience the essence of what is unique about individual destinations, be it culture, nature, cuisine, history, medicine, architecture, sports, festivals, urban life, and the like. Latin America could compete in many of these growing segments, including archaeology, nature, and urban life. The archaeological remains of the three major pre-Columbian cultures are important potential tourism resources in Mexico, Belize, Guatemala, Honduras, Ecuador, Peru, and Bolivia. Peru has perhaps

2010! 2010!

The Tourism Sector

35

most effectively incorporated archaeological treasures into its national branding and tourism experience (Tamborini 2005). An increased awareness of the environment led to the growth of ecotourism and nature tourism. The national parks of Costa Rica, the Galapagos National Park in Ecuador, the Pantanál and Amazon in Brazil, the birds of Venezuela, the quetzal of Guatemala, the scuba of the Bay Islands in Honduras, the glaciers of Argentina, and other natural features are powerful potential magnets for international nature tourists. Urban tourism is a rapidly growing segment of international tourism due to growth in mobility, making it increasingly difficult to separate tourists from locals (Maitland and Newman 2009: 1). These urban tourists are unlikely to be tempted by packaged enclave beach resorts or cruise ships, and prefer to experience the cuisine and culture along with the locals. The “36 Hours in . . .” a city feature in the New York Times and similar features from myriad other media outlets cater to individuals who want to visit local art galleries in La Paz, Bolivia; shop at local artisan markets and visit museums in Lima, Peru; find the best dulce de leche or tango in Buenos Aires, Argentina, or the creamiest sorvete in Belém, Brazil; experience the local spots and participate in the Carnival parade in Rio de Janeiro, Brazil; embrace Cartagena and Bogotá, Colombia; eat at the best under-the-radar gourmet restaurant or the best neighborhood dives (bodegones) in Buenos Aires, Argentina; explore the newly fashionable Valparaíso, Chile; trace the culinary roots and bargain at craft the fairs of São Paulo, Brazil; or dance the samba in Bahia, Brazil.1 Historian and cultural tourism entrepreneur Ricardo Watson observes: Since the 1980s the exponential growth and the planetary scale of mass tourism . . . produced an important modification within the tourism activity, with the emergence of a consolidating stage of more sophisticated forms— some would call elitist—of tourism: rural tourism, adventure tourism, ecotourism, cultural tourism, historical tourism. The market revealed its segmentation and flexibility, and placed its emphasis on “experience.” . . . Not surprisingly, in short order the tourism industry devised a product for the mass of tourists for these new tourism activities. And so was eventually produced the encounter between tourism and cultural patrimony. Every destination that possesses some cultural patrimony was converted (or at least attempted) to tourism potential, the destination where one can enjoy this marketed and recreated fantasy in the studied publicity images of travel agencies. It is proper to recognize that in many cases the same economic resources generated by tourism are in turn indispensible for assuring the conservation of the same cultural patrimony. (2009: 87–88)

Tourism in Latin America is no longer only about beach vacations. International tourism now comprises multiple niches, which include not only those already mentioned but also such growing segments as business and convention

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Peddling Paradise

tourism, religious tourism, medical tourism, study-abroad tourism, extreme sports tourism, and others. Competition and changes in tourism preferences coincided with and perhaps led to the response of countries to expand or create ministries of tourism throughout much of the developing world and Latin America. Countries can no longer succeed with laissez-faire tourism policies, even with beautiful tropical beaches. National tourism promotion is complex and difficult, and requires a series of crucial and often difficult choices by policymakers.

Tourism as a Lens for Studying State Capacity International tourism promotion is an excellent lens for understanding state capacity and the best single economic sector for that task. This is a bold assertion, and one focus of this chapter is to explore and justify why tourism is an important sector to study and understand. As we explore these dynamics of international tourism promotion, we also answer our first puzzle, as to why the role of the state expanded so dramatically in tourism while it was reduced in other economic sectors in recent decades. Why is tourism an excellent lens for understanding state capacity? There have been a host of sector studies on development and state capacity, in diverse fields such as mining and oil, healthcare, technology, education, construction, agriculture (coffee and bananas), and manufactured goods. Peter Evans’s (1995) work on the computer industry, Terry Karl’s (1997) study of state capacity in petrostates, and Danny Breznitz’s (2007) research on hightech innovation in small countries are but three examples of the payoff of successful sector research programs. A carefully crafted examination of the role of the state in tourism promotion can have an even greater contribution to our understanding of state capacity. The tourist sector has not been a common topic of research in political science; indeed tourism has been largely ignored by comparative politics scholars. One possible reason for the systematic bias against research on tourism and tourism ministries may be the widespread belief that there is something “soft” about the topic and that scholars who seek grants to study the tourism industry would be primarily interested in sitting on the beach. The relative absence of tourism sector studies in comparative politics results in a lacuna in literature—lots of literature in political economy and comparative politics on the role of the state and the effects of societal structures on institutions, while the literature on tourism, which is extensive and rich for Latin America, is largely concerned with best practices, processes, and policies (Gunn and Var 2002; Inskeep 1991).2 There have been excellent general books on politics and tourism (Elliot 1997), some restricted to Asia (Airey and Chong 2011), and with excellent work on the Middle East (Hazbun 2008), and tourism research has belatedly embraced social science since the landmark

The Tourism Sector

37

special issue on tourism and social science in the Annals of Tourism Research in 1991 (vol. 18, no. 1). There are some exceptional case studies on politics and tourism in Latin America (Gregory 2006; Hellier-Tinoco 2011), but an absence of comparative studies of politics and tourism of the region. This book merges the social science and tourism literature to further our understanding of why some destinations are able to institute best practices and even innovative policies in tourism promotion (inputs) and also generate greater revenues and more positive distributional externalities (outcomes). There are seven principal reasons why tourism lends itself particularly well to a sector study on state capacity: the size and growth of the sector, the importance of the sector for jobs and balance of payments, the universality of the potential of the industry, the chance to study new or emerging institutions, the widespread agreement across the ideological spectrum that the role of the state is crucial and complex in this sector, the role of the state in solving collective action problems, and the need for state leadership in destination branding. Size, Scope, and Growth

Tourism is arguably the world’s largest industry and largest employer.3 The importance of tourism is relatively new and, as shown in Figure 3.2, has expanded dramatically in the past half century. As recently as 1950, only about 25 million people visited another country each year. By 2000, the number

Figure 3.2

Global International Tourist Arrivals, 1950–2010

1,000

Millions of International Tourists

900 800 700 600 500 400 300 200 100 0 1950

1960

1970

1980

Source: UNWTO, Yearbook of Tourism Statistics, 1991, 2011.

1990

2000

2010

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reached 700 million. By 2010, one out of every seven people, or nearly 1 billion total, traveled to a foreign country each year. The World Travel and Tourism Council predicts that by 2022, tourism in Latin America alone will produce US$608 billion in economic activity annually (9.5 percent of gross domestic product) and 7.5 million jobs (WTTC 2012). By 2020, international tourists in the Americas will number 282.3 million annually, 38 percent of whom will be long-haul travelers on flights of more than 7 hours (UNWTO 2002a: 11). Judging Latin America’s success in attracting international tourists is not a simple matter, for numbers themselves do not fully portray policy performance. Countries can have suboptimal policies and have an increase in the number of tourists. Destinations can free-ride off the success of neighbors’ tourism policies, they can be contiguous to countries with growing numbers of international tourists, or they can host onetime events that bring large numbers of tourists. Measuring and classifying tourism capacity must delve far deeper than mere numbers. Nevertheless, the empirical data are useful, but confusing. Figure 3.3 presents the numbers of tourist arrivals in Latin American countries in 2000 and 2010. Mexico, which sits alongside the largest outbound market of tourists, dwarfs the other countries in the region, and makes tourism seem rather insignificant in most of the rest of Latin America. Argentina follows Mexico as the second most visited country in 2010, leading South America. Other ways of examining the data present very different portraits of performance. Figure 3.4 presents the growth of international tourist arrivals in

Thousands of International Tourists

Figure 3.3

Tourist Arrivals to Latin America, 2000 and 2010

25,000

20,000

15,000

10,000

2000 2010

5,000

Ar

ge nt in a Bo liv ia Br az il C C hile ol om C os bia ta D R om ic in a ic an C u R ba ep ub Ec lic El uad Sa o r lv G ad ua or te m al a H a H on iti du ra M s e N xic ic ar o ag Pa ua na Pa ma ra gu ay Pe r U ru u Ve gua ne y zu el a

0

Source: UNWTO, World Tourism Highlights, 2011.

The Tourism Sector

Figure 3.4

39

Growth of International Tourist Arrivals to Latin America, 2000–2010

Thousands of International Tourists

3,000 2,500 2,000 1,500 1,000 500 0

Ar

ge

nt in Bo a liv ia Br az il C Co hile l Co omb i st Do a a Ri m c in a ica n Cub Re a pu Ec blic El uad Sa or G lvad ua o te r m al a Ho Hai nd ti ur a M s e Ni xic ca o ra g Pa ua n Pa am ra a gu ay Pe Ur ru u Ve gua ne y zu el a

–500

Source: UNWTO, World Tourism Highlights, 2011.

Latin America from 2000 to 2010. The top five clear success stories were Argentina, Colombia, the Dominican Republic, Mexico, and Peru. The next five—Chile, Costa Rica, Cuba, Nicaragua, and Panama—performed reasonably well over the decade. The clear failures, with growth of fewer than 500,000 additional tourists, were Bolivia, Brazil, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Paraguay, Uruguay, and Venezuela. Brazil and Venezuela, two countries with extraordinary tourism endowment, underperformed woefully. A very different picture of performance emerges if population size is taken into consideration. The growth of tourists in a country as large as Mexico does not have the same impact as the same growth in a small country like Panama. Figure 3.5 presents the per capita growth of international tourist arrivals over the decade. Eleven countries—Argentina, Chile, Costa Rica, Cuba, the Dominican Republic, El Salvador, Honduras, Nicaragua, Panama, Peru, and Uruguay—experienced a growth of at least fifty tourists per capita from 2000 to 2010, with Costa Rica and Panama as the clear leaders. Bolivia, Brazil, Colombia, Ecuador, Guatemala, Haiti, Mexico, Paraguay, and Venezuela all underperformed, with Brazil and Venezuela the biggest failures and Haiti, Mexico, and Paraguay rounding out the bottom five. Some countries performed well consistently, whether using total or per capita growth of international tourist arrivals as the measure. These included the top five in Latin American tourism: Argentina, Costa Rica, Cuba, the Dominican Republic, and Panama. Bolivia,

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Figure 3.5

Per Capita Growth of International Tourist Arrivals to Latin America, 2000–2010

Number of International Tourists per Capita

300

250

200

150

100

50

Ar

ge nt in a Bo liv ia Br az il Ch i l e Co lo m bi Co a st a R Do ica m in Cu ica ba n Re pu bl Ec ic ua d El Sa or lva do G ua r te m al a H Ho aiti nd ur as M ex i co Ni ca ra gu Pa a na m Pa a ra gu ay Pe ru Ur ug u a Ve ne y zu el a

0

Source: UNWTO, World Tourism Highlights, 2011.

Chile, Colombia, Ecuador, and Peru performed modestly well across both measures. Brazil, Ecuador, Guatemala, Haiti, Paraguay, and Venezuela were the consistent failures, spectacularly so for Brazil and Venezuela. Exports, Foreign Currency, Balance of Payments, and Jobs

For the developing world, tourism is the principal export and the second leading source of foreign currency after petroleum products (UNWTO 2002a: 6). Economic liberalization and floating exchange rates have brought tremendous pressures to the developing world to export, bring in foreign currency, and close balance of payments gaps. This has led countries as diverse as Angola, Brazil, Cuba, and North Korea to promote international tourism. Nowhere in Latin America is the balance of payments more important than in Cuba. After the collapse of the Soviet Union and the end of trade agreements between Cuba and Russia, Cuba faced economic collapse and many Cubans experienced a “special period” of hunger and malnutrition as the country lacked cur-

The Tourism Sector

41

rency reserves to import food and other basic goods. The country survived and partially recovered largely through aggressive promotion of international tourism, something that was seen as anathema in the early days of the revolution. By 2000, one out of eleven Cubans made their living from the tourism industry (Figueras 2001: 11). Cuba simply could not have recovered from its misery and hunger without the more than US$2 billion in foreign currency it received each year. And it was just not Cuba that relied heavily on tourism; Costa Rica not only owed 44 percent of all new jobs to tourism in the 1990s (Bowman 2002: chap. 7), but its more than US$2 billion in tourism receipts annually are crucial to closing the gap in balance of trade. By 2001, travel and tourism accounted for 8 percent of all jobs globally (UNWTO 2002b: 12). Per capita tourism receipts in Latin America for 2000 and 2010 are presented in Figure 3.6. There was some growth in receipts in nearly every country of the region. However, only Argentina, Costa Rica, Cuba, the Dominican Republic, Mexico, Panama, and Uruguay had per capita receipts of more than US$100 in 2010. Many countries claim the benefits of international tourism for balance of payments deficits without considering that the net benefit of tourism as a generator of foreign currency must also account for the money leaving the country with outgoing tourists. The global leader in net tourism receipts is Spain, with the industry adding net US$38.7 billion to the economy (a whopping US$958 per capita) in 2007.4 As shown in Figure 3.7, the countries in Latin America with a significant net national income (US$800 million or more) from international tourism in 2010 were Costa Rica, Cuba, the Dominican Figure 3.6

Per Capita Tourism Receipts in Latin America, 2000 and 2010

$500 $400 $300

2000 2010

$200 $100

ge

nt in Bo a liv ia Br az il C C hile ol o C mb os ta ia D om R ic in a ic an Cu R ba ep ub Ec lic El uad Sa or l G vad ua o te r m al a H Hai on ti du ra M s e N xic ic ar o ag Pa ua na Pa m ra a gu ay Pe r U ru u g Ve ua ne y zu el a

$0

Ar

Tourism Receipts per Capita (US$)

$600

Source: UNWTO, World Tourism Highlights, 2011.

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Figure 3.7

Net Tourism Receipts in Latin America, 2000 and 2010

$4,000

Tourism Receipts (US$ millions)

$2,000 $0 –$2,000 –$4,000 –$6,000

2000 2010

–$8,000 –$10,000 –$12,000

M ex ic o ar ag u Pa a na Pa ma ra gu ay Pe ru U ru g Ve ua ne y zu el a

ti

s

ai

N

ic

ra

H

du on

R

an D

om

in

ic

H

a ep ub Ec lic ua El d Sa or lv G ado ua r te m al a

a C

ub

a

ic

bi

R

om

ta

ol

os

C

il

le C

az

hi C

Br

in nt

Bo

Ar

ge

liv

a

ia

–$14,000

Source: UNWTO, World Tourism Highlights, 2011.

Republic, Mexico, Panama, and Uruguay.5 Tourism was a major benefit to the balance sheet of these countries, providing hundreds of thousands of net new jobs. In contrast, Brazil had a net tourism deficit of nearly US$14 billion in 2010. Universality

While there are certain geographic or resource advantages for some countries, tourism is a sector that can be developed in any country. This alone separates it from many other economic sectors in the developing world. Studies on oil, gold, copper, and other extractive industries are limited to countries with large deposits of those materials. For agriculture, coffee, citrus, bananas, and wine are limited by climate and soils. Industrial industries are greatly constrained by size and location (few would propose that Bolivia could have followed the Singapore or Hong Kong model with much success). Any country can, however, dramatically increase international tourism revenues. Every country has something interesting to package and the ability to develop “brand” identification, even if some have considerable advantages (beaches, location next to large numbers of potential tourists with considerable disposable income, colonial architecture). The cases of Las Vegas and Costa Rica are useful. A century

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43

ago, the dusty desert of Las Vegas did not look much like an ideal tourist destination. Due in large measure to a successful quasi-governmental agency (the Las Vegas Convention and Visitors Authority) and room taxes that generated tourism revenues of US$169 million in 2001, Las Vegas became one of the top tourism success stories. This transformation did not occur naturally or through market forces, but required capacity and considerable resources. Likewise, former Costa Rican president José Figueres Ferrer (1956: 101) noted in 1956 that Costa Rica lacked the dry weather, colonial architecture, and cultural endowment that would interest tourists. And yet Costa Rican state capacity and successful branding that began in the 1990s led to a tourism bonanza. New Institutions

Due to the unprecedented recent growth in international tourism, the exhaustion of the generic sand and sea model, expectations for dramatic growth in the next decade, and the pressures for tourism to generate jobs and foreign currency, national tourism authorities and local tourism authorities are being created, overhauled, or upgraded in every Latin American country. A study of tourism promotion in Latin America presents a rare opportunity in social science to execute a comparative study of new institutions. Even the largest country in the region, Brazil, only recently upgraded its national tourism authority to a sports and tourism ministry and produced the first coherent national policies for tourism (Santana 2000), and then went further by establishing a standalone tourism ministry in 2003 and much more ambitious national plans and objectives. Widespread Agreement on Critical Role of the State

Even while many argue for a reduction in the role of the state in a host of activities (industrial policy, basic services, utilities, security, pensions, and even health and education), there is widespread agreement across the political and economic spectrum and to the furthest reaches of the private sector that the state must participate actively in national and regional tourism promotion. Controlling entry (visa policies), branding, and ensuring sufficient infrastructure are merely a few of the many activities that the state must provide for success in the increasingly competitive international tourism market. The state not only must regulate tourism as in many sectors, but also in this competitive sector must innovate and brand. Refusing to take up this task can be costly. The United States has long been an oddity in national tourism policy, leaving tourism branding and promotion to the individual states and playing a minimal role in coordinating government and private sector efforts to promote international tourism. Oxford Economics, a consulting firm, reports that the United States “missed out on a global tourism boom of historic

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proportions” due to general disinterest and lackadaisical national policies. International tourism to the United States dropped by 9 percent from 2002 to 2010 even as global tourism increased by 29 percent. The Wall Street Journal revealed that misguided policies led to the US share of flights longer than seven hours falling from 17 to 12 percent over this period, costing US$606 billion in lost spending and 467,000 jobs (Dow 2011). Despite intense partisanship in recent years in Washington, D.C., on March 4, 2010, a bipartisan group of lawmakers looked on eagerly as President Barack Obama signed a major piece of legislation. It was the Tourism Promotion Act, designed to provide earmarked money and a public-private partnership to enhance the branding of the United States as a tourism destination. “All around the world, countries advertise their tourism. All we see on TV is money spent by other countries having us go to their countries,” claimed Senator Harry Reid (D-Nev.). “We want to do the same in their countries” (Reid 2010). The United States is only now admitting what the rest of the world has long known, that “regardless of one’s conception of the state, it is clear and accepted that the public and private sectors must work together” for success in this competitive sector (Busquets 2010). Resolving Collective Action Problems for Destinations

Who pays for marketing and advertising for a tourism destination? Without the intervention of a Leviathan, perhaps the dominant strategy for hotels and other businesses is to free-ride on the advertising and marketing of others. The most common solution for this collective action problem is to have the national government or local authority levy a fee or tax on some aspect of international tourism and pool the money in order to coordinate marketing and promotion for the destination. There are many models. In Las Vegas, the Convention and Visitors Authority is a public-private partnership that collects hundreds of millions of dollars from room taxes. In Argentina, the national government assesses an airline ticket tax for national promotion. In Costa Rica, there is a tax on all tourist activities that feeds into the national tourism authority for marketing and promotion. The State and Destination Branding at the Subnational Level

In the past decade the model of tourism based on generic sand, sun, and sea began showing clear signs of exhaustion. Destinations based largely on generic beach vacations have experienced little growth and, as generic destinations, are highly susceptible to exchange rates and price wars from other beach destinations. Culture, nature, and experience tourism are the areas of highest growth, such as the national parks of Costa Rica, the experience of

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Cuzco and Machu Picchu in Peru, the winery circuit in Chile, the architecture of Old Havana, or the boutiques and restaurants of the Palermo neighborhood in Buenos Aires. According to interviews with North American travelers to Latin America in 1998, tourists to Latin America want to meet with the people and experience culture.6 Beaches and swimming are declining in importance, while culinary experiences and nightlife are second only to personal security as factors for selecting a destination and the likelihood to return. Tourism at the national level is increasingly dependent on the success of global destination branding at the subnational level. Global cities in particular drive national tourism growth, acting as gateway cities for countries. Restaurant reviews for Latin American cities in the New York Times are arguably more important for tourists to Latin American destinations than pictures of beaches in travel magazines. Policymakers must enable and empower local authorities with resources and autonomy to build global brands, which can be difficult in centralized political systems with rigid bureaucracies. Tourism plays an important and growing role in the new trend in country branding. Led by Simon Anholt (2007), destination branding is not merely jingles and advertising, but involves destination officials building and showcasing strengths and qualities that others want to experience. The state, either alone or in partnership with the private sector, is responsible for developing the quality of the experiences that make up the brand and for the global marketing of the destination brand. This is a much more complex and difficult task than building a bridge or regulating a utility and requires real state capacity.

The State and the Externalities of Tourism The economy is only one of eleven externalities of tourism, and each of these externalities can be either positive or negative, as shown in Table 3.1. Without appropriate government regulation and intervention, it is highly likely that international tourism would lead to negative results in each of these domains. The environment is but one example. Unregulated tourism in the real world leads to hotels removing mangroves, noise, habitat destruction, untreated sewage in local waters, and other environmental damage. However, with proper state intervention, regulation, and incentives, tourism can result in heightened local awareness of the environment, real ecotourism, and improved conservation and national parks (Bowman 2011). In a similar fashion, the type of tourism and the role of the state determine if an influx of tourists and tourist dollars has a positive or negative effect on gender issues, culture, property rights, agriculture, and other issues. The influx of millions of dollars of tourism money can quickly alter power relations, and the interests of the weak or the poor can be trampled by local elites, multinational corporations, and other actors (Mowforth and Munt 1998).

46 Table 3.1

Potential Positive and Negative Results of International Tourism Externalities

Externality

Positive Results

Negative Results

Environment and ecology

Environmental conservation Ecotourism Heightened local awareness of conservation Employment of locals Increased tax revenues New investments Decreased balance of payments deficits Increased foreign currency Economic growth in poor regions Learning from travelers (cultural education) Learning from traveling (cultural tourism) Increased awareness of local heritage Tourism studies and training Respect for local culture and customs Interaction between cultures and mutual learning Reinvigoration and revaluation of traditional customs and products Wider horizons for young educated women More opportunities for local women

Increased sewage, solid waste, noise, habitat destruction, and air pollution Changed landscape Breakdown of traditional industries Poorly paid, low-skill jobs Increased local prices Low status for locals Lack of local control over local economy Increased inequality Limited insight into local conditions Ignorance of multifaceted nature of tourism Lack of schools for the growing local population due to immigration “Borrowing culture for a day” Tourist arrogance Social tension Drug abuse, alcoholism, prostitution Xenophobia Sex tourism Child prostitution Local women relegated poorly paid, low-skilled jobs Poor sanitation Unhealthy food Lack of basic hygiene Import and export of disease Drugs and alcohol problems Decreased farming and fishing Increased land values and taxes Loss of local ownership Land speculation Conflicts over property rights Tourism overcrowding Pollution Unpleasant travel “Move to next destination to be created” “Apartheid” tourism, with private beaches for tourists and little access for locals to tourism activities Discrete tourism, with high leakages and few opportunities for local industries

Economy

Education

Culture

Gender

Health

Increased leisure time Increased family interaction

Agriculture and fishing Property rights

Increased demand for local products

Future expectations

Increased local ownership Increased value of property owned by locals Sustainable tourism Ethics for tourists

Access equalities

Tourism activities accessible to local communities

Synergy with other industries

Cluster-based growth, with low leakages and multiplication of local opportunities to tap the tourism sector

Sources: Adapted and expanded from Puppim de Oliviera 2003: 102; and Lovel and Feuerstein 1992.

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Leakage is a useful final illustration of the role of the state in shaping tourism externalities. Two countries may have similar levels of international tourism receipts but very different net developmental effects of tourism, based simply on the leakages involved. The significance of tourism in developing country economies is viewed as positive in circumstances where (1) the revenues per tourism increase over time; (2) the benefits of tourism allow for the sustainable use of natural and other tourism resources as the market develops; and (3) tourism income is distributed throughout the value-chain in a manner commensurate with the sustainability and growth of the sector and the economic health of the destination’s economy. Tourism’s impacts become negative when leakages occur at unacceptable levels along the value chain, resources are not sustainable, and the local market is precluded from effective participation in the development of the tourism market. (Gollub and Hosier 2002: 24)

Without a capable state that is active and energetic in purposely shaping tourism for the potential positive externalities, a destination evolves into the vision portrayed by Malayan poet Cecil Rajendra. Rajendra’s poem “When the Tourists Flew In” vividly describes the promises made by the government officials and tourism business owners and the subsequent exploitation and suffering of the people when the tourists arrive (1978).7 Using a different framework, Rebecca Torres (2002) describes the challenges to tourism in reference to Cancún, which, along with the enclave tourism resorts in the Dominican Republic and Jamaica, represents the best (lots of tourism dollars) and worst (leakages, negative externalities in Table 3.1) in international tourism. The challenge to state capacity is to foment a shift from Fordist to post-Fordist modes of tourism production and consumption. The challenge to the state is significant, requiring at the very least improvements in security for tourists so that they can wander and spend money outside the armed all-inclusive tourist enclaves, coordination and investment to extend the commodity chain, and training and education. Finally, the United Nations World Tourism Organization (UNWTO), the Organization of American States, the Inter-American Development Bank, the World Bank, and other international organizations have come to the conclusion that tourism arrivals and tourism expenditures are hollow statistics for true development without shaping the tourism product to limit leakages and create positive externalities. In its recent report Tourism and Poverty Alleviation, the UNWTO extols the potential positive benefits of tourism for poor countries, poor regions, poor people, and poor women. However, these benefits do not naturally accrue to countries that attract tourists. Rather, “governments must lead with visionary strategies, practical policies, regulations, and thoughtful, inclusionary coordination” (UNWTO 2002b: 11).8

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We have now answered the first puzzle: Why did the Latin American state become so actively involved in the international tourism sector in recent years? The principal components of that answer are that the state is a necessary partner to avoid collective action problems and to produce positive externalities. In addition, the state is the only national actor that can brand the national destination and compete successfully in this highly competitive and growing sector. When international tourism was a minor activity in the region and based largely on beach tourism, the state could play a more hands-off role. That is no longer possible. Today, a successful state must be active in a range of policy domains to harness the benefits of tourism. These are the subjects of the next two chapters.

Notes 1. All of these articles appeared recently in the New York Times (see http://travel .nytimes.com/travel/guides/central-and-south-america/overview.html?page=1# articleslist) or the Los Angeles Times (see http://www.latimes.com/travel/destinations/ centralsouthamerica). 2. There are notable comparative exceptions, such as Hall and Williams 2008 and Hazbun 2008. 3. There are existing debates about how to measure tourism, whether it is an industry, how big it is, and so forth (CTCC 2008). 4. Spain is unique in having such a small percentage of the population of a wealthy country traveling outside the country. Spain is a tourism country, but the Spanish people are not international tourists: 48 percent of Spaniards have never left Spain and 15 percent have never left their autonomous communities (Muñoz 2011). 5. Though for Mexico tourism receipts have fallen dramatically in recent years, from US$13.3 billion in 2008 to US$11.9 billion in 2010 (UNWTO 2011: 8). 6. This is from a report by the Karma Centre for Knowledge and Research in Marketing at McGill University. The results were shared by officials from the Costa Rican Institute of Tourism (ICT). 7. The state can also play an active role in enhancing negative externalities, as in the case of South Korea. “The search for the benefits of modernization through tourism development may also have its undesired effects, with the political wish for the economic benefits also serving to reinforce other political, economic, social, and genderbased inequalities. For example, the authoritarian nature of successive South Korean governments through the 1970s and 1980s, in which individual freedoms were limited, has played a major role in the commoditization of people through ‘kisaeng’ tourism. ‘Kisaeng’ originally referred to females who were hired as companions and served a similar social function as the geisha in Japan. However the word is now synonymous with prostitution. A survey of kisaeng girls in 1978 by the Korea Church Women United estimated that ‘no less than 100,000’ tourist service girls were operating in 1978, mainly serving Japanese male tourists. However, this figure excluded the large number of unregistered sex workers. . . . Prospective kisaeng endured lectures by male university professors on the crucial role of tourism in the South Korean economy before obtaining their prostitution licenses. However, more telling is the attitude of the South Korean Minister for Education who stated that ‘the sincerity of girls who have

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contributed with their cunts to the fatherland’s economic development is indeed praiseworthy’” (Hall 1994: 121). 8. Rodrigo Grunewald (2002) shows how tourism can provide for cultural renewal and Miguel Figueras (2001) shows how the Cuban government was able to reduce leakage to only 30 percent by 2000, even though it was as high as 80 percent in the Caribbean (Gollub and Hosier 2002).

4 The Politics of Choice

When we ask the top officials at the Ministry of Economy and Energy why tourism can’t be a higher priority, with larger budgets, and perhaps its own ministry like other Latin American countries, they smile and tell us that Chile is a country with 16 million people and $35 billion in mining exports: tourism is too much work. —Tourism official, Santiago, June 2007

Tourism officials in Latin American destinations, be they countries or cities, increasingly compete for larger numbers of international tourists. Presidents, tourism ministers, mayors, and industry leaders have proclaimed tourism as a priority and promised policies and activities to increase visitors, generate foreign exchange, and create tourism-related jobs. However, the policies and choices made by policymakers often fall far short of those needed for success. The single biggest revelation of my fieldwork was that the actual commitment to international tourism is often halfhearted and does not approach the rhetoric, discourse, and media images. Policymakers often make choices that undermine their own stated goals. Policies are too often suboptimal. This chapter is about role of choice in state tourism capacity and details those policies and commitments required for the greatest success in international tourism in the new millennium. This series of policy choices establishes a three-level typology of state capacity—holistic, hollow, and rhetorical— based on accumulation and legitimacy. It is puzzling that some destinations choose policies that are insufficient to achieve their stated objectives. Why would officials in a country or city 51

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choose suboptimal policies? There are two principal explanations for why capacity is holistic, hollow, or rhetorical. First, the paradox of plenty explains and predicts hollow tourism priorities. The paradox of plenty is the concept whereby countries endowed with abundant and extractable natural resources (such as oil reserves) paradoxically fail at long-term development. Extracting and shipping copper or oil (or soy) is relatively easier than implementing and following through with the complex and interdependent tasks of holistic commitment necessary to maximize international tourism. Second, Latin American states are poor multi-taskers, and a continual focus on crisis, such as national security, can undermine efforts for a sustained campaign in international tourism promotion. Time horizons matter.

Policy Choices A country’s international tourism profile (the amount of tourism and whether that tourism is inclusive or enclave) is a product of choice and structure. Choice comprises a number of policy decisions that can have effects in the short and medium term and can be divided into two of Evelyne Huber’s (1995) pillars of state strength—accumulation and legitimation. Accumulation refers to state capacity for generating international tourists and comprises multiple dimensions of policies and performance. There are a number of accumulation attributes that are both observable and crucial for success, and those accumulation attributes include ease of entry for tourists, innovative, creative, and autonomous state and local tourism authorities, and sustained prioritization of the sector. Legitimation refers to the voluntary compliance and support of the population and private sector and results from observable indicators that include prior state successes, public-private cooperation, and transparency. Where states proclaim tourism as a national priority but their policy choices reveal a total absence of suitable actions, destinations have rhetorical tourism capacity and international tourism underperforms significantly. Where states proclaim tourism as a national priority but their choices reveal limited actions necessary to succeed, destinations have hollow tourism capacity and tourism underperforms its potential. Where states proclaim tourism as a national priority and their choices confirm that priority, destinations have holistic tourism capacity.1

Basic Policies for International Tourism Growth Ease of Entry

For some cases in Latin America, a tourist feels unwelcome long before they ever arrive. Are there uncertainties, bureaucratic mazes, and hassles for

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tourists from high-potential markets to enter the country? What are the visa policies? Policies that make tourist entry easier or more difficult are the clearest indicators of a country’s prioritization of international tourism and real commitment to the industry. It is easy to understand why international tourism has been heralded as a national priority throughout Latin America. Tourists bring jobs, foreign exchange, urban redevelopment, and opportunities for small business. Writing in 2001, Brazilian president Fernando Henrique Cardoso captured the sentiment found throughout the region at the turn of the century: “When our government took power in 1995, we clearly understood that the principal challenge of our administration would be generating jobs and income. . . . And, when we understood that Tourism was a sector so important for growth and development in Brazil, the fomenting of that activity became a priority. . . . [Tourism] occupies the third position among products that generate the most international income, contributing decisively to the equilibrium of our current accounts. Tourism in our country is now responsible for six million Brazilian jobs! And you can be sure that in the future due to the potential of the Brazilian tourism product and for the rapid return on our investments, tourism should expand much more in its importance to Brazilian life, becoming one of the pillars of development of the nation at the beginning of this new millennium” (Embratur 2001b: 5). The official Internet pages of national tourism authorities throughout Latin America, all of which have an English-language website to entice the big-spending US tourist, practically beg tourists to come and visit. As the following example illustrates, the assistance that countries provide to facilitate tourists is far less than the enthusiastic welcome found in colorful brochures and on sophisticated websites. It should be easier for US citizens to get a visa to Paraguay than to Cuba. Paraguay, more than most South American nations, could benefit considerably from the foreign currency and jobs that international tourism generates. The United States and Paraguay have long maintained friendly relations and Paraguay is a traditional ally. The two countries cooperate extensively on antiterrorism and counternarcotics issues. The Paraguayan consulate in Buenos Aires was a necessary stop for my first trip to Asunción in 2008. I had recently finished reading John Gimlette’s (2004) fascinating travelogue on Paraguay and was ready to experience this unique destination. The Paraguayan tourism office captivates potential visitors in the English-language section of their website. All I needed was a visa. Having already successfully maneuvered through the complex maze of requirements for a Brazilian visa, I expected the Paraguayan process to be fairly easy; I wanted to spend money in their country. The consulate was chaotic and it took several minutes to navigate the boisterous crowd and locate the appropriate line. The lady at the window had me fill out a form, took my US$65, and collected my passport. I asked when I could expect to get the visa. “I don’t

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know,” she responded. “The man in charge of US visas has not been in lately, and he is the only one who can approve them. Leave the passport and the money and drop by every afternoon to see.” Looking at the confusion throughout the consulate and the disorder on the desk behind the glass window, I sheepishly asked for a receipt. Receipts were not available and I had very little confidence that I would ever see my passport again if I left it. If I were going to travel to Asunción, I would have to take the risk. I turned over my passport and money, shaking my head and better understanding why Paraguay receives virtually no international tourists and tourism receipts.2 The differences between that experience and traveling to Cuba in 2004 are dramatic. Given the diplomatic tensions, one might assume that it would be difficult and time-consuming to obtain a Cuban visa. In practice, Cuban representatives pass out Cuban visas to US citizens at airports in cities such as Cancún, Mexico City, Panama City, and San José as if they were candy. For $15, a US citizen can immediately purchase a Cuban paper visa at the airport, which is then slipped into the passport. This temporary visa is easily discarded after leaving the island, leaving no trace of ever having visited that prohibited space. When I asked Cuban officials why they made it so easy for Americans to visit, they responded that the island needs tourists and dollars and that they wanted to make it as easy as possible for US tourists to arrive. Brazilian visa policies do not fit the enthusiastic and optimistic growth expectations of Presidents Cardoso and Lula. Brazil not only requires a reciprocal visa fee for US tourists, but also presents a maze of requirements to get the visa. A recent online posting series for the “Brazil Travel & Tourism” LinkedIn group asking if people were surprised that Brazil did not have a topfifty flight destination resulted in many postings from Brazil travel experts, almost all pointing to visa policies as the main culprit: No, I am not surprised. Not after losing more than $1000 in 2004. I wanted to attend a technical conference in Brazil, so I applied for a visa. Embassy: Show us your flight plans. Me: I bought non-refundable airline tickets (they are cheaper and I was foolishly sure I would be granted the visa). Embassy: VISA DENIED! I have been suggesting to friends ever since “Try Santiago, Buenos Aires, Lima, etc.” Not at all! The Brazilian Visa politic for Americans doesn’t help marketing our lovely country. I do understand and I’m even proud and happy in political reasons, but definitely not wise at all for business. The visa experience in San Francisco was like a bad joke. And I compared notes with many others who had the same experience there. It was a fiasco that was time-consuming and patience-testing.

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I hope, and believe, that perhaps the World Cup, and even more the Olympics may be reason enough for those in power to see the sense in re-thinking the visa policies. I sympathize with the politics of the current policy, given the hassle Brazilians have to get visas for the USA. I don’t think the person who could get employment in a more developed tourism industry would agree with the logic. The cost of the current policy far outweighs the benefits to the country and those that are unemployed and could be in work.

