Tourism as a Tool: For Economic Development and Poverty Alleviation

By McCarthy, John | International Trade Forum, October-December 2010 | Go to article overview

Tourism as a Tool: For Economic Development and Poverty Alleviation


McCarthy, John, International Trade Forum


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Mexico is one of the world's top tourist destinations with more than 22 million visitors every year. Almost one in eight jobs is tourism-related and foreign revenue from the sector ranks third after revenues from oil and remittances. Although the road towards a tourism-based economy has been bumpy at times, the sector has demonstrated its success as a tool for economic growth and poverty alleviation. That success is largely attributed to the Government of Mexico's commitment, long-term view, strong leadership and decision-making over the past 35 years.

In the early 1970s the Central Bank of Mexico was faced with the challenge of how to populate certain regions of Mexico, redistribute the country's wealth and, at the same time, bring in badly needed foreign investment to finance its development. The bank decided to bet on tourism an industry that at the time was not well measured or understood, but had shown substantial economic and social benefits in some of Mexico's emerging destinations such as Acapulco and Mazatlan.

This led to the creation of several 'think tank' institutions and other bodies that focused on financing and developing Mexico's tourism sector. It was then decided that these functions should all be placed under the single umbrella of the National Fund for the Development of Tourism (Fonatur).

Mexico has always been well placed to benefit from tourism with its rich history, abundant natural attractions, temperate climate and unique cultural heritage. The country currently ranks 11th in the world in terms of visitor arrivals. Fonatur's first mandate was to acquire, through expropriation, land reserves in the Mexican Caribbean and Pacific, giving birth to Cancun and Ixtapa. It subsequently built new developments including Huatulco, Los Cabos, Loreto and Litibu.

The strategy was simple in theory: to acquire the land and finance the development, with the help of international agencies, such as the World Bank and the Inter-American Development Bank, and create a world-class master plan, build the infrastructure, invite the private sector to build hotels that would create critical mass and traffic--and then promote, promote, promote.

After only 35 years, in spite of many 'bumps on the road', the exercise has proven to be positive. Cancun now has 35,000 rooms and hosts almost 3 million tourists a year. Furthermore, as a result of Cancun's success, new resorts such as Riviera Maya, Cozumel and Isla Mujeres in the Quintana Roo region have become part of the world tourism map with a total room count of 70,000 and 6 million tourists each year. Quintana Roo was once so scarcely populated that it did not justify statehood but it now represents one of the highest gross domestic products (GDP) per capita in Mexico. The region also has one of the highest levels of schooling and the largest inflow of interstate migrants who would otherwise have to look for opportunities outside Mexico, mainly in the United States.

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When Fonatur created these integrally planned resorts, it set a series of guidelines in order to accomplish its goal to develop tourism as a major contributor to Mexico's GDP. Among them was a stringent 'no speculation' rule, which essentially meant that they would sell land at very affordable prices, but buyers were committed to build within a specified period of time. Another key policy was the promotion of hotels with international brands that would attract national and international visitors, putting 'heads on beds' that would create critical mass and, in turn, fill airplane seats. …

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