As shown in Table 4.1, Latin American countries fall into five categories of visa requirements for US citizens, who constitute the largest tourism market in the hemisphere. A number of countries, such as Argentina (until December 2009), Costa Rica, and Mexico, have no requirements for visas. A second group, which includes the Dominican Republic and El Salvador (and de facto Cuba in the departing airport before arrival), charge upon arrival a nominal fee (US$5–30) for a thirty- to ninety-day visa or tourist card. Others, such as Argentina (beginning in December 2009) and Chile, charge a reciprocal visa fee to tourists arriving in the national airport as tit-for-tat for US policies. One country, Bolivia, requires a reciprocal fee and additional documents upon arrival. This results in uncertainty, and there are many reports of tourists being denied visas at the Bolivian border. And finally, Brazil and Paraguay require a visit to a consulate, a number of forms, proof of a return ticket, and a visa before US citizens can enter their territory.3 The first two categories are pro-tourist. The costs are zero or insignificant and there are no burdens or inconveniences for the tourist. Most important, there is no uncertainty. When visas become more expensive, beginning with the third category, this can be frustrating for tourists, but is not a significant disincentive for tourists who are traveling alone or as couples. But increased expense is a major potential disincentive for large families. Argentina increased its visa costs in December 2009, a sign that its unquestioned enthusiasm for tourism is fading. On a recent trip to Argentina, I was required to purchase the reciprocal visa. I asked a dozen US citizens in the line if this was a surprise, and five of them said that they were unaware that they had to pay a reciprocal visa fee to enter Argentina. Two families with multiple children were horrified at the US$140 per person visa fee. The immigration personnel handling the special line for reciprocal visa fees were well trained in dealing with complaints; they spoke excellent English and explained politely why the policy was in effect—to reciprocate for the fees charged to Argentine tourists traveling to Australia, Canada, and the United States. There are no requirements for any additional documents, so the receipt of the visa is ensured and the visa lasts for the duration of the passport. Credit cards are accepted. This reciprocal policy is popular in Argentina, and Chile too, for issues of fairness and parity, even if it has a negative effect on tourism. Many travel websites are full of complaints about these policies, and many individuals proclaim that they will not travel to Argentina while this reciprocal tourism tax remains in

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Table 4.1

Visa Requirements of Latin American Countries for US Passport Holders

1. Free and Easy (no visa required)

2. Inexpensive and Easy (short-term tourist card)

Argentina (pre– December 2009) Colombia Costa Rica Ecuador Guatemala Haiti Honduras Mexico Peru Uruguay Venezuela

Cuba ($15 at airport, last stop before arriving in Cuba) Dominican Republic ($5) El Salvador ($10) Nicaragua ($5) Panama ($5)

3. Expensive and Easy (reciprocal visa fee paid upon arrival) Argentina (post–December 2009) ($140) Chile ($131)

4. Expensive, More Difficult, and Uncertain (long-term visa granted upon arrival and presentation of required documents) Bolivia ($135 plus photo, copy of hotel reservation, and evidence of sufficient funds)

5. Expensive and Major Hassle (visa required before travel begins) Brazil ($140) Paraguay ($65)

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effect, for example.4 The real impact on the arrival numbers of Americans, Canadians, and Australians has yet to be determined, but data will soon provide clues. In contrast, the Bolivian policy discourages even US tourists traveling alone or as couples. The cost is the same as that in Argentina, but the requirement of additional documentation consisting of hotel reservation, passport photo, and evidence of funds opens a window of uncertainty and nervousness for travelers, and of bad publicity from complaints on the Internet from the few travelers who experienced nightmare scenarios (such as three-day waits at the border). This is clearly a bad policy choice. Bolivia gains nothing by asking for more than do Chile and Argentina, but loses tourists due to the uncertainty and hassle. It is difficult to believe that international tourism is a priority given such counterproductive and symbolic policies. Brazil and Paraguay have visa policies that significantly reduce the number of tourists from the United States. Visitors must visit a consulate with forms, photos, proof of return flight, and money orders, and leave their passport. If one lives far from a consulate, they must express-mail a packet of documents, money order, and passport, along with an express-mail envelope for the consulate to return the passport. Having shepherded many study-abroad students through the process over the years, I can confirm that it is confusing, stressful, and a major hassle. For Brazil this is tit-for-tat, with the country not only wanting to charge US tourists the same fee the United States charges Brazilians, but also making US tourists suffer just as Brazilians suffer when trying to get a visa for the United States. The policy is remarkably popular in Brazil, for Brazil is a big country and Brazilians feel that it needs to be treated as an equal to the United States. I have asked more than two dozen colleagues and friends in Brazil if they support the policy, even if it significantly reduces tourist arrivals and hurts the Brazilian economy, and all are in favor of the policy. If Brazilians have to grovel and pay to get a US visa, then Americans should have to grovel and pay to get a Brazilian visa. If Brazilians get fingerprinted by US customs officials, then Americans should get fingerprinted too. While the policy is reasonable in the domain of tit-for-tat, it is not a reasonable policy choice for a country with the goal of dramatically increasing the number of tourists from the hemisphere’s largest market, the United States. Brazil might have the desire to increase tourism, but tourism policy is trumped by other interests, in particular the country’s powerful foreign ministry (Itamaraty), as more fully described in Chapter 6. Empowered Creativity, Autonomy, and Innovation in Bureaucracy

Tourism bureaucrats perform complex functions not found in any other government sector. This is due to the nature of tourism itself, and due to the need

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to create successful destination brands for today’s dynamic tourism based on culture, cuisine, architecture, and other destination-specific experiences. Destination branding fully arrived with the 1993 publication of Philip Kotler, Donald Haider, and Irving Rein’s Marketing Places: Attraction Investment, Industry, and Tourism to Cities, States, and Nations. Dozens of books and hundreds of articles have since been published on destination branding. There is some criticism that destination branding is all about jingles, but most of the scholarship is careful to emulate the Socratic advice that the way to gain a good reputation is to endeavor to be what you desire to appear. The work of Keith Dinnie (2008) and Simon Anholt (2007) provides but two recent examples of case studies, theoretical advances, and policy advice for destination branding. Tourism is a valuable element in nation branding “for the simple reason that is has permission to brand the country directly” (Anholt 2007: 89). Tourism destination branding occurs in two distinct phases. First, the destination uses new images and information to attract the tourist. Second, the visitors’ experience at the destination “tends to improve people’s attitudes towards the whole nation, its people and products, so tourism is also important because it encourages what in the private sector would be thought of as ‘product trial.’ . . . Tourism . . . generates enormous secondary benefits for the economy and the employment of a country” (Anholt 2007: 90). Destination branding of an all-inclusive resort enclave can be done successfully by the private sector itself. Sandals, Superclubs Hedonism Resorts, Club Med, and Barceló All Inclusive Resorts have their own branding, based not on the specific destination where they are located, but on the specific niche market that is catered within each enclave resort company. Some seek to attract families while other companies focus on singles and still others on couples. Just as the power of Starbucks is that the client knows precisely what they will get at any Starbucks no matter the location, Sandals clients value the Sandals experience more than the particular location of the resort. Destination branding of a city or country is quite another matter and requires the active involvement of the state. As Dinnie’s (2008) case studies affirm, successful destination branding is complex and requires a creative bureaucracy, innovative and skilled leadership, public-private cooperation, legitimacy from the public, and long time-horizons with sustained prioritization of the sector and sufficient dedicated funding. The fieldwork for my project featured extensive interviews in eight national tourism authority offices (ministries, secretaries, or subsecretaries depending on the country), seven regional offices (state or provincial), and four city tourism authorities. The interviews included three questions. I first asked who the tourism ministers or other leaders were, what their job qualifications were, and how long they served in office before leaving or being replaced. To succeed in contemporary tourism, ministries must innovate and brand, and this requires creative and committed leaders and real expertise.

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Unfortunately, politicians often use ministries of tourism to reward relatives (Paraguay) and political supporters who have no expertise (Honduras), or as placeholders for politicians awaiting the next election (Brazil). For example, Paraguayan president Luis González Macchi named his brother-in-law, Hugo Galli Romañech, director of the tourism secretariat. Galli Romañech had little training for tourism, and spent his time directing tourism by illegally harvesting palo santo, a hardwood found only in Bolivia and Paraguay and protected by law from being cut down. He also diverted tourism airport taxes for his own use.5 Next I asked what the educational and experience requirements for other bureaucrats were, and whether mid-level bureaucrats were professionals and had been specifically trained in skills needed by the tourism authority. The gap between professionalism and training in the tourism ministry in Costa Rica (high) and that in Honduras (low) is dramatic. Even a country with high human capital and a relatively high gross domestic product can have a tourism ministry full of unqualified bureaucrats. When I was reviewing tourism statistics in the tourism ministry of one of the wealthiest countries of South America, the two-person staff confessed that they were unable to offer much data because they did not understand statistics. They went on to explain that they had worked for the national railroad, and when the railroad closed, the government found new jobs for them as the statistics team for the tourism ministry. The government never provided any training for their new jobs, and they were working to become self-taught statisticians, reading books and enrolling in some short courses that they paid for themselves. They were intelligent, courteous, and wanted to do high-quality work, but did not have the training. In another national tourism authority in the Southern Cone, the director of tourism promotion was a pleasant and attractive young woman who had recently graduated from college with a degree in the humanities. In some ministries of tourism, the problems with the bureaucracy are incomprehensible. For example, in the Cambodian tourism ministry there are insufficient funds to pay all of the bureaucrats. In an act of solidarity, employees with language and analytical skills abandon the ministry for long periods of time to do consulting and other projects, in part so that the available funds can cover the salaries of the unskilled bureaucrats, who need their meager salaries from the tourism ministry to survive. This results in a woeful situation: the lowest-skilled workers, who are unable to make significant contributions to the ministry, are the ones who come to work, while the highest-skilled workers, whom the country and ministry desperately need, provide their skills to nongovernmental organizations and private companies (interview with two Cambodian public servants, Tsukuba, Japan, February 26, 2011). In Argentina, I spent several days in the late 1990s with a consultant who was drafting a 200-page national tourism review and proposal. In a scene straight out of Our Man in Havana, the British consultant told me that he had

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previously been in the vacuum business, and through serendipity had ended up giving a presentation at a conference in Uruguay, after which he had been hired by the Argentines to produce an assessment and proposal for tourism. He was bright and hardworking, and his report was workmanlike and competent, but it was not the type of forward thinking and innovative proposal that Argentina needed. The good news is that ministries can be transformed into innovative and professional teams, with the right leadership. Hernán Lombardi, one of the most qualified and innovative tourism officials in the hemisphere (and a subject of Chapter 7), who became minister of tourism for Argentina in December 1999, notes that “the tourism bureaucracy was a mess, and it took years to build a quality team of professionals” (interview, Buenos Aires, June 30, 2009). That process continued through the economic and political crisis in 2000 to 2004 with a series of high-profile and highly qualified ministers of tourism, including Daniel Scioli, a politician with an educational background in marketing and a professional career that spanned politics, international motorboat racing, and international business, and Carlos Enrique Meyer, a highly respected and innovative minister who has led Argentine tourism since May 2003. The differences in the bureaucracy between 1999, when I first conducted interviews, to 2010 are palpable and dramatic. In part that is because domestic tourism dominated Argentine tourism efforts in 1999, and international tourism is now a major focus. More impressive, all of the eleven people whom I interviewed in the ministry from 2007 to 2009 are well trained and view themselves as part of an innovative and creative process, something that is radically different from situation in 1999.6 Unfortunately, just as effective leadership and proper policy choices can transform a destination, poor leadership and improper policies can quickly reverse gains in tourism competitiveness. In 2009, Argentina began charging reciprocal visa fees to Americans, Australians, and Canadians, and in 2012, tourists struggled with multiple exchange rates and currency controls. Tourism is no longer the highest priority as it was in the 2003–2009 period. An additional important indicator of commitment and seriousness is the disposition of the national tourism authority to base their assessments on realistic projections and honest evaluations of past performance. In Brazil’s landmark Aquarela tourism plan, aggressive projections of visits by US tourists were included even though known Brazilian policies made those projections highly unrealistic. Finally in my interviews, I asked where promotion and marketing funds came from, and whether they were dedicated funds or collected on an ad hoc basis from year to year. Funding is important not only for sustained long-term marketing and branding, but also as a key indicator of legitimation. Funding of tourism promotion and branding is important due to collective action problems. Without some required pooling of marketing money, hotels, restaurants,

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and other tourism businesses can free-ride on those businesses that spend on marketing. The Las Vegas Convention and Visitors Authority (LVCVA) is one of the most successful and innovative models of tourism promotion and branding. Gambling and entertainment began in the 1930s, but the temporal distribution was uneven. Weekdays, summers, and the Christmas holidays brought few tourists, and local leaders decided to focus on conventions as a solution. A new convention center was needed, and in 1955 the state of Nevada agreed to finance its construction through a room tax levied on motels and hotels in Clark County. This proved to be popular, since local residents benefited from the convention business while being exempt from paying for the convention center. The convention business was a success, and Las Vegas now hosts 20,000 conventions and meetings annually.7 The LVCVA emerged from this experience as a quasi-governmental agency with the power to collect room taxes on the 148,000 hotel and motel rooms in southern Nevada. The agency is a private-public partnership. Its board of directors consists of six representatives from the private sector and eight representatives from the local governments. The 9 percent room tax for resort hotels is divided as shown in Table 4.2. The public-private partnership and considerable permanent funding created a virtuous circle in Las Vegas, with advertising bringing both more tourists and larger budgets. Table 4.3 shows the growth in tourism and marketing resources in Las Vegas from 1970 to 2007. These revenues resulted in a budget of US$33 million for marketing, US$85 million for advertising, US$14 million for special events, and US$25 million for grants in fiscal year 2007 (LVCVA 2009: 21), without the need for allocation from the government budgets nor for any taxes on locals. Las Vegas has solved the collective action problem for destination advertising and marketing, while generating high levels of legitimation through public-private partnership, transparency of certified public disclosure of all revenues and expenditure, and a half century of success.

Table 4.2

Las Vegas Room Tax Allocation, July 1, 2007 (percentages) Resort Hotels

LVCVA Taxing entity (Clark County or various city entities) County transportation Clark County school district State tourism promotion Total Source: LVCVA 2009: 27.

Other Hotels/Motels

5 1

4 2

1 1.625 0.375 9

1 1.625 0.375 9

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Table 4.3

1970 1980 1990 2000 2007

Tourism and Marketing Resource Growth in Las Vegas, 1970–2007

Visitor Volume (millions)

Convention Delegates (millions)

Gaming Revenues (US$ millions)

LVCVA Room Taxes (US$ millions)

6.8 11.9 21.0 35.8 39.2

0.27 0.66 1.70 3.90 6.20

369 1,617 4,104 7,671 10,868

3.8 18.2 49.5 130.6 219.7

Source: LVCVA 2009.

Public-private partnerships are found in tourism authorities in places beyond Las Vegas. However, this model proves challenging in Latin America. The private sector is regularly opposed to supporting tourism taxes for promotion and marketing. Even in Costa Rica, which has collected a tourism tax of 3 percent for more than a decade and has experienced award-winning success in marketing and branding due in part to the resulting funds, complaints are widespread and regularly appear in the newspapers.8 Legitimation is an important determining factor for how a country raises funds for tourism promotion. I interviewed fifty tourism businesses in Costa Rica (managers or owners at hotels, restaurants, and tour companies) and thirty tourism businesses in Honduras and asked one crucial question to measure legitimation: “If [Costa Rica/Honduras] taxed tourists a set percentage and earmarked those funds to be used solely for national tourism promotion and marketing, do you believe that the money would be used for tourism promotion and marketing. That is to say, will tourist taxes be used to promote tourism or will they be diverted to another purpose?” Follow-up conversations in both Costa Rica and Honduras suggested that perceptions of previous experiences with dedicated taxes resulted in a decline of government legitimacy. In Costa Rica, six respondents mentioned that the government had initiated a special gasoline tax for the express purpose of repairing roads, and that the funds were diverted to the general budget. In Honduras, all twelve of the respondents who believed that none of the tourism tax would be used for promotion and marketing commented that the government was not honest and that the money would be stolen or misused, as shown in Table 4.4. The misuse of tourism taxes often results in a long-term distrust of the state and its role in solving the collective action problem inherent in tourism promotion. In Paraguay, tourism taxes charged at the airport have been misused and misappropriated, which can greatly limit the legitimacy of the state.

The Politics of Choice

Table 4.4

63

How Tourism Businesses Think Tourist Taxes Will Be Used, Costa Rica and Honduras, 1997–2000 Respondents Who Hold This Opinion

Opinion All tourist taxes will be used to promote and market tourism. Some tourist taxes will be used to promote and market tourism, and some will be diverted to another purpose. All tourist taxes will be diverted to another purpose.

Costa Rica

Honduras

18/50 (36%) 24/50 (48%)

1/30 (3.3%) 17/30 (56%)

8/50 (16%)

12/30 (44%)

Note: Managers or owners at hotels, restaurants, and tour companies were asked, “Will tourist taxes be used to promote tourism or will they be diverted to another purpose?”

Poor Policy Choices: Why? We have identified several policy choices that are often counterproductive for achieving the goals of international tourism promotion and reveal that countries lack seriousness or commitment. Why do countries make these choices? This section provides two explanations, one based on the paradox of plenty and the other based on crisis management. The paradox of plenty, also known as the resource curse, stems from the warning from Adam Smith of the negative consequences of reaping riches without having to sow. Terry Karl (1997) and other political scientists have examined the effect of easily extractable resources such as oil and minerals on economic development and government policies. Countries with huge resource benefits such as Nigeria and Venezuela often exhibit poor long-term economic performance. The negative consequences of the resource curse include the following: Dutch disease: Revenues from commodity exports undermine other productive sectors by increasing exchange rates and wages. Taxation: Revenues from exports such as petroleum in Mexico result in a political relationship wherein rulers do not sufficiently tax citizens. Revenue volatility: Natural resource prices fluctuate widely. Excess debt: Projected revenue flows of the future entice leaders into borrowing heavily today. Human resources: The high salaries of resource exports disfigure the economy by attracting the best talent away from innovation, entrepreneurship, and education. Resource-poor countries often spend far

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more on education and research and development than do resourcerich countries. It is not just extractive industries such as petroleum and mining that can produce disincentives for economic development and sustainable economic policies. In The Campaign, Carlos Fuentes (1992: 51) narrates the paradox of plenty in an agricultural setting through a conversation between the rural patriarch José Antonio Bustos on the pampas of Argentina and his philosopher son visiting from Buenos Aires: “Is there anything this country doesn’t produce?” said José Antonio. “A man can get a return of more than twenty times the value of his labor force here. There are no forests to clear, as there are in North America. You can plant twice a year. The same field yields wheat for ten years without being exhausted. The only thing you have to be careful of is planting too much in one spot. If you do, the harvest will be overly abundant. And the cattle graze on their own.” The father paused with a smile and asked his son: “Aren’t you worried about a country like this?” “On the contrary. You confirm all my optimism.” “I’d be more cautious. A country where all you have to do is spit for the land to produce may turn out to be weak, sleepy, arrogant, self-satisfied, uncritical.”

The paradox of plenty is a powerful explanation of the long-term commitment that countries have for international tourism and tourism revenues. Countries that can easily export oil, copper, natural gas, or high-priced soy in the current global market find tourism too difficult to fully commit to. These paradox of plenty cases are the countries with the most-stringent visa requirements and the least-experienced tourism ministers. These are also the countries that often have net negative currency flows from international tourism. Not only do these countries underperform in attracting international tourists, but also their citizens spend a lot of money abroad. Tourism receipts and expenditures in Latin America for 2000 and 2010 are presented in Table 4.5 (which includes Spain for comparison), where I have also identified the paradox of plenty countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Venezuela. Every one of these countries has negative net per capita tourism receipts, except Mexico, which has a small surplus. The net tourism receipts per capita are summarized in Figure 4.1. Argentina is an interesting case, going from strongly negative to positive from 2000 to 2007 and then negative again in 2010. The economic and political crisis in 2002–2003 resulted in a dramatic shift in the country’s attitude toward international tourism, a professionalization of the national tourism authorities, and a decline in Argentine tourism abroad. Tourism kiosks

Table 4.5

Tourism Receipts and Expenditures in Latin America, 2000 and 2010 (US$) 2000

Argentinaa Boliviab Brazila Chileb Colombiab Costa Rica Cuba Dominican Republic Ecuadorb El Salvador Guatemala Haiti Honduras Mexicob Nicaragua Panama Paraguay Perub Uruguay Venezuelab Spain

2010

Receipts (millions)

Expenditures (millions)

Receipts per Capita

68 1,810 819 1,030 1,302 1,737 2,860 402 254 482 128 260 8,294 129 455 73 837 713 469 2,9967

4,425 77 3,892 620 1,060 485 0c 309 299 80 182 18 120 5,499 76 188 102 423 423 1,058 12,200

78.5 8.2 6.7 53.9 24.4 342.6 157.9 340.5 31.9 43.8 42.3 16.6 40.6 85.3 25.3 156.90 13.27 32.57 216.06 19.96 749.18

Net Receipts per Capita –41.1 –1.1 –7.7 13.1 –0.7 215.0 157.9 303.7 8.1 30.0 29.4 14.3 21.9 28.8 10.4 92.1 –1.5 16.1 87.9 –25.1 444.2

Receipts (millions)

Expenditures (millions)

Receipts per Capita

Net Receipts per Capita

4,982 310 5,702 1,620 2,083 2,009 2,187 4,209 781 390 1,378 167 650 11,992 308 1,676 217 1,496 1,496 739 52,525

6,375 421 19,340 2,399 2,368 534 0c 542 862 280 1,033 431 406 9,075 323 575 269 534 817 2,430 22,800

123.0 29.8 29.5 94.7 45.8 437.0 195.0 425.0 55.0 62.9 95.7 17.0 85.5 108.4 51.3 478.9 33.4 68.1 440.0 25.7 1115.2

–34.4 –11.0 –70.6 –46.0 –6.3 321.0 195.0 370.0 –5.7 17.7 24.0 –26.9 32.1 26.4 –2.5 164.3 –8.0 12.3 282.9 –58.7 631.1

Sources: Population Reference Bureau; UNWTO 2011. Notes: a. Considerable trade balance surplus from 2000 to 2010 from agricultural commodities. b. Major exports of oil, natural gas, or mining products. c. Cuba does not report expenditures of outgoing tourists and is reported as zero here.

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Figure 4.1

Net Tourism Receipts per Capita in Latin America, 2000–2010

Tourism Receipts per Capita (US$)

$400 $350 $300 $250 $200 $150 $100

2000 2010

$50 $0 –$50

Ar

ge

nt in Bo a liv ia Br az il C C hil ol e C omb os D ta ia om R ic in a ic an C u R ba ep u Ec blic El ua Sa do r G lvad ua o te r m al a H Ha on iti du ra M s N exic ic ar o ag Pa ua na Pa m ra a gu ay P U eru ru g Ve ua ne y zu el a

–$100

Source: UNWTO, World Tourism Highlights, 2011.

appeared, as well as signage in English, thousands of locals began to rent out their apartments as short-term furnished housing for tourists, the country was listed in multiple newspapers and magazines as the hot place to visit, and tourist arrivals grew by 60 percent from 2000 to 2008, even as global tourist arrivals grew by 35 percent over the same period. As the Argentine economy has improved and exports of soy and other products have skyrocketed, the country’s commitment to tourism has softened, as demonstrated by the new visa charge for US tourists in December 2009. In an online article that was widely read and commented upon, a travel website announced, “Argentina says screw you to tourists with new entry fee.”9 One of the comments came from Maria, a tour company operator in Buenos Aires, who wrote: “I am afraid this is going to be a big disaster for us. . . . This fee . . . is a bad way to start your vacation in our country. We will keep trying to get this reversed, but our government doesn’t listen.” At the same time, larger numbers of Argentines

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began to travel and spend abroad. By 2010, net per capita receipts were again negative. Only five countries, none of them extractive paradox of plenty countries, rely on tourism as a significant part of their economy and net generator of a significant percentage of national jobs. The Dominican Republic (US$379 net receipts per capita), Costa Rica (US$321), Panama (US$315), Uruguay (US$283), and Cuba (US$195) can point to tourism as a major game-changer for their economies. Brazil (–US$71), Venezuela (–US$59), and Chile (–US$46) have the biggest net negative receipts per capita from international tourism. One country worth singling out is Paraguay, a country that exhibits neither paradox of plenty characteristics nor any interest in international tourism. There are various possible explanations for this odd case. First, Paraguay is landlocked and has neither the beaches nor the mountains that were needed for the development of tourism in the boom years of the 1970–2000 period. Second, the largest components of the Paraguayan economy include contraband and illegal activities. “About one-fifth of the Paraguayan economy has been driven for years by illicit cross-border trafficking in everything from cigarettes and pirated Nintendo games to submachine guns and stolen BMW’s.”10 The elites who richly benefit from the contraband and smuggling have little interest in developing tourism or having outsiders poking around. While tourism could benefit the country as a whole and provide jobs to lower- and middle-class Paraguayans, the risks outweigh the probable benefits for the economic elites.

The Effects of Crisis on State Tourism Efforts: Costa Rica and Honduras Another reason that countries select suboptimal tourism policies is that they are fixated on security and political crises. Where political and military objectives are primary, then the process of economic and policy reform may have to be slower.11 This section examines Costa Rica and Honduras at the beginning of the tourism boom, from the early 1980s to the end of the 1990s. Costa Rica was a pioneer in the region in embracing and prioritizing the tourism sector. Why was Costa Rica an early innovator and industry leader while the rest of Central America was not? This case can create comparative context for the case studies of Chapters 6 and 7, which examine the 2000–2010 period. Costa Rica and Honduras are both endowed with enticing natural destinations for adventurous tourists. Having spent considerable time traversing both Costa Rica and Honduras, I agree with the Ricardo Martínez, executive director of the Honduran Institute of Tourism (IHT), that Honduras has a greater tourism resource endowment than does Costa Rica (IHT 2000: 6–7). Accord-

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ing to the IHT, there are five attractions that bring tourists to third world countries, as shown in Table 4.6, and to which I add surfing and fishing.12 The attraction rankings shown in the table are shared not only by myself and Honduran tourist officials, but by many Costa Ricans as well. As early as 1956, José Figueres Ferrer noted the challenges for attracting tourists to Costa Rica. Unlike other countries such as Honduras, Figueres admitted that Costa Rica lacks pre-Columbian people and ruins, colonial architecture, and cultural souvenirs. In addition, the country has the most severe rainy season in Central America (Figueres Ferrer 1956: 101). Honduras has the resources to at least match if not surpass the increases in tourism revenues achieved in Costa Rica.13 Tourism revenues are presented in Figure 4.2. As shown, tourism revenues increased sixfold in Costa Rica from 1985 to 1997, from US$118 million to US$714 million. Tourism revenues are important for Costa Rica, with international tourism earning roughly double the revenues of coffee exports. Tourism has been the number one generator of new employment in the past decade, creating 128,000 new jobs, or 44 percent of all new jobs. Twelve percent of the occupied labor force works in the tourism industry. Stated simply, Costa Rica’s economy would be significantly weaker without the development of this industry. In addition, tourism has had an important impact outside of the Central Valley, where most industry is located; 72 percent of tourism activity is found outside the valley and has been an engine for growth in some of the poorest regions of the country. Finally, tourism has created thousands of microbusinesses owned by local residents: 73 percent of hotels have fewer than twenty rooms, and a visitor can travel throughout the country staying only at locally owned hotels and eating only in locally owned restaurants.14 In contrast, growth in international tourism revenues in Honduras has been moribund, increasing from just US$29 million to only US$32 million.15 The situation is so dismal in Honduras that in 1993, this poor country with significant tourism-promise had a net loss in currency reserves from tourism, as

Table 4.6

Tourism Endowment in Costa Rica and Honduras

Attraction

Costa Rica

Honduras

Beaches Colonial heritage Fishing Flora and fauna Pre-Columbian sites Scuba Surfing

Good None Excellent Excellent None Average Excellent

Good+ Some Good Excellent Excellent Excellent+ Poor

The Politics of Choice

Figure 4.2

69

Tourism Revenues in Costa Rica and Honduras, 1979–1997

$800

Tourism Revenues (US$ millions)

$700 $600 $500 Costa Rica

$400

Honduras

$300 $200 $100 $0 1979

1983

1987

1991

1995

1997

Source: UNWTO, Yearbook of Tourism Statistics, various years.

wealthy Hondurans were spending $6 million more on international travel than the country was receiving from foreign visitors (IHT 1994: 79). How can one possibly explain the starkly different trajectories of the tourism industries in these two countries? I put this question to a host of industry officials, media experts, political commentators, and tourism operators in both countries.16 There was near universal consensus on the explanation, which can be divided into two parts—tourism legislation and image branding. Tourism Legislation

Costa Rican tourism was growing quite slowly until 1987. The principal reason for the sudden increase is found in Law no. 6990 of 1985 (interview with ICT official Emilia Mora, San José, September 22, 1997; ICT 1997). In its 1998 platform, the Unity Party (the opposition party in 1985 and not responsible for the law) admitted that “the promulgation of the 1985 Law of Tourism Incentives No. 6990 opened the path for tourism to become a generating source of income and of employment” (PUSC 1998). Tourism will not develop without a minimal level of services and hotels. Not only are hotels important for lodging, but they also promote the country through international advertising. In the early 1980s, Costa Rica did not possess the facilities for tourism and realized that an incentive was necessary. Law no. 6990 provided an incentive to invest in tourism by allowing the duty-free importation of equipment, supplies, vehicles, boats, and other accouterments for tourism enterprises; and

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allowing tax benefits through an acceleration of depreciation (ICT 1997: 83–97). In addition, the Costa Rican Institute of Tourism was given autonomy and a dedicated source of income for promotion that was derived from a 3 percent surcharge on hotel rooms and a fee for every airline ticket. The ICT has been able to spend large sums of money on international promotion and local capacity; in 1997 the ICT spent some US$10 million on advertising in the United States, pushing the theme “Costa Rica: No Artificial Ingredients.” Investment incentives were quite successful, as the number of hotel rooms in the country tripled from 1985 to 1993. Costa Rica first marketed itself as a destination for backpackers and ecotourists. The country subsequently diversified into high-end tourism with higher–value added products. Many megaprojects have been constructed in the past two decades (La Nación, October 5, 1997). One of the great frustrations for Honduran tourism officials is the date of legislation for the zonas libres turísticas (ZOLTs), or free zones for tourism, which went into effect on July 7, 1992. The legislation was relatively simple and had goals similar to those of the 1985 Costa Rican tourism incentive legislation, permitting duty-free importation of tourism-related materials and equipment as well as tax benefits (La Gaceta, July 7, 1992). The legislation was not controversial and did not create winners and losers among local elites in the same fashion that a shift from protected import substitution industrialization to open export-led growth engenders.17 Tourism officials had been lobbying for years for incentive legislation; they knew that they could capture a portion of the growing hemispheric tourist trade and that the legislation was critical. The legislation not only had no domestic opposition that I could identify but also did not require a large expenditure from the national treasury, and similar legislation was demonstrated to be effective in Costa Rica. In contrast to Costa Rica, which demilitarized in 1948, Honduras formed its first institutionalized military with US assistance in 1954, leading to the first military coup in Honduran history in 1956. A second military coup took place in 1963 and after that event the Cold War and anti-communism emerged as dominant themes in Honduran politics and as a foundation of Honduras-US relations. After the Sandinista revolution in neighboring Nicaragua in 1979, Honduras was transformed into the base of operations for the Nicaraguan Contras’ counterrevolutionary activities. US military activities in Honduras were so extensive that Honduras was regularly referred to as the U.S.S. Honduras (Bowman 2002: Ch. 5). Why did tourism legislation come so late in Honduras? The answer hearkens back to a statement of the US Government and Accountability Office that reforms would be slower when military objectives were primary. In the 1980–1993 period, military security issues still dominated the agenda. Priorities were skewed away from the type of long-term policies represented by the ZOLTs. Elected officials were consumed during the “lost decade” with either short-term survival or putting out fires from a recal-

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citrant and threatening military caste that was not tamed until the mid-1990s (Bowman 2002). Economic policy during these years existed, but instead of proactive planning of sustainable developmental policy it was reduced to crisis management and short-term reaction. This was largely the result of the military’s power and the battle to control and reduce that power. One may ask, how do we know that incentive legislation actually spurred tourism in Honduras? Perhaps Honduras was incapable of luring tourists. The passage of the ZOLTs in 1992 provides a test. After a lag period of two years, tourism revenues grew dramatically, from US$32 million in 1992 to US$80 million in 1995 and US$150 million in 1997—a fivefold increase in five years after passage of the ZOLTs. As of July 1997, nineteen hotels were under construction, bringing US$100 million in new investment. IHT executive director Martínez provided the answer for the sudden success of the industry: “Martínez said that the growth of the tourism sector is the result of the Incentives Law that the government has been promoting, which includes the dutyfree importation of goods and equipment, as well as the exoneration of taxes” (El Heraldo, July 26, 1997).18 The Honduran Institute of Tourism was also granted autonomy, and I found its seventy-five employees to be both highly qualified and highly motivated. The IHT was still no match for the Costa Rican Institute of Tourism, which had some 200 employees and twenty times the annual budget of the IHT. The IHT had no dedicated funding source, which limited long-term promotional planning and effectiveness. In May 1998, newly elected Honduran president Carlos Flores announced a 4 percent tax on hotel rooms, vehicle rentals, and tour agencies, with the money to go to the national tourism authority (IHT) for promotional purposes (Honduras This Week, May 4, 1998). Collecting the tourism tax has been problematic. Image Branding

Another important linkage between level of militarization and tourism is international image. On one hand is Costa Rica, which has been nominated twelve times for the Nobel Peace Prize, specifically for the absence of a military; the country (and President Óscar Arias) won the prize in 1989. Its image as a peaceful and demilitarized country merged nicely with the preferences and concerns of its targeted tourist market—ecotourists. According to a Menlo Consulting Group survey of 45,000 US households, the US tourists who were most interested in visiting Costa Rica in the mid-1990s were well-aware of Costa Rica’s political climate; respondents stated that one of the reasons they would visit was the country’s “political stability in a part of the world known for military rule and instability.” The research also showed high interest among respondents in understanding local conditions of the places they visited. For example, four in ten of Costa Rica’s prospective visitors wanted to

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understand the country’s political and social structure (Menlo Consulting Group 1996: 6, 14). Costa Rica has utilized its “no-military” status extensively to lure these socially aware and progressive tourists. The three key points used in promotion are biodiversity, peace with no military, and the friendliness of Costa Ricans (interview with ICT official Ireth Rodríguez, San José, September 16, 1997). The “no-military” condition is emblazoned on popular tee-shirts worn proudly by tourists: one tee-shirt features an image of beautiful native birds and the caption “The Costa Rican Air Force”; another features an image of massive leatherback turtles lumbering up a beach and the caption “The Costa Rican Navy.” In contrast, the international image of Honduras has been very negative. With Voice of America referring to the country as an “army with a country” the image of Honduras in the United States is of death squads, mafialike armed forces hiding behind sunglasses and tanks, and instability. This type of negative image can be overcome, but requires promotion and success stories in the international press.19 From 1997 to 2008, Costa Rica’s tourism revenues increased from US$714 million to US$2.3 billion, while in Honduras revenues increased from US$150 million to US$619 million (UNWTO 2011: 8). Unfortunately, security and political events continue to haunt the people and policies of Honduras. The criminality and gang problems are regular features in the international media and were the theme of the sole feature film that has been produced about Honduras, Sin Nombre in 2009. Worse still, the ouster of elected president Manuel Zelaya in 2009 resulted in months of bad press and elections that are still not recognized as legitimate by many Latin American countries. Much of the good work done by tourism officials has been undone, the national brand is in tatters, and the future of tourism’s benefits for the country in jobs and foreign currency is threatened.

Conclusion Countries and cities in Latin America have long recognized the benefits of tourism, and have proclaimed the industry as a national priority. Unfortunately, the choices made by policymakers often do not meet the lofty rhetoric. Some destinations, as shown in Table 4.7, have holistic capacity and sustained policies of increasing the numbers of international tourists and tourism revenues. They have effective and creative tourism leaders and ministries with highly trained and career bureaucrats. Entry policies are pro-tourism. Destination branding is an ongoing endeavor, with sufficient short- and long-term dedicated funding. There are high levels of transparency, public-private cooperation, and legitimacy that engender public support of tourism policies and expenditures.

The Politics of Choice

Table 4.7

73

Tourism Policy-Choice Rankings of Latin American Countries, 2000–2010

Choice (accumulation and legitimacy)

Examples

Low: Rhetorical capacity

Paraguay

Medium: Hollow capacity

Brazil, Chile, Honduras, Mexico, Uruguay, Venezuela

High: Holistic capacity

Argentina (2003–2009), Costa Rica, Panama, Dominican Republic

Another group of destinations exhibits hollow capacity—their policies support tourism but are entirely insufficient. Barriers to tourism entry are erected through punitive visa policies, ministers of tourism are often selected for reasons other than their commitment to and expertise with tourism, and bureaucracies are filled with workers who lack the necessary training and skills. The commitment to tourism is limited. These limitations are often a result of the paradox of plenty or repeated political or security crises that bleed the reservoir of sustained and long-term commitment required to compete globally in international tourism. Destinations often proclaim tourism as a priority, but in actuality this priority is often trumped by other concerns. And finally there are countries that make so little effort in international tourism promotion that their capacity is merely rhetorical. These cases include a very wealthy country, the United States, where the national government has historically done very little tourism branding and promotion, leaving this largely to cities and states. Paraguay is another country with merely rhetorical tourism capacity, and is an interesting case because this fascinating country exhibits little interest in attracting international tourists. Why do some destinations perform better than others, and how do some countries with superior endowment underperform? Policy choices—regarding visa requirements, leadership, innovation, investment, commitment, publicprivate cooperation, and the like—help determine the success of tourism promotion. However, choice does not tell the entire story. Structural variables largely determine the types of tourism that develop, the distributional benefits, the amount of leakage, and other externalities. The next chapter addresses the constraints of structure in international tourism.

Notes 1. As described in Chapter 7, there are subtle but important differences between tourism capacity at the local and national levels. One key difference is that the local

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tourism authority is embedded in and potentially strongly affected by the national tourism bureaucracy. In addition, while powerful ministries such as foreign affairs and defense can trump the national tourism ministry, as in Brazil, at the local level the tourism ministry is a relatively stronger voice and less likely to have its interests superseded by more powerful bureaucracies. 2. According to data from the United Nations World Tourism Organization, Paraguay received US$73 million in tourism receipts in 2000 and US$102 million in 2007, the lowest numbers in all of Latin America (UNWTO, Yearbook of Tourism Statistics, 2010). 3. This information comes from personal communications with consulates and from consulate web pages. 4. FlyerTalk.com, http://www.flyertalk.com/forum/argentina/1026434-visa -reciprocity-fee-start-december-20-2009-a-31.html. For example, a recent forum on Argentina’s visa reciprocity fee (Author 2009) has over 450 comments, mostly negative. 5. ABC Digital, “Cuñado del president se burla de la ley,” October 9, 2002, http://archivo.abc.com.py/2002-10-09/articulos/14520/cunado-del-presidente-se -burla-de-la-ley; ABC Digital, “ Cuantiosas deudas deja en turismo Hugo Galli, cuñado del Presidente,” July 3, 2003, http://archivo.abc.com.py/2003-07-03/articulos/55810 /cuantiosas-deudas-deja-en-turismo-hugo-galli-cunado-del-presidente. 6. Argentina formally established a tourism ministry in 2010. Previously the national tourism authority was the tourism secretariat. However, the minister of tourism had full ministerial rank since 1999 and reports directly to the president, so the actual effect of the creation of a new ministry is limited. In contrast, the head of Chile’s national tourism service reports to the economy ministry, ever since the new tourism law, designed to energize Chilean tourism, went into effect on January 1, 2011. 7. Las Vegas Convention and Visitors Authority, “Mission and Purpose,” accessed December 17, 2012, http://www.lvcva.com/about/mission-purpose.jsp. 8. See, for example, Tico Times editorial, “New Tourism Tax Won’t Help Matters Much,” January 12, 2007, http://www.ticotimes.net/Opinion/Previous-editorials/New -Tourism-Tax-Won-t-Help-Matters-Much. 9. “Argentina Says Screw You to Foreign Tourists,” January 22, 2010, http:// travel.booklocker.com/2010/01/22/argentina-says-screw-you-to-foreign-tourists. 10. Tony Smith, “Contraband Is Big Business in Paraguay,” June 10, 2003, http:// query.nytimes.com/gst/fullpage.html?res=9805E2DB1239F933A25755C0A9659C8B 63&pagewanted=all. 11. Kevin Casas Zamora, a Costa Rican scholar and former program officer at the Arias Foundation for Peace and Human Progress, told me that his research indicated that civilian governments in countries with large militaries often opt to do nothing in policy areas that have even a remote possibility of upsetting a fragile status quo with the armed forces (interview, San José, Costa Rica, September 10, 1997). This contributes to hesitancy in addressing important policy issues. 12. Costa Rican surfing is growing in international fame and Playa Grande was featured in the surfing movie Endless Summer II (1994). In 1996, 3.7 percent of visitors to Costa Rica listed surfing as their principal reason for visiting the country. Only 2.8 percent of visitors listed fishing as their principal reason, but it is widely accepted that fishing generates large sums of dollars per tourist (data provided by UNIMER, a public opinion survey firm). 13. One might assume that Costa Rica would have much better infrastructure than Honduras. This is not necessarily true. My experience (at least before Hurricane Mitch of 1998) is that the Honduran highway system is in much better condition than that of

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Costa Rica, where dodging the potholes is a dangerous drawback to any travel. Honduras also has four international airports, compared to two in Costa Rica. 14. See Unidad Social Cristiana’s tourism platform, www.nacion.co.cr/In_ee /elecciones/programa/turismo.html. 15. The situation for international tourism was far worse than these numbers indicate. Tourism revenues include money spent by missionaries, US soldiers stationed in the country or participating in joint training maneuvers, and other visitors who are not tourists. 16. In Costa Rica, interviews on tourism were held with various officials of the Costa Rican Institute of Tourism, tourism journalist for La Nación Emilia Mora, Catarina García of the public opinion survey firm UNIMER, US embassy officials, former presidents Óscar Arias and Luis Alberto Monge, and dozens of tourism entrepreneurs. In Honduras, interviews on tourism were held with several officials of the Honduran Institute of Tourism, political commentators Marvin Barahona and Rafael del Cid, US embassy officials, and dozens of tourism entrepreneurs. 17. Discussions of the tensions between domestic beneficiaries of import substitution and proponents of export-led growth, and possible solutions within a democratic polity, are found in Pastor and Wise 1995. 18. In an attempt to boost state capacity, President Rafael Callejas (1990–1994) also sponsored the most extensive modernization of the state since Marco Soto (1876–1883) and Juan Gálvez (1949–1954) held office. 19. According to Luis Alfredo Zuniga of the Honduran Institute of Tourism (IHT), tourism was also undermined by the devastation of Hurricane Mitch of 1998. Not only did the hurricane destroy infrastructure, but more importantly it diverted attention and IHT resources at a crucial time (interview, Tegucigalpa, Honduras, June 12–13, 2002).

5 The Constraints of Structure

Rio de Janeiro has nowhere to grow tourism. The tourist zone of Ipanema and Copacabana is built out and bordered by the ocean, the mountains, the favelas, and areas of high crime. —Tourism consultant, Rio de Janeiro, June 2011

In the five-year period 2007–2012, some 50,000 people were killed as part of the drug war in Mexico (Tovrov 2012). While much of the violence takes place along the US-Mexico border region, tourist destinations in the interior of the country, such as Mazatlán and Acapulco, have witnessed gruesome, highpublicity crimes and a decline in tourist arrivals. The crime wave led the US State Department to issue an official warning on April 22, 2011, regarding travel to Mexico in general and to multiple Mexican cities and states in particular. An official travel warning from the State Department not only results in individuals reconsidering their travel plans, but also automatically triggers the cancellation of institutionalized travel programs, such as study-abroad programs from many US universities. Regarding the famed resort of Acapulco, the State Department noted in 2011: Downtown Acapulco and surrounding areas have seen a significant increase in narcotics-related violence in the last year. Incidents have included daylight gunfights and murders of law enforcement personnel and some have resulted in the deaths of innocent bystanders. Due to the unpredictable nature of this violence, you should exercise extreme caution when visiting downtown Acapulco. To reduce risks, tourists should not visit the downtown area at night and should remain in clearly identifiable tourist areas.1

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If this Mexican crime wave were a temporary swell of violence or a discrete event, the results could be devastating to tourist arrivals for the short term. The enduring perception of violence in Mexico reduced the number of international tourist arrivals by a total of 24 million from 2006 to 2011.2 Mexico receives a lot of tourists, but with its tourism endowment and location it should receive many more. It is easy to understand why crime, terrorism, war, and other safety issues would have a strong effect on the destination choice of tourists (Botterill and Jones 2010; Fuchs and Pizam 2011). In their review of the challenges to tourism in Latin America, Nicolino Strizzi and Scott Meis state that the “further deterioration of law and order, rising criminal activity, and the spread of infectious disease will also raise tourism-related security and health concerns, potentially reducing tourism volumes and spending by incoming foreign visitors” (2001: 191). Even in relatively safe Costa Rica, the kidnapping of a German tourist and a Swiss national by former Nicaraguan guerrillas on January 1, 1996, led to a significant decline in tourist arrivals from Germany for the following year (interviews with officials from the Costa Rican Institute of Tourism, 1998). Crime directly reduces tourism demand and has been extensively researched and demonstrated. After five years of the drug war and 50,000 violent deaths, the fear is not that Mexico will experience short-term declines in tourism but that high levels of violence will become a permanent structural condition that will reduce the positive externalities of tourism and increase the negative externalities, with tourism in Mexico becoming increasingly concentrated in protected enclaves. Structural crime is devastating for tourism. It is estimated that the city of Rio de Janeiro alone loses 1 million potential tourist arrivals per year due to violence (Khalip 2004), but the more damaging result of crime is the enclaving of the tourism product in that marvelous city. All crime is not the same. There is a tremendous difference between the sustained level of crime in Rio de Janeiro and Mexico and the discrete criminal event of a kidnapping in Costa Rica, as shown in Figure 5.1. The bad fortune of a high-profile crime, a natural disaster, or a health scare can have a significant effect on tourism in the short term, but it does not lead to a dramatic shift in tourism, including in the distribution of the benefits and externalities of tourism. When crime or instability is perceived as a permanent condition of a destination, it becomes part of the social structure for tourism, resulting in enclave tourism, as shown in Figure 5.2. An unfavorable structure significantly limits state capacity by limiting policy choices. One of the important puzzles of this book is why some countries and cities follow an inclusionary tourism model with better distributional effects, while others follow an enclave model with far fewer positive distributional benefits. Enclaves have high leakage, low wages, limited penetration by local businesses, a series of exploitative elements such as prostitution, and a lack of authenticity. Enclave tourism is inferior in every way to more inclusive

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Figure 5.1

The Effect of Discrete Unfavorable Structural Events on Tourism

Discrete crime, health scare, or other highprofile event

Figure 5.2

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Tourists cancel vacations or choose alternative destinations

Status quo restored by time, public relations, and absence of sustained negative conditions

The Effect of Sustained Unfavorable Structure on Tourism

Sustained high levels of crime, permanent health dangers, or other structural weaknesses

Tourism policies shift tourists into enclaves to avoid unpleasant, unsafe, or unhealthy conditions

Enclave tourism results

tourism models, yet many destinations follow this inferior model. Destinations are channeled to choose enclave tourism because the social structure is inhospitable to inclusive tourism and enclave tourism models can allow destinations to pursue international tourism without having to first resolve difficult structural problems. Crime is merely one of several structural conditions discussed in this chapter that affect international tourism. For discrete events, the damages can be controlled with time and effective public relations. If the conditions are perceived as constants, then destinations are faced with two options. The first option is to change the conditions such that there are real improvements in the structural conditions in which tourism policies are embedded. This is the best

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long-term choice, but does not satisfy the short-term interests of foreign direct investors, politicians, and tourism officials. The second option and the most common choice is to encourage enclave tourism that is insulated from the structural realities. Inequality, war, low human capital, perilous health conditions, poverty, and ethnic, religious, or gender discrimination are other structural elements that negatively affect international tourism and lead to enclave tourism. The United Nations World Tourism Organization confirms that the greatest threats to tourism in Latin America and the Caribbean include crime, sociopolitical disturbances, terrorist attacks, and health scares (UNWTO 2002a: 10). This is both intuitive and supported in newspaper reports and research. The actual causal process by which structural constraints limit tourism and produce a form of tourism that is harmful to local communities is less understood. I argue that unfavorable structural conditions shift tourism into national, regional, or local enclaves that in turn exacerbate structural cleavages and provide minimal benefits to local populations. To protect tourists from poverty, crime, unsanitary conditions, and the like, they are herded into idyllic enclaves of comfort and safety. This process results in high levels of leakage, exploitation, exclusion of small and medium-size entrepreneurs and businesses, prostitution and other vices, and low salaries for local tourism workers. I also argue that enclave tourism establishes a pattern and model of tourism that impedes the further development of other models of more inclusionary tourism. Urban, cultural, culinary, and other tourism modalities that include both locals and international tourists as participants and that benefit larger percentages of local population are very unlikely if not impossible to nourish and develop in those settings where enclave tourism dominates. As tourist preferences for the generic sea and sand vacations decline and urban and other authentic tourism experiences grow in popularity, those destinations that choose enclave tourism will be stuck with a stagnant product and limited growth or declines in tourism. In this chapter I first define and conceptualize the social structure of tourism. I then describe the process by which an unfavorable tourism structure leads to enclave tourism and how this results in what I refer to as the “enclave trap.” Finally I provide empirical data suggesting that Latin America as a region underperforms in international tourism because of unfavorable social structural variables. If a destination wants long-term success in tourism and positive externalities for development, the first steps are to improve education, reduce inequalities, enhance citizen and tourism security, and improve other structural variables. Tourism proponents such as the UNWTO argue that tourism is a strategy for reducing poverty and for development. This is not necessarily true. Tourism can be part of a strategy, but is not sufficient for social development. In an inhospitable structural climate that leads to tourism enclaves, tourism will exacerbate poverty, exploitation, and inequality.

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Defining and Conceptualizing the Social Structure of Tourism Social structure is the set of institutions and arrangements whereby the population interacts and lives together. Inequality, poverty, exploitation, gender power relations, ethnic discrimination, crime, health, and other variables compose the social structure and produce and result from “those cultural or normative patterns that define the expectations that agents hold about each other’s behavior and that organize their enduring relations with each other” (López and Scott 2000: 3). Social structure shapes upward mobility, power, entrepreneurship, opportunity, and tolerance. I define a favorable tourism social structure as comprising those conditions that facilitate the inclusion of the largest number of individuals in the benefits of tourism and the participation of the local population in local tourism activities. A population with low levels of poverty and inequality, high levels of education and language skills, low levels of crime, and low levels of discrimination based on gender, religion, or sexual orientation is one in which a wide range of its members can benefit from tourism and can participate in enjoying the natural, cultural, and other attractions that appeal to tourists. Tourism social structure comprises two principal components, distribution and legal order. Distribution further comprises various components including class; inequality, poverty, and health; human capital and education; ethnic, racial, religious, gender, and other cleavages or areas of discrimination; crime; investment security and ease of operating a business; and corruption. Class

Social class is much more than the distribution of income. It can include markers such as language as well as preferences in attire, music, food, and other things that distinguish the elites from the non-elites. These markers in turn result in inclusion or exclusion. If class cleavages are extreme, there are expectations and customs about social relations. Certain beaches, jobs, or interactions with international tourists are de facto reserved for certain elites, while other beaches, jobs, or interactions with tourists are expected to be filled by the lower classes. Tourism modalities are layered on existing class constructions. If a destination is characterized by interactions among the local population where elites do not wait in lines and feel an intrinsic superiority or series of entitlements, then tourism will reflect this power relation whereby the poor are exploited. I once worked in the Philippines, and a group of expatriates living in Manila were working to establish a nonprofit at the largest dump in the country, known as Smoky Mountain. Thousands of people lived at the dump and the children were trapped in a life of garbage picking, with few opportunities of education or upward mobility. The local elites were aghast at the

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thought of trying to help these children, because the elites considered the children unfit to get an education, attend university someday, and interact as equals with higher classes. The saying in Brazil is that if an elite faces a long line, they cut to the front. If challenged by a non-elite in the line, they merely need to say, “Do you know who you are talking to?” and then continue to cut.3 Nara Milanich (2009) explains how social inequalities and class distinctions endure in Chile even with impressive improvements in healthcare and education for the lower classes. The class gulf is beautifully revealed in Sebastián Silva’s 2009 film The Maid, in which the family who employ the maid refuse to treat her with sufficient respect; instead of calling her by name, they regard her as subhuman and summon her by ringing a bell. Inequality, Poverty, and Health

Latin America is the region of the world most characterized by high levels of income inequality (Bowman 1997). Countries of relative abundance such as Brazil and Chile are home to large numbers of favelas and shantytowns and poverty would be greatly reduced with moderate improvements in the distribution of income. Poverty is associated with urban blight and poor health and sanitation services. Human Capital and Education

Tourism opportunities for the local population are often limited by the weakness of education and human capital. The growth of tourism in Brazil and Rio de Janeiro is limited by poor-quality public education and a shortage of people with language skills (Branco 2003; The Economist, June 4, 2009; Fitzpatrick 2003). As the 2014 World Cup in Brazil and the 2016 Olympics in Rio de Janeiro approach, this structural weakness is being exposed, with timid attempts to teach English to cab drivers taking place. But it will be a case of too little, too late. Ethnic, Racial, Gender, and Religious Cleavages

There are significant barriers to inclusive tourism models in destinations with extreme social cleavages. Officials often prefer the enclaving of tourists rather than risk the problems that can result from the interaction of large numbers of tourists with locals under these structural conditions. The enclave tourism that has emerged in parts of the Middle East as described by Rami Daher (2007) and Waleed Hazbun (2008) takes place in Club Med or Dubai in part to insulate the tourists from the local cleavages, but also to insulate the tourists from local power relations involving different social practices and gender roles.

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These distributional structural variables combine in different ways in different destinations to divide the hierarchy between the tourists and the locals. Tunisian director Ridha Behi’s classic 1976 film The Sun of the Hyena vividly shows how a Tunisian fishing village was transformed into a neocolonial enclave with the arrival of Club Med. One of the most troubling insights of the film concerns the logic of enclave tourism whereby locals must abandon their traditional ways and serve German tourists by acting “authentic” according to the desires of the latter. As discussed in Chapters 6 and 7, the best way to avoid the servant/master modality in enclave tourism is to embed tourism as part of the activities practiced by the citizens of a destination. This requires a significant native middle class. My own definition of what defines the middle class is the presence of those people or families who take regular vacations and stay in hotels, campgrounds, inns, or other paid housing. This excludes visiting relatives or friends and staying free of charge. In those countries with large numbers of domestic tourists, such as Costa Rica and Argentina, the magnetic pull of establishing enclaves is greatly reduced. In those destinations with a small middle class and limited domestic tourism, such as Honduras and Haiti, the temptation to establish enclave tourism will be hard to resist. Crime

Crime is the most obvious structural impediment to tourism and the strongest incentive to build an enclave tourism model that isolates and protects the tourists from the local people. Here is one description of tourism in Jamaica, a prototype enclave destination: “Most visitors to Jamaica seldom leave the resorts, and when they do, it is in buses supplied by the resorts, with guides supplied by the resorts, with visits restricted to one of the few Jamaican ‘tourist attractions.’ These are usually Dunn’s River Falls, Martha Brae River Rafting, Fern Gully, Green Grotto Caves, etc. Otherwise, few tourists take it upon themselves to hire a car and explore on their own (this kind of activity is discouraged by the resorts, with warnings of various possible dangers).”4 Another leading enclave destination and a tourism success story in terms of quantity of international visitors is the Dominican Republic. Kay, a tourist selected by the Punta Cana resorts to describe the pleasures of the all-inclusive enclave experience, notes that “the Dominican-Republic-Resorts offer you so many amenities that you really do not have to leave the resort to enjoy your Punta Cana all-inclusive vacation.”5 The enclave experience is appealing given the nature of travel warnings to the island, such as this official warning from the Australian government: “We advise you to exercise a high degree of caution in the Dominican Republic because of the risk of serious criminal activity and incidents of civil unrest.”6

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One regular visitor to the Dominican Republic offers the following advice for first-time tourists: “All Resorts in Punta Cana I’ve seen are walled with armed guards, so no, it is not recommended that you leave the resort without a guide. Inside the walls it is absolute paradise. The resorts contain just about everything you would want . . . bars, clubs, shopping, doctors, shows, etc., so folks don’t feel the need to leave. Like someone else said, there are plenty of things to see in the Dominican Republic like Sonoma Island and certainly Altos de Chavon, but they are a distance away. I highly recommend the tours if you want to see the island, but while making the bus ride to these different places you will see the real DR and understand why they would rather you stay within the walled resorts. The poverty rivals the poorest areas I have seen in Mexico. I was in Punta Cana a few months ago and told that Santa Domingo was not somewhere to go without a good guide. . . . The Dom. Rep. has beautiful resorts and the larger ones will keep you entertained for weeks, but leaving the walls is something I would do 2 or 3 times a week at the most, and only with a guide.”7 Investment Security and Ease of Operating a Business

Investment security and ease of operation seem obvious necessities for the arrival of large international businesses such as a Marriott or Accor hotel. The opening of these hotels in a destination not only provides rooms and associated jobs and income, but also sophisticated and free destination marketing and branding by the chains. The investments are large and are not likely to occur without long-term confidence in the legal system, the ability to repatriate profits, and the expectation that expropriation will not occur. Investment security and ease of opening and operating a business are even more important for small-scale local entrepreneurs. Costa Rica has one of the most sophisticated training programs for tourism entrepreneurship, including both traditional education and training through the National Vocational Training Institute, and tourism-specific training through the Costa Rican Institute of Tourism. The training can help Costa Ricans who want to open restaurants or inns, or even become certified nature guides at national parks. Corruption

Tourism involves billions of dollars and where that much money changes hands, corruption can follow. Corruption limits the opportunities of the nonelites to participate in and benefit from the tourism sector. In Brazil, extreme corruption in the tourism ministry in 2011 led to the dismissal of two dozen officials, including the tourism minister.8 In the case of Paraguay, endemic corruption, contraband, money laundering, and embezzling make this country the most corrupt in Latin America.

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Paraguay ranks fourth from last on Transparency International’s 2003 Corruption Perception Index. “Corruption in Paraguay is endemic and systemic and takes place in all three branches of government as well as in the state and bi-national enterprises. It is perceived as pervasive, touching many aspects of the lives of its citizens, both rich and poor. While petty corruption is allencompassing, it is grand corruption that captures attention and focus. The principal forms of corruption are: bribes, influence peddling, embezzlement, extortion, conflict of interest, patronage and nepotism. Other associated problems include contraband, money laundering and drug trafficking” (Cohen, Berthin, and Mizrahi 2004: ii). Given this institutional setting, it is no surprise that corruption, nepotism, and other scandals have beset the tourism bureaucracy.9 Paraguay receives fewer international tourists than any other Latin American country. Paraguayans are missing out on the jobs and opportunities that tourism might bring if the structure were more favorable for tourism and if corruption were sharply reduced.

The Enclave Trap Cancún, the Dominican Republic, and Rio de Janeiro are three of the major tourist destinations in the hemisphere with a structural foundation that does not facilitate integrated tourism. The logic of the structure of poverty, inequality, insecurity, a small middle class, and low levels of human capital leads to an enclave model. In Rio de Janeiro, the vast majority of the tourists stay in the narrow strip of beaches in the zona sul (southern zone), which includes Leme, Copacabana, Ipanema, and Leblón. The majority of the citizens of Rio de Janeiro have no meaningful interaction with tourists at all. In the Dominican Republic, tourists are concentrated in the Punta Cana region on the far eastern tip of the island and in other all-inclusive hotel zones far from the population centers. The more than 100 hotels in the Punta Cana region are dominated by the all-inclusive mega-resorts, with 28,000 rooms and twelve golf courses; the “wonderful thing about the all-inclusive resorts is [their ability] to satisfy just about all your needs without ever having to leave.”10 And in Cancún, tourists can feel right at home at the Hooters restaurant. The development of tourism enclaves is a trap. It is tempting for tourism officials to avoid the health, crime, poverty, inequality, and other structural impediments to tourism by insulating tourists far from the local people and hoping to someday expand tourism to more integrative models. Unfortunately, the enclave becomes self-reinforcing, providing all types of amenities—such as evening entertainment like musical shows and discos, an all-inclusive dining—but then constantly reminding the tourists that it is not safe to go beyond the walls and the armed guards. Enclaves experience high levels of leakage, provide few high-paying jobs, inhibit the development of small and medium-

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sized local businesses in the tourism sector, and exploit the locals into a servant-master relationship with the tourists. Enclave tourism does not represent a step toward more inclusive and integrative forms of tourism. Enclave tourism is a policy choice that leads away from the kind of inclusive and developmental tourism that can reduce poverty and benefit local communities. The enclave trap creates an international brand and image of a destination as an enormous terrestrial cruise ship, with the locals portrayed as inferior and dangerous savages living beyond the high walls, barbed wire, and armed guards. To completely bypass interaction with local realities, private airports land jumbo jets right next to the resorts. Punta Cana International, a private airport built by the Punta Cana resorts to bring tourists directly into the allinclusive enclave, received 3.8 million passengers in 2008, making it the busiest airport in the Dominican Republic.11 Tourism strategies are path-dependent and self-reinforcing. A destination’s best long-term strategy is to improve structural conditions and slowly build holistic and integrated tourism with less leakage and greater interaction and benefits for the local population. But the best short-term strategy is to build an enclave, and unfortunately the enclave is a trap, bringing the worst externalities of tourism and providing few of the positive externalities. The allinclusive resorts and their foreign management are the winners. The local population and the national government receive poorly paid service jobs and few tax revenues. One of the first enclave tourism resorts in the Spanish-speaking Caribbean was in Caracas, Venezuela. Built by the Rockefeller brothers in 1940, the Hotel Avila would become an enclave sanctuary catering to US citizens working in the petroleum industry (Ward 2008: 8). The Rockefellers, joined by the Hiltons, expanded their tropical hotel empires to Venezuelan islands, Havana, and Puerto Rico in the ensuing decades. The 1970s witnessed the rise of enclave Cancún, as the local service population swelled from 119 in 1970 to 40,000 in 1979 (Ward 2008: 118). By 1986, more than 600,000 foreign tourists were visiting Cancún annually, triple the number of Mexican tourists (Ward 2008: 124). The most ambitious tourism enclaves in the hemisphere are in the Dominican Republic. Ironically, Dominican dictator Rafael Trujillo initiated a tourism model centered on the capital of Santo Domingo with the construction of luxury hotels such as the Intercontinental Embajador, which opened in 1956. Unfortunately, the structural conditions for tourism did not exist in Santo Domingo. “Trujillo’s heavy-handed dictatorial rule, followed by his assassination in 1963 and subsequent political instability, practically killed the Dominican Republic’s tourist trade in the mid-1960s. As stability returned to the country in the late 1960s, the Joaquín Balaguer administration commissioned a series of assessments of tourism development in the Dominican

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Republic” (Ward 2008: 155). The result of these assessments was the identification and focus on several isolated beach areas for development. Due in part to the arrival of Club Med in 1979 and the subsequent construction of a private airport, Punta Cana became the most important enclave in the country. By 1993, Punta Cana–Bávaro boasted over 21,000 of the nation’s total of 56,000 rooms (Ward 2008: 171). The growth was helped in part by the creative use of celebrity partners such as Julio Iglesias and Oscar de la Renta (Ward 2008: 173). The growth of tourism dollars and tourist arrivals has been nothing short of spectacular in the Dominican Republic. But how has that growth benefited the local population? A 2011 report by the Catalan association Alba Sud and the United Nations Development Programme (UNDP) affirms that while the Dominican Republic’s tourism model attracts millions of international tourists, it provides little development for its population and instead “concentrates wealth and redistributes poverty. . . . Though it constitutes an important alternative for the national economy, the tourism activity hasn’t generated . . . development that involves the community,” according to UNDP official Pavel Isa. The tourism model is based on large hotel complexes that are not linked to the reality of their social surroundings, and lacks public policies to bolster social services and the involvement of local populations. According to Isa, this has resulted in, “on the one hand, extraordinary growth of tourism and hotels, and on the other, the massive diffusion of marginal population centers.”12 In one of the most extensive studies of tourism on the island, Angelica Weiner observes that “the Dominican Republic has an interesting juxtaposition of the largest tourism industry in the Caribbean with some of the worst social conditions in the region such as high rates of unemployment, poverty, and infant mortality. While the Dominican tourism industry experienced growth rates in the double digits in the 1990s, incomes for the lowest wage earners remained flat” (2010: 2). More recently in Honduras, plans to construct an enclave tourism area in Tela Bay have repeatedly been put forth, even though Honduras will have to displace traditional Garifuna indigenous communities in order to build a golf course, an equestrian park, and multiple all-inclusive enclave hotels in the Punta Sal national park. High crime rates and other structural impediments make mass tourism to Honduras challenging without the safety of an enclave, and the proposed Los Micos beach and golf resort has the support of Honduran elites, the Honduran Institute of Tourism, and the Inter-American Development Bank, which has offered a construction loan.13 Social anthropologist Christopher Loperena finds that this project in Tela Bay on the coast of Honduras “is leading to the displacement of Garifuna and small farm communities. The coup d’etat in that country opened the door to interests ready to move fullsteam ahead on this project, despite local resistance and studies showing

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severe environmental damage” (2010). While plans to develop the Tela Bay enclave tourism zone for international tourism were discussed when I lived in Honduras in the early 1980s, the project is finally taking shape with considerable investment from international financial institutions and the Honduran government. The first phase—the Los Micos luxury hotel, residences, and golf course—was scheduled to open in 2012, but was not open as of this writing. It is far too early to know whether the Los Micos resort will bring a tourism boom or bust to the Honduran Caribbean coast. What is more easily predicted is that the result will provide limited benefits for the local population and the Honduran state. Honduras is a country of tremendous tourism potential with impressive Mayan ruins, world-class diving, and charming mountain towns. Unfortunately, it is not hospitable for integrated tourism, and the country is choosing a costly path.

The Structural Deficit and Tourism Underperformance in Latin America Latin America as a region exhibits comparatively high levels of crime, inequality, and poverty (Bowman 1997). While there are limited success stories in terms of numbers of tourist arrivals in enclave destinations such as Cancún, the Dominican Republic, and Rio de Janeiro, enclave tourism has not generated large numbers of tourists in most of the region. While it requires far less state capacity to develop enclave tourism than other forms of tourism, even developing successful enclave tourism is difficult, and success is far from ensured in the new enclave zone in Tela Bay in Honduras. I hypothesize that high rates of crime, inequality, and poverty negatively affect tourism competitiveness in the region and help explain why tourism in Latin America is growing slower than in other regions of the developing world. To test the hypothesis, I employ data from the World Economic Forum’s 2008 Travel and Tourism Competitiveness Index to construct a tourism performance index. This index presents country tourism competitiveness rankings adjusted for natural and cultural resources. Countries endowed with high levels of cultural and natural tourism resources should exploit those benefits and exhibit higher levels of tourism competitiveness than those destinations lacking cultural or natural resources. As shown in Table 5.1 (which includes Iberian countries Portugal and Spain for comparison), nearly every Latin American country underperforms in tourism competitiveness given their levels of natural and cultural resources. Bolivia (–71), Venezuela (–61), Ecuador (–49), Peru (–49), and Brazil (–46) are the five countries with the worst performance. Brazil is particularly telling, as it has the third best combined natural and cultural tourism resource endowment in the world, and yet is ranked only 49th in overall tourism competitiveness.

The Constraints of Structure

Table 5.1

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Tourism Performance Index for Latin American Countries, 2008 Global Rank for Competitiveness

Spain Portugal Costa Rica Brazil Panama Chile Mexico Argentina Uruguay Dominican Republic Guatemala Peru Colombia Honduras Ecuador El Salvador Nicaragua Venezuela Bolivia Paraguay

5 15 44 49 50 51 55 58 61 63 68 70 71 75 86 97 99 103 106 115

Global Rank for Resources 4 12 41 3 36 44 16 22 53 90 45 21 28 59 37 128 83 42 35 94

Tourism Performance Index –1 –3 –3 –46 –14 –7 –39 –36 –8 27 –23 –49 –43 –16 –49 31 –16 –61 –71 –21

Source: Resource and competitiveness rankings from World Economic Forum 2008.

Latin America underperforms in tourism growth compared to other regions, despite excellent tourism endowments and proximity to one of the most important tourism markets, the United States. Crime, poverty, poor infrastructure, low human capital, health risks, corruption, and other structural variables limit the options and opportunities for tourism in the region. More important, those structural variables and the enclave alternatives to developmental tourism limit the benefits of tourism to citizens and destinations. For a healthier tourism that empowers locals as entrepreneurs, reduces poverty, and provides good jobs, structural deficits must be improved in many destinations. Casual observers often assert that differences in tourism performance at the destination level are largely caused by exchange-rate fluctuations and perceptions of price. The empirical evidence in a longitudinal cross-sectional panel study of Latin America found that price is irrelevant for tourism growth. What does matter for growth is infrastructure, education, and social development in health services. Improving structural variables for tourism, therefore, has a huge long-term payoff, resulting in not only better tourism but also more tourism (Eugenio-Martin, Morales, and Scarpa 2004).

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Notes 1. US Department of State, “Travel Warning,” April 22, 2011, http://travel.state .gov/travel/cis_pa_tw/tw/tw_5440.html. 2. EFE, “160,000 Businesses Left Mexico in 2011 Due to Violence,” April 5, 2012, http://latino.foxnews.com/latino/news/2012/04/05/coparmex-160000-businesses -left-mexico-in-2011-due-to-violence. 3. One of the most important markers of status in Brazil is a visit to Disney World. There are hundreds of Internet blogs and comments complaining of the Brazilian propensity to cut lines. 4. Jamaican Caves, “Jamaica Crime and Tourism,” October 27, 2011, http://www .jamaicancaves.org/jamaica-crime.htm. 5. Kay, “Punta Cana All Inclusive Resorts,” undated, assessed December 17, 2012, http://www.punta-cana-sunshine.com/dominican-republic-resorts.html. 6. SmartTraveller, Government of Australia, “Dominican Republic,” August 10, 2012, http://www.smartraveller.gov.au/zw-cgi/view/Advice/Dominican_Republic#. 7. Sherri, “Can You Leave the Resort in Punta Cana, Dominican Republic?” undated, accessed December 16, 2012, http://answers.yahoo.com/question/index?qid =20080805091755AAMIEE9. 8. See Chapter 6 for a full description of corruption in tourism in Brazil. 9. ABC Digital, “Cuñado del president se burla de la ley,” October 9, 2002, http://archivo.abc.com.py/2002-10-09/articulos/14520/cunado-del-presidente-se -burla-de-la-ley; ABC Digital, “ Cuantiosas deudas deja en turismo Hugo Galli, cuñado del Presidente,” July 3, 2003, http://archivo.abc.com.py/2003-0703/articulos /55810/cuantiosas-deudas-deja-en-turismo-hugo-galli-cunado-del-presidente. 10. Colonial Tours, “Punta Cana—Bavaro,” undated, accessed December 17, 2011, http://www.colonialtours.com.do/punta_cana_bavaro_En.htm. 11. Dominican Republic Airport Authority, “Estadísticas Pasajeros,” January 2009, http://www.departamentoaeroportuario.gob.do/Html/estadisticas_pasa/enero _diciembre_2008_g.jpg. 12. Dominican Today, “Dominican Tourism Redistributes Poverty, Report Says,” February 14, 2011, http://www.dominicantoday.com/dr/poverty/2011/2/14/38596 /Dominican-tourism-redistributes-poverty-report-says. 13. Sandra Cuffe, “Nature Conservation or Territorial Control and Profits,” February 6, 2006, http://upsidedownworld.org/main/honduras-archives-46/194-nature -conservation-or-territorial-control-and-profits.

6 Contrary Cases: Brazil and Argentina in Comparative Perspective

numerous Latin American countries and expanded in others with the hope of capturing part of the international tourism market, which comprises 1 billion tourist arrivals and nearly US$1 trillion annually in tourism expenditures (UNWTO 2012). Tourism was a boom industry that would deliver jobs, foreign currency, investment, small and medium-sized businesses, and greater development in poor regions. By 2000, all Latin American countries had pronounced a public commitment to attracting greater numbers of tourists and had enhanced the institutions necessary to do so. The optimists were correct and tourism did continue to expand both globally and in Latin America. Globalization, the increasing ease of international travel, the Internet, and aggressive international marketing resulted in a 39 percent global growth of international tourist arrivals over the period 2000– 2010, from 674 to 939 million. Central and South America exhibited an impressive growth of 61 percent over the period, from 19.6 to 31.5 million tourist arrivals (UNWTO 2012). These international tourists provided some US$26 billion in foreign currency in 2008, creating millions of new jobs, local businesses, and enhanced infrastructure. Despite the overall growth, there are some surprising outliers. Brazil should be the greatest tourism success story in Latin America. It is endowed with a coastline of more than 1,700 miles with hundreds of picturesque tropical beaches and multiple world-class tourism icons. The World Economic Forum’s 2008 Travel and Tourism Competitiveness Index ranks Brazil number one in the hemisphere and number three in the world for natural and cultural tourism resources; with this endowment of core tourism resources, Brazil should be one of the top destinations in the world. Brazil should have benefited 91

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more than any Latin American country from the rapid growth of international tourism in recent years. Brazil announced international tourism promotion as a national priority in the late 1990s, established a standalone tourism ministry in 2003, placed high-profile officials in charge of national tourism promotion, and announced ambitious official plans to multiply the number of international visitors to Brazil and create millions of new jobs. Yet international tourism in Brazil stagnated and underperformed, with international tourist arrivals actually declining from 5.30 million in 2000 to 5.16 million in 2010 (UNWTO 2011). How and why did this happen? At the same time, Argentina was the scene of chaos and the greatest economic crisis in its crisis-prone history. In 2001 the country witnessed a prolonged economic downturn, widespread strikes, a run on the banks, and desperate decrees by super-minister Domingo Cavallo to effectively freeze bank withdrawals. Riots and the famous cacerolazos, where large numbers of protesters banged empty pots and pans, followed, and President Fernando de la Rúa fled angry mobs by helicopter from the roof of the Casa Rosada presidential office on December 21. No fewer than five presidents led the country in December 2001, the decade-old convertibility of the peso with the dollar was abandoned, and the economy and political system went into freefall. While the international press swooned over Brazil, President Luis Inácio “Lula” da Silva, and Brazil’s emergence as a country of the future (a member of the BRICs along with Russia, India, and China), this decade’s media portrayal of Argentina and its husband-and-wife team of presidents (Néstor Kirchner and Cristina Fernández de Kirchner) has been highly critical. According to the World Economic Forum’s 2008 Travel and Tourism Competitiveness Index (see Blanke and Chiesa 2008), Argentina lags far behind Brazil in both tourism cultural resources and natural resources, the two constants in tourism endowment.1 Yet despite Brazil’s sizable endowment advantages and public commitment to tourism, Argentina was the tourism star of the continent and Brazil was the major disappointment. International tourist arrivals to Argentina exploded by 82 percent from 2000 to 2010, from 2.90 to 5.29 million (UNWTO 2011). In 2000, Brazil received 83 percent more international tourists than did Argentina. By 2010, Argentina was receiving more international tourists than Brazil. What accounts for these trends? The relative tourist performance2 of Argentina and Brazil from 2000 to 2010 is presented in Figures 6.1 and 6.2. Figure 6.1 charts the actual numbers of international tourist arrivals through the decade. Figure 6.2 presents the total percentage change, with 2000 as a baseline, and adds global tourism as a reference. International tourism declined in both countries after the external shocks of September 11 in 2001 and the global economic crisis in 2008. In both cases, Argentina recovered much quicker and stronger than did Brazil. It is also evident that Argentina followed a pattern similar to that of the world, albeit with a larger negative effect of 9/11 due to the Argentine crisis of

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2001–2002, and then with a faster rate of growth from 2003 to 2010. Brazil’s efforts were clear failures. The variance between the excellent performance of Argentina well above the global mean and the poor performance of Brazil provides an excellent domain to examine state capacity, policy failures, and policy successes. I argue that different outcomes in Argentina and Brazil did not result from chance or actions of individuals or businesses, but that politics, policy choices, and differences in sustained commitment largely determine the growth of international tourist arrivals. Brazil exhibits hollow capacity; its rhetorical commitment to tourism is high, but its actual commitment is limited. In Argentina, sound and innovative policy choices contribute significantly to its success with international tourism: politics and policy matter. I argue that the keys to understanding performance in these cases include levels of state capacity, specific choices of policymakers, bureaucratic constraints, and the negative consequences of governing (and naming ministers) in a political system with multiple political parties in congress and a need to form complex coalitions to govern. In Argentina, tourism policy was initially constrained by political and party dynamics, but the Argentine crisis of 2001–2002 led to an agreement to shelter tourism policy from politics. In contrast, the booming economy in Brazil contributes to hollow support of tourism and the tourism bureaucracy and policies are captive to and compromised by the Brazilian dilemmas of party politics and federalism.3 This chapter provides a comparative historical analysis of tourism capacity in these two countries. The Brazilian case is as complex as it is perplexing, and receives more attention.

Millions of International Tourists

Figure 6.1

Tourist Arrivals to Argentina and Brazil, 2000–2010

6.5 5.5 4.5 3.5

Argentina Argentina Brazil Brazil

2.5 1.5

04 20 05 20 06 20 07 20 08 20 09 20 10

03

20

02

20

01

20

20

20

00

0.5

Source: UNWTO, World Tourism Highlights, 2011.

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Figure 6.2

Cumulative Change in Tourist Arrivals to Argentina and Brazil, 2000–2010

Percentage Change in International Percentage Change in Tourist Arrivals International Tourist Arrivals

100.0

80.0

60.0

40.0 Brazil 20.0

Argentina Wo orld

0.0

–20.0

20 10

09

08

20

07

20

20

06

05

20

20

04

03

20

20

20 02

01 20

20 00

–40.0

Source: UNWTO, World Tourism Highlights, 2011.

International Tourism in Brazil Visitors have been arriving in Brazil for hundreds of years. They were initially neither tourists in the modern sense nor travelers. Rather, they were explorers, naturalists, and functionaries of the Portuguese crown (Taschner 2001). The arrival of the Portuguese monarchy in Rio de Janeiro in 1808 had important consequences for the city. The urban forests, museums, libraries, churches, and other architectural features of contemporary Rio de Janeiro and the immediate region are largely a result of the Portuguese and Brazilian monarchs. Tourism in Brazil was centered in Rio de Janeiro, the “marvelous city.” Tourism opportunities in Rio de Janeiro expanded with the opening of the tunnel from Botafogo to Copacabana in 1906, providing access from the city center to the beaches in the southern zone. This led to the construction of hotels on the beach, such as the Hotel Avenida in 1908 and the world famous Copacabana Palace in 1923. Tourism icons that would forever be associated with Brazil emerged in the first part of the twentieth century. The tram to the top of Sugarloaf Mountain

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was built in 1912 and the Christ the Redeemer statue was constructed on top of Corcovado between 1922 and 1931; the statue is now one of the New Seven Wonders of the World. Further awareness of Brazil came from the Hollywood success of Carmen Miranda, and films such as That Night in Rio. Hitchcock’s Notorious (1946), the Bing Crosby and Bob Hope caper Road to Rio (1947), Marcel Camus’s Carnival-inspired Black Orpheus (1949), the French New Wave blockbuster That Man from Rio (1964), Moonraker (1979), Blame It on Rio (1984), and others presented an exotic, musical, romantic, sunny, and mysterious city and country—a tourist’s dream. The long military dictatorship from 1964 to 1985 curtailed aggressive tourism expansion. The economic miracle for Brazil was industrial development and infrastructure. Tourism was not completely ignored, particularly in Rio de Janeiro. The Brazilian Tourism Board (Embratur), founded in 1966 and headquartered in Rio de Janeiro, was the first federal institution charged with increasing tourism. However, the Brazilian government soon lost any interest in promotion and branding, and the national activity was restricted to financing hotels (Embratur 1995: 7). In 1991 a total of 1.23 million international tourists visited Brazil, with slightly more than half of the total visiting Rio de Janeiro. The 1990s were years of great international tourism expansion in Brazil. The end of the military regime, the strong Argentine peso that was pegged one-to-one with the US dollar, the emergence of the Southern Cone Common Market (Mercosur) trade region and accompanying ease of travel and lifting of visa requirements, and a strong US economy combined for a 430 percent increase in international tourist arrivals in Brazil from 1991 to 2000. Rio de Janeiro’s share declined, as only 34 percent of the international tourists to Brazil visited the “marvelous city.” Still, the numbers of international tourists to Rio de Janeiro tripled over the decade, to 1.8 million. Without much effort from policymakers, natural and cultural tourism endowment could attract what was essentially low-hanging fruit. The first strategic tourism plan in Brazil was not formulated until 1995 (Embratur 2002: 25). As part of the embrace of tourism as a national engine of growth, Embratur was moved from Rio de Janeiro to Brasilia. This was one more element of a long trend of favoring the rest of the country over the historic cultural and political capital, most evident in replacing Rio de Janeiro with Brasilia as the national capital in 1960. It was also a trend against Rio de Janeiro as the traditional tourism jewel and gateway city to Brazil, a trend that would have long-term negative consequences. The Ministry of Industry, Commerce, and Tourism published the first multiyear action plan for tourism in 1995, as the sector was proclaimed a national priority under the administration of Fernando Cardoso. The plan covered the years 1996–1999, and was notable for its simplicity and amateurish published appearance. The publication was fifty-four pages long and photocopied instead

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of printed; it contained a series of basic impressions and hunches. This is not surprising, as interviews and government documents report that national tourism personnel were not professionalized prior to the twenty-first century. While there does not appear to be any coherent design, source of funding for promotion and branding, or rationale for the three-year goals, it is surprising that this is the only multiyear Brazilian tourism plan whose targets and goals were actually met. By 2001 the sophistication and presentation of national tourism policy was dramatically improved over 1995. Tourism was now part of the Ministry of Sports and Tourism, budgets were much bigger, and the publication announcing tourism as “the silent revolution” was sixty-eight beautiful full-color pages, detailing investments, marketing, and ambitious goals. The overarching theme was to spread tourism throughout Brazil. Governors secured extraordinary power and resources in shaping the 1988 constitution, and emerged as the most powerful brokers in Brazil’s clientelistic political game (Samuels 2003). Brazil’s multiparty system and regional political powers complicate governance and policy, as presidents need allies and support from multiple parties for legislative success (Montero 2000). This can result in suboptimal selections of ministers, something that plagued tourism during the Lula administration (2003–2011) and in the first months of the Dilma Rousseff presidency in 2011. Strong federalism also results in governors and politicians from poorer states demanding priority attention from Brasilia, even in tourism strategy (interviews with tourism officials in Brasilia, 2003; and Rio de Janeiro, 2009 and 2011). Instead of Embratur and Brazil exploiting Rio de Janeiro as the gateway city and showcasing the globally recognized icons, the focus of tourism promotion and investment was off the beaten track. This may have been a politically astute strategy, but when combined with other bureaucratic challenges particular to Brazil, proved to be disastrous in international tourism both for Rio de Janeiro and for the country. Brazil’s first 500 years witnessed the consolidation of a mere fifty tourist destinations. The goal in 2001 was to develop 250 new destinations in two years. The vehicle for this development of hundreds of new tourist magnets in Brazil had its roots in the National Program of Municipalization of Tourism (PNMT) in 1992 (da Silva 2004: 60). As national tourism policy matured, the PNMT was harnessed to spread money around and “privilege all of the microregions of the country, improving areas of development, capacity, and marketing of the tourism product” (Embratur 2001a: 33). As José Henrique da Silva Jr. (2004) documents in his case study of Diamantina, the PNMT and the shotgun approach to tourism development in Brazil led to frustration and failure, as the policies were not tailored to the specific needs of specific communities, the actions were not comprehensive, and decisionmaking remained too centralized. These new tourism destinations lacked the infrastructure of foreign-language-speaking personnel, signage, and

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promotion, limiting their contribution to international tourism. Regardless of the limited success of focusing tourism promotion on new destinations, the political logic of spreading the benefits of tourism and limiting promotion of Rio de Janeiro remains powerful in Brazil and is reinserted in future national tourism plans. “The government, through the Brazilian Tourism and Culture Movement, is attempting to strengthen the Brazilian brand by increasing awareness of other tourism options besides the usual suspects of Rio de Janeiro, Carnival, and the Amazon. The country is rich with natural treasures, historical gems, and unending exploration opportunities. However, the average tourist has no idea these options exist” (Dixon 2006: 33). Embratur and the Ministry of Sports and Tourism published a visually stunning ninety-six-page summary of tourism during the Cardoso years, Tourism in Brazil: Principal Evolutions, 1995–2002. The news was good only for what is now explicitly the national priority (Embratur 2002: 25). The government spent US$16.5 billion in tourism investment over the seven years, trained 1 million people, and provided hundreds of millions of dollars to Embratur for promoting tourism. The country consolidated 250 new tourism destinations, domestic tourism tripled from 1994 to 2000, and Embratur was professionalized. As President Cardoso proclaimed, “Brazil today is a victorious country [in tourism] due to all of the positive results that we have achieved” (Embratur 2002: 7). And the future was bright. Tourist arrivals would grow from 5 million in 2005 to 9 million in 2010 (projected to 14 million in 2020), creating over 10 million jobs by 2010 (projected to nearly 16 million by 2020) (Embratur 2002: 91). Lula took office for the first of his two terms on January 1, 2003, having been elected on a platform that included the promise of a tourism ministry and the full professionalization of Embratur. One of his first initiatives as president was the creation of a standalone Ministry of Tourism (MinTur) and a new four-year plan, which was kicked off with great energy and enthusiasm. Lula’s message in the national tourism plan for 2003–2007 revealed his personal interest in the sector and his understanding of the potential positive benefits of it: Much is said about the challenges facing the new government in the areas of economic and social development. The need to create jobs, to generate foreign currency for the country, to reduce regional inequalities, and to have a better income distribution are themes that must be addressed immediately. Without a doubt, Brazil is unique for its natural, cultural, economic, and historical richness. This makes our country a marvelous space with innumerable tourist attractions. . . . The generation of new jobs in Brazil requires investments in the tourism sector. . . . Understanding the importance of tourism as a strategic and self sustaining activity, with clear social effects, the ministries of Tourism, Labor and Employment, and National Integration, together with the Bank of Brazil, the Federal Savings Bank, and the [Brazilian National Development Bank]

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BNDES are collaborating with resources of R$1.8 billion [US$1 billion] to be investing in the tourism sector in the next 12 months. Tourism, due to its nature and its activities and with the dynamic of growth in the last ten years, is the sector of the economy most capable to respond completely to the challenges we face. [Tourism will benefit Brazil] particularly if we take into consideration the capacity of tourism to positively intervene in the area of regional inequalities, reducing [inequalities] once diverse important tourist destinations of Brazil are located in the poorest regions, and because of tourism are visited by citizens from richer areas of the country and of the world. (MinTur Brazil 2003: 4)

The transfer of power after two terms of President Cardoso to the incoming Lula administration provided space for a critical assessment of Brazil’s tourism performance. In the “diagnostics” section of the document, Brazil was far from receiving the number of tourists that it should, given its potential. The list of shortcomings included an absence of a process of evaluation of government policies, lack of data and research, legal and bureaucratic roadblocks, insufficient credit, chronic deficiencies in basic infrastructure, low quality of tourist products, and insufficient promotion funds (MinTur 2003: 17–18). The new Ministry of Tourism would resolve these problems, and produce a flood of tourists to Brazil. Five goals were set forth for the four-year period ending in 2007: Create 1.2 million new jobs; increase the number of foreign tourists to 9 million; generate US$8 billion in foreign currency in 2007; increase the number of passenger arrivals by domestic flights to 65 million; and develop at least three quality tourism products in each of the twenty-six Brazilian states and in the federal district. The creation of the Ministry of Tourism resulted in a dramatic increase in research, investment, and planning, as well as an embrace of the need to create a country brand for Brazil. In 2004, Embratur interviewed 7,000 people from eighteen countries at a cost of US$1.7 million in the first large-scale systematic study of perceptions of Brazil. The results formed the foundation of subsequent branding efforts. After an intense competition for a new country logo, Kiko Farkas of Máquna Estúdio was selected to design it. Farkas’s design represents the major facets of Brazil and its culture: happiness, strength, vibrancy, and modernity. The overlapping colors represent the mixing of peoples and cultures and the brilliance and variety of the country: green for lush forests, blue for waters, yellow for the sun and luminescence of the people, red and orange for the festive gatherings, and white for religious manifestations and peace. “The logo joins colors and illustrates what tourists think of Brazil. It is happy, luminous and modern.”4 This multicolor image of Brazil was incorporated as part of a sophisticated and ongoing master plan for international tourism promotion, the Aquarela (Watercolor) plan, and unleashed an avalanche of research, documents, projections, and multiyear plans. Phase one of the Aquarela plan went

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from 2004 to 2006, overlapping with the 2003–2007 national tourism plan. This was primarily a preparation phase for announcing the new national plan and the action phase of the Aquarela Plan in 2007. The primary difference between the Aquarela Plan and the national plan is that the national included both international and domestic tourism, while the Aquarela plan’s exclusive interest was international tourism. This exposes a clumsy element of Brazil’s tourism bureaucracy. From 1966 to 2003, Embratur was the dominant tourism institution of the Brazilian state. There was no tourism ministry, and tourism remained a minor player in larger industries such as industry and commerce. As such, Embratur acted as a ministry even though it was a federal agency. When Lula granted tourism its own standalone ministry, he faced a decision as to what to do with Embratur, a large bureaucracy with hundreds of jobs guaranteed by Brazilian civil service law and an established institutional identity (interviews with Embratur officials, 2003). The options were to fold Embratur into the new ministry, dissolve Embratur and transfer its employees into the ministry, or keep Embratur separate. The final solution was a mix of the first and third options, as Embratur technically became part of the new ministry, but with its own president, identity, and autonomy. Its autonomy was and remains so great that Embratur was not included in some organizational charts of the Ministry of Tourism. Authorities attempted to engineer cooperation between the ministry and Embratur by clearly dividing the responsibilities, with the ministry in charge of domestic issues of tourism and Embratur in charge of all international issues of Brazilian tourism, including branding and promotion. Of course, in practice, this division is not so clear-cut. Tensions between the Ministry of Tourism and Embratur can flare up, in part because some tourism officials perceive Embratur as the reservoir of experience and professionalism, and the ministry as a political actor for which politics can be more important than technical and professional skill (interviews with tourism officials in Brasilia, 2003; São Paulo, 2005; and Rio de Janeiro, 2009 and 2011). These concerns about the Ministry of Tourism were heightened when President Lula named Marta Suplicy as minister of tourism in March 2007, just at that critical juncture when the Aquarela plan’s activities were ramping up. Marta (like many Brazilians, she is known by her first name) started her career as a television anchorwoman who gave sex advice, and was eventually elected mayor of São Paulo in 2000 but lost her reelection bid in 2004. She had no tourism training or expertise and many in the tourism industry were aghast at the choice, thinking that Lula was using the Ministry of Tourism as a vehicle for keeping Marta’s political hopes alive. “Not only did she not have any knowledge of tourism, but she was not interested in learning” (interviews with RioTur officials, 2009). Marta proved the critics correct, resigning from the Ministry of Tourism in June 2008 to run again for the São Paulo mayorship,5 her fifteen-month tenure as minister of tourism insufficient

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to master the job. This experience also calls into question Lula’s commitment to tourism and is an example of the politicization of tourism that continues to plague Brazil’s policy efforts. Systematic surveys in eighteen target markets formed the foundation of the Aquarela plan, and in 2007 both a new national tourism plan, for 2007–2010, and the operational phase of Aquarela were launched. The advances in data, detail, professionalism, and specificity over any previous tourism plan in Brazil were enormous. The Aquarela plan for 2007–2010 contained nearly 2,500 pages, sophisticatedly divided into annexes covering specific markets and topics. For example, the third annex, covering Brazil’s tourism promotion program in the United States, is a comprehensive, eightythree-page document on the market, opportunities, tourist preferences, and market challenges, all based on real data and surveys. As always, new tourism plans include new tourism goals, and the 2007– 2010 Aquarela plan not only provided goals for total international tourist arrivals, but also, for the first time, broke down the arrival data by country of origin for high-priority markets. These data are presented in Table 6.1. Brazil has now fully established a pattern of multiyear plans, of greater and more sophisticated research and analysis, of more investment in hotels and infrastructure, of ambitious goals for tourist arrivals, and of missing those goals by a significant amount. The prediction made in 2006 of 7 million international tourist arrivals in 2009 was off by 2.2 million; not only did tourism not grow from 5 to 7 million arrivals in three years, but the number of arrivals dropped by 200,000. The specific high-priority country data are also useful. The number of tourist arrivals from Argentina and Chile actually surpassed Brazil’s goals for 2008, while tourist arrivals from other priority countries missed the mark. The prediction for tourist arrivals from the United States for 2008 was 900,000, but the actual number was a disappointing 625,000 (Embratur 2009a: 6). Brazil predicted a 13 percent growth in the number of tourist arrivals from the United States, but ended up with a 21 percent decline. This decline in US tourists was particularly damaging to Rio de Janeiro, where US tourists represent more than 20 percent of international tourists to that city, nearly double the amount of the next largest group (interviews with RioTur officials, 2009). More disheartening, this drop in tourism was predictable, given Brazilian visa policies. The 2007–2010 national tourism plan, titled A Journey Towards Inclusion, focused on domestic tourism and social inclusion. President Lula and the Minister of Tourism presented tourism as a right and consumption item for all Brazilians. “The ultimate goal of the 2007–2010 National Tourism Plan is social inclusion . . . [to] enable leisure activities. . . . It will be a major stimulus to domestic tourism, which will pay back in jobs, development, and social inclusion. More than just doing business, we hope to give everyone the right to know our country and our identity” (MinTur 2011: 3). The minister of

Table 6.1

High-Priority Markets, Predictions, and Actual Performance of the Brazilian Tourism Sector, 2005–2010 Actual Numbers of Tourists

Tourist Country of Origin Germany Argentina United States England Canada Chile Spain France Holland Belgium Italy Portugal Total predicted tourists from high priority markets Total predicted tourists from all marketsa Actual performance Underperformance

2005 308,598 992,299 793,559 169,514 75,100 169,953 172,979 252,099 109,708 30,783 303,878 357,640 3,736,110

5,358,000

2006 277,182 921,061 721,633 169,627 62,603 148,327 211,741 275,913 86,122 30,037 291,898 312,521 3,508,665

5,019,000

Predicted Numbers of Tourists 2007

2008

2009

2010

310,000 1,000,000 800,000 190,000 70,000 165,000 235,000 300,000 95,000 33,000 300,000 340,000 3,838,000

350,000 1,000,000 900,000 220,000 80,000 185,000 265,000 340,000 105,000 38,000 340,000 380,000 4,203,000

400,000 1,100,000 1,000,000 250,000 90,000 210,000 300,000 385,000 120,000 45,000 380,000 425,000 4,705,000

475,000 1,200,000 1,200,000 300,000 100,000 240,000 360,000 435,000 135,000 50,000 430,000 450,000 5,375,000

5,500,000

6,200,000

7,000,000

7,900,000

5,026,000 474,000

5,050,000 1,150,000

4,800,000 2,200,000

5,161,000 2,739,000

Sources: Actual numbers of tourists for 2005–2006 and predicted numbers of tourists for 2007–2010 are from the 2007–2010 Aquarela Plan (Embratur 2007). Actual performance 2007–2010 from UNWTO 2011 and RioTur via e-mail. Notes: a. This prediction was for all tourist arrivals, including high priority markets and other markets.

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tourism called for 1.7 million jobs to be created by 217 million domestic tourism trips, which would help solve the huge drop in tourism during the off seasons. The emergence of domestic tourism as a right of Brazilians complicates the mission of Embratur to meet the goals of the Aquarela plan. Tourism activities and infrastructure for the domestic market are not necessarily complementary for international tourists. While not zero-sum, there is a tradeoff in privileging domestic over international tourism (e-mail communication with Paul Barnett, September 1, 2010). In December 2009, Embratur published the most recent multiyear Aquarela plan, for 2020, comprising 30 pages. Months later, the Ministry of Tourism released a 160-page national tourism plan for 2011–2014. The cooperation deficit between Embratur and the Ministry of Tourism is apparent, since they have different projections for tourist arrivals. The ministry’s multiyear plan includes three different projections, but even the rosiest predictions of international tourist arrivals are smaller than Embratur’s goals, and the ministry has a renewed focus on domestic tourists. These and other predictions from Embratur and MinTur for 1995 to 2020 are presented in Figure 6.3, as well as actual tourist arrivals. In seven national tourism plans, the only prediction that was met or surpassed was that of the 1995 plan, a photocopied and unsophisticated document

Figure 6.3

Actual vs. Predicted International Tourist Arrivals to Brazil, 1998–2020

16,000

Thousands of International Tourists

14,000

Actual Actual

12,000

Embratur 1995 EMBR ATUR 1995

10,000

Embratur 2001 EMBR ATUR 2001 Embratur 2002 EMBR ATUR 2002

8,000

MinTur 2003 Min Tur 2003

6,000

Embratur 2006 EMBR ATUR 2006 MinTur 2010 Min Tur 2010

4,000

Embratur 2009 EMBR ATUR 2009

2,000

14 20 16 20 18 20 20

12

20

10

20

20

06 08 20

20

02 04 20

00

20

20

19

98

0

Source: Embratur 1995, 2001b, 2002, 2007, 2009a; MinTur 2003, 2011. Notes: Actual data for 1998–2010; all other data are predictions.

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based on what appears to be hunches and casual observation. Every prediction since 1995 has turned out to be wildly overestimated. Given the growth of global and South American tourism over the period, the predictions were not overly optimistic. Rather, Brazil has consistently underperformed, despite growing sophistication and research in Embratur and the Ministry of Tourism and huge state expenditures in the industry in the past decade.

Choice and Structure: The Failures of Brazilian Tourism Given the ramping up of the Ministry of Tourism, the increased state investment, the global and regional growth in tourism, and the rosy predictions, why has Brazil underperformed so consistently and dramatically? This section presents an explanation for Brazil’s capacity deficit based largely on interviews and fieldwork. Brazil’s commitment to tourism is lukewarm and its capacity hollow because of several factors: the industry is constrained by bureaucracy; tourism policy is consistently trumped by other interests; efforts are diluted by federalism and poor ministry leadership due to electoral coalitions; tourism officials are unwilling to honestly diagnose the challenges or even admit that they are failing; human capital is limited; and Brazil is a tourism follower and not a tourism innovator and leader. Bureaucratic Challenges

As documented previously, at a crucial time for the implementation of the Aquarela plan and when leadership was most needed in the new tourism ministry, Lula’s selection of a minister of tourism was made in order to maintain the electoral viability of one of his allies, Marta Suplicy. This not only undermined the ministry at this crucial time, but also sent a signal to the tourism industry and tourism organizations that Brazil’s commitment was limited (interviews with RioTur officials, June 2009). The Brazilian bureaucracy is often described as unusually rigid, complex, and overregulated, and as penalizing creativity and innovation (BresserPeriera 2007; Gaetani and Heredia 2002). Adding the additional bureaucratic layer of having two entities responsible for tourism, Embratur and the Ministry of Tourism, is clumsy and results in mixed messages. The ministry’s focus on the rights of Brazilians to travel in Brazil does not complement Embratur’s focus on attracting more international tourists (interviews with tourism officials, Brasilia, 2005). The rigidity of Brazil’s bureaucracy undercuts the creativity and flexibility of tourism officials at the local, state, and national levels. Tourism officials at the local level are handcuffed when it comes to innovation and creativity, in part because they are not allowed to spend money abroad at specialty fairs or

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tourism promotion events. Due to Brazilian bureaucratic rules, a complex and difficult bidding process is required for any expenditures outside of the country. RioTur, the local tourism authority for the city of Rio de Janeiro, is de facto restricted to participating in international events where Embratur is participating. This restricts RioTur to being an industry follower and not an innovative leader. The city of Buenos Aires has far more autonomy in brand creation and innovation, with unrestricted budgets and authority to act independently of the national tourism authority there. These restrictions constrain the type of individuals who work for the local tourism authorities. Highly creative innovators will not be attracted to a local tourism authority if it is bureaucratically rigid. Tourism Trumped by the Power of the Itamaraty

Tourism is not a priority in Brazil because other concerns and policies trump the industry. The Itamaraty (Foreign Ministry) is the first ministry among equals, and Itamaraty visa policies have seriously undermined Brazil’s capacity to attract foreign tourists.6 Due to the self-perceived correlation between country size/population and prestige/international muscle, Brazil sees a much greater need to demand equal treatment from the United States than do other countries in the hemisphere (Bowman 2006). Indeed, Brazil is regularly willing to sacrifice material benefits rather than give the perception of submission to the United States. When the United States began charging Brazilians US$135 for a visa, in response Brazil charged the same to US citizens, even when it hurt the tourism industry. When the United States in 2004, ostensibly due to security concerns, required fingerprinting and photographing of all Latin Americans entering United States through international airports, only Brazil responded tit-for-tat to the United States, even when it led to long lines and negative international press coverage. This response directly undermined Brazil’s renewed efforts to increase tourism, yet was widely popular in the country: Brazil’s size and national prestige demand reciprocity. This heavyweight tit-for-tat is a point of national pride, and is only somewhat approximated by the other large-population country in Latin America, Mexico. But Brazil’s reaction is a childish gesture at best, and a monument of economic stupidity at worst. . . . It illustrates Brazil’s incredible neglect of what could be one of the most lucrative income sources, tourism. Brazil is a continent-sized country that holds 22 percent of the world’s vegetation and 17 percent of its birds, it has a 5,000 mile coastline with 2,045 of the globe’s most beautiful beaches. In addition, it has the world’s most famous Carnival, the best soccer players, a musical culture with few rivals and some of the most beautiful people anywhere. Yet, with a paltry 3.8 million foreign visitors a year, Brazil ranks 34th among the world’s tourism destinations, behind countries such as Czech Republic, South Africa, and Saudi Arabia. When you

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think that Spain draws 50 million tourists a year and Mexico 20 million, Brazil’s performance is pathetic. Instead of taking populist measures such as the new airport screenings, Brazil should be fighting through diplomatic channels against the U.S. screenings, while spending its energies promoting the country’s beauties abroad and fighting street crime to lure more tourists. (Oppenheimer 2004)

In 2004, Exame, the leading business magazine in Brazil, published a cover story titled “Tourism in Brazil: Lots of Beauty and Little Money—and Why Do Countries Like Super Violent South Africa, Miniscule Singapore, and Inhospitable Dubai Attract More Foreign Tourists Than Us?” (Caixeta 2004). Exame concluded that the failures of Brazil included efforts and resources being too widely dispersed, money being spent to serve the interests of local officials and not to build a global brand, and bureaucratic jobs in the sector being passed out for short-term political interests. But the biggest reason that tourism in Brazil lags is that Itamaraty policies punish Brazil’s most lucrative market, the United States. According to the Brazilian Tourism Association (BRAZTOA), the country loses 640,000 US tourist arrivals and US$2 billion annually due to its visa requirements (Caixeta 2004). Caixeta (29) provides an example of a country that placed tourism ahead of national pride, Thailand. In 1993, Thailand abolished the visa requirement for fifty-six countries and doubled the permitted tourist stay to thirty days. Thai tourism grew from 7.4 million tourist arrivals in 1998 to 14.5 million in 2007. If Brazil had matched Thailand’s growth during the period, it would have received 9.3 million tourists, which would have created billions of additional dollars each year in receipts and hundreds of thousands of permanent jobs. And Thailand’s tourists were coming from far away. In 2006, Thailand received double the number of European tourists that Brazil did. Not only do US citizens need a visa to enter Brazil, but they must also navigate a labyrinth of forms and links on the Internet, obtain a money order at the post office, and mail their passport to a Brazilian consulate—and then often must redo the process due to an error. Chile also requires a visa of reciprocity for US travelers, but merely charges arriving tourists the US$131 and staples the visa to the passport upon entry into the country. Brazilian cities have taken Itamaraty to court to stop its fingerprinting of Americans and the Ministry of Tourism has negotiated with Itamaraty to soften the visa rules, or to at a minimum follow Chile’s hassle-free policies, but to no avail (Cimieri 2004).7 In interviews conducted in Brazil, I found that Brazilians overwhelmingly supported reciprocity with Americans even if it greatly reduced tourism and damaged the economy (Bowman 2006). The sentiment of tit-for-tat punishing of Americans is so strong that the visa issue is taboo and never mentioned as a challenge in any of the seven multiyear action plans reviewed in this study.8

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Clearly, Brazil has the right to reciprocate with the United States and play tit-for-tat. However, it cannot pretend that these measures do not indicate a hollow commitment to glossy documents and ambitious multiyear tourism plans. That the Ministry of Tourism and Embratur published substantial action plans for the US tourism market and announced ambitious targets for attracting more US tourists while simultaneously pretending that the visa problem did not exist is particularly telling. It should come as no surprise that US tourism to Brazil is not only failing to grow at predicted rates, but also falling. The dilemma is heightened with the upcoming 2014 World Cup and 2016 Olympics. Although the United States is not regularly regarded as a soccer nation, US tourists were the single largest contingent of international tourists for the 2010 World Cup in South Africa, purchasing 130,000 of the 2.8 million match tickets (Goff 2010). Private sector Brazilian tourism associations are concerned that the visa requirements will limit tourism from the most lucrative market for the upcoming mega-events and have joined the fight by launching a website that tracks lost tourists, revenues, and hotel-room nights, in real time, due to Brazil’s tourism policies and publishes information and links to stories about other negative consequences.9 Brazilian tourism officials and the aforementioned tracking website contend, however, that the only way forward is an agreement between Brazil and the United States whereby both countries drop visa requirements. Tit-for-tat continues to constrain policy options for Brazil. A strong case can be made that the United States limits its tourism potential with current visa policies with Brazil. Brazilians are the biggest per-tourist spenders in the world, yet they must wait an average of 141 days for a consular appointment and then travel, often great distances, to one of four US consulates in their huge country to obtain a visa. US visa policies for Brazil and other countries since 9/11 have cost the United States an estimated 467,000 jobs and US$606 billion (Rogers 2011). The US economy suffers from US visa policies.10 But it is poor public policy for Brazil and Brazilian tourism to suffer from mimicking an unwise US policy, and it is dishonest for Brazil to make predictions and tourism plans that ignore the impact of its policy choices. Federalism and Electoral Coalitions

Brazilian federalism results in tourism policies that treat all states as tourism equals. Embratur and the Ministry of Tourism must focus promotions and tourism destinations equally, at three tourism products per state. In an effort to equalize tourism, officials have essentially pulled Rio de Janeiro down in an effort to promote tourism products in other states. “The country would be much better off if they used the globally-recognized tourism attractions to bring people to Brazil, and provide the infrastructure and promotions for

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tourists to add side-trips to emerging destinations and activities. Rio de Janeiro has been pushed to the back of promotions and brochures, and this punishment hurts the entire tourism industry” (interview with RioTur official, June 2009).11 As mentioned earlier, Brazil’s multiparty system and regional political powers complicate governance and policy, as presidents need allies and support from multiple parties for legislative success (Montero 2000). Brazil uses an open list proportional representation system by state to elect members of the senate (3 senators per state) and chamber of deputies (513 total seats). This results in an extreme multiparty system, with seventeen parties in the senate and more than twenty in the chamber of deputies in 2010. Governing requires coalition building, and coalition partners have demanded money in the past to vote with the government.12 Large coalition partners also demand control of ministries. Historical and institutional factors combine with a large number of effective parties to create a cabinet formation process in Brazil that emphasizes and exaggerates the power of political bosses from poor states of the north and northeast. Extreme malapportionment in both national legislative chambers gives local party bosses additional national weight.13 Historically, coronelismo was established in the Old Republic (1889–1930) where regional strongmen were the dominant actors in the machine politics of the day. These regional oligarchs were both political and economic bosses who used patronage and force to maintain power.14 Coronelismo endures, whereby political clans such as the Sarney family in Maranhão, the Magalhães family in Bahia, and the Collor de Mello family in Alagoas control huge swaths of political, media, and economic power in their states and transform that local patronage and power into national influence and plum political appointments—including to national ministries—for relatives and political allies. The Economist (2009c) referred to the Sarney clan as “semi-feudal” and to the political system of Maranhão as a place “where dinosaurs still roam.” In part to deliver ministries to electoral allies, Brazil has a huge number of cabinet positions, thirty-seven (Pereira 2011). The most important ministries, such as foreign (Itamaraty), justice, finance, and defense, are likely to be headed by individuals with considerable experience. The ministries of least importance to the government are used as rewards to coalition allies and can be subsequently headed by political appointees with negligible experience and expertise, including Marta Suplicy as minister of tourism under the Lula administration as the Aquarela plan was launching.15 One indicator of the priority to the government to a particular sector is the qualifications of the corresponding minister. By this indicator, tourism is a very low priority in Brazil. After the 2010 national elections delivered the presidency to Lula’s handpicked successor, Dilma Rousseff, the ruling Workers Party controlled 14 out of 81 senate seats and 88 of 513 seats in the chamber of deputies. The largest

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electoral party in the senate is the Brazilian Democratic Movement Party (PMDB), with 21 senators. The PMDB is a catchall party that traces its roots to the military dictatorship that governed Brazil from 1964 to 1985. To secure congressional support for her government, Dilma gave five ministries to the PMDB (MercoPress 2010). One of these was the Ministry of Tourism, which Pedro Novais, a federal deputy (PMDB) from the poor northern state of Maranhão, was appointed to lead. The eighty-year-old Novais, who has been in politics since serving in the military’s party, the National Renewal Alliance Party (ARENA), in the 1970s, caused the first scandal of the Dilma presidency when it was revealed that he had requested and been paid a reimbursement of some US$1,500 from the chamber of deputies for hosting a private party at the Motel Caribe in the Maranhão capital of San Luis in June 2010.16 The scandal led Dilma’s chief of staff to halt the nomination, but the PMDB intervened with its heavyweight cabal-leader José Sarney—former president of Brazil, current president of the Senate, longtime coronel of Maranhão, and father of the current governor of Maranhão—to rescue the nomination. Sarney secured the Ministry of Tourism for his longtime ally Novais in exchange for cuts in the ministry’s budget.17 With the upcoming World Cup in 2014 and Olympics in 2016, Brazilian tourism is at a crossroads. The entire trajectory of the industry and the country brand is at stake. At this crucial moment, electoral politics has resulted in the appointment of an eighty-year-old scandal-tainted minister with no significant experience or training in tourism, who sacrificed part of his ministry’s budget to keep his nomination. This nomination undermined morale throughout the tourism bureaucracies, at both the national and the local level. One tourism official whom I interviewed in Rio de Janeiro in June 2011 observed: “When we heard who had been chosen as the Minister of Tourism, we were stunned and demoralized. We attended a big tourism show in Germany, and Minister Novais came. He is so old that we thought that he did not even know where he was. He looked tired and uninterested, and showed no understanding of tourism.” The nomination of a political figure with no experience in tourism as the head of the Ministry of Tourism is a recurring problem in Brazil, while the leadership of Embratur has long been held by professionals in the sector. That is why the June 2011 nomination of Flávio Dino to head Embratur was so surprising. Dino, an attorney and former congressman with no experience in tourism, is a leader of the Brazilian Communist Party (PCdB). The PCdB is a coalition member of the Dilma government. One fascinating element of this nomination is that Dino is an adversary of the Sarney family in Maranhão, and is widely believed to be positioning himself to run against current governor Roseana Sarney, the daughter of José Sarney. One can only conclude that Dilma has appointed the leadership of both the Ministry of Tourism and Embratur as part of a political game of balancing the power of coalition mem-

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bers in the small state of Maranhão (Lôbo 2011; interview with Ariane Janer, Rio de Janeiro, June 27, 2011). The bureaucratic farce that is the Ministry of Tourism and Embratur reached a new height in August 2011. The federal police arrested thirty-eight tourism sector officials after Operation Voucher discovered an embezzlement scheme of some US$10 million in which Ministry of Tourism resources were paid to phantom or fictitious nongovernmental organizations in the state of Amapá. Those arrested included Frederico Silva da Costa, the executive secretary and second in charge of the Ministry of Tourism (Nery 2011; Rio Times 2011). The embezzlements in Operation Voucher occurred before Pedro Novais’s arrival as minister of tourism. Yet, only one month after the scandal and arrests of Operation Voucher, Novais would be the source of another political storm. On September 13, 2011, São Paulo newspaper Folha reported that Novais had paid his maid, Doralice Bento de Sousa, with chamber of deputies money from 2003 to 2010, having listed her as a chamber secretary. After leaving the chamber of deputies to become minister of tourism, Novais could no longer pay his maid as if she were a parliamentary secretary, and payment of her salary was taken over by a company that does contract work for the Ministry of Tourism. One day later, on September 14, Folha reported that the wife of Novais had a full-time chauffer who was employed as an administrative assistant in Novais’s office in the chamber of deputies (where he served as a PMDB party deputy) until January 2011, when he became minister of tourism. At that point, the chauffer became a legislative assistant to another PMDB legislator from Maranhão, Francisco Escórcio. Folha further revealed that Novais was leasing the car used by his wife for a whopping US$4,000 per month. According to Brasilia political expert David Fleischer, “Escórcio hired at least another three persons who had worked for Novais. Both Novais and Escórcio are ‘subordinates’ to the ‘Sarney cabal’ in the state of Maranhão” (2011c). These Folha reports were too much for President Dilma, and she demanded that PMDB leader and current vice president Michel Temer return to Brasilia from São Paulo, where he was recovering from an intestinal infection, and obtain Novais’s resignation (Fleischer 2011c). Dilma then faced a dilemma. She had recently appointed a Maranhão political enemy of both Sarney and the PMDB as the president of the powerful Embratur in an effort to counterbalance the power of Sarney and Novais both in Maranhão and in the tourism bureaucracy. Yet the model of handing out ministries as prizes to coalition partners appeared to be collapsing, as no fewer than five ministers resigned under the shadows of scandal in Dilma’s first eight months as president. These resignations included Minister Alfredo Nascimiento (Party of the Republic), who was ousted from the Ministry of Transportation for kickbacks in procurement, and Minister Walter Rossi

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(PMDB), who was ousted from the Ministry of Agriculture after skewed procurements were featured in the press (Fleischer 2011c). The bigger question for the tourism industry and bureaucracy was whether the upcoming 2014 World Cup and 2016 Olympics would prioritize the tourism sector and result in Dilma nominating a tourism minister with real tourism sector qualifications and skills. The answer was not long in coming, and once again demonstrates Brazil’s hollow commitment to international tourism: The PMDB leaders (Alves and Temer) presented a “short list” of PMDB deputies for Pres. Dilma’s scrutiny. . . . Reportedly, Pres. Dilma asked why Dep. Gabriel Chalita (São Paulo) was not included. Temer replied that he was “being saved” to become the PMDB’s candidate for Mayor of São Paulo next year. One name on the list, Dep. Manoel Junior (Paraiba), is accused of homicide, and Dilma rejected him. Another name, Dep. Marcelo Costa (Paiu), was involved in the recent Federal Police Operation Voucher because he used the Tourism Ministry to “place” his budget amendments that guaranteed a large “return.” Also, his brother was involved in the corruption activities at Dnit (Transportation Ministry). Finally, by a process of elimination, Gastão Vieira was selected. Reportedly, some PMDB leaders suggested Minister Moreira Franco (Strategic Affairs), Geddel Vieira Lima (Vice-President at the [Federal Savings Bank]), and former governor of Espíritu Santo, Paulo Hartung. All three replied, “Thank you, but no thank you.” The list presented by PMDB floor leader Dep. Henrique Alves contained Ficha Sujas.18 Dep. Manoel Junior rushed over to the Presidential office to declare that these accusations against him were fabricated by his local “opposition” in Paraiba. He blamed José Sarney for his “elimination.” (Fleischer 2011c)

At this key juncture—the most important in the history of Brazil for branding and consolidating international tourism—Dilma hastily named Gastão Vieira, another long-term member of the chamber of deputies, to the Ministry of Tourism, one day after Novais resigned. Notably, Vieira was not charged with homicide, a charge that disqualified one leading candidate for the position, and was an ally of Maranhão political dinosaur and PMDB caballeader José Sarney. Sixty-five-year-old Vieira’s only tourism experience is his position as an alternate to a tourism commission from 2003 to 2005. In answering the question “Who is Gastão Dias Vieira?” Fleischer (2011c) responds that, first and foremost, “he is another ‘faithful soldier’ of the Sarney Group in Maranhão.” Disbelief and despair over this fiasco immediately appeared in the national press, showcasing Brazilians’ frustration with the ministerial spoils system. One comment to Veja magazine summed of the opinion of many: “Could it be that the state of Maranhão has the best tourism university in Brazil or is this yet another imposition of the dinosaur Sarney”? (Castro 2011). After Novais resigned, Brazilian Social Democratic Party (PSDB) senator

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Alvaro Dias claimed: “The newest resignation alerts us of the need to end the current model of filling public posts. Brazil needs to shift its model to emphasize merit and competency. The current model has evolved into a scandal factory” (Sadi 2011). Unfortunately, the principal victim of the Brazilian ministerial spoils system is international tourism.19 There is an additional weakness in Brazil’s strongly federalist and multiparty political system that was revealed during the Pan American Games in Rio de Janeiro in 2007. When Rio de Janeiro and Brazil won the rights to host the 2007 Games, they promised to construct fifty-four kilometers of new metro lines, clean up fetid Guanabara Bay, and spend a total of US$177 million on the Games. In the end, the 2007 Pan American Games cost a reported US$2 billion, not a single kilometer of metro lines was built, and Guanabara Bay remained just as polluted (Downie 2009). Massive corruption was purported to have taken place, bloating the projected budget more than tenfold. In the end, the Pan American Games was a missed opportunity for Rio de Janeiro and Brazil. The problems were largely political, as the city mayor, the state governor, and President Lula were all political rivals and nobody would put up the finances for construction until the last possible minute, which led to cost overruns and poor-quality construction (interviews RioTur officials, June 2009; Christopher Gaffney, Rio de Janeiro, June 27, 2011; and Erick Omena, Rio de Janeiro, June 10, 2011). According to Fulvio Danilas, the top FIFA official in Brazil for the upcoming 2014 World Cup, these political rivalries remain a problem and are particularly strong and exceptionally costly in Brazil: “We at FIFA are very concerned about the stadium construction because Brazilians are notorious for doing anything to stop their political rival from looking good. Venues in states that are run by opponents of the Dilma government will have delays in getting financing and cost overruns could be a problem” (interview, Rio de Janeiro, June 21, 2011).20 Officials on Rio de Janeiro’s Olympic Organizing Committee hope that the current harmony of interests and alliances between Rio, the state governments, and the national government will continue through 2016. Rio’s handling of the Pan American Games in 2007 is widely considered to be a disaster; if the political fighting and finger pointing are repeated at the 2016 Olympics, the result will be another wasted opportunity for Rio de Janeiro and Brazil (interview with Agemar Sanctos, director of institutional relations, Olympic Organizing Committee, Rio de Janeiro, June 24, 2011).21 Brazilians are likely to be disappointed if they believe that the international tourism image of Brazil will be enhanced merely by the country’s hosting of the 2014 World Cup and 2016 Olympics. According to Simon Anholt, creator of the country brand term and index, hosting a mega-event in a country with high levels of poverty, poor infrastructure, insufficient services, and high inequality can showcase the negative and result in a diminished inter-

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national image. “I see a parallel situation with that of South Africa after the World Cup. Since the end of apartheid, the country had reinvented its brand, showing the world a transformed society, ignoring questions of poverty and inequality. But, during the World Cup, the television crews of the entire world showed the reality and this provoked a shock. Because of this, we have witnessed a readjustment in peoples’ perceptions. My surveys show that the image of South Africa has fallen. I believe the same thing can happen in Brazil” (Estadão 2011). Unwillingness to Recognize Problems

Brazilian bureaucrats play with numbers to make tourism look like a huge success. In recent years, Brazil has experienced two dramatic short-term declines in tourism. The 9/11 attacks and the Argentine economic crisis led to a collapse in Brazilian tourism in 2002 and 2003. These uncharacteristically “down” years are used as the base years of every subsequent tourism analysis done by MinTur or Embratur. No matter how poorly international tourism performs in the middle and long term, it is always portrayed as an unqualified success, as there is always growth from the baseline low. By not admitting failure and always claiming success, MinTur and Embratur have no need to fix Brazil’s significant tourism problems. Changes will not come if the tourism ministry and the president continue to cherry-pick the data to claim success. Also, every tourism plan since the mid-1990s has naturally failed to meet its overly ambitious targets, which has led to a lack of legitimacy and little confidence in government data and projections. Limited Human Capital

In every interview I conducted in Brazil with tourism officials, journalists, professors, and stakeholders, human capital was identified as a significant limiting factor for international tourism. Brazil has been making important progress in education in recent decades (UNDP 2010), but language skills are particularly weak. One tourism entrepreneur noted: “Even in Rio de Janeiro, there are very few English speakers or even Spanish speakers outside of the small number of wealthy elites who travel abroad for their education. Very few taxi drivers speak foreign languages. There are some efforts to teach languages to cab drivers and others before the 2014 World Cup, but the efforts are very limited” (interview with Alvaro do Cabo, Rio de Janeiro, June 9, 2011). Brazilian higher education and training are characterized by a highquality public university system with an entrance exam system (vestibular) that limits enrollment to students with sufficient resources to pay for years of test preparation courses (cursinhos), and a private university system with a few quality institutions and many for-profit educational centers. Unfortu-

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nately, tourism education and training largely take place in for-profit, lowquality educational centers. As described in detail by Teresa Catramby and Stella da Costa, tourism education in the state of Rio de Janeiro is characterized by untrained teachers who work by the hour and who do not produce the “qualified human resources that are imperative to make Brazil competitive” in the tourism sector (2005: 24). Rapid economic growth in Brazil resulted in high demand for skilled labor and shortages in technical and high-skill positions (Folha 2011a). The shortage of high-skill labor in Rio de Janeiro is particularly acute, with massive labor demands for the pre-salt oil exploration in deep waters along the Rio coastline. According to Rio’s Federation of Industries, the biggest bottleneck for growth in the tourism industry is the difficulty in hiring personnel “in the necessary quantity and quality” (Rocha 2011). Regarding human capital for the tourism sector, Brazil lags behind competitors such as Argentina, Chile, Costa Rica, Mexico, and Uruguay (Blanke and Chiesa 2008). Lack of Tourism Innovation and Leadership

Brazil did not launch its first national tourism plan, the Aquarela plan of 2004, until more than a decade after Peru and Costa Rica launched their national plans. “Although slow to jump onto the branding bandwagon, Brazil finally did come to understand the value that a strong brand can bring to a country’s level of foreign investment, especially in the tourism sector. And luckily for the Brazilian government, the country is not short on selling points” (Dixon 2006: 28). If Brazil could leverage the 2014 World Cup and 2016 Olympics to become an innovative leader of tourism, the sector could finally deliver on its promise. This would require focus, acknowledgment of problems, priority, autonomy for local authorities, improved human capital, and cooperation between the capital, the states, and the cities. But the political climate looks gloomy, with President Rousseff still using MinTur and Embratur to continue the corrupt patronage system of the past instead of embracing the merit-based and innovative tourism model of the future.

Argentina: Catching the Tourism Wave When I first started interviewing officials in the national and provincial tourism offices in Argentina in 1999, my impressions of the international tourism bureaucracy could not have been worse. Argentina was in the first year of a deep recession, there was little cooperation between the various tourism authorities, and international tourism had been identified as important but the policies and commitment from the government to the industry were

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weak. Political scandal, economic collapse, and negative international images followed. In 2000, national vice president Carlos “Chacho” Alvarez resigned from the Fernando de la Rua government, angered at the president’s tolerance for corruption in legislative pay-for-votes schemes. Tourism policies were focused almost entirely on local tourism. As one official in Argentina’s tourism secretariate explained in June 1999: “Let’s face facts. Argentina has a US$20 billion tourism industry, but only ten percent is international tourism. Our real efforts are focused on Argentine tourists visiting different regions of Argentina.”22 Tourism kiosks and English-language signage were virtually nonexistent, even in downtown Buenos Aires. Ten years later, everything had changed in Argentina. International tourism had become a national obsession, the tourism authorities had been professionalized, and ministers and other policymakers were among the most creative and innovative in the hemisphere. Tourism centers throughout the country now had helpful tourism kiosks, English-language tours sponsored by local governments had proliferated, and tourism had evolved as a full partner in culture and consumption. As a result, Argentina had become the tourism star of the region, with international tourist arrivals growing from 2.9 million in 2000 to 5.3 million in 2010. How did this happen, especially compared to the contrary experience in Brazil? Argentina does not possess the cultural and natural endowments of Brazil, but does have another important endowment—high levels of human capital and multilingual residents, particularly in Buenos Aires. More important, Argentina made a long-term commitment to tourism, as evidenced by policy choices and the autonomy and leadership provided to the sector. Argentina’s commitment to tourism was transformed from weak to strong and its capacity was shifted from hollow to holistic. This transformation occurred because bureaucratic constraints were altered, providing autonomy and allowing creativity at the highest levels of the tourism bureaucracies; tourism policy was made a national priority and was not trumped by the concerns of other ministries; institutional changes resolved coordination weaknesses; Argentine human capital niches in Buenos Aires were leveraged to enhance the national brand; tourism officials were honest in assessing problems and did not overpromise; and Argentina became a tourism innovator and did not follow existing models. I observed these changes as they happened over a decade. In contrast to Brazil’s practice of appointing patently unqualified tourism ministers as political prizes to coalition partners through 2011, Argentina began a process of professionalizing the tourism ministry in late 1999. Part of this professionalization included the selection of highly qualified and longterm leaders. While Fernando de la Rua will always be remembered as the president who fled office by helicopter in December 2001, he played a key role in the country’s tourism success. As the first directly elected mayor of Buenos Aires in 1996, de la Rua envisioned Buenos Aires as a bustling inter-

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national tourist destination, and he named Hernán Lombardi as minister of culture and tourism. Lombardi is a civil engineer with a master’s degree in tourism marketing from the Glion Hotel and Tourism School in Switzerland and an MBA from the ESEADE university in Buenos Aires. When de la Rua became president of Argentina, Lombardi was brought on as secretary of tourism, a post he held until December 2001. Daniel Scioli, a Peronist deputy, world-champion powerboat racer, and former director of Electrolux Argentina, became the secretary of sports and tourism until his election as vice president in 2003. Scioli was replaced by German Pérez, a tourism professional and former head of Argentina’s tourism chamber. Pérez only lasted a few months, as President Néstor Kirchner rearranged his cabinet early in his first year in office. Since August 2003, the national tourism minister has been Carlos Enrique Meyer. In contrast to Brazilian tourism ministers, Meyer has been involved in the industry his entire life, studying tourism for four years in Buenos Aires, working as a tour guide, owning tourism companies, and serving as tourism minister for the province of Santa Cruz for thirteen years. The Argentine economic crisis of 2001–2003 was both a threat and an opportunity for tourism. The international media coverage of Argentina was overwhelmingly negative, featuring riots, poverty, political chaos, and increased crime. The crisis also provided important opportunities. The first and most important was a currency devaluation in which the peso lost 75 percent of its value against the US dollar. But this was not the most important result. The crisis unleashed an entrepreneurial explosion in Buenos Aires based on necessity, with thousands of individuals becoming entrepreneurs by renting out their apartments to tourists, scores of unemployed professionals and academics founding new tourism-related companies, and talented expatriates flocking to Buenos Aires to join the creativity boom that followed the crisis.23 The explosion of creativity in Buenos Aires—from cuisine in the hip Palermo neighborhood to artisans in San Telmo, from book festivals to design festivals, from new tango to new museums—was both organic and spontaneous but also carefully nurtured and leveraged. At the national level, the minister of tourism, Carlos Enrique Meyer,24 led a focused effort to enhance and maximize Argentina’s brand (Marca Pais), while at the city level, Buenos Aires’s minister of culture and tourism, Hernán Lombardi, explicitly and energetically cultivated a wide range of cultural events and creative activities to shift the tourist image of Buenos Aires from something nostalgic to something cutting-edge and contemporary (interview with Lombardi, Buenos Aires, June 1, 2009). The success of this shift in perceptions of Buenos Aires and Argentina is evident not only in the awards and lists as top destinations, but also in the fact that international tourism to Argentina continues to skyrocket even though it is not longer an inexpensive destination.25 The economic crisis created a national emergency and a harmony of interests among political parties, levels of government, provinces, and the private

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sector to set aside political differences and insulate international tourism from the political power plays that plague Brazil. Argentina defaulted on its debt and was shut out of international lending, and an influx of foreign currency became a national priority, whether from exports of soy and other commodities or from tourism. In the 1990s, with convertibility of one Argentine peso pegged to one US dollar and the brash style of President Carlos Menem, politics and economics became increasingly polarized and zero-sum, and connections and support from the central government increasingly important. The federal tourism council, comprising provincial, national, and Buenos Aires tourism officials, stopped holding meetings to coordinate national tourism. After the crisis, the importance of international tourism and the opportunities of devaluation led to a resumption of the council’s activities and cooperation among the local and national leaders (interview with Patricia Molina, director of promotion, INPROTUR, Buenos Aires, May 22, 2009). Between 1999 and 2002, I conducted interviews at the Buenos Aires offices of six provinces, all of which had tourism representatives. One group of questions concerned the level of cooperation between the provinces and between provinces and the national government in international tourism policies and promotion. The provinces universally characterized the relationship as conflictive. For example, tourism officials from Misiones26 complained that they placed an ad in the Miami Herald’s tourism section and were surprised to see an ad for Argentina in the same edition. They were frustrated that there was no effective mechanism to coordinate ad buys or ad messages, and that their complaints and suggestions for improved coordination were dismissed by federal officials. A decade later, from 2009 to 2011, I held similar conversations with officials at five of the original six provincial offices, along with officials in the city of Buenos Aires. All officials characterized national tourism policy as highly cooperative and satisfactory. A tourism official for the province of Buenos Aires explained that in Argentina, “politics . . . can [produce] support from the front lines and from top policymakers, but the interests and battles of individuals in the middle level of politics and economic interests are looking for their own personal advantages and this clogs up the process and leads to suboptimal outcomes. With tourism, there was an informal agreement [in 2004] on all sides that the political processes had to surpass this, and take place at a higher level where cooperation was more likely. The political battles that existed in the early 2000s have been overcome for international tourism because everyone could benefit” (interview with Héctor Horacio Mangas, Buenos Aires, June 10, 2011). Not only was there conflict between layers of government, but there was also an absence of cooperation in the transition from one government to another. “Devaluation was a short-term opportunity [and] needed to be fol-

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lowed quickly by quality public-private cooperation and real, meaningful branding. There were huge changes in the culture in tourism. For example, previously it would be normal for new administrators to throw away all of the ongoing projects and work of past administrators, and to simply start anew. This no longer happens. There is a lot more coordination and long-term planning (interview with Patricia Molina, director of promotion, INPROTUR, Buenos Aires, May 22, 2009). Cooperation was also enhanced by professionalizing tourism bureaucracies at all levels. Officials selected for political expediency are often less capable and committed compared to trained and career tourism officials. As Buenos Aires culture and tourism minister Lombardi noted: “Tourism needed better statistics and professional bureaucrats at all levels—national, provincial, and city. This started in the late 1990s, but was not complete until much later” (interview, Buenos Aires, June 1, 2009). The change in perceptions of conflict versus cooperation across levels of government is presented in Table 6.2. Formal institutional changes were also enacted. In 2005, Argentina approved an ambitious national tourism law that declared tourism as “essential” for the development of the country and international tourism as a priority export. The act recognized the importance of cooperation at the federal tourism council, created the National Institute of Tourism Promotion (INPROTUR), and provided mechanisms for funding tourism investment and promotion. INPROTUR not only promotes international tourism, but also links the public and private sectors. Its board of directors comprises five members appointed by the national tourism ministry, three members appointed by the private sector tourism chamber, and three members appointed by the federal

Table 6.2

Conflict vs. Cooperation in Provincial and National Tourism Policy in Argentina, 1999–2002 vs. 2009–2011 1999–2002 Primarily Conflict

City of Buenos Aires Province of Buenos Aires Córdoba Jujuy Mendoza Misiones Saltaa Santa Cruz National tourism authority

2009–2011

Primarily Cooperation

Primarily Conflict

Primarily Cooperation x x x x x x x

x x x x x x

Note: a. No interview in Salta in 1999 to 2002.

x

x

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tourism council. Just as Brazil formulated an ambitious tourism plan at this same time (the Aquarela plan), Argentina announced an ambitious, decadelong plan of its own, a strategic federal plan for sustainable tourism. There are some major differences between the plans of the two countries. Most important, Argentina, unlike Brazil, was realistic in its goals and objectives, projecting between 4.4 and 5.1 million international tourist arrivals in 2010 and between 5.1 and 6.7 million by 2016; Argentina’s actual performance surpassed the most optimistic goals, reaching 5.3 million tourist arrivals in 2010 (Secretaría de Turismo Argentina 2005: 19). By 2005, Argentina had a national consensus of prioritizing the sector, superb long-term professional leadership in the bureaucracy, cooperationinducing institutions and norms, aggressive but reasonable goals and objectives, and vibrant human capital. This led to concrete policies for tourism growth that contrast with those in Brazil. One important policy difference has been in the ease of entering Argentina. Brazil has one of the most cumbersome and tourism-depressing visa policies in the hemisphere, matching US policy tit-for-tat. Although Argentina is also a highly nationalistic country with a propensity to demand parity in diplomatic issues, tourism trumped national pride and Argentina maintained ease of entry for many years after the United States demanded visas from Argentines beginning in 2002. In December 2009, Argentina did enact reciprocity of visa fees for tourists from Australia, Canada, and the United States, but the visa was automatic upon landing and required none of the paperwork and hassles demanded by Brazil. Even though the visa process in Argentina is less onerous than that in Brazil, this still represents a negative sign that the unqualified and focused priority of tourism in Argentina is over. Argentina also leveraged its gateway city, Buenos Aires, rather than fighting the popularity gap between its tourism star and the rest of the country. Marketing and branding of both the capital city and the county was synergistic, based on shifting the image of Argentina from one of nostalgia based on historical icons such as Carlos Gardel, Eva Perón, and Diego Maradona to one based on contemporary culture. Buenos Aires was a major shaper of this national brand, but the national tourism ministry and INPROTUR started a country brand (Marca Pais) initiative in 2006 to showcase Argentina’s new wines, designers, films, and other cultural productions, as well as its sports, including soccer superstar Lionel Messi.

Conclusion Policy choices matter for success in government in general and in tourism in particular. Theory and observation from Weber to today confirm that a professional, merit-based, hierarchical bureaucracy is necessary for well-functioning

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modern governments. The comparative cases of Brazil and Argentina confirm the traditional view but add some important new considerations. The failures of Brazil and the successes of Argentina did not happen by chance, but resulted from very different policies and choices. Success depends on four aspects: Competency: Tourism ministry and agency leadership should be highly qualified. Tourism bureaucrats should be experienced and professional. Coordination: Tourism success requires a positive-sum approach and high levels of sustained coordination between layers and divisions of government and between the public and the private sectors. Continuation: Building a successful tourism destination requires many years and long-term commitment. Constantly changing plans or leadership will have a negative effect. Creativity: Tourism ministries need to be more than merely competent, professional, and hierarchical. The traditional Weberian view of the bureaucracy is too rigid and constrained. Success in tourism requires creativity and innovation. Destinations such as Costa Rica and Argentina are not industry followers that coordinate to meet demand, but are industry leaders that innovative to create demand. Scholars have known of the need for competency, cooperation, and continuation for successful bureaucracies for many decades. Why does Brazil fail to incorporate these basic concepts into its tourism ministry? The research suggests two principal causes. The first is the political incentives of cabinet formation based on Brazil’s historical experience of regional powerbrokers, extreme party fragmentation, and large cabinet. The tourism ministry is a prize to be handed out and not an asset to be developed. The second reason why Brazil has experienced a lost decade in tourism is that the economy has boomed in recent years and tourism promotion is a lot of work. In the language of prospect theory, Brazil was in the domain of gains and playing it safe. In Argentina, a deep crisis placed the country in the domain of losses and resulted in the embrace of tourism and creation of an autonomous and innovative bureaucracy. In the period 2000–2010, Brazil was a failure. The Argentine tourism booms holds lessons for Brazil. The most important lesson is that change can come fairly quickly. Argentina made dramatic changes between 2000 and 2004, and those changes resulted in a growth of tourism that was beyond the most optimistic projections. Brazil will soon host mega-events that can be used to transform the industry. To do this, Brazil should immediately and unilaterally remove visa requirements for the United States, appoint high-quality leadership in MinTur

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and Embratur, encourage creativity at the local as well as the national level, upgrade the language and other human capital skills of the work force, and provide the institutions and incentives necessary to enhance coordination. Argentina cannot rest on its past successes. The change in entry rules, high levels of inflation, and uncertainty about exchange rates can dampen prospects for the future. The gains to Argentina from tourism are so large that the country should continue with unqualified support for the sector.

Notes 1. Brazil ranks third and Argentina ranks twelfth globally in tourism natural resource endowment; for Latin America, Brazil ranks first and Argentina ranks seventh (Cuba is not included in the rankings). For tourism cultural endowment globally, Brazil ranks twelfth and Argentina ranks forty-first; for Latin America, Brazil ranks first and Argentina ranks sixth (Cuba is not included in the rankings) (Blanke and Chiesa 2008: 16–17). 2. Casual observers often assert that differences in tourism performance at the destination level are largely caused by exchange-rate fluctuations and perceptions of price. The empirical evidence in a longitudinal cross-sectional panel study of Latin America found that price is irrelevant for tourism growth (Eugenio-Martin, Morales, and Scarpa 2004). In addition, Argentina’s most impressive growth occurred in 2010, when the Argentine peso was not undervalued. 3. See, for example, Ames 2001 and Samuels 2003. 4. See Dixon (2006: 31–33) and Brazilian Ministry of Tourism press release regarding the release of the Brazil Brand, http://200.189.169.135/marcabrasil/conceito .pdf. 5. Marta Suplicy lost the election. 6. The one person I interviewed who disputed the claim that the Itamaraty is the driving force of reciprocity with the United States was Ambassador Agemar Sanctos, a career diplomat who is currently on loan from the Itamaraty to serve as director of institutional relations for Rio de Janeiro’s Olympic Organizing Committee for the upcoming 2016 Games. Sanctos claimed that the Itamaraty does not object to allowing US tourists to enter Brazil without visas, but that the federal police, who control immigration and border checkpoints, insist on reciprocity (interview, Rio de Janeiro, June 24, 2011). 7. In December 2009, Argentina began to follow the Chilean model of charging a reciprocal visa fee at the airport to visitors from the United States, Australia, and Canada. 8. There was much conversation in Brazil in 2011 about changing visa rules for the 2014 World Cup and 2016 Olympics. 9. As of December 18, 2012, the number of lost tourists for 2012 was 243,709, with 4.42 million lost hotel room nights, and lost revenue of 4.5 billion reals (US$2.2 billion). See http://www.visawaivernow.com.br. 10. Thomas Donahue, president of the US Chamber of Commerce, asserts that the single most important US policy change to improve the economy would be to make it easier for foreign tourists to come to the United States, which according to Donahue would create as many as 1.3 million permanent jobs (Lipman 2011: 44).

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11. This could change with the awarding of the 2014 Olympics to Rio de Janeiro and the 2016 World Cup to Brazil. 12. The mensalão (big monthly payment) was a major scandal that threatened to destroy the Lula administration in 2005. The government was paying legislators some US$12,000 per month to vote for Lula’s legislative agenda in 2003 and 2004 (WorldPress 2005). 13. In the Brazilian lower house, states can have a maximum number of seventy legislative seats and a minimum of eight seats. São Paulo has a population approximately ninety times larger than that of Roraima, but has only about nine times as many legislative seats. 14. The classic study of coronelismo in Brazil is Leal 1977. 15. Appointment of individuals with questionable qualifications occurs in many countries. After Hurricane Katrina in the United States in 2005, the George W. Bush administration came under sharp criticism when it was revealed that the head of the Federal Emergency Management Agency, Michael Brown, had limited experience and qualifications for the job. 16. Leandro Colon, “Deputado que sera ministro do Turismo pagou motel com dinheiro da Cámara,” September 17, 2011, http://www.estadao.com.br/estadaodehoje/ 20101222/not_imp656847,0.php. 17. Agéncia Estado, “Dilma começa a nomear candidatos derrotados do PMDB,” March 9, 2011, http://www.d24am.com/noticias/politica/dilma-comeca-a-nomear -candidatos-derrotados-do-pmdb/18915. 18. In 2008, the Brazilian Association of Magistrates began to publish the names of thousands of candidates against whom legal proceedings were under way. Candidates with fichas sujas (dirty records) are allowed to run for office in Brazil. 19. Appointment of inexperienced and unqualified ministers of tourism happens far too often in Latin America, even in countries where tourism should be a principal development sector. In Mexico, “the bias against ‘popular’ tourism is further reinforced by another characteristic of public policy formation . . . with regard to tourism: the people appointed to ministerial rank at both the national and state levels are frequently named for their political connections rather than for their knowledge of the sector; even in those instances where they have experience in the area, their programs usually are designed to further their personal investments and to create new personal opportunities” (Barkin 2001: 37). 20. As of December 18, 2012, some six hundred days before the 2014 World Cup, only one world cup stadium has been inaugurated and construction practices have led to tension, corruption, and social strife in various cities. The best ongoing coverage of the megaprojects and construction in Brazil is Christopher Gaffney’s blog at http://www.geostadia.com. 21. Corruption in construction projects in Brazil is endemic and scandalous. Many experts believe that Brazil delays construction projects until the last minute so that the political and economic elites can use the emergency to charge incredible cost overruns. Rio de Janeiro scholar Christopher Gaffney is an expert on the construction of stadiums and other event arenas in Brazil, and reports on these developments on his blog at http://www.geostadia.com. His post for September 22, 2011, includes the following: “Let’s start with costs. According to the Folha do São Paulo, World Cup related projects have increased by R$27 billion in 8 months. It’s hard to convert that figure this week as the Real has jumped from US$1.60 to US$1.90 in two weeks. But if we project this increase forward 1000 days, that will be around a R$100 billion increase. Without question, the Brazilian 2014 World Cup will be more expensive than all of the

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World Cups combined. This is no joke. We will likely arrive at a number well above R$130 billion and the majority of the projects will still not be ready. The slowness of the contracting process has been exacerbated by the lack of planning on the part of the organizers. The closer we get to the Cup, the more things will cost to construct.” 22. Argentina had a large middle class much earlier than Brazil, and tourism was a marker of that identity. More than 430,000 cars were registered in Argentina in 1930 and by 1942 the Argentine Automobile Association had more than seventy club stations around the country. Argentina also had an extensive passenger rail system that took tourists to Mar del Plata and to luxury hotels built near train stations, such as the luxurious Sierra de la Ventana hotel and casino in southwestern Buenos Aires province (Schlüter 2001, 2008; Wallingre 2007). 23. Interview with historian and tourism entrepreneur Ricardo Watson, Buenos Aires, June 15, 2011. 24. Meyer was technically the secretary of tourism until 2010, when the secretariat was upgraded to a ministry. However, since the 1980s the secretary of tourism has reported directly to the president and forms part of the cabinet. 25. Argentina became an inexpensive destination after the crisis and peso devaluation in 2002. Due to high inflation, the country was no longer a cheap destination after 2009 (Gómez 2011). 26. Misiones, home to Iguazú Falls and Jesuit missions, is a major tourism destination.

7 A Tale of Three Cities: Buenos Aires, Havana, and Rio de Janeiro

was captivated by the Argentine capital. It was difficult to convey to family and friends why I liked Buenos Aires. There was no beach, it was cold and rainy in June and July, and there were no spectacular landmark buildings, colonial architecture, or world-class tourism activities. I could not find a single photograph or postcard that would entice someone to travel there. Yet there was something about staying in a Buenos Aires neighborhood, going to the famous Boca Juniors bombonera soccer stadium, walking the city, and spending an afternoon at an asado barbeque with new friends that was singular and vibrant. My first visit to Havana was in 1999. The colonial squares and architecture of Old Havana (Habana Vieja) were visually stunning. There are many postcards or photographs of Havana that would attract tourists. The music, the history, the dancing, the old cars, and the safety of the city all surpassed my expectations. And there was that adrenaline from the taboo aspect, from the US embargo, from the revolution. The first experience in Havana is a unique and overwhelming mixture of delight and disgust, and one that beckons the intrepid explorer to return again and again. I first visited Rio de Janeiro in 2001, and was enchanted by the beaches, the forests, the landscapes, the food, the music, and the people. No city has more beautiful postcards. I mentioned to the late Brazilian historian José Carlos Sebe Bom Meihy how much I enjoyed Rio de Janeiro but that I wished there were more historical and architectural tourism, and that I preferred Buenos Aires and its neighborhoods or Havana and its colonial heritage. Sebe asked me if I had been to the San Bento monastery or the national library or the Academy of Letters. I responded that I had not, and had not even seen them 123

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promoted or advertised. He spent two days showing me the colonial and historical Rio de Janeiro, far from the enclave tourist areas of Copacabana and Ipanema in the zona sul (southern zone).1 I discovered that Rio de Janeiro consisted of much more than the globally recognized icons; it is also rich in dramatic Oscar Neimeyer architecture, colonial baroque churches with exquisite woodwork covered in gold leaf, outstanding museums, and unique neighborhoods (RioTur n.d.). Two observations struck me. First, that Rio de Janeiro had far better cultural and architectural tourist attractions than did Buenos Aires, in addition to the beaches, sunny weather, mountains, and the world’s largest urban forest. And second, while tourists flock to the rather pedestrian national cathedral and other historic buildings in Buenos Aires, there were very few international tourists visiting the far more impressive attractions of downtown Rio de Janeiro. I have subsequently spent many days in downtown Rio de Janeiro, and I never see international tourists. When it comes to the combination of cultural and natural endowments for tourism, there is no other city as impressive as Rio de Janeiro. It was awarded and hosted the Pan American Games in 2007, has been awarded the 2016 Olympics, and will also be a key city for the 2014 World Cup. And yet it is a city that experienced a decline in both international flights and international tourist arrivals from 2000 to 2010. Why? This chapter examines international tourism trends in these three great global cities—Buenos Aires, Havana, and Rio de Janeiro—to explore the dimensions of capacity at the city level. The experience of these three cities in international tourism over the decade 2000–2010 (see Figures 7.1 and 7.2) provides valuable lessons for understanding the role of policy choices and capacity of bureaucracies as well as structural variables of class, poverty, and human capital for the generation of international tourism and the modalities of tourism that result. Cities are the discrete incubators of tourism innovation, and these three cities reveal important and distinct patterns and lessons in bureaucratic organization, autonomy, and innovation. Among the three countries, Buenos Aires is the clear success story in tourism performance,2 with a growth in international tourist arrivals of 71 percent over the period 2000–2010, while Havana experienced a growth of 42 percent. The fact that Rio de Janeiro had fewer international tourist arrivals in each of the years from 2006 to 2010 than in 2000 is particularly puzzling, given that the city hosted the Pan Am Games in 2007 and was preparing itself to host the 2016 Olympics and the country’s 2014 World Cup. Rio de Janeiro received 11 percent fewer tourists in 2010 than in 2000, and 14 percent fewer than in 2005. In 2000, Rio de Janeiro received 17 percent more international tourists than did Buenos Aires and 83 percent more than Havana. Things changed dramatically over the following decade. By 2010, Havana had nearly caught up with Rio de Janeiro, while Buenos Aires had zoomed by Rio de Janeiro,

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Figure 7.1

Tourist Arrivals to Rio de Janeiro, Buenos Aires, and Havana, 2000–2010

2.5 2.0 Rio Rio d de e Ja Janeiro neiro

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Bu enos Ai res Buenos Aires 1.0

H avana Havana

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Source: Data for Rio de Janeiro come from personal correspondence with RioTur. Data for Buenos Aires come from Observatorio Turistico (http://www.bue.gov.ar/?ncMenu-443). Data for Havana come from UNWTO, various years, Yearbook of Tourism Statistics.

Figure 7.2

Cumulative Change in International Tourist Arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010

Percentage Change in International Tourist Arrivals

80

60

40 Rio de Janeiro

20

Buenos Aires Havana

0

–20

10 20

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Source: Data for Rio de Janeiro come from personal correspondence with RioTur. Data for Buenos Aires come from Observatorio Turistico (http://www.bue.gov.ar/?ncMenu-443). Data for Havana come from UNWTO, various years, Yearbook of Tourism Statistics. Note: For Havana, long-term data show that a fairly constant 56 percent of tourists to Cuba visit Havana (Colantonio 2004).

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receiving 64 percent more tourists than the “marvelous city.” Why? The answer is multifaceted, and state capacity explains much of the difference across the range of issues. The answer also includes well-known structural explanations such as perceptions of violence and inequality in Rio de Janeiro. Human capital is another important structural variable in these three cities. There are additional explanations that are crucial, but less understood. These deal directly with differences in innovation, autonomy, and creativity that were not the result of happenstance or random chance, but were intentional and resulted in a successful rebranding of Buenos Aires and a symbiotic relationship between tourism and renovation of colonial architecture in Havana while Rio de Janeiro chose to follow the same worn strategies from the past and a stagnant global tourism brand. Creative and innovative leadership is crucial to establishing tourism identity and branding for emerging global tourism cities. It is important to distinguish creativity from innovation. For tourism purposes, creativity refers to the process of developing new ideas and solutions that are imaginative, inspired, or original (Hall and Williams 2008: 83). This is a challenge in tourism, where the typical evolution in bureaucracies is “gradual ossification” (Downs 1967: 160) and best practices often involve no more than recycled campaigns, policies, and activities of the past. Innovation is a still more difficult endeavor. Successful innovation in destination tourism is the actual application of novel or recombined methods and products at any stage of the tourism cycle that allows a destination to successfully offer new and improved tourism services that result in improved performance in the sector.3 Colin Hall and Allan Williams (2008: chap. 4) provide the most extensive analysis of the state and innovation in tourism. They present eight innovative dimensions of the state’s role in tourism: Coordination: Novel approaches in public-private partnerships. Planning: Stakeholder-oriented planning approaches. Legislation and regulation: New regulatory regimes that can reduce costs to the tourism sector. Entrepreneurship: State-sponsored development of new infrastructure, such as stadiums and transportation. Stimulation: Providing tax incentives or inexpensive land to stimulate tourism. Promotion: New branding and marketing campaigns and strategies. Social tourism: Provision of tourism opportunities for disadvantaged groups. Interest protection: New means of providing equity in tourism-related policies. Hall and Williams focus largely on the developed countries of Europe, New Zealand, and Australia. In the developing world, where the state is just begin-

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ning to play an important role in tourism, active involvement by government institutions is required to compete and catch up (Gerschenkron 1962). Subsequently, tourism innovation by tourism authorities in the developing world can go well beyond these eight dimensions and in two of our three cases includes a much more active role in developing the tourism brand, not only in marketing but also in creating, nurturing, and recombining tourism products to generate a novel and holistic tourism experience that is the essence of the tourism brand. For international tourism in the developing world, successful innovation requires innovative products and services and a concomitant change in global perceptions of the destination brand. Local tourism authorities not only need sufficient autonomy, but also excellent leaders who themselves are willing to take risks in implementing novel and creative policies. A competent bureaucrat is not sufficient for this task. Active innovation in a bureaucracy is in most cases “a radical change. It often requires changes in legislation and, even more so, in the mindset of people working in an administration. A businesslike attitude is required” by the leaders (Kotilainen 2005: 78–79). This chapter looks extensively at the role of leadership and innovation at the city level. Buenos Aires and Havana both had bold and creative leaders who were able to envision a tourism product and brand and implement policies that contributed to the development of innovative products, while Rio de Janeiro did not. This difference is in part a result of the autonomy of the local tourism authorities in Buenos Aires and Havana, while the Rio de Janeiro tourism authority is in a bureaucratic straightjacket due to both Brazilian bureaucratic rigidity and structural constraints that result in enclave tourism and static products. The second major focus of this chapter is the importance of structural variables such as human capital, inequality, and crime in shaping the range of tourism strategies that can be pursued. Structure varies considerably across these three cities. Choice variables such as leadership, institutional autonomy, and creativity and innovation in policies combine with structural variables to produce the typology of city tourism capacity introduced in Chapter 2 and shown in Figure 2.5. Buenos Aires, Havana, and Rio de Janeiro exemplify three distinct models of tourism capacity, so a comparative exploration of the history of tourism in these cities forms the core of this chapter. But first we turn to the importance of global cities in destination branding and international tourism.

The Growing Importance of the Tourist City in Latin America International tourism in Latin America expanded from 1.3 million international arrivals in 1950 to more than 70 million in 2010. Tourism in the region evolved through four separate phases during that time. The period 1950–1960

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was the dormant phase, with international tourism characterized as insignificant and stagnant. The period 1960–1980 was the awakening phase, with steady but unspectacular growth. The period 1980–2000 was the easy boom phase, when an explosion of sun, sand, and sea tourism resulted in extensive sector growth with or without strong government intervention. The 2000–2010 period was the contested boom phase, characterized by heavy competition for slow-growth and generic sun, sand, and sea tourism, weak performance in the traditional beach vacation centers of Mexico and the Caribbean, and more rapid growth in the branded tourism products of ecotourism, city tourism, gay tourism, cultural tourism, wine tourism, and the like, which require extensive and successful participation by local and national tourism authorities. City tourism is a complex, competitive, and promising product and is the focus of considerable research (Donald and Gammack 2007; Maitland and Newman 2009; Judd and Fainstein 1999). The growing importance of tourism cities and the rapid growth in mobility has eroded the “clear demarcations between leisure and work places, leisure and work activities, and leisure and work time . . . and with them the [lines between] host and visitors [and] touristic and non-touristic activities” (Maitland and Newman 2009: 3). Tourists at theme parks and beaches participate with other tourists in clearly demarcated tourist activities, while tourists in global cities can both consume traditional tourism at attractions such as the Statue of Liberty or largely blend in with locals in art, theater, sidewalk culture, colonial architecture, restaurants, and festivals that are shared activities of a vibrant cultural life. Vacationing as a local is exemplified in the popular “36 Hours In . . .” tourism series in the New York Times; the alluring options and activities are not those found in standard tourism guidebooks, but rather are activities and events that are largely consumed by locals. The essence of traveling to a foreign destination is to experience the life of the locals and avoid high concentrations of other tourists. In its recent “cocina confidential” issue, the New York Times (Metcalf 2009) featured the local dive restaurants of Buenos Aires, noting that “the real Buenos Aires resides in its bodegones, neighborhood restaurants steeped in what it means to be Argentine.” The tourist experience at such restaurants offers unique and authentic meals and interaction with the local people, whereas meals at the Buenos Aires Marriot Hotel are just typical dinners surrounded by other tourists that could be largely replicated at any other Marriot located thousands of miles from Buenos Aires. Global tourism cities provide value to mobile tourists through a sense of experiencing authenticity, where authenticity is derived “from the property of connectedness of the individual to the perceived everyday world and environment. . . . Authenticity is born from everyday experiences and connections which are often serendipitous” (Hall 2007: 1140).4 Destinations that feature authenticity are important for two principal reasons. First, generic attractions such as many sun, sand, and sea destinations are

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highly price-sensitive and susceptible to being underpriced by other destinations or by losing competitiveness through changes in exchange rates. Destinations that feature authenticity are singular, and while price and exchange rates can influence tourism flows to some degree, people flock to London or Paris even if they are expensive because the attractions are unique. Buenos Aires was an inexpensive city to visit between 2003 and 2006 and tourism benefited, but the biggest jump in tourism happened in 2010, after the price advantages of devaluation had disappeared through years of high inflation (Perdiguero 2011).5 Second, the unique cultural, culinary, festival, architectural, residential, and other features of cities can themselves be nurtured and enhanced and play an important part in the reputation, marketing, and brand of a city. The growing importance of cities as cultural, business, and tourism destinations in an increasingly urban and mobile world led to the creation of rankings and measures of cities. Loughborough University in England maintains the Global and World City Project, an effort to rank global cities based on international connectedness.6 Simon Anholt, the father of the nation-brand phenomenon, uses interviews to produce an annual city-brand index based on perceptions of presence, place, prerequisites, people, pulse, and potential.7 Perhaps the most data-centered and sophisticated city ranking is the Global Cities Index, a collaboration of Foreign Policy Magazine, A.T. Kearney, and the Chicago Council on Global Affairs. The Global Cities Index measures five dimensions with five indicators each. The five dimensions are business activity, human capital, information exchange, cultural experience, and political engagement, elements that can serve as a foundation for the new modalities of integrated urban tourism. The highest-ranked cities in this index are all robust tourism destinations.8 Rapid globalization and mobility result in intense competition between cities for performance on indicators and image along a number of dimensions that are captured in these indexes. These indicators both affect and are affected by tourism, and successful cities must be creative and deliberate in developing and executing long-term tourism plans that differentiate themselves from others. This is all the more important where globalization tends to force cities to become generic, replaceable, and substitutable, with similar restaurants, hotels, Starbucks, and shopping malls (Bramwell and Rawding 1996). How have Buenos Aires, Havana, and Rio de Janeiro fared in meeting these challenges?

Buenos Aires In a single decade, Buenos Aires has been transformed from a city whose charm was retrospective and associated with historical icons—based on eclectic architecture, steak and pasta restaurants, and nostalgia for Carlos Gardel,

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Eva Perón, and Diego Maradona—to a city with one of the most vibrant, creative, and forward-looking tourism brands. “No matter where I go in the city . . . I keep recalling the question that the angry young narrator Che asked in the Lloyd Webber and Rice musical Evita: ‘What’s new, Buenos Aires?’ Judging by the looks of things now, the answer is simple: what’s new is youth, vigor, and a fresh sense of self-awareness that has nothing to do with Europe yearning of past generations” (Owen 2005). As Newsweek (Byrnes 2007) proclaimed, Buenos Aires is the new “Capital of Cool.” The new Buenos Aires global brand resulted in a near doubling of international tourist arrivals between 2000 and 2010, from 1.55 to 2.64 million. This transformation was a product of multiple factors. It began in the late 1990s, was briefly derailed and then accelerated by the economic crisis, and was then nurtured by an innovative and highly capable local tourism authority. Human capital and other structural variables were crucial for the dynamism and distribution of tourism in the city. Paradoxically, the economic crisis enhanced human capital, especially in the creative sector. This section presents the role of policy choices and structural variables in the growth and distribution of benefits from tourism in Buenos Aires. The combination of the existing structure of a large middle class with high levels of human capital and innovative policies resulted in a city akin to what Richard Florida (2002) describes as the ideal in The Rise of the Creative Class. According to Florida, educated and creative people choose to live and visit cities with “street-level culture,” where individuals are participants and not mere spectators in the cultural mix. Florida describes these participant and experiential activities as a “teeming blend of cafes, sidewalk musicians, and small galleries and bistros, where it is hard to draw the line between participant and observer, or between creativity and its creators” (2002: 166). Florida also found a strong correlation between the cities that are tolerant to gays, musicians, and other artistic people and the development of the creative class and sidewalk-level culture.9 There have been many tourism and culture leaders in Buenos Aires who have participated in shaping the transformation of the city from within the bureaucracy, such as Pacho O’Donnell, who first extended culture systematically to the neighborhoods (Fontevecchia 2007), as well as Darío Lopérfido, Silvia Fajret, Jorge Telerman, and Hernán Lombardi. Representing different political trajectories and parties, these leaders nourished high culture, street-level culture, microculture, and a diversification of the creative class that accompanied and led the transformation of the city. What characterized these leaders was a commitment to both traditional cultural attractions such as the Colón Theater and tango as well as extensive investment and support for street-level culture in neighborhoods far from the traditional tourism centers of the city. The city’s principal proponent is Hernán Lombardi, who bridged culture and tourism as secretary of tourism for the city of Buenos Aires in the late 1990s,

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as secretary of tourism for Argentina from 1998 to 2002, and as minister of culture and president of tourism for the city of Buenos Aires beginning in 2007. Trained at the graduate level in economics and tourism in Buenos Aires and Switzerland and experienced in a wide range of activities in the tourism private sector, Lombardi is guided by the vision and “totally radicalized position that every tourist is a cultural tourist” who at their core wants to discover how people live in other parts of the world (Lombardi 2009: 13). Lombardi posits that this common interest of global travelers in understanding what it is like to live somewhere else focuses contemporary international tourism on culture and identity: “the intersection of tourism epistemology and culture epistemology is the concept of identity” (2009: 13). The greatest advantage of Buenos Aires in culture and tourism is the mosaic of identities as characterized by such elements as the eclectic architecture, the vibrant and distinct neighborhoods, the 176 independent theaters, and the explosion of unique owner-chef restaurants in the city. I interviewed more than twenty-five academics, tourism entrepreneurs, politicians, and tourism bureaucrats across a range of ages and political ideologies to learn about Lombardi. He has been widely and enthusiastically praised despite political differences. Tourism scholar Regina Schlüter thinks that his focus on tourism culture “is fantastic” for the city of Buenos Aires, but that it did not work when he served as secretary of tourism for the entire country, as nature tourism is considered more important in Argentina as a whole (interview, Buenos Aires, June 7, 2011). Historian and tourism entrepreneur Ricardo Watson contends that Lombardi’s radical idea that all tourism is culture leads to a conceptualization that all culture is tourism, with a tendency to commodify historical buildings and other cultural patrimony (interview, Buenos Aires, June 15, 2011). All twenty-five interviewees agree on what constitutes Lombardi’s tourism vision and on his core idea that all tourism is culture. All agree that he is a forceful, highly qualified, and intelligent leader. Lombardi’s vision for tourism in Buenos Aires is constructed on several conceptual pillars. First, that tourism and the cultural products that accompany it must be authentic to the city and its people and not merely products to please tourists. “Culture is not a photograph that remains the same. That is nostalgia. Culture is identity in movement, like a film. . . . We do not use the identity of the Tango as an artifact of the past but as living and vigorous culture. . . . The first time that one goes to Paris, someone can fool us with the Moulin Rouge, but after that they will not fool us again. The first time you go to Cuba, they can fool us with the Tropicana, as beautiful as it is and how great the Cubans dance. But, real Cubans do not dance in the Tropicana and the real French do not dance in the Moulin Rouge, this can be seen in destination after destination and confirm that the artificialization of cultural resources is also bad business to encourage” (Lombardi 2009: 14, 16). Second, to maintain authenticity of cultural activities that are largely enjoyed by locals in shared space with a smaller number of tourists, activities

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must be dispersed throughout the city and neighborhoods to avoid overuse and the “touristification” and “disnaturalization” of cultural products. Not only is the product altered if it is a cultural showcase produced to meet the perceived expectations of the tourists, but “transculturation is a risk to be attenuated. This phenomenon can be associated with cultural colonization, with questions of self-esteem, etc.” (Lombardi 2009: 14). If a restaurant or cultural event is largely full of tourists and not locals, Lombardi considers the experience as detracting from his long-term vision (interview, Buenos Aires, June 1, 2009). Third, to successfully expand cultural products throughout Buenos Aires requires an active government agency with significant resources and a city with high levels of public safety. To expand the Boca neighborhood from a concentrated tourism zone during the day into a larger geographic area, various historic theaters and buildings are being renovated, lighting and safety are being addressed, and top urban and contemporary artists are being enticed to perform there. The city and public foundations are investing in neighborhoods like La Boca to preserve patrimony and enhance the cultural life for porteños, the inhabitants of Buenos Aires, and soon thereafter tourists will follow. The plans are not developed merely to satisfy tourist preferences. This is a radical and creative vision of tourism. The policies to pursue this vision have been innovative and successful and have required high levels of expertise and technical skills in the bureaucracy. According to Lombardi, this innovation in Buenos Aires was not possible in the 1990s in part because the bureaucrats did not possess the requisite technical skills. “The former model was to meet demand for the nostalgia of the city, for tango and architecture, steak and Diego Maradona. The new model is forward-looking, creating a new and vibrant demand based on culture, new cuisine, art, festivals, identity, and other elements that are unique to Buenos Aires. This makes tourism less pricesensitive. . . . Buenos Aires is no longer a cheap destination, but the numbers are growing. . . . The ideal is to have tourists come to a unique place that cannot be replicated at any price” (interview, Buenos Aires, June 1, 2009). The major emphasis of the tourism plan for the city is to build an international reputation with hip events that are designed for and attended by Argentines, but with a significant number of tourists included. The annual Night of Museum brings 400,000 people into the streets. Gallery nights mix 15,000 Argentines and 5,000 tourists. The city’s annual international book fair attracts more than 1.2 million participants, overwhelmingly Argentines but with tens of thousands of visitors from Peru, Colombia, Chile, and Uruguay. And the foreign attendees are the trendsetters of what is current and cool in their countries. “Here is how it works,” as Lombardi explains. “We have an international design fair. Lots of Argentines participate, but also Peruvians, Colombians, Brazilians, etc. They help create the product by making Buenos Aires the most relevant city in Latin America for design, and then create the demand by telling their colleagues and friends about the city. We repeat this pattern with

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film, food, poetry, architecture, wine, literature, theater, nightlife, etc. All tourism is culture and culture is a way to create a brand and a constantly evolving product” (interview, Buenos Aires, June 1, 2009). This innovative tourism strategy can be condensed to four steps. First, the city should invest heavily in culture-led urban regeneration that enhances identities across a wide range of neighborhoods (Santos and Azeredo 2010; Kanai and Ortega-Alcázar 2009). The range of identities included in cultural urban regeneration goes far beyond ethnic or religious, and also includes the gay community, bohemians, young people, artists, and intellectuals. Florida (2002) found that a tolerant atmosphere toward designers, musicians, filmmakers, gays, and other culturally unconventional identities builds a “creative class” from a sidewalk culture that attracts creative people to visit and even live in a city.10 Florida developed a “gay index” and a “bohemian index” and found a strong correlation between those indexes and the size of the creative class. Second, the city should support festivals, events, and activities that highlight cultural products and provide a strong participatory interface between culture producers and culture consumers. The city of Buenos Aires supports a wide range of large and small cultural activities, including theater, dance, exhibitions, film festivals, gaucho fairs, operas, music, gay milongas, large and small museums, and the like. To make a real difference, the Buenos Aires Ministry of Culture and Tourism requires a substantial budget and significant autonomy to develop and implement creative ideas. Without the healthy budget and considerable autonomy, the ministry could not attract top talent (interview with Hernán Lombardi, Buenos Aires, June 1, 2009). In fact, Lombardi only agreed to serve as minister of culture and president of tourism for the city under Mayor Mauricio Macri when he was sure that he could work with a “guarantee that we would be able to act with total liberty” unrestricted by the city government, and sure that “we could focus on identity and globalization” (Fontevecchia 2007). The budget of the Ministry of Culture and Tourism for 2011 was US$212 million11 (City of Buenos Aires 2011). Of that amount, a mere US$4.7 million was budgeted specifically for tourism. But since all tourism is culture according to the Lombardi model, the total tourism budget for the city should be thought of as the total budget of the ministry. This budget dwarfs the budget of other cities and even countries in Latin America for tourism development and promotion.12 The trend in many cities is to multiply ministries and institutionally isolate tourism from culture. An important element of the innovative capacity in Buenos Aires is in doing the opposite— embedding the tourism bureaucracy within the culture ministry and having the culture minister serve as the president of the tourism board. Instead of fragmenting resources and encouraging ministries at cross-purposes, as occurs in Rio de Janeiro and many other cities, real synergies are created in Buenos Aires. While there are areas of culture that are not at all related to tourism, “the

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synergies [between them] are splendid” (Lombardi, quoted in Fontevecchia 2007). The culture ministry and the tourism office in Buenos Aires were fused in 2007, and while tourism and branding have benefited considerably from the merger and the Lombardi model, some purists have voiced concerns that culture will be shaped by market forces.13 Third, the city should target and recruit the “creative class”—the bohemians, artists, journalists, intellectuals, and gay community—from other countries to participate in exhibitions, fairs, and other events and thus in the production of culture and the cultural events. In Buenos Aires this augments the cultural offering and tourism product and transforms visitors into brandbuilders back in their home cities. A large number of these highly creative people have moved to Buenos Aires, strongly enhancing the cultural and culinary production and acting as magnets for tourism among their colleagues, friends, and relatives (Salkin 2006). Suddenly, Buenos Aires is no longer the city of nostalgia but the capital of cool. “Prague was the place in the early 1990s. B.A. is the hot spot now” (Salkin 2006). The relationship between tourism officials and the lesbian, gay, bisexual, and transgender (LGBT) community exemplifies these efforts. On July 22, 2010, the same day that President Cristina Kirchner was signing the law to make gay marriage legal in Argentina, Culture and Tourism Minister Lombardi was opening an annual LGBT tourism conference in Buenos Aires. The gay community makes up nearly 20 percent of all international tourists to Buenos Aires and spent nearly US$850 million in 2008 (Mosely-Williams 2010). Per-tourist spending for the gay community is much higher than average spending of tourists as a whole, and LGBT tourists are also very likely to recommend destinations to friends and colleagues when they return home. The city and tourism sector in Buenos Aires caters enthusiastically to the gay community, which is a key pillar in the Lombardi model. The city supports numerous events such as gay milongas, LGBT conferences, and arts and design festivals that are attended by considerable numbers of LGBT participants. Fourth, the city should expand its cultural products geographically. If a neighborhood, restaurant, or activity is characterized as locals serving tourists, the essence of cultural tourism implodes, the product is artificial, and the local population is culturally colonized. International tourists must remain minority participants or consumers. There are areas of every city where the tourists dominate and cultural offerings are mere caricatures of local cultural identity. In Buenos Aires this is found in the business hotel district of Puerto Madero and the Micro-Centro. There is nothing hip, bohemian, or interesting about this sector of tourism, even though business tourism is important. The real tourism innovation occurs with the inclusion of new identities and neighborhoods in the cultural tourism mix. Indeed, the bohemian, cultural, and creative class constantly identifies and moves to new neighborhoods as the once-hip neighborhoods become gentrified and housing prices escalate.

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The Lombardi model,14 while an overwhelming success in Buenos Aires, cannot be easily replicated in other Latin American destinations. The model is based on the structural conditions in Buenos Aires and has been facilitated by the particular dynamics of the economic crisis and recovery in Argentina. Structural variables and the economic crisis of 2002 to 2004 played important roles in the transformation of Buenos Aires. Buenos Aires is a city with relatively high levels of human capital and low levels of violent crime spread throughout a large geographic area. According to the 2010 Global Cities Index, Buenos Aires has the highest level of human capital of any city in Latin America. Human capital comprises five indicators: international schools, international students, inhabitants with tertiary degrees, top universities, and the foreign-born population (A.T. Kearney 2010: 8). The city’s high level of human capital makes it one of the safest cities in the Americas, with the second lowest murder rate of any large city in the hemisphere (Rodríguez 2010). While there are many dangerous areas in the suburbs outside the city proper, many of the neighborhoods in Buenos Aires exhibit relatively low levels of violent crime and large numbers of people walking the sidewalks at all hours. When the economic and political crisis erupted in Argentina in 2001–2002, the immediate effect on tourism was strongly negative. The media image was of a country in chaos, of multiple presidents, of waves of kidnappings to steal money from automated-teller machines, and of Argentines abandoning the country en masse. However, due to the characteristics of Buenos Aires, the crisis had a powerful and long-term positive effect on tourism, for three reasons. First, the exchange rate lured many tourists to the city. Second, porteños with high levels of education became entrepreneurial. Third, thousands of creative expatriates moved to Buenos Aires. When mixed with the city’s cultural and tourism policies and with its structural conditions, these three consequences of the crisis resulted in a cultural blossoming of Buenos Aires and a continuation of the tourism boom even when the city became relatively expensive. This cultural expansion is documented in the Global Cities Index. Culture is one of five dimensions of greatness in a global city, and culture comprises six indicators: sister cities, culinary offerings, international travelers, sporting events, visual and performing arts, and museums. Buenos Aires rose from a ranking of twenty-fifth globally in 2008 to ninth in 2010 for cultural experience. This resulted in Buenos Aires rising from an overall ranking of thirty-third to twenty-second in the global index during that same period (A.T. Kearney 2010: 3). This was the biggest jump of any city in the world, placing Buenos Aires first among Latin American cities. I was in Buenos Aires in May 2002 when prices were still based on a peso-dollar exchange of one to one but when the official exchange had fallen to nearly four to one. I will never forget eating four-course steak lunches for US$2 and purchasing new music CDs for even less than that. The cheap prices

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brought significant numbers of new tourists to the country as soon as order was restored.15 Argentines became very entrepreneurial, with individuals and businesses who had no money trading goods and services in exchange clubs (clubes de trueque), with workers taking over factories that had gone bankrupt, and with individuals catering to the surge of tourists. In the tourism sector, individuals began renting out their fully furnished flats in US dollars to tourists wanting to live in their neighborhoods, and multiple businesses blossomed as online rental agencies. BYTArgentina.com was founded by a former academic who started renting a few dozen apartments to tourists. As of late 2012, the company was listing more than 1,900 apartments in ten neighborhoods throughout the city. This is but one of dozens of listing agencies. Another agency, Casa34, lists fully furnished apartments for tourists in nineteen neighborhoods. Thousands of Buenos Aires families have now become tourism entrepreneurs by renting apartments in neighborhoods that just a few years ago were isolated and excluded from the tourism market. My own experience is an example of the geographic expansion of tourism in the city. I have rented over a dozen apartments from four separate listing agencies since 1999, and over the years have migrated from downtown, to the traditional elite neighborhood of Recoleta, to the suddenly hip neighborhood of Palermo Soho, and then, when Palermo became popular with tourists, to the suddenly edgy neighborhood of Villa Crespo. The geographic expansion goes hand in hand with the growth of business and employment. Palermo was a sleepy, middle-class neighborhood in 2002, but now it is one of the centers of street-level culture and tourism, with hundreds of boutiques, hundreds of cafes, more than 450 restaurants (based on an Oleo.com search), galleries, festivals, milongas and tango halls, and parks. Dozens of boutique hotels have opened in the area and real estate prices have skyrocketed, sending the next wave of expatriates to other neighborhoods. This spreads the benefits of tourism and allows for a large number of tourism entrepreneurs. Locals are not restricted to service work as they are in business tourism or enclave tourism models. High levels of human capital and low levels of crime throughout many large neighborhoods also mean that the carrying capacity for authentic tourism is very high in Buenos Aires. Another example of tourism entrepreneurship is Eternautas. Founded by three historians from the University of Buenos Aires, the company specializes in high-quality and authentic historical and cultural tours. While Eternautas was founded before the economic crisis, the company benefited significantly from the ensuing exchange-rate collapse and was catapulted to success. The company employs dozens of historians and cultural experts who speak nearly a dozen languages as tour guides who cover everything from Argentina’s Labyrinth to Jewish culture in Buenos Aires to art in Buenos Aires to microneighborhoods like Palermo Chico.16

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Historian and tourism entrepreneur Ricardo Watson contends that the role of expatriates in the transformation of the city is too often overlooked. The need of locals to become more entrepreneurial and their spontaneous response “to the crisis to an exertion to produce cultural goods” (Lombardi, quoted in Fontevecchia 2007) and the arrival of tens of thousands of creative expatriates produced an explosion of sidewalk culture and a diversity of cultural and culinary offerings throughout the city (interview with Ricardo Watson, Buenos Aires, June 1, 2011). The exchange-rate benefits of the crisis and the low prices for lofts and creative space brought the first wave of expatriates to Buenos Aires, and word of mouth and cultural development in the city brought subsequent waves. It is hard to estimate the total number of expatriates, but according to the US embassy, 23,000 US citizens lived in Buenos Aires in 2006 and the Young Expatriates Society of Buenos Aires had some 3,000 members in 2006, with 2,000 from the United States. “Lured by B.A.’s high culture at low prices,” many of the expatriates are writers, architects, artists, restaurateurs, musicians, and entrepreneurs (Salkin 2006). “There are expats everywhere tapping into the city’s thriving cultural arts scene. . . . And it’s not backpacker types, but people with money and contacts. Drawn by the city’s cheap prices and Paris-like elegance, legions of foreign artists are colonizing Buenos Aires into a throbbing hothouse of cool. Musicians, designers, artists, writers and filmmakers are sinking their teeth into the city’s transcontinental mix of Latin élan and European polish, and are helping shake the Argentine capital out of its cultural malaise after a humbling economic crisis earlier this decade” (Lee 2008). The creative and innovative policies combined with the favorable structure of a large middle class with high human capital and low crime and the arrivals of tens of thousands of young expatriates to transform Buenos Aires both for residents and for tourists. “Tourist activity has grown into an important economic sector in recent years for the City of Buenos Aires,” and is now the third largest employment sector. In 2011, tourism was responsible for 13 percent of employment in the city, at 330,000 jobs (Tomino 2011). While the structure, the crisis, and the arrival of expatriates were important for the growth of tourism, specific policies and a creative, well-funded, and autonomous bureaucracy with exceptional leadership were necessary to innovate the production, distribution, and benefits of the city brand and make Buenos Aires a more desirable global city to visit and in which to live. City policies have played a positive role for many years and “have enhanced tourism strengths and attenuated tourism weaknesses” (Lombardi, quoted in Perdiguero 2011). Buenos Aires is now a “mature and solid” tourism city, no longer as susceptible to booms and busts from tourism trends or price competitiveness. “Today, the city is a cultural beacon of indisputable attraction,” according to Lombardi (quoted in Tomino 2011). For that reason, even as the

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city becomes comparatively more expensive, twenty-four new large hotels and twelve small boutique hotels were under construction as of 2011, spread throughout the city (Tomino 2011). High long-term inflation has transformed Buenos Aires from a bargain to a relatively expensive destination. “The great cultural offering and the extensive geography that boasts a diversity of landscapes, helps to prevent this tourism destination from the economic cycle downturns” (García Iribarne and García Rosa 2010).

Havana: Creative, Innovative, and Disarticulated Tourism Whenever I visit Cuba and rent a room from a family in a private residence or visit a friend’s home, I ask to see their family photographs. Photographs are a luxury item in Cuba, and while most people only have a few, they are prized possessions that their owners proudly show off. One can always identify the photos from the “special period” in the early 1990s, when the Russians stopped paying premium prices for Cuban sugar and the economy collapsed. The people in the photos often appear gaunt and unhealthy. Such photos are testimony of just how bad Cuban life and the Cuban economy were in the early 1990s, and help us understand the unconventional policies that were adopted on the island. The change in Russian support greatly reduced the flow of foreign currency into the Cuban treasury, and as a result, tourism was identified as a potential source of dollars and euros. After all, Cuba had experienced nearly a century of booms and busts in international tourism. World War I diverted US tourists from Europe to Florida, and Havana competed for them. A casino, jaialai, golf, and a huge Florida hurricane contributed to the growth of tourism, and international visitors spent US$26 million during the 1928–1929 winter season, but tourism quickly collapsed during the Great Depression (Schwartz 1999: 30–88). The next golden phase was in the 1950s, which brought cabarets, 10,000 prostitutes, Ernest Hemingway and his favorite bars the Floridita and the Bodeguita del Medio, and gambling led by unofficial minister of tourism and mob-associate Meyer Lansky. Upon seizing power in 1959, Fidel Castro confiscated the foreign-owned hotels, shut down the casinos and bordellos, and generally disdained tourism. As the Soviet Union began imploding, just over 300,000 tourists visited Cuba in 1988. The “special period” resulted in rapid legal and political reforms that led to over a million tourist arrivals annually by 1996, a compound annual growth rate of 16 percent (Suddaby 1997: 123). Cuban tourism policy included many traditional measures such as inviting foreign investors and hotel companies. Overarching Cuban tourism mar-

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keting strategy was quite traditional for the sun, sand, and sea market, “quickly penetrating source markets by offering low, all-inclusive prices” (Suddaby 1997: 129). At the same time, the desperate conditions led to extreme measures and some unusual strategies such as allowing the Cuban military to operate a large tourism company and own dozens of hotels. The Cubans also implemented new models of tourism and tourism infrastructure funding. The most creative ideas and innovative actions occurred in the heart of the Cuban capital. As with the case of Buenos Aires, extraordinary local leadership and a severe economic crisis accompanied and led transformations and innovation in the tourism sector in Havana. Eusebio Leal Sprengler was born in 1942 and was active in Catholic action organizations in his youth. In 1959, Leal began working for Emilio Roig, Havana’s city historian. Leal was named director of the city museum and city historian’s office in 1967. He was largely self-taught in history and cultural heritage, earning his undergraduate degree in 1979 and then his doctorate in historical sciences many years after restoring the captain-general’s palace. In 1978, Leal declared Old Havana (Habana Vieja) a national monument, which led to increased resources from the Cuban government and the first phases of rehabilitation of the colonial center. In 1981, the Cuban state assigned an exclusive budget to the city historian’s office for rehabilitation and restoration of the colonial squares and architecture. In 1982, Leal shepherded the old city through the process to be designated a United Nations Educational, Scientific, and Cultural Organization (UNESCO) World Heritage site. He also initiated and hosted for over twenty years a popular weekly television program, Walking in Havana.17 Due to Cuba’s long Spanish colonial period, which lasted until the end of the nineteenth century, Havana is especially rich in colonial architecture. Old Havana houses over 100,000 residents in about four and a half densely packed square kilometers (Hearn 2006: 148). There are thousands of colonial-era buildings as well as fortifications and colonial squares. The wealthy citizens began moving out of the old city over a century ago, and the deterioration accelerated in the first decades of the revolution. Due to Leal’s skills and efforts, rehabilitation of the crumbling colonial buildings and squares was happening, but too slowly to outpace the deterioration. The final straw occurred in 1993, when a dilapidated convent collapsed in the city center. It was that year that Leal synthesized several trends into an innovative policy that transformed Havana. The Cuban economic crisis of the 1990s was itself both a curse to the city historian’s efforts and an opportunity. It was a curse because there were even fewer local resources than before, but it was an opportunity because the depth of despair during these years resulted in a possibility for radical changes.18 The economy was in freefall, people were starving, and communism was being overthrown around the world. In this environment, Leal

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turned the city historian’s office into an autonomous income-generating entity never before seen in Cuba. Leal made a deal with the nation’s leadership, promising to rapidly rehabilitate the colonial marvel that was Habana Vieja and increase tourism revenues for the state in exchange for unprecedented autonomy and self-financed management. Backed by authority of law and a green light from the government, Leal quickly established four corporations under the control of the city historian’s office to facilitate the generation of income for rehabilitation. Habanaguex, a tourism company, was founded in 1993 with US$1 million to rehabilitate colonial buildings such as hotels in Habana Vieja. The company now controls nearly two dozen small hotels, as well as tourist shops, restaurants, and offices, generating tens of millions of dollars per year. The city historian’s office is also principal shareholder in a travel agency (San Cristóbal) and two construction and real estate management companies (Fénix and Aurea). Altogether, these businesses generated operating profits of US$43 million in 2009, with half going to the state and half going to rehabilitation projects (Goldberger 2009). In ten years (1994–2004), the city historian’s office had recovered and rehabilitated fully one-third of Habana Vieja, and had implemented five times the number of projects undertaken in all previous periods combined (von Oers 2009: 10). The renovations start at public squares and work outward, block by block. In addition to hotels, restaurants, and shops for tourists, the projects rehabilitate tenements and apartments to be used by residents, libraries, afterschool facilities of neighborhood children, community centers, and the like.19 In 2001 the law was expanded to cover rehabilitation and tourism development along the shoreline, known as the Malecón. In 2003 the law was further expanded to cover the picturesque Chinatown, just west of Habana Vieja (von Oers 2009: 9). Local ethnic Chinese have been granted the right to open small restaurants and businesses in order to draw tourists into the neighborhood. At a 1993 conference in China, Leal predicted that “in less than a few years Barrio Chino will reappear; there will reappear Chinese people from one side to the other. They will start . . . to bring the traditional restaurants back to life. . . . I know very well that it’s not a matter of changing it or adorning it; it’s a matter of making it live, and life always comes from the inside out” (quoted in Hearn 2006: 151). The limited survey research shows that residents of Habana Vieja are very satisfied with the transformations and the benefits of tourism. Andrea Colantonio (2004) reported that 95 percent of surveyed residents of Habana Vieja viewed “change brought by tourism” as positive, and that nearly the same percentage supported more tourism development. This corresponds with two informal surveys of twenty-five residents each that I conducted in 2002 and 2004 in Old Havana. There was near universal agreement that tourism was positive for the area, and that Eusebio Leal had been largely responsible for the rehabilitation and transformation.20

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Structural Variables and Tourism in Old Havana

Cuba exhibits some strong elements of enclave tourism. There is a guarded entrance to the tourist area of Varadero to keep Cubans away, and I have witnessed security guards shooing away locals at the tourist beach near the Bay of Pigs. Cubans have their own dilapidated holiday hotels where international tourists are prohibited from staying, and international tourists have their modern hotels where Cubans are prohibited, even if they have dollars.21 Havana is different from the beaches, as there is mixing on the streets and in the squares, with many tourists eating in family-owned restaurants (paladares) and staying in rented rooms in family homes (casas particulares). Old Havana does not follow an enclave tourism model in a direct sense, such as the all-inclusive resorts of Jamaica or the Dominican Republic, where fences or security guards keep locals away from the tourists and the tourists are warned not to leave the resorts. This is in part because violent crime is exceptionally low in Havana. Yet extreme differences in class, race, and liberties result in a disarticulated tourism structure and limited benefits for the local community. There is a Havanalandia magic kingdom feel to the colonial center. Both tourists and locals stroll the squares and streets and inhabit the same geographical space, but in such different dimensions that the locals are a type of ornamentation and somewhat akin to the costumed characters of Disneyland. Tourists and locals never mix as equals in the hotels, the restaurants, the nightclubs, or shops. Colantonio’s (2004) research reveals the weakness of the Cuban model, as residents of Old Havana do not feel part of the decisionmaking process for tourism-related projects in the area, and the benefits of shopping and other conveniences for tourists do not accrue to the residents. Structural tourism disarticulation is illustrated in three dimensions: entrepreneurship, race, and liberties. Entrepreneurship and Distribution of the Benefits of Tourism

In the inclusive tourism structure of Buenos Aires or Costa Rica, tourists often participate in the same activities as locals, and small businesses benefit from the additional customers and spread of tourism to new neighborhoods or regions. In enclave tourism, tourists are concentrated in large corporate hotels in Cancún, in all-inclusive hotel packages at Puerto Plata in the Dominican Republic, or on cruise ships that let the tourists off for a couple of hours at private beaches in Haiti. In enclave tourism, entrepreneurial activity is largely limited to venders on the beaches or vices such as prostitution. Havana is somewhere in between, and a number of entrepreneurial opportunities appeared in the 1990s for paladares and casas particulares. Paladares are family-owned restaurants that are located in Cubans’ homes. They are strictly regulated in the number of chairs allowed and are

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subject to a flat monthly tax. Casas particulares are also strictly regulated by the Cuban state, and owners must register all guests and pay a monthly tax in dollars per room, whether anyone stays or not. In 1999, 2002, and 2004, I interviewed a total of fourteen paladar owners and nine casa particular owners in Old Havana, Vedado, Trinidad, and Cienfuegos. The biggest problem faced by both businesses is unfair competition, as the Cuban state both owns restaurants and hotels and determines and regularly alters the conditions and taxes for private restaurants and room rentals. When the growth of tourism outpaced the state’s capacity to supply corresponding services, the incentives were high for the private sector to fill the absence of restaurants and places to stay. Taxes were low and paladares were able to function with up to twenty-four seats. As the number of state-owned restaurants and hotels grew, the private sector businesses were viewed as unwanted competition and unnecessary services. The state responded by quadrupling taxes and limiting paladares to sixteen seats and four tables each (interviews with business owners, Havana, 2004). By 2004, the city historian’s office had rehabilitated and opened fifteen hotels, twenty-eight cafeterias, eighteen restaurants, and four bars in Havana. The other state-owned tourism companies, operated by the military and the other state companies, ran an additional fifty-eight hotels, 141 cafeterias, and fifteen restaurants in Havana alone (Colantonio 2004: 38). Taxes for casas particulares vary by location and type of room (interview with Ministry of Tourism official, May 2004). As of 2010, monthly taxes per room in Havana are about US$200, even during the off season, when the rooms are closed. Rules change often and dramatically in Cuba. Raul Castro’s recent reforms led to the dismissal of hundreds of thousands of government workers and an easing of restrictions for small businesses. Paladares can now have up to fifty seats and taxes on casas particulares have been reduced by 25 percent. While these prospects are promising, the Cuban state has a long history of suddenly reversing reforms. Interviewees expressed frustration, and several of the casa particular owners claimed in May 2004 that they were losing money when they factored in taxes and electricity costs. Race and Tourism in Cuba

One of Cuba’s greatest revolutionary successes was the reduction of the achievement gap between Afro-Cubans and white Cubans. Universal literacy, equal access to housing and higher education, and universal healthcare led to tremendous career mobility for Afro-Cubans. While the percentage of black doctors and attorneys in the United States and Brazil is much lower than that for whites, in Cuba there is no gap in prestige careers based on skin color (de la Fuente 2007).While the Cuban approach has not created a racial paradise, Cuba “could justifiably claim that the country’s relative success in combating

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racism was one of the great achievements of the socialist country” (de la Fuente n.d.).22 In 2002 and 2004, I accompanied university students on study-abroad programs to Cuba. Having previously read Alejandro de la Fuente’s (n.d.) excellent work on race on the island, I was interested to discuss the experience with the Afro-American and Nigerian students I was accompanying. I was expecting the black students to have some positive comments about race in Cuba, and was surprised when they announced that they had never felt so racially victimized as they did in Cuba. They were regularly singled out and stopped by hulking doormen and security personnel from entering restaurants and hotels, merely because they had black skin. The Hispanic and Cuban American students were never subjected to the same treatment. I began to stand far back when my students were entering restaurants and hotels, so I could witness them being regularly halted at the door and interrogated before they could enter. They were also singled out and stopped by police on the street, who assumed the students were Cubans and wondered why they were mingling with white tourists. The tragedy of tourism in Cuba is that it has revived racism throughout the island. In Santiago de Cuba, where 70 percent of the population selfidentifies as black, hotel management staff are conspicuously all fair-skinned. As local black musician Carlos Thomas Brown explained, “Everywhere else in Cuba a black person can rise to assistant manager or manager of an enterprise. But in tourism, no. The people who are running the tourism businesses are white and they prefer to have their own people working there” (quoted in Howell 2001). The principal class divide in Cuba is between those who have access to dollars and those who do not. Remittances from Miami and Spain represent one major source of dollars, which are necessary for exchanging for Cuban convertible pesos, which in turn are used to purchase goods and services at markets, stores, and other well-stocked outlets. Supplies and variety at regular peso stores are sparse at best. For those Cubans who do not receive regular remittances, tourism is an alternative source of dollars, euros, or convertible pesos. A maid can make more money in tips in one month than a medical doctor can make in a year. Tourism jobs are consequently highly desirable. It is in this juncture that racist ideas came to play a more active role in the allocation of scarce resources. In order to minimize the black and mulatto presence in tourism, white managers began to demand from prospective employees what they defined as a “pleasant appearance” (buena presencia), an aesthetic attribute which only people deemed to be white could fulfill. The same criteria has been applied to positions in the so-called joint ventures, companies financed and partly owned by foreign investors in which Cuban employees typically receive a portion of their salary in dollars. By creating supposedly objective indicators of desirability and competence that can be

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used to exclude Afro-Cuban job seekers from the most desirable positions, this ideology has helped whiten the most desirable sectors of the labor market and to rationalize the process of exclusion. According to research done by the Centro de Antropologia de Cuba, blacks barely represent 5 percent of the labor force employed in tourism and other dollar-related activities. (de la Fuente n.d.)

Inequality of Liberties

The third structural element that limits the benefits of tourism to the people of Havana is the liberty gap between the locals and the tourists. There is one reality for the tourists, one that includes CNN in their hotel rooms, Internet access, and freedom to leave the island. There is another reality for the locals, who are prohibited from entering a hotel room that features CNN, who are nervous about receiving news magazines from friends, who use black-market Internet cafes, and who are interrogated by neighborhood watch associations (Committees for the Defense of the Revolution) if they invite foreigners into their homes.23 Tourists and locals live in two completely different dimensions. Cubans are second-class citizens of Havana. Tourists can stroll the famed Malecón and marvel at the view over the Caribbean. For locals, the view from the Malecón is a reminder of where they cannot go and transforms the paradise into a tropical prison. While Cuba remains a destination with considerable structural weaknesses in tourism, impressive changes have occurred in Havana Vieja under the visionary innovation of Eusebio Leal. He is overseeing a miraculous rehabilitation of Old Havana and improving the conditions of the locals who live there. He and his work have become important components of the global branding of Havana and Cuba and are in part responsible for the increase in international tourism. The structural tourism conditions for entrepreneurs and Afro-Cubans limit the benefits for the inhabitants. The liberty gap between tourists and locals results in massive levels of inequality and an exploitation of the locals as unpaid characters at a modern theme park.

Rio de Janeiro: Hollow Commitment and Enclave Structure If any city should have succeeded in the global tourism expansion of the first decade of the twenty-first century, it would be Rio de Janeiro. This city has an envious supply of globally recognized tourism icons—tropical weather, Ipanema, Copacabana, the Corcovado Christ statue, Carnival, Reveillon, Maracaná soccer stadium, Sugarloaf, the world’s largest urban forest (Tijuca),

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Freitas Lagoon (Lagoa), Guanabara Bay, samba, and Brazilians themselves. But Rio de Janeiro is much more than those gorgeous attractions. Astonishing baroque, rococo, and neoclassical churches and temples from the colonial period are found throughout the downtown area, as well as dazzling theaters, museums, libraries, cultural centers, restaurants, bars, and live music.24 As far as tourism endowment, no city in Latin America comes close to matching Rio de Janeiro. Considering that mix of scenic and urban endowment, Rio de Janeiro should have been able to continue with the sun, sand, and sea tourism that already existed and create a large new flow of tourists for the rapidly expanding culture, architecture, and urban tourism market. This did not happen. Due to choice and structure, Rio de Janeiro has been stuck with the same tried, true, and maximized brand. During the tourism boom, the “marvelous city” of Rio de Janeiro, Brazil’s world-class tourism destination, experienced an unexpected 13 percent decline in annual international tourist arrivals, from 1.8 million to 1.61 million between 2000 and 2010 (e-mail from RioTur, June 27, 2011), even as the city hosted the Pan American Games in 2007 and was bidding to host the 2016 Olympics, and as Brazil as a whole was bidding to host the 2014 World Cup. How did Latin America’s premier tourist city lose tourists during a golden era of international tourism in the region? Rio’s underperformance can be accounted for by policy choices and structural conditions that have resulted in the stale and concentrated beach tourism in the southern zone of Ipanema and Copacabana. The blessing of so many natural wonders has also been a curse for bureaucratic creativity and innovation. Brazil also did not experience a foreign currency crisis like Argentina (2002–2004) and Cuba (the “special period” of the early 1990s) did, and therefore did not experience incentives to risk radical new policies to increase the flow of international tourists. Rio de Janeiro continues rely on decades-old strategies and institutions, resting on its natural endowment to attract the same profile of tourists who were visiting in the 1960s or the 1990s. Policy Limitations and Lost Opportunities

While Buenos Aires and Havana have autonomous and well-funded tourism authorities with exceptionally creative and entrepreneurial leadership and innovative policies, Rio de Janeiro’s local tourism authority, RioTur, is a traditional bureaucracy with limited autonomy and merely competent leadership. A competent Weberian bureaucracy may be sufficient in some domains and some ministries, but in tourism competence must be supplemented with entrepreneurship and innovation if a destination is to compete with others. One tourism expert in Rio de Janeiro characterizes the tourism authority as “doing the same thing over and over for decades. Beaches, sun, bikinis, occasional big concerts. They are incapable of successfully doing anything new” (interview, Rio de Janeiro, June 27, 2011). A senior staffer at RioTur complained that the

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mayor will have some sudden idea from hearing about events or festivals in other cities, and RioTur will then try to copy the experience. But, he continued, it is always lacking in quality and is a bit of a flop. People come for the beaches, the icons, Carnival, and the New Year’s Réveillon. Without significant resources and considerable autonomy, truly exceptional leaders will not agree to head tourism bureaucracies. The director of RioTur is António Pedro Viegas Figueira de Mello, who has experience as subsecretary of tourism for the state of Rio de Janeiro and who served as director of the Tijuca forest, home of the Corcovado Christ statue. Interviewees described him as an energetic and competent bureaucrat, but nobody described him as exceptional, creative, visionary, or entrepreneurial. On December 21, 2011, a Lexis-Nexis Academic search of the tourism leaders of Buenos Aires, Havana, and Rio de Janeiro yielded 488 results for Eusebio Leal in Havana, and 97 hits for Hernán Lombardi in Buenos Aires, but no hits at all for Rio de Janeiro’s tourism director. RioTur and its supporters counter that Rio de Janeiro is at an institutional disadvantage compared to Buenos Aires and Havana, for three principal reasons. First, RioTur is a bureaucratic island, unable to leverage other elements to build synergies with tourism. In Buenos Aires, Lombardi has all of the resources and strengths of the culture ministry to leverage tourism and to generate tremendous resources. In Havana, Leal is able to build synergies with urban rehabilitation and generate tens of millions of dollars. In contrast, the culture ministry in Rio de Janeiro is completely independent from tourism, and follows a different agenda. For example, in 2002 former mayor Cesar Maia announced the construction of a new cultural center—the City of Music, which was to cost 86 million reals (US$26 million) and open in 2004. The concert hall was to be the largest in Latin America. The critics immediately cried foul, wondering why a giant cultural center was to be located in the swamps near Barra de Tijuca with no subway service and not as part of a redevelopment plan for downtown Rio de Janeiro. It was, after all, the city that would be paying for the construction. As of June 2011, the pharaonic project’s cost had more than quintupled and the concert hall still had not opened. In the end, this cultural project will cost hundreds of millions of dollars but offer extremely limited benefits for the city and for tourism. The second institutional disadvantage for RioTur is its lack of autonomy. Brazil’s bureaucracy is not known for flexibility or entrepreneurship. Due to the highly rigid bureaucracy in Brazil, RioTur is even unable to spend money abroad without navigating an impossible labyrinth of bid requirements and regulations. As a result, the city only participates in fairs and tourism events in partnership with the Brazilian Tourism Board (Embratur), the national tourism promotion organization. This limits rebranding and promotional efforts, leaving the city to continue with the same brand it has had for the past half century (interviews with tourism officials, 2009 and 2011).

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Finally, in Argentina and Cuba, the state enthusiastically encourages tourism in Buenos Aires and Havana respectively, and feature these cities as the crown jewels in international campaigns. But in Brazil, for the past decade, the state has sought to balance tourism throughout the country. RioTur officials complained in 2009 and 2011 that Rio de Janeiro is often featured at the very back of promotional materials and that the rivalry between cities and states undermines branding efforts. Structural Impediments to International Tourism Growth

The greatest threats to tourism are issues of crime and security. High-profile crimes, CNN stories of riots, films that portray a destination as crime-ridden or dangerous, or national crime warnings lead to swift and dramatic declines in tourist arrivals and tourist revenues. The most recent country to suffer such dramatic declines has been Venezuela. The widespread perception of violent crime, corrupt police, and arbitrary justice negatively impacts all of Latin America, but is particularly acute in countries such as El Salvador, Honduras, and Paraguay. Instead of Carmen Miranda or James Bond, the new cinema portrayal of Rio de Janeiro stars the murdering drug dealer in such films as Bus 174 and City of God. Rio de Janeiro is violent, with a murder rate of 39.7 deaths per 100,000 inhabitants, while Buenos Aires has one of the lowest murder rates of capital cities in the hemisphere, at 4.6 deaths per 100,000 inhabitants.25 Crime waves targeting tourists have occurred in Rio de Janeiro, and violence is the city’s biggest problem, according to Alfredo Lopes de Souza, president of Rio de Janeiro’s Hotel Industry Association (Khalip 2004). Unfortunately for Rio de Janeiro, the widespread perception of an increase in crime occurred just as tourism recovered from the terrorist events of 9/11 (De Oliveira 2004). Instead of focusing on measures to reduce violence, Brazilians too often focus on the negative effects of the media that portray the violence. The Rio tourist board not only complained about a telenovela that featured random violence in the posh Leblón neighborhood, but also sued Fox Television for the Simpsons episode called “Blame It on Lisa,” a take on the 1984 film Blame It on Rio. In the episode, Homer and Bart are mugged in a juice bar, fearsome monkeys roam the streets, and taxi drivers kidnap tourists (Bellos 2002). In her book on the tourism image of Brazil abroad, Rosana Bignami (2002: 10) observes that Brazil blames the international media for the negative perceptions of crime and inequality, which deflect responsibility for the real existence of social problems and a lack of comprehensive policy of tourism promotion. “The degree of Brazilian participation in the international tourism market is minimal and certainly the country possesses various exceptional attractions, that would justify a much larger quantity of tourists than what are coming. Placing the blame on the media, the country misidentifies the cause

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of the problem, that in reality are the many failures in the national system of tourism, which include an absence of promotion, which could generate a significant change in the image of the country. . . . Brazil, to attract tourists, should stop blaming the press (especially the foreign media) and must stop believing that the solution is only in communication, for the solution requires a more holistic set of strategies to promote the country. This signifies that the product itself must change, and social problems that are real and denigrating the image of Brazil need to be solved or reduced” (2002: 22). I spent dozens of days in downtown Rio de Janeiro for interviews and tourism. I have seen wonderful things there and enjoy the experience every time, but one thing that I never see in downtown Rio de Janeiro is an international tourist. If a single one of Rio de Janeiro’s colonial churches were located in downtown Buenos Aires, it would fill with tourists every day. In interviews with fifty international tourists in Ipanema, I always asked if their trip to Rio de Janeiro included a visit to the glorious churches, historical buildings, museums, and other downtown sites. Four tourists mentioned a brief visit to the public art project Lapa Steps as part of a Rio de Janeiro city tour, but not a single one of the fifty had any plan to visit downtown Rio’s historical sites. When I pressed my interviewees about their reason for avoiding downtown and historical Rio de Janeiro, several patterns emerged. First, very few were even aware of Rio de Janeiro’s museums, churches, and other tourism offerings. Rio de Janeiro does not successfully market these activities. Rio de Janeiro has been stuck with the same brand for more than half a century—sun, sand, and sex. As other destinations innovate and modernize, Rio has been chasing the same tourist sector for a long time. Second, just as Rio’s boldly rising mountains were a barrier separating the beach communities from downtown before the building of the tunnels, the absence of language skills and human capital are barriers to tourists leaving the enclaves of the zona sul. “Brazilians indeed don’t know how it costs them not to speak English. . . . And probably never will” (Branco 2003). Brazil’s public schools, while increasing attendance, are woeful and holding the country back from increasing productivity and innovation (The Economist, June 4, 2009). In terms of tourism, this human capital deficit is evident in the surprisingly small number of English- or Spanish-speakers. According to journalist Scott Fitzpatrick, who has lived in Brazil for twenty-five years, “This lack of English speakers is another disadvantage that leaves Brazil behind most other places. This is understandable among the population as a whole, but is unacceptable in the tourist industry. . . . Spanish . . . is useless as a means of verbal communication. . . . Once again, there is no sign that the Brazilian tourist authorities are taking any steps to ensure that English is given a priority” (2003). For me and for my students, the gap in the number of English-speaking taxi drivers, bank employees, and others whom tourists would encounter outside the tourist zone between Costa Rica and Argentina on the one hand, and Brazil on the other, is

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dramatic. One simply cannot feel comfortable visiting downtown Rio de Janeiro without a guide or without speaking Portuguese. There are no tourism kiosks, nor is there any English signage. The differences in accessibility to museums in Rio de Janeiro compared to Buenos Aires provide a dramatic example of the degree to which cultural tourism has not been adopted in Rio. In June 2010 in Buenos Aires, the culture ministry and the tourism board inaugurated the Mile of Museums, featuring ten of the city’s best cultural attractions in three neighborhoods. The city also inaugurated the Mile of Museums Bus for tourists, as well as a popular Bike the Museums program, in which participating museums lend bikes to tourists to ride the museum circuit.26 Museums are fully accessible to nonSpanish-speakers and feature all the amenities that tourists expect. In contrast, the museums in Rio de Janeiro are very hard to reach, are often closed due to strikes, and have limited restroom access with few other services provided (Lasmar 2005). Some mastery of Portuguese is needed to visit museums and other cultural or historical attractions in Brazil. Third, class and crime perceptions inhibit tourists from exploring the city. The geographic contours of poor favelas rising on the hilltops at the edges of the tourist zones in Rio enhance the feeling of tourist enclaves. Tourists are weary of leaving the zona sul because they fear that one wrong turn will place them in a dangerous situation, where nobody speaks their language and where the police are poorly trained and not to be trusted. The class, crime, human capital, and geographical structure of the city combine to concentrate international tourism far from the city center, in the narrow band along the beaches of the zona sul and Barra de Tijuca. These are enclaves within the city, relatively safe and protected, with hotel and service workers who have language skills. One serious limit to tourism growth is that the prime tourism zone, comprising Leme, Copacabana, Ipanema, and Leblón, is completely built-out; there is no more space for hotels without tearing down existing buildings. A second major problem is that the city concentrates infrastructure and security resources where the tourists are concentrated, increasing the potential gap between the southern zone and rest of the city. “The decision by the Secretary of Tourism to privilege the Zona Sul in the interventions related to Rio Incomparavel [the infrastructure plan for the city], especially in terms of increased security, has also triggered debate. . . . [T]he Secretary maintained that since the Zona Sul attracted the most tourists and generated the most revenues, it deserved more security. Extravagant spending and uneven resource allocation among different city neighbourhoods have given rise to a public debate. For example, the first phase of the major city infrastructure plan Rio Cidade clearly privileged chic Zona Sul neighborhoods like Leblón, Ipanema, and Copacabana. Here in the expensive neighborhoods, urban furnishings were custom designed and bus-stop shelters averaged more than US$10,000

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apiece, twice the cost of shelters in lower-income neighborhoods” (Broudehoux 2001: 282). Rio de Janeiro’s tourism officials are hoping that the mega-events of the 2014 World Cup and the 2016 Olympics will transform the city’s tourism performance in the same way the 1992 Olympics contributed to a rebranding of Barcelona. Unfortunately, Rio’s experience with the Pan American Games is a cautionary tale that illustrates the relative competitive weakness of the city as a dynamic tourism destination. In 2002, Rio de Janeiro was selected to host the 2007 Pan American Games. The budget for the Games was US$2 billion, and the Games were to provide the impetus for new infrastructure, particularly transportation, to make the city more accessible. Rio’s bid included the promise that it would transform itself with a new light railway, a new ring road system, fifty-four kilometers of new metro lines, and a new state highway (Downie 2009). Yet not a single kilometer or metro line or road was built. The reason, according the RioTur officials and confirmed by other interviewees, is that the mayor, the governor, and President Lula all detested each other, were unable to work together, and held back funds until the last minute to punish each other (interviews, Rio de Janeiro, 2009 and 2011). The lastminute release of funds made the transportation and other infrastructure improvements impossible to achieve. Christopher Gaffney, the leading academic on stadium and mega-events in South America, is painstakingly documenting the realities for Brazil regarding the 2014 World Cup and for Rio regarding the 2016 Olympics (Geostadia.com). The stadium construction, transportation improvement, forced relocations, and other elements share important features: there is an absence of transparency, government officials and cronies are making windfall profits on construction, assets are being financed by the taxpayers but for the future benefit of private concerns, and benefits are exacerbating rather than alleviating class inequalities. Buenos Aires has avoided becoming a Fordist tourism destination, “if Fordism is defined as a large-scale production of a uniform product according to inflexible organizational principals,” and destinations such as Cancún “could be considered as a paradigm of a totally Fordist tourist resort” (Hiernaux-Nicolas 1999: 131). Structure and policy choices shaped tourism outcomes in Rio de Janeiro, resulting in a destination with decidedly Fordist characteristics. Fortunately, Rio de Janeiro has the tourism endowment and resources to eventually move beyond a Fordist model, but that transition will be challenging and require long-term commitment.

Conclusion Choice, structure, and tourism branding are important not merely at the national level, but are at the subnational level. City tourism is one of the most

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dynamic and growing sectors of international tourism. Cities can develop unique brands that are not as price-sensitive as generic and declining sun and sand vacations. Global tourism cities also serve as gateways to other national destinations, even as city tourism choices and policies are embedded in national policies and actions. Since 2006, Buenos Aires and Havana have continued to receive more international tourists than Rio de Janeiro, even though Rio has superior endowment in terms of iconic tourism images, colonial architecture, and beaches. The lack of correlation between tourist endowment and tourist performance at the city level can be explained by three key factors: the importance of local autonomy and public institutions for innovation and creativity, human capital, and class and inequality compositions. Prospect theory helps explain why Rio de Janeiro played it safe during the economically prosperous past decade and maintains a stagnant and uncompetitive tourism bureaucracy while Buenos Aires and Havana, in times of major economic and social crisis, took risks in the tourism bureaucracies and have introduced creative and innovative new institutional arrangements and tourism models.

Notes 1. The zona sul is the area of Rio de Janeiro that includes Copacabana, Ipanema, Leme, and Leblón. 2. Price and exchange rates are not found to be a major cause of tourism performance in Latin America (Eugenio-Martin, Morales, and Scarpa 2004). Argentina’s most impressive growth occurred in 2010, when the Argentine peso was not undervalued. 3. This definition was largely borrowed from a personal communication with innovation scholar Dan Breznitz. 4. As described by Robert Maitland and Peter Newman (2009: 4–6), urban tourism creates a two-way flow of images, information, consumption patterns, and authenticity. The New York Times, in its “36 Hours in Buenos Aires” feature of February 4, 2007, recommends that tourists eat brunch at the hip Scandinavian restaurant Olsen, which is frequented by expatriates, filmmakers, and wealthy Argentines and offers herring and sixty brands of vodka. In a concession to Argentines’ overheated nightlife, brunch is offered until 8:00 P.M. 5. Costs for tourists in Buenos Aires have grown beyond the double-digit annual inflation increases since 2003. There is considerable debate about the measures of inflation (see Forero 2009; Grannis 2011). The Economist’s 2012 Big Mac Index shows Argentina with an overvalued, not undervalued, currency, and more overvalued than in the euro area or Japan. The argument that the tourism boom under way in Argentina since 2009 is due to cheap prices is false. 6. The Global and World City Project ranking has three tiers—alpha, beta, and gamma, in descending order of level of international connectedness. In 2010 the two alpha++ cities were London and New York. The alpha+ cities were Hong Kong, Paris, Singapore, Tokyo, Shanghai, Chicago, Dubai, and Sydney. Buenos Aires was one of eighteen alpha cities, while Rio de Janeiro was a beta and Havana did not make the cut. See http://www.lboro.ac.uk/gawc.

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7. In the 2011 index, Rio de Janeiro ranked forty-first, Buenos Aires fortysecond, and Havana fifty-second. See http://www.simonanholt.com/Research/cities -index.aspx. 8. In this index, Buenos Aires ranks twenty-second, Rio de Janeiro ranks fortyninth, and Havana is unranked. See http://www.foreignpolicy.com/node/373401. 9. Buenos Aires offers cafe culture par excellence. The Buenos Aires tourism office published excerpts of an interview with architect Horacio Spinetto, author of the book Cafés in Buenos Aires: “The café is a porteño institution par excellence. This is the place where people can feel free, at their ease, the perfect spot to dream with friends and find magical solutions to the country’s problems. It is here, better than another scenario, where people think that utopias are possible. Bars are very warm. How many love relationships have started there? How many people have had their first kiss? On the other hand, some goodbyes and separations have taken place in these houses. The cafés are as life is, the light and the shadow, happiness and sadness, but always with the presence of a friend. Jorge Luis Borges said: ‘I think that one of the most important functions of the city is to bring the dialogue,’ and cafés are the best solution to that. We could say that the café is the friendship temple and thus, for that reason, its continuance. . . . Cafés are usually real references to the neighbourhoods. They are part of the usages and customs of the porteño society and its everyday history. Cafés are part of the town landscape, poetry, and literature. Going to a café is very necessary for many writers in the process of their work. The bars, with their continuance, provide the fondest situations. There, the tangible and intangible cultural patrimony is always and daily present.” See http://www.bue.gov.ar/?mo=portal&ac=componentes&ncMenu=285&tr =body&mn=1.2.15.162.285.&lang=en&&sm=&me=1&ou=printer. 10. In another example of branding, Japan’s Ministry of Economy, Trade, and Industry is leveraging the creative class to try to transform stodgy perceptions of Japan. Young designers, chefs, and pop stars are “flocking” to the ministry as part of a “Cool Japan” campaign (The Economist, October 15, 2011). 11. Using an exchange rate of 4.1 pesos to 1 US dollar. See http://www.buenos aires.gov.ar/areas/hacienda/presupuesto2011/?menu_id=33249. 12. Institutionalized sources of tourism resources are an important element for cities trying to brand and innovate. Las Vegas and many cities use a large room tax in order for tourism to be self-funded. Barcelona is considering a tourist tax across a range of activities. Old Havana generates funds through tourism businesses operated by the city historian’s office. In the end, significant resources are a necessary but not sufficient condition for tourism branding and innovation at the city level. 13. According to Josefina Delgado: “I believe that the fusion between culture and tourism, since Lombardi is from that sector, can be good or bad. For the city, culture is more important than tourism.” Noé Jitri argues that culture and tourism are totally distinct, and that this fusion is purely utilitarian and that does not serve culture: “I do not see how you resolve this ‘fusion.’” And Orly Benzacar notes: “Lombardi is highly regarded in tourism but not in culture. It is an easy decision. Tourism consumes culture and his designation is a way to treat culture as a product. But culture is much more than that. It is our identity. I expected better.” All quotes from Cornejo 2007. 14. While Lombardi is the highest-profile and most consistent proponent of the model, he is but one of many. 15. While the favorable exchange rate produced a surge in tourism, the long-term success of Buenos Aires is not based on prices. Years of double-digit inflation since the crisis led to the city losing its price advantage; Buenos Aires “has ceased being a cheap city” and yet tourism is growing like never before (Perdiguero 2011).

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16. This information comes from my many conversations with the founders of Eternautas and my participation in many of its tours over the years. 17. This section of the chapter is largely based on the application packet of the 2007 United Nations Habitat Scroll of Honor (an award for individuals and countries that make extraordinary contributions to the development of housing) for Leal; and von Oers 2009. 18. The basic idea of prospect theory is that humans are risk-averse in the domain of gains and risk-seeking in the domain of losses. See Weyland 2002 for discussion of prospect theory’s application in Latin American political economy. 19. My students have volunteered in an after-school art institute in Old Havana. The facilities, directors, teachers, and students are excellent and funded by the city historian’s office. One of the institute’s directors explained that the children of Old Havana need a place to do photography, crafts, and art, to keep them busy so that they are not tempted to hustle tourists (interview, May 14, 2004). 20. Unfortunately, surveys conducted in Old Havana are very difficult to interpret, because Cubans seem to fear being overheard saying anything negative and so might be expressing the very thoughts that they believe foreign surveyors want to hear. But outside the urban tourist centers of Vedado and downtown Havana, Cubans are very open and often critical. 21. International student groups are sometimes allowed at Cuban hotels, as was the group I directed in 2004. 22. de la Fuente, n.d., http://casgroup.fiu.edu/pages/docs/1176/1314985303 _Racism,_Culture,_and_Mobilization.pdf. 23. I visited two black-market Internet cafes in 2004. In both cases, the owners worked for foreign firms and were allowed to have Internet in their homes, and they rented out access to neighbors and friends. A medical doctor and his architect wife invited me to dinner at their house on two occasions. They reported that the local defense committee interrogated them both times about the purpose of my visit. 24. This assessment is based on RioTur promotional materials, as well as Jordan 2002 and my own tours of city. 25. See http://www.pagina12.com.ar/diario/elpais/1-153423-2010-09-19.html. 26. See http://www.museos.buenosaires.gob.ar and http://www.mejorenbici .gob.ar.

8 Good News, Bad News

a niche activity to a trillion-dollar industry. Cities and national governments have seized upon tourism as a golden opportunity to provide jobs, businesses, and foreign currency. By the turn of the twenty-first century, every country of Latin America had publicly proclaimed international tourism as a national priority and established or strengthened institutions to attract the growing number of tourists traveling throughout the region. The promises of tourism as a development strategy are ubiquitous, but so are the disappointments. How can international tourism be harnessed for development? Why do some Latin American countries succeed while others fail? This book has provided a comparative analysis of the political economy of tourism in Latin America, in order to solve three guiding puzzles: Puzzle one: Why did the states of Latin America become so actively involved in the tourism sector in the past two decades? Puzzle two: Why are there such widespread performance differences across the region in attracting international tourists? Puzzle three: Why do some countries and cities follow an inclusionary tourism model with better distributional effects, while others follow an enclave model with far fewer positive distributional benefits? Chapters 2 and 3 provided answers to the first puzzle, regarding the considerable expansion of the role of the state in tourism in Latin America over the past two decades, even during the height of the Washington Consensus and the shrinking of the state in many economic arenas. The incredible global growth of tourism, the newly accepted role of the state in destination branding, the 155

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need to solve collective action problems, the shaping of externalities of tourism, the emphasis on resolving balance of payment problems, and the necessary involvement of the state in tourism infrastructure such as airports and entry through visa requirements—all combined to demand an active role for the state. The destination itself, be it a city, region, or nation, is the most enduring element of the tourism product, and extensive state involvement is inescapable in branding, regulation, and coordination. Destinations that refuse to take a lead role in coordinating international tourism will lose tourists and dollars. The United States is the best example. Tourism is fundamentally different from any other economic sector, both because the destination is the brand and because in any country and regardless of the tourism endowment, international tourism can expand rapidly with appropriate policy choices. The performance and type of tourism that characterize a destination are the result of three tourism capacity pillars: endowment, choice, and structure. The endowment consists primarily of the natural and cultural tourism resources of a destination, such as colonial churches, cultural attractions, beaches, flora and fauna, and other natural or cultural draws. The other important endowment component is the distance to large tourism markets. These endowments are relatively fixed. Some countries in Latin America, most notably Brazil, have exceptional cultural and natural endowments for tourism. All countries have sufficient endowment to attract more international tourists. The second pillar of tourism capacity is choice. Every single country in Latin America publicly expressed in the 1990s the commitment to make international tourism a national priority. Surprisingly, very few countries actually enacted the policies that such a commitment would require. Policymakers often make choices that undermine their stated goals. The important policy choices include tourist-friendly entry and visa regulations, the establishment of a creative bureaucracy with an exceptional and stable leadership, publicprivate partnerships, sufficient long-term funding, the establishment of cooperation between regions and federal and local officials, and a protection of tourism policies from political dynamics that might undermine tourism in favor of other ministries or interests. To succeed, tourism must be a sustained national priority. The single most surprising finding of my research is that the actual commitment to international tourism in the region is often halfhearted and does not approach the rhetorical commitment to the sector. Choice consists of those policies and decisions made by policymakers to generate international tourism and leads to three levels of capacity. Where states proclaim tourism as a national priority but their policy choices reveal a near complete absence of suitable actions, destinations exhibit rhetorical tourism capacity. Paraguay is an example. Where states proclaim tourism a national priority but their policy choices reveal limited and insufficient actions to succeed, destinations have hollow tourism capacity. Brazil, Chile, and Venezuela are examples. Where states proclaim tourism as a national priority

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and their policy choices confirm that priority, destinations exhibit holistic tourism capacity. Costa Rica, Argentina, the Dominican Republic, and Spain are examples. Countries with extractive resource exports suffer from the paradox of plenty, and in those countries tourism capacity is likely to be hollow. The third pillar of tourism capacity is structure. Crime, instability, inequality, poverty, health concerns, ethnic or gender discrimination, low human capital, corruption, and other structural variables weaken the appeal of a destination and limit tourism’s potential not only for bringing in tourists and dollars but also for benefiting the local population. For long-term success, destinations should improve their structural foundations and build a sustainable tourism industry on that base. Unfortunately, destinations with poor structural conditions for tourism often select the shortcut of enclave tourism, where the tourist is fenced-in or isolated from the structural weaknesses. Enclave tourism does not provide sufficient benefits for the local population, but rather enhances inequalities and exploitation, results in high levels of leakage, and leads to a number of important negative externalities. Enclave tourism is also not a first step on a path toward the type of integrative, sustainable tourism that empowers locals. Enclave tourism creates a logic and pattern of exploitative tourism that makes it less likely for a destination to develop sustainable and inclusive tourism practices in the future. The lesson is clear: for the greatest long-term developmental success, enclaves are to be avoided. Chapters 6 and 7 presented the empirical cases. Chapter 6 featured the comparative country cases of Argentina and Brazil. Looking at these two cases in 2000, I believed that Brazil would be the tourism success story of the hemisphere due to its improvement in overall governance and the world-class endowment of natural and cultural tourism resources. I believed that Argentina would be a tourism failure. I was wrong. Argentina was the tourism success story of the hemisphere from 2000 to 2010, while Brazil was the region’s most auspicious tourism failure. Chapter 6 detailed the policy choices in these two countries that produced these widely disparate results. Policies, bureaucracies, leadership, cabinet formation norms, commitment, and execution are crucial for long-term international tourism success. Argentina was characterized by holistic tourism capacity during this decade while Brazil was characterized by hollow tourism capacity. Brazil suffered from extreme bureaucratic rigidity, a federal and electoral system that provided incentives to appoint political cronies to lead tourism ministries, dishonest data reporting and interpretation, and a tourism-punishing tit-for-tat entry policy for US, Canadian, and Australian tourists. While tourism underperformed in the 2000–2010 period in Brazil, the economy was growing at historic rates, so the country faced few pressures and incentives to focus on tourism. In contrast, the severe economic crisis in Argentina resulted in a focused commitment to international tourism. The bureaucracies were strengthened and sheltered from political constraints, and high-quality leaders were

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appointed. Entry requirements remained pro-tourist for most of the decade. Private-public coordination was enhanced and the Argentine tourism brand flourished. In contrast to Brazil, in Argentina the economy was in freefall 2001 to 2004 and the country faced severe balance of payment problems. Argentina needed dollars, and the depth of the crisis provided incentives for cooperation and prioritizing international tourism. Chapter 7 provided a comparative historical examination of international tourism from 2000 to 2010 in three global cities in Latin America—Buenos Aires, Havana, and Rio de Janeiro—focusing on the importance of structure in shaping tourism and the role of entrepreneurial and innovative bureaucratic leadership in succeeding in today’s highly competitive international tourism market. Buenos Aires exhibited creative and innovative leadership that contributed to an impressive upgrade of the city’s brand and a favorable tourism structure that facilitated holistic and inclusive tourism that was authentic and benefited a large number of local citizens and small businesses. The city’s culture and tourism ministries were fused together and a radical model wherein all tourism is considered culture was adopted and proved to be a wildly successful and innovative endeavor. Havana exhibited one of the most creative and innovative city tourism policies, synergizing tourism and urban restoration of Old Havana. In this model, the city historian controlled all tourism, including tourism revenues, in Old Havana, and used those considerable resources to renovate the historic buildings and build a global brand. The structural foundation of inequality between tourists and locals in Havana limited the benefits for the local population and exacerbated inequalities, particularly racial divisions. Rio de Janeiro exhibited competent bureaucratic leadership but lacked the creative and innovative leadership found in Buenos Aires and Havana. While Buenos Aires and Havana impressively remade their image and brand through new modalities of tourism, Rio de Janeiro maintained the same beach tourism and focus on big events as in the past four decades. The structural conditions in Rio de Janeiro are particularly unfavorable for inclusive tourism practices. The policy choices and structures in these three global cities determined the amount and type of tourism that developed from 2000 to 2010. Tourism boomed in Buenos Aires and spread throughout large swaths of the city; tourism grew impressively in Havana but was restricted to specific tourism zones; and tourism remained stagnant in Rio de Janeiro and largely concentrated in the enclave areas of Copacabana and Ipanema in the southern zone. One of the most important lessons from the comparative research on these cities is the need to have local tourism leaders with characteristics, experience, and autonomy more akin to that of entrepreneurs than bureaucrats. Both Buenos Aires and Havana have leaders, in Hernán Lombardi and Eusebio Leal, who are highly creative and entrepreneurial and have the resources and skills to transform creativity into innovation. In contrast, the bureaucracy in

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Rio de Janeiro is much more restrictive and traditional and is unable to match the creativity of the other two cities. Prospect theory helps explain why Rio de Janeiro maintains a stagnant and uncompetitive tourism bureaucracy while Buenos Aires and Havana introduced creative and innovative new institutional arrangements and tourism models. The innovative cities faced dire economic crises and so became risk-takers. Rio de Janeiro has experienced economic growth and significant revenues from offshore oil and so remains risk-averse. International tourism will continue to grow dramatically in the coming decades, and countries and cities in Latin America will continue to proclaim tourism as a panacea for economic growth, regional development, job creation, and poverty alleviation. Unfortunately, very few destinations will secure the promise of tourism and many will fall prey to the perils. To capture the benefits, destinations must develop a long-term holistic approach that is creative and innovative and that benefits more than just a narrow elite. The policy implications of this research are clear. For tourism to be sustainable and inclusive, education, security, income distribution, and bureaucracies must be improved. Tourism is most beneficial in those destinations where tourists participate in authentic activities alongside local citizens. Enclave tourism is a shortcut that leads destinations further away from and not closer to the objective of sustainable tourism. To compete in an increasingly competitive international tourism market, Latin American bureaucracies must be modernized and tourism ministries provided with sufficient autonomy, resources, and leadership to go beyond Weberian bureaucratic competence to entrepreneurial models that create synergies and innovation. Latin America provides examples of some of the most creative and successful tourism policies, from the ecotourism of Costa Rica to the urban restoration tourism of Old Havana and the microcultural tourism of Buenos Aires. With the right policy choices and structural enhancements, Latin America can leverage its considerable tourism endowment and provide far greater benefits to its people. Latin America should and must do better. When I surveyed the region in 2000, I believed that Brazil would be the tourism success story. In reality, it was the biggest failure. Looking forward, Brazil still has the greatest promise and the greatest cultural and natural endowment, and will host two upcoming global events—the 2014 World Cup and the 2016 Olympics. Brazil is poised to experience a tourism bonanza and finally reach the tourism promise made by past presidents and tourism officials. In addition, many structural variables such as crime, poverty, inequality, and lack of education have improved. Brazil must now choose whether it will make a real commitment both to further the structural improvements and build the institutions required to compete for international tourists. This would require extensive bureaucratic reform, exceptional long-term leadership, pro-tourist visa policies, and an investment in human capital.

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The evidence from my research is that these reforms will not occur in Brazil for the simple reason that the Brazilian economy is doing relatively well and because dramatic reforms in Argentina, Costa Rica, Cuba, Buenos Aires, and Spain occurred when those destinations faced economic crises and were experiencing what prospect theory refers to as the domain of losses. There is nothing that prohibits Brazil or any other destination from pursuing aggressive, sustainable tourism policies in good economic times, and the megaevents of this decade might spur those choices in Brazil. The next decade will witness continued tourism growth and considerable additional evidence to further our understanding of the political economy of tourism in the region and the importance of state capacity for the successful development of the international tourism sector. Argentina’s unparalleled successes over the past decade are no guarantee of future success. Argentina is no longer in an economic crisis and has enjoyed unprecedented economic growth since 2004. A relaxation of the commitment to international tourism has already been witnessed with the tightening of visa requirements in December 2009. In 2012, Argentina had a two-tier exchange rate for the peso, with an official rate of 4.70 pesos to the dollar and a “blue”market exchange rate of 6.37 pesos to the dollar (Mount and Schipani 2012). The two-tier exchange is confusing to tourists and threatens continued growth. Structural conditions, policy choices, and government priorities are the keys to understanding different outcomes. The good news about international tourism is that countries can relatively quickly attract more tourists with the right menu of policy choices and commitment. The bad news is that success can be ephemeral and a single poor policy choice can undermine competitiveness.

Acronyms

ARENA BRAZTOA Embratur ICT IHT INPROTUR LGBT LVCVA MERCOSUR MinTur PCdB PMDB PNMT

PSDB RioTur UNDP

Aliança Renovadora Nacional (National Renewal Alliance Party, Brazil) Associação Brasileira das Operadoras de Turismo (Brazilian Tourism Association) Empresa Brasileira de Turismo (Brazilian Tourism Board) Instituto Costarricense de Turismo (Costa Rican Institute of Tourism) Instituto Hondureño de Turismo (Honduran Institute of Tourism) National Institute of Tourism Promotion, Argentina lesbian, gay, bisexual, and transgender Las Vegas Convention and Visitors Authority Mercado Común del Sur (Southern Cone Common Market) Ministry of Tourism, Brazil Partido Comunista do Brasil (Brazilian Communist Party) Partido do Movimento Democrático Brasileiro (Brazilian Democratic Movement Party) Programa Nacional de Municipalização do Turismo (National Program of Municipalization of Tourism, Brazil) Partido da Social Democracia Brasileira (Brazilian Social Democratic Party) local tourism authority, Rio de Janeiro United Nations Development Programme

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Acronyms

UNESCO UNWTO ZOLT

United Nations Educational, Scientific, and Cultural Organization United Nations World Tourism Organization zonas libres turísticas (free zones for tourism, Honduras)

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Index

Acapulco, Mexico, 77 Access equalities: positive and negative results of tourism externalities, 46(table) Accumulation: dimensions of successful international tourism promotion, 23(table); effect of legal order on, 23–24; outcomes of structure and choice for national tourism capacity, 27(fig.); policy decisions comprising choice, 52; role of choice in tourism capacity, 26(fig.); typology of state capacity, 51 Afro-Cubans, 142–144 Agriculture and fishing: Costa Rica and Honduras, 68(table), 74(n12); paradox of plenty, 64; positive and negative results of tourism externalities, 46(table) Airports, 86 Alvarez, Carlos “Chacho,” 114 Angola, 40 Anholt, Simon, 45, 58, 111, 129 Aquarela Plan (Brazil), 60, 98–100, 102, 118 Archaeological remains, 34–35, 68 Architectural features: Brazil, 94; commodification of, 131; Havana, 123–124, 126, 139–140; Rio de Janeiro, 124, 144–145 Arias, Óscar, 71 Arrivals, international tourism: actual versus predicted international tourist arrivals to Brazil, 1998–2020, 102(fig.); Brazil and Argentina, 92; Brazil’s

strategic tourism plan, 97–98, 100; Brazil’s visa policies curbing, 105; cumulative change in tourist arrivals to Argentina and Brazil, 94(fig.); cumulative change in tourist arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010, 125(fig.); explosive growth, 37–39; global international tourist arrivals, 1950–2010, 37(fig.); growth in Central and South America, 91; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); high-priority markets, predictions, and actual performance of Brazil’s tourism sector, 101(table); per capita growth, 2000-2010, 40(fig.); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); tourist arrivals to Rio de Janeiro, Buenos Aires and Havana, 2000–2010, 125(fig.) Art events: Buenos Aires, 132–133 A.T. Kearney, 129 Authenticity, importance for destination tourism, 128–129 Autonomy, 71, 127, 146 Awakening phase of tourism, 128 Balance of payments, 40–42 Barcelona, Spain, 15–16, 152(n12) Bariloche, Argentina, 32 Batista, Fulgencio, 32 Bay of Pigs (Cuba), 141

173

174

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Beach tourism, 33–34, 44–45, 68(table), 87, 94–95, 128–129, 139, 145 Behi, Ridha, 83 Belgium: performance of Brazil’s tourism sector, 101(table) Belize: archaeological remains, 34–35 Benidorm, Spain, 32–33 Big Mac Index, 151(n5) Bignami, Rosana, 147–148 Bike the Museums program (Buenos Aires), 149 Bohemian index, 133 Bolivia: archaeological remains, 34–35; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; failure of neoliberal policies, 20; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); per capita income, 5; real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism underperformance, 88–89; tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 55, 56(table), 57 Botafogo-Copacabana tunnel, 94 Branding. See Destination branding; Image branding Brazil: actual versus predicted international tourist arrivals, 1998–2020, 102(fig.); Aquarela Plan, 60, 98–100, 102, 118; beach tourism, 33; bureaucratic competence, 59; bureaucratic corruption, 108–111; bureaucratic deception, 112; candidates with dirty records, 121(n18); corruption in construction projects, 121–122(n21); cumulative change in tourist arrivals to Argentina and, 94(fig.); cumulative growth of real GDP per capita, 1951–2010, 7(table); ecotourism and nature tourism, 35; elements of successful tourism policy, 119–120; federalism and electoral coalitions, 106–112; field study, 15–16; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); highpriority markets, predictions, and actual

performance of tourism sector, 101(table); history and development of tourism in, 94–103; hollow commitment to tourism, 9–10, 156–157; income inequality, 82; institutional upgrades, 43; Itamaraty policies undermining tourism, 104–106, 120(n6); lack of innovation and leadership, 113; literature and theory on politics, tourism, and capacity, 19–20; MERCOSUR and regional tourism, 33; middle class, 122(n22); negative receipts per capita, 67; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); per capita income, 5–6; projections of tourist visits, 60; real GDP per capita, 1951 and 2010, 6(table); resource endowment, 120(n1); strategic tourism plan, 95–98, 102–103; supporting expansion of tourism, 53; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals in Argentina and, 92–93, 93(fig.); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); underperformance despite resource endowment, 2–3, 88–89, 91–92, 103–113, 159–160; visa requirements, 54–55, 56(table), 57 Brown, Carlos Thomas, 143 Brown, Michael, 121(n15) Buenos Aires, Argentina: appeal to tourists, 123; branding creativity and innovation, 104, 152(n7); cafe culture, 152(n9); city-brand index, 152(n7); cultural transformation, 129–131; cumulative change in tourist arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010, 125(fig.); dive restaurant experience, 128; endowment and performance, 11; entrepreneurship after crisis, 136–137; explosion of creativity, 115; field study, 15–16; Global and World City Project ranking, 151(n6); Global Cities Index, 135–136; inflation, 152(n15); Lombardi plan for tourism, 131–135, 152(n13); long-term commitment to tourism, 114–115; social structure, policy choices and tourism

Index

models in global cities, 28(fig.); tourism performance, 124–126; tourist arrivals to Rio de Janeiro, Buenos Aires and Havana, 2000–2010, 125(fig.); tourist costs, 151(n5) Bureaucracy: Brazil’s state capacity, 19–20; Brazil’s underperformance, 103–104; concealing Brazil’s poor performance, 112; creativity, autonomy and innovation, 57–63, 126; defining state capacity, 13–14; Lombardi plan for Buenos Aires tourism, 132; need for modernization, 159; rigidity of Brazil’s, 146; Rio de Janeiro’s underperformance, 145–147; role of choice in tourism capacity, 26(fig.); social structure, policy choices and tourism models in global cities, 28(fig.) Bush administration, 121(n15) Business activity: Global Cities Index, 129 Business sector, 84 Business tourism, 32 Cafe culture (Buenos Aires), 152(n9) Cambodia: competence of bureaucrats, 59 The Campaign (Fuentes), 64 Canada: performance of Brazil’s tourism sector, 101(table) Cancún, Mexico, 33, 47, 85 Capacity. See Choice; Resource endowment; State capacity; Tourism capacity Capacity pillars, 22, 22(fig.), 156–157 Capitalist states, 20 Caracas, Venezuela, 86 Cardoso, Fernando Henrique, 11, 53, 95, 98 Caribbean, 33–34, 34(fig.). See also Cuba; Haiti Casas particulares (Cuban rented rooms), 142 Castro, Fidel, 32, 138 Castro, Raul, 142 Cavallo, Domingo, 92 Celebrity partnerships, 87 Celebrity tourists, 95 Central America: archaeological remains in Belize, 34–35; tourist arrivals, 1950–2010, 34(fig.). See also Costa Rica; El Salvador; Guatemala; Honduras; Nicaragua; Panama Chicago Council on Global Affairs, 129 Chile: cumulative growth of real GDP per capita, 1951–2010, 7(table); economic

175

growth, 6; field study, 15; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); hollow commitment to tourism, 9–10, 156–157; income inequality, 82; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); performance of Brazil’s tourism sector, 101(table); real GDP per capita, 1951 and 2010, 6(table); subnational destination branding, 45; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); underperformance, 29(n5); visa requirements, 55, 56(table), 57, 105, 120(n7) Choice: Brazil’s bureaucratic rigidity, 103–104; Brazil’s underperformance, 103–113; creativity, autonomy and innovation in bureaucracy, 57–63; destination capacity, 9; ease of entry, 52–57; effects of crisis on, 67–72; elements of successful tourism policy, 118–120; outcomes of structure and choice for national tourism capacity, 27(fig.); pillars of tourism capacity, 22, 22(fig.), 156–157; policy decisions comprising, 52; poor policy choices, 63–67; Rio de Janeiro’s national branding, 145; role in tourism capacity, 26(fig.); structure and, 24–26; tourismpolicy choice rankings of Latin American countries, 2000–2010, 73(table) City of Music (Rio de Janeiro), 146 City tourism: Global Cities Index, 129; growth of, 35; increasing importance of, 128; social structure, policy choices and tourism models in global cities, 28(fig.); structural variables, 10–11; “36 Hours in Buenos Aires,” 151(n4). See also Buenos Aires, Argentina; Havana, Cuba; Rio de Janeiro, Brazil City-brand index, 129, 152(n7) Civil society, 24 Class: Cuban tourism and, 143–144; defining, 81–82; Rio de Janeiro, 149; role of structure in tourism capacity, 25(fig.)

176

Index

Club Med, 33, 58, 83, 87 Coalitions, electoral: Brazil, 107–112 Cognitive theory, 28 Collective action, 8, 44 Colombia: cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); The Strategy of Economic Development, 17; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Colonial history, 123–124, 139–140 Comparative political economy, 12(n6), 29–30(n9) Comparative tourism studies, 8 Competency, 119 Connectedness, international, 129 Contested boom phase of tourism, 128 Continuation, 119 Coordination, 119, 126–127 Coronelismo, 107 Corruption: Brazil under Lula, 121(n12); Brazil’s continuing patronage, 113; Brazil’s tourism ministry, 108–109; construction projects in Brazil, 121–122(n21); defining social structure, 84–85; megaprojects and mega-events, 121(n20); misappropriation of tourism taxes, 62; privatization and, 20–21; role of structure in tourism capacity, 25(fig.) Costa Rica: bureaucratic competence, 59; criminal activities, 24; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; ecotourism and nature tourism, 35; effect of crisis on tourism, 67–72; field study, 15; funding tourism promotion, 62; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); holistic commitment to tourism, 10, 157; image branding, 3, 42–45, 71–72, 74(n12); infrastructure, 74–75(n13); innovation, 21; international image, 3; investment security and ease of business operation,

84; kidnappings of tourists, 78; negative receipts per capita, 67; net tourism receipts, 41–42, 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); opposition to privatization, 12(n7); per capita growth of tourist arrivals, 20002010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); receipts per capita, 67; reliance on tourism, 41; state-owned utilities, 4–5; subnational destination branding, 44–45; tourism legislation, 69–71; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism revenues, 1979–1997, 69(fig.); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 55, 56(table) Creative class, 134 Creativity: attracting creative people to cities, 133; impact on Buenos Aires’s tourism, 137–138; innovation and, 126; Lombardi plan for Buenos Aires tourism, 132; tourism success and, 119 Crime: defining social structures, 83–84; Dominican Republic, 83–84; effect of discrete and sustained structural events on tourism, 77–79, 79(figs.); effect of legal order on accumulation, 23–24; Mexico’s drug trafficking, 77–78; Rio de Janeiro, 147, 149; role of structure in tourism capacity, 25(fig.); threatening tourism, 80. See also Corruption Cuba: balance of payments, 40–41; class divide, 143–144; ease of entry, 54; expansion of tourism under Batista, 32; field study, 15; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); inequality of liberties, 144; net tourism receipts, 41–42, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); race and tourism, 142–144; receipts per capita, 67; risk behaviors in policymaking, 28; subnational destination branding, 45; tourism policy, 138–140; tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa

Index

requirements, 55, 56(table). See also Havana, Cuba Cultural experience: Global Cities Index, 129 Cultural resources: Argentina, 92; Brazil’s underperformance despite resource endowment, 2–3, 88–89, 91–92, 103–113, 159–160; Buenos Aires’s transformation, 129–131; destruction and restoration of, 30(n11); Global Cities Index, 135; Honduras, 88; Lombardi plan for Buenos Aires tourism, 131–135, 152(n13); positive and negative results of tourism externalities, 46(table); Rio de Janeiro, 124, 144–145; as tourism, 131 Cultural tourism: authenticity in city tourism, 129; Costa Rica and Honduras, 68, 68(table); destination branding at the subnational level, 44–45; growth of niche tourism, 35–36; Lombardi plan for Buenos Aires, 115, 132–133; Rio’s lack of, 149 Currency devaluation, 116–117, 122(n25); Argentina, 115–116 Deaths, 77 Debt, 1, 63 Democratic transition: decline in state capacity, 20 Destination branding: archeological remains, 34–35; Brazil’s strategic tourism plan, 96–97; creativity, autonomy, and innovation, 58; state role in, 155–156; subnational destination branding, 44–45. See also Image branding Development: Brazil’s economic miracle, 95; literature and theory on politics, tourism, and capacity, 19–20; militarization and, 17; origins of tourism as development tool, 32; state capacity, governance, and, 4–8, 20–21 Developmentalist states, 19 Dias, Alvaro, 111 Digital discussion groups, 16 Dino, Flávio, 108–109 Disarticulated tourism: outcomes of structure and choice for national tourism capacity, 27(fig.); social structure, policy choices and tourism models in global cities, 28(fig.) Discrete structural events, 78–80 Disease, 78

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Distribution: Buenos Aires’s cultural transformation, 129–130; dimensions of successful international tourism promotion, 23(table); effect of legal order on, 23–24; ethnic, racial, gender, and religious cleavages, 82–83; Havana’s tourism, 141–142; race and tourism in Cuba, 143–144; role of structure in tourism capacity, 25(fig.); variation in distributional effects, 3 Domain of losses, 9 Domestic tourism: Brazil, 100, 102 Dominican Republic: Club Med, 33; cumulative growth of real GDP per capita, 1951–2010, 7(table); effects of enclave tourism on local populations, 87; enclave tourism, 83–87; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); holistic commitment to tourism, 157; net tourism receipts, 41–42, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); per capita income, 5–6; real GDP per capita, 1951 and 2010, 6(table); receipts per capita, 67; self-reinforcement of enclave tourism, 86; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 55, 56(table) Donahue, Thomas, 120(n10) Dormant phase of tourism, 128 Drug trafficking, 77–78 Dutch disease, 63 Ease of entry, 26(fig.), 52–57, 118. See also Visa requirements Ease of operation, 84 Economic crisis: Argentina’s opportunity for tourism, 92–93, 115–116; bureaucratic competence and, 60; Cuba, 139–140; immediate and long-term effects on tourism, 135; impact on Buenos Aires’s new dynamism, 130; paradox of plenty, 64–66; prospect theory, 9; risk behaviors in policymaking, 28; sparking tourism growth and innovation, 160 Economic failure, 6

178

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Economic growth: externalities of tourism, 45; increasing Brazil’s demand for skilled labor, 113; inequalities and, 12(n10); Paraguay’s illicit economy, 67; positive and negative results of tourism externalities, 46(table); state capacity and, 4–6, 12(n9), 19–20, 23 Economic liberalization, 1, 40–41 Ecotourism, 14, 35 Ecuador: archaeological remains, 34–35; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; ecotourism and nature tourism, 35; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000–2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism underperformance, 88–89; tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Education: Brazil’s shortage of human capital, 112–113, 148–149; of bureaucrats, 59; class structures and, 81–82; defining social structure, 82; Hernán Lombardi, 131; human capital, 135; positive and negative results of tourism externalities, 46(table) El Salvador: cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 55, 56(table) Embezzlement, 109 Embratur (Brazilian Tourist Board), 95–98, 102–103, 106, 108–110, 113, 119, 146 Enclave tourism: Club Med, 33, 58, 83, 87; crime and instability, 78–80; Cuba,

141–142; destination branding, 58; effect of discrete and sustained structural events on tourism, 79(figs.); exacerbating social problems, 10; explaining and predicting changes in tourism capacity, 26–27; externalities of tourism, 47; Jamaica and Dominican Republic, 83–84; Mexico, 34; Middle East, 82–83; outcomes of structure and choice for national tourism capacity, 27(fig.); Rio’s infrastructure distribution, 149–150; as selfreinforcing trap, 85–88; social structure, policy choices and tourism models in global cities, 28(fig.); sustainable tourism versus, 159; Venezuela, 86 Endowment. See Resource endowment England: performance of Brazil’s tourism sector, 101(table) Entrepreneurship, 115, 126–127, 136–137, 141–142 Environment and ecology: ecotourism, 14, 35; enclave tourism threatening, 87–88; positive and negative results of tourism externalities, 46(table) Eternautas, 136 Ethnic/religious tension, 25(fig.), 82–83 Europe: Club Med tourism, 33 Evita (musical), 130 Exame (Brazilian business magazine), 105 Exchange clubs, 136 Exchange-rate fluctuations, 89, 120(n2), 129, 135–137, 151(n2), 152(n15) Exclusionary tourism, 10 Excursionism, 13 Expatriates, role in Buenos Aires’s transformation, 137 Exploitation, enclave tourism and, 80 Explorers, 31, 94 Exports, 40–42 Externalities of tourism, 9, 14, 37, 45–48, 48(n7) Extractive industries, 63–64, 157 Farkas, Kiko, 98 Federalism: Brazil, 106–112 Fiji, 29(n6) Fitzpatrick, Scott, 148 Flores, Carlos, 71 Florida, Richard, 130, 133 Fordism, 150 Foreign currency, 40–42 Foreign direct investment, 22 Foreign Policy magazine, 129

Index

Foreign-born population, 135 France: performance of Brazil’s tourism sector, 101(table) Free zones for tourism, 70–71 Future expectations: positive and negative results of tourism externalities, 46(table) Galli Romañech, Hugo, 59 Gay community, 133–134 Gender: defining social structure, 82–83; positive and negative results of tourism externalities, 46(table). See also Women Geographic expansion of tourism in Buenos Aires, 135–136 Geographical structure: Rio de Janeiro, 148–149 Germany: performance of Brazil’s tourism sector, 101(table) Global and World City Project, 129, 151(n6) Global Cities Index, 129, 135 Globalization, 14–15, 21, 31, 91, 129 Gonzáles Macchi, Luis, 59 Governance: Brazil’s federalism and coalitions, 106–112; Lombardi plan for Buenos Aires tourism, 132; state capacity, development, and, 7–8. See also State capacity Great Depression, 138 Gross domestic product (GDP), 5–6, 6(table)–7(table) Guatemala: archaeological remains, 34–35; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; ecotourism and nature tourism, 35; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Guerrilla activity, 78 Habanaguex tourism company, 140 Haiti: cumulative growth of real GDP per capita, 1951–2010, 7(table); growth of international tourist arrivals to Latin

179

America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Havana, Cuba: appeal to tourists, 123; citybrand index, 152(n7); cumulative change in tourist arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010, 125(fig.); destination branding at the subnational level, 45; endowment and performance, 11; entrepreneurship and distribution of benefits, 141–142; field study, 15–16; Global and World City Project ranking, 151(n6); history and phases of tourism, 138–139; institutionalized resources, 152(n12); rehabilitation and development, 140–141; social structure, policy choices and tourism models in global cities, 28(fig.); structural variables and tourism in, 141; tourism performance, 124–126; tourist arrivals to Rio de Janeiro, Buenos Aires and Havana, 2000–2010, 125(fig.) Health: defining social structure, 82; positive and negative results of tourism externalities, 46(table); threatening tourism, 80 Hemingway, Ernest, 138 High-priority tourist markets, 101(table) Hirschman, Albert, 17 Holistic commitment to tourism: defined, 10; outcomes of structure and choice for national tourism capacity, 27(fig.); policy choice, 157; tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); typology of state capacity, 51 Holland: performance of Brazil’s tourism sector, 101(table) Hollow commitment to tourism: defined, 9–10; outcomes of structure and choice for national tourism capacity, 27(fig.); policy choice, 156–157; Rio de Janeiro, 144–150; tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); typology of state capacity, 51 Honduras: archaeological remains, 34–35; bureaucratic competence, 59;

180

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cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; effect of crisis on tourism, 67–72; enclave tourism displacing indigenous communities, 87–88; field study, 15; funding tourism promotion, 62; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); infrastructure, 74–75(n13); national image, 3, 72; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); stateowned utilities, 4–5; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism revenues, 1979–1997, 69(fig.); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Human capital: Argentina’s commitment to tourism, 114; Brazil’s shortage of, 112–113, 148–149; Buenos Aires, 135; defining social structure, 82; difference in performance between Rio de Janeiro, Buenos Aires, and Havana, 126; Global Cities Index, 129; role of structure in tourism capacity, 25(fig.) Human resources: paradox of plenty, 63–64 Identity, Buenos Aires, 131 Illicit economy, Paraguay’s, 67 Image branding: Argentina’s enhancement and maximization of, 115; Argentina’s national tourism policy, 117; beach tourism and, 11; Brazil’s hope for World Cup and Olympic Games, 111–112; Brazil’s image abroad, 147–148; Brazil’s strategic tourism plan, 96–98; Brazil’s tourism ministry scandals, 110; Buenos Aires’s innovation, 130–131; city-brand index, 129; “Cool Japan,” 152(n10); Costa Rica, 3, 21, 71–72, 74(n12); enclave trap, 86; Honduras, 72; institutionalized resources, 152(n12); Las Vegas, 61; role in tourism, 42–43; state role in, 43–44, 155–156; subnational level, 44–45. See also Destination branding

Import substitution industrialization, 5–6 Inclusive tourism, 3; barriers to, 82–83; entrepreneurial activity, 141–142; outcomes of structure and choice for national tourism capacity, 27(fig.); social structure, policy choices and tourism models in global cities, 28(fig.); social structures impeding, 78–80 India, 19 Indigenous communities, enclave tourism displacing, 87–88 Inequalities: benefits of tourism, 14; defining social structure, 82; Dominican Republic’s enclave tourism increasing, 87; economic growth variations, 12(n10); race and tourism in Cuba, 142–144; role of structure in tourism capacity, 25(fig.). See also Social structures Inflation (Argentina), 120, 122(n25), 129, 138, 151(n5), 152(n15) Information exchange: Global Cities Index, 129 Infrastructure: Brazil’s corruption over Pan American Games, 111; Costa Rica and Honduras, 21, 74–75(n13); defining state capacity, 13–14; Rio de Janeiro’s increasing gap, 149–150 Innovation: Argentina’s explosion of creativity, 115; Brazil’s lack of, 113; Buenos Aires’s cultural transformation, 130; in bureaucracies, 57–63; creativity and, 126; eight innovative dimensions of state role in tourism, 126–127; impact on Buenos Aires’s tourism, 137–138; Lombardi plan for Buenos Aires tourism, 132–133; prospect theory, 9; role of choice in tourism capacity, 26(fig.); social structure, policy choices and tourism models in global cities, 28(fig.); state role in, 21, 43–44 INPROTUR (Argentina), 117–118 Institutional strength, 7, 146 Inter-American Development Bank, 47 Interest protection, 126–127 International financial institutions, 1, 20 International tourism, defined, 13 Internet: supporting expansion of tourism, 53 Investment security, 25(fig.), 84 Italy: performance of Brazil’s tourism sector, 101(table) Itamaraty, 104–106, 120(n6)

Index

Jamaica, 83 Japan, 20; branding, 152(n10) Jobs, 40–42, 67 Kidnappings of tourists, 78 Kirchner, Cristina, 92, 134 Kirchner, Néstor, 92, 115 Kisaeng tourism (South Korea), 48(n7) Language barrier: Brazil, 148–149 Lansky, Meyer, 32, 138 Las Vegas, Nevada: collective action, 44; developing brand identification, 42–43; impact on the author, 17; institutionalized resources, 152(n12); room tax allocation, 61(table); tourism and marketing resource growth, 62(table); tourism promotion and branding, 61 Leakage, 3, 47, 80. See also Enclave tourism Leal Sprengler, Eusebio, 139–140, 146 Legal order, 23–24, 25(fig.), 27(fig.) Legislation, tourism, 69–71, 126–127, 140 Legitimation: accumulation and distribution, 24–26; funding tourism promotion, 62–63; outcomes of structure and choice for national tourism capacity, 27(fig.); policy decisions comprising choice, 52; role of choice in tourism capacity, 26(fig.); typology of state capacity, 51 Lesbian, gay, bisexual, and transgender (LGBT) community, 133–134 Local populations: citizen interaction, 85; effect of enclave tourism, 87; Havana’s enclave model, 141; inequality of liberties in Cuba, 144; Lombardi plan for Buenos Aires tourism, 131–132; race and class in Cuba, 142–144 Lombardi, Hernán, 60, 115, 130–135, 146, 152(n13) Lopes de Souza, Alfredo, 147 Lula da Silva, Luis Inácio “Lula,” 10–11, 92, 97–98, 100, 102, 111, 121(n12), 150 Macri, Mauricio, 133 Maia, Cesar, 146 Marketing and advertising, 44, 60–61, 70. See also Image branding Marketing Places: Attraction Investment, Industry, and Tourism to Cities, States, and Nations (Kotler, Haider and Rein), 58

181

Martínez, Ricardo, 67–68, 71 Media: business tourism, 32; crime, 24; portrayal of Brazilian violence, 147; structural elements impeding tourism, 80; urban tourism, 35 Mega-events: Brazil’s corruption in construction projects, 121–122(n21); Brazil’s visa requirements threatening, 119–120; Olympic Games, 11, 82, 108, 111, 113, 120(nn6,8), 124; Pan American Games, 111, 124, 145, 150; World Cup, 11, 82, 108, 113, 120(n8), 121–122(n21), 124 Mega-resorts, 85 Menem, Carlos, 116 Mexico: archaeological remains, 34–35; beach tourism, 33; crime, 23–24; crossborder tourism, 31–32; cumulative growth of real GDP per capita, 1951–2010, 7(table); drug trafficking, 77–78; economic growth, 6; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 48(n5), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals, 1950–2010, 34(fig.); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); unqualified appointees, 121(n19); visa requirements, 55, 56(table), 104–105 Meyer, Carlos Enrique, 60, 115, 122(n24) Middle class: Argentina and Brazil, 122(n22); Buenos Aires’s cultural transformation, 130, 137–138; defined, 29(n2), 83; increasing international tourism, 15 Middle East, 82–83 Mile of Museums Bus (Buenos Aires), 149 Militarization: civilian governments and, 74(n11); Costa Rica and Honduras, 70–72; Cuban tourism, 139; development and, 17 Military dictatorship, 95, 108 Ministries of tourism: Argentina’s establishment of, 74(n6), 114–115; Brazil’s strategic tourism plan, 43,

182

Index

91–92, 95–98, 146; Buenos Aires, 131, 133; creation and expansion of, 2; elements of tourism performance, 159; growth of, 91; Lombardi plan for Buenos Aires, 133. See also Bureaucracy Ministry of Tourism (Brazil), 97–99, 102, 106, 109, 113, 119 Miranda, Carmen, 95 Missionaries, 31 Mobsters, 32 Models of tourism, 3; social structure, policy choices and tourism models in global cities, 28(fig.). See also Enclave tourism; Inclusive tourism Movie industry, 95 Multiparty system: Brazil, 107–108 Nascimiento, Alfredo, 109–110 National champions, 21 Natural disasters, 75(n19), 78 Natural resources, 2, 91–92. See also Paradox of plenty; Resource endowment Naturalists, 31 Nature tourism, 35 Neoliberalization, 20 New comparative political economy, 29–30(n9) New York Times, 128 Nicaragua: cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); impact of militarization on Honduran tourism, 70–71; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Niche tourism markets, 31, 35–36 Nigeria: resource curse, 27–28 Nobel Peace Prize, 71 North Korea, 40 Novais, Pedro, 108–109 Obama, Barack, 44 O’Donnell, Pacho, 130

Old Havana. See Havana, Cuba Olympic Games, 11, 82, 108, 111, 113, 120(nn6,8), 124 Operation Voucher, 109 Organization of American States, 47 Ouro Prieto, Treaty of (1994), 33 Packaged tourism, 32–33 Paladares (Cuban family-owned restaurants), 141–142 Pan American Games, 111, 124, 145, 150 Panama: cumulative growth of real GDP per capita, 1951–2010, 7(table); growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); negative receipts per capita, 67; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); per capita income, 5–6; real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Paradox of plenty: driving poor policy choices, 63–64; hollow commitment to tourism, 10, 52, 157; policy variations, 27–28; tourism receipts and expenditures, 2000 and 2010, 65(table) Paraguay: bureaucratic competence, 59; corruption, 84–85; cumulative growth of real GDP per capita, 1951–2010, 7(table); ease of entry, 53–54; economic growth, 6; field study, 15; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); lack of interest in tourism promotion, 67; MERCOSUR and regional tourism, 33; misappropriation of tourism taxes, 62; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); rhetorical commitment to tourism, 9–10, 156–157; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy choice

Index

rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); underperformance, 29(n5); visa requirements, 55, 56(table), 57 Pérez, German, 115 Performance: actual versus predicted international tourist arrivals to Brazil, 1998–2020, 102(fig.); Argentina and Brazil, 92–93; Brazil’s underperformance, 88–89, 91–92, 144–145; expansion of international tourism in Latin America, 1950–2010, 127–128; growth of international tourist arrivals, 38–40; policy decisions comprising choice, 52. See also Arrivals, international tourism Peru: archaeological remains, 34–35; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); subnational destination branding, 45; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism underperformance, 88–89; tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Photographs, 138 Pillars of international tourism capacity, 22, 22(fig.), 156–157 Pillars of the Lombardi plan for Buenos Aires, 131–135 Planning, 126–127 Political engagement: Global Cities Index, 129 Politics: Argentina’s national tourism policy, 116–117; Brazil’s strategic tourism plan, 95–97, 99–100; Buenos Aires’s cultural transformation, 130–131; literature and theory on capacity, tourism, and, 18–26 Portugal: arrival in Brazil, 94; performance of Brazil’s tourism sector, 101(table); tourism performance, 88–89, 89(table) Poverty: Cuba’s balance of payments, 40–41; defining social structure, 82; Dominican Republic, 84; enclaves as

183

response to, 80; tourism reducing, 14. See also Social structures Predicted performance: Brazil’s tourism sector, 101(table) Prior state success: role of choice in tourism capacity, 26(fig.) Private sector, 20–21 Privatization: Argentina, 1; lost decade, 20; opposition to, 12(n7); state-owned utilities, 4–5 Professionalization of tourism ministries, 97–100, 108–109, 114–115, 117, 121(n19), 131 Prohibition (US), 31–32 Promotion, tourism, 37, 126–127 Property rights: positive and negative results of tourism externalities, 46(table) Prospect theory, 11, 27–28, 160 Prospective comparative process tracing, 9 Provincial tourism: Argentina, 116, 117(table) Public sector, 21 Public-private partnerships: Las Vegas, 61–62; role of choice in tourism capacity, 26(fig.) Punta Cana, Dominican Republic, 33, 83–87 Quality of life, state capacity and, 5–7 Race: racial cleavage as barrier to inclusive tourism, 82–83; tourism in Cuba, 142–144 Rajendra, Cecil, 47 Regulation, 126–127 Rehabilitation projects, Havana’s, 139–140 Reid, Harry, 44 Religious cleavages, 82–83 Rental properties and rented rooms, 136, 141 Rent-seeking, 4–5 Research methodology, 16–26, 29(nn4,7,8) Resource curse. See Paradox of plenty Resource endowment: Brazil and Argentina’s rankings, 120(n1); Buenos Aires, 123; Costa Rica, 68(table); destruction and restoration of resources, 30(n11); Havana, 123; Honduras, 67–68, 68(table); paradox of plenty, 10; pillars of international tourism, 22, 22(fig.); pillars of tourism capacity, 156; Rio de Janeiro, 123–124, 144–145; state capacity and, 8; underperformance despite, 88–89

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Index

Restaurants, 128, 141–142 Revenue volatility, 63 Revenues, tourism, 1–2; Costa Rica and Honduras, 69(fig.); Costa Rica’s increase, 68; image affecting, 3; net tourism receipts per capita, 2000–2010, 66(fig.); tourism receipts and expenditures, 2000 and 2010, 65(table). See also Paradox of plenty Rhetorical commitment to tourism: defined, 9–10; outcomes of structure and choice for national tourism capacity, 27(fig.); policy choice, 156–157; tourism-policy choice rankings of Latin American countries, 2000–2010, 73(table); typology of state capacity, 51 Rio de Janeiro, Brazil: appeal to tourists, 123–124; Brazil’s strategic tourism plan, 95; city-brand index, 152(n7); corruption over Pan American Games, 111; criminal activities, 24; cumulative change in tourist arrivals to Buenos Aires, Havana, and Rio de Janeiro, 2000–2010, 125(fig.); drop in tourist arrivals, 100; early development of tourism, 94; enclave trap, 85; endowment and performance, 11; equalization of tourism, 106–107; field study, 15–16; Global and World City Project ranking, 151(n6); policy limitations, 145–147; social structure, policy choices and tourism models in global cities, 28(fig.); structural impediments to tourism growth, 147–150; tourism bureaucracy, 104; underperformance, 124–126, 144–145; urban tourism, 151(n4) Riots, 92 RioTur, 104, 146, 150 The Rise of the Creative Class (Florida), 130 Risk behavior, 28 Roig, Emilio, 139 Rossi, Walter, 109–110 Rousseff, Dilma, 96, 107–110, 113 Rúa, Fernando de la, 92, 114–115 Sanctos, Agemar, 120(n6) Sarney, José, 108, 110 Sarney, Roseana, 108 Scioli, Daniel, 60, 115 Sebe Bom Meihy, José Carlos, 123 Security: Brazil’s visa requirements, 104–105; criminal activities, 24; effects

of crisis on choice, 67–72; reinforcing enclave tourism, 85–86. See also Enclave tourism Sex tourism, 48(n7) Small businesses, 80 Smith, Adam, 27, 63 Social conditions. See Crime; Inequalities; Poverty Social structures: class, 81–82; corruption, 84–85; crime, 83–84; defining, 81–85; enclave trap, 85–88; ethnic, racial, gender, and religious cleavages, 82–83; human capital and education, 82; inequality, poverty, and health, 82; investment security and ease of operating a business, 84; policy choices and tourism models in global cities, 28(fig.); structural deficit and tourism underperformance, 88–89; tourism growth and, 8. See also Distribution; Legal order; Structural variables; Structure Social tourism, 126–127 Sociopolitical disturbances threatening tourism, 80 South Africa, 112 South Korea, 19, 48(n7) Southern Cone Common Market (MERCOSUR), 33 Soviet Union, Cuba and, 138 Spain: Cuba’s colonial period, 139; field study, 15–16; holistic commitment to tourism, 157; net tourism receipts, 41–42; packaged tourism, 32–33; performance of Brazil’s tourism sector, 101(table); tourism performance, 88–89, 89(table); tourist population, 48(n4) Sports tourism, 31 State capacity, 3–8; capacity index, 10; defining, 13–14; destination branding, 58; developing enclave tourism, 88; difference in performance between Rio de Janeiro, Buenos Aires, and Havana, 124, 126; economic growth and, 12(n9); externalities of tourism, 45–48, 48(n7); global growth of tourism, 155–156; Havana’s private sector services competing with state services, 142; innovative dimensions of state role in tourism, 126–127; literature and theory on politics, tourism, and, 18–26; prioritizing policy, 18; size, scope and growth of tourism, 37–40;

Index

understanding state capacity through study of tourism, 36–37 State Department, US, 77 State government: critical role in promoting tourism, 43–44 State strength, 22–24 State tourism capacity index, 10 Stimulation, 126–127 The Strategy of Economic Development (Hirschman), 17 Structural adjustment programs (SAPs), 28 Structural variables: class, race and liberty gaps in Cuba, 142–144; difference in performance between Rio de Janeiro, Buenos Aires, and Havana, 124–126; federalism, 106–112; generalization of the Lombardi model, 135; Havana, 141; impeding Rio de Janeiro’s tourism growth, 147–150; legal order, 23–24, 25(fig.), 27(fig.); Rio de Janeiro’s national branding, 145. See also Crime; Human capital; Inequalities; Poverty; Security Structure, 77–89; Brazil’s Itamaraty policies undermining tourism, 104–106; choice and, 24–26; crime and instability as part of, 78–80; effect of discrete and sustained structural events, 79(figs.); elements leading to enclave tourism, 80; Itamaraty policies undermining tourism, 120(n6); outcomes of structure and choice for national tourism capacity, 27(fig.); pillars of international tourism, 22, 22(fig.); pillars of tourism capacity, 157; role in tourism capacity, 25(fig.). See also Social structures Subnational destination branding, 44–45 Subnational level, 10–11 The Sun of the Hyena (film), 83 Suplicy, Marta, 99–100, 103, 120(n5) Sustained priority: role of choice in tourism capacity, 26(fig.) Sustained structural events, 78–80 Synergy with other industries: positive and negative results of tourism externalities, 46(table) Taxes: accumulation and distribution, 24; Costa Rica and Honduras, 71; Cuba’s casas particulares, 142; defining state capacity, 13–14; funding marketing and promotion, 44; funding tourism promotion, 62–63; how businesses think taxes will be used, 63(table); Las Vegas

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room tax allocation, 2007, 61(table); misappropriation of, 62; public-private sector partnerships, 61–63; reciprocal visa fees, 54–57; resource curse, 63 Tela Bay, Honduras, 87–88 Telephone services, 4–5 Terrorism threatening tourism, 80 Thailand, 105 “36 Hours In…” series, 35, 128 Tolerance, cultural, 133 Tourism and Poverty Alleviation (UNWTO publication), 47 Tourism capacity: explaining and predicting changes in, 26–29; local and national levels, 73–74(n1) Tourism Promotion Act (2010), 44 Transnational businesses, 84 Transparency: role of choice in tourism capacity, 26(fig.) Travel and Tourism Competitiveness Index, 2, 10, 88, 91–92 Trujillo, Rafael, 86 Tunisia, 83 Underperformance, 88–89, 91–92, 144–145 UNESCO World Heritage site, 139 United Nations World Tourism Organization (UNWTO), 47, 80 United States: branding and innovation, 43–44; Brazil’s visa policies undermining tourism, 104–106; ease of entry, 120(n10); performance of Brazil’s tourism sector, 101(table); rhetorical tourism capacity, 73; state involvement in destination branding, 156; tourist arrivals in Brazil, 100; unqualified appointees, 121(n15) Urban tourism. See City tourism Uruguay: Argentina and, 31; beach tourism, 33; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; field study, 15; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); MERCOSUR and regional tourism, 33; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 67; net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 2000-2010, 40(fig.); real GDP per capita, 1951 and 2010, 6(table); Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism-policy

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choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Utilities, 4–5 Valencia, Spain, 15–16 Venezuela: business tourism, 32; crime, 23–24; cumulative growth of real GDP per capita, 1951–2010, 7(table); economic growth, 6; ecotourism and nature tourism, 35; enclave destinations, 86; growth of international tourist arrivals to Latin America, 2000–2010, 39(fig.); hollow commitment to tourism, 156–157; negative receipts per capita, 67; net tourism receipts, 41(fig.), 42(fig.); net tourism receipts per capita, 2000–2010, 66(fig.); per capita growth of tourist arrivals, 20002010, 40(fig.); per capita income, 5; real GDP per capita, 1951 and 2010, 6(table); resource curse, 28; structural impediments to tourism growth, 147; Tourism Performance Index, 89(table); tourism receipts and expenditures, 2000 and 2010, 65(table); tourism underperformance, 88–89; tourismpolicy choice rankings of Latin American countries, 2000–2010, 73(table); tourist arrivals to Latin

America, 2000 and 2010, 38(fig.); visa requirements, 56(table) Viegas Figueira de Mello, António Pedro, 146 Vieira, Gastão, 110 Violence: effect of legal order on accumulation, 23–24; Mexico, 77–78; state capacity and, 13–14 Visa requirements: Argentina, 60, 118, 120(n7); Brazil, 54–55, 104–106, 119–120; Cuba, 54; Paraguay, 53–54 Voice of America, 72 Volstead Act (1919), 31–32 Weather and climate: Honduras and Costa Rica, 68 Weber, Max, 19 Women: benefits of tourism, 14; kisaeng tourism in South Korea, 48(n7). See also Gender World Bank, 47 World Cup, 11, 82, 108, 113, 120(n8), 121–122(n21), 124 World Development Report, 7–8 World Economic Forum. See Travel and Tourism Competitiveness Index World Heritage site (UNESCO), 139 World War I, 138 Zona sul (Rio de Janeiro’s southern zone), 124, 149–150, 151(n1) Zonas libres turísticas (Honduras), 70–71

About the Book

Though tourism has been lauded throughout Latin America as an engine of certain economic growth, actual performance in the sector has varied to an extreme degree. Kirk Bowman investigates this puzzle. Why did Latin American states become so actively involved in the tourism sector even as they were reducing their role in other sectors of the economy? Why have destinations with similar endowments differed so greatly in their success in attracting international tourists? And why does tourism in some cases contribute to broader socioeconomic development and in other cases not? Drawing on extensive fieldwork in eight Latin American countries between 1996 and 2011, Bowman offers a rich comparative analysis and compelling explanations for both failed policies and impressive successes in using tourism to foster development in the region. Kirk Bowman is associate professor of international affairs at the Georgia Institute of Technology. He is author of Militarization, Development, and Democracy: The Perils of Praetorianism in Latin America.

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