1. New Economic Order
Tourism as an Alternative Means of Economic Growth
Amanda Rodriguez
Tourism Senior Seminar
December 5, 2014
This research paper was written for Western Washington University’s TourismSeniorSeminar in
Anthropology.Throughout the paper comparisons are made between two different strategies for
economic growth. The first strategy comesfrompolicies put forth by the International Monetary Fund,
the World Trade Organization, and the World Bank, while the second strategy comesfromcommunity
based tourism. This cross cultural research aims to showthat the current loaning and regulatory systems
put in place to help regions are, in reality, hurting more than they are helping. This paper arguesthat
community based tourismcan be a more rewarding and viable option for struggling economies.

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Many impoverished countries and communities around the world are trying to survive in
the new globalized arena. As people become more connected, the societies and cultures that
differentiate and define us are being contested; western nations have expected the rest of the
‘developing’ world to conform to their ideologies concerning the economy, business, and politics
despite each region’s potential to ‘develop’ on their own terms. The International Monetary Fund
(IMF), World Bank (WB) and World Trade Organization (WTO) are three international
organizations that spread western ideology and hold countries in contempt if they do not conform
to IMF, WB and WTO standards. This paper explores WTO, WB and IMF policies and
consequences while comparing them to community based tourism as an alternate and less
intrusive economic growth strategy.
In order to compare the two approaches of relying on international monetary strategies or
international tourism, a brief historical background of the WTO, WB and IMF is given, followed
by an overview of the requirements made by these three loaning, regulatory organizations. One
regional example of each of the two strategies are given; one is about Mexico and its relationship
with the US through the three aforementioned international organizations, while the other
focuses on a town in South Africa that used community based tourism as a way to bring itself out
of a severe economic decline. After the two examples are discussed in detail, this paper looks
into the specifics of what it takes for a place to become a tourist destination as well as a couple of
organizations that provide communities with the financial means to start new businesses. This
paper then discusses the limitations of this research and the downfalls of relying solely on
tourism as a means of economic growth. The conclusion discusses the different scales by which
these two strategies operate, and how countries can apply small scale tourism led economic
development model to their region. By the end of this paper the reader should have some

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understanding of how tourism is a viable option for countries to consider using (along with other
more locally based tactics) to revamp their economy and start anew with policies that help both
the wealthy and the impoverished.
Historical Context of the IMF, WTO and WB
Many are familiar with the idea of the International Monetary Fund, World Bank, and
World Trade Organization, but the logistics of what these organizations actually practice is often
left out of the conversation. This section aims to answer some of these basic questions regarding
the three organizations. To clarify, this paper is written by someone who believes that in theory,
the goals set forth by the three are admirable, but in reality they have proven to be ethnocentric,
unhelpfully tautological, and focused primarily on profiting from the unfortunate circumstances
of those in need. In a very brief expansion upon these proclamations, this paper examines the
history, requirements demanded of the loanee countries, and the assumptions made by the three
international organizations (Ho and Loucky 2012).
According to Christine Ho and James Loucky in their book Humane Migration, the IMF
and WB started out as an attempt to help Europe rebuild itself after World War II. The intent of
these organizations was to be a “last resort” lender to countries who had fallen into “desperate
financial trouble” (De Silva, Dakshina and Zhen 2007, 63). Europe declined help from the World
Bank on the basis that they did not want to sell their economy to foreign bankers. When WB was
rejected by Europe it simply altered its mission to focus on “eliminating poverty in the third
world”, and tried its luck with newly developing nations instead (2012, 23-24). The WTO had a
less shoddy start in that it was carefully planned to take over the role of the General Agreement
on Tariffs and Trade (GATT) to better suit the needs of US corporations. WTO does this by
enforcing over-generalized rules that do not always fit well within societies that differ from

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western standards, and it favors corporate interest over human and environmental rights. Any
countries that do not adhere to the rules set forth by the WTO, IMF and WB are subjected to
harsh sanctions that the rest of the world must blindly follow (Cavanagh and Mander 2004; Ho
and Loucky 2012).
General Requirements of the IMF, WTO and WB
The requirements put forth by the three organizations are as strict as they are
unidimensional. Cavanagh and Mander provide great explanation of the main requirements,
which are summarized below from their book Alternatives to Economic Globalization. Each
location must:
 Cut government spending on education, health care, the environment, and price subsidies
for basic necessities such as food grains and cooking oils.
 Devalue the national currency and increase exports by accelerating the plunder of natural
resources, reducing real wages, and subsidizing export-oriented foreign investments.
 Liberalize (open) financial markets to attract speculative short-term portfolio investments
that create enormous financial instability and foreign liabilities while serving little if any
useful purpose.
 Increase interest rates to attract foreign capital that has fled its home country, thereby
increasing bankruptcies of domestic businesses and imposing new hardships on indebted
individuals.
 Eliminate tariffs and other controls on imports, thereby increasing the import of
consumer goods purchased with borrowed foreign exchange, undermining local industry
and agricultural producers unable to compete with cheap imports, increasing the strain on

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foreign exchange accounts, and deepening external indebtedness (Cavanagh and Mander
2004, 55-56).
What makes the measures on the list unidimensional is that each aspect is geared toward the
assumption that capitalism is not only the best economic system, but it is assumed to be the
system that all “developing” countries want to work toward. It should come as no surprise that
the nations running these three organizations are wealthy, predominantly western, and favor the
ethnocentric idea that the only way to properly ‘develop’ as a nation is to follow the path carved
out by western nations (De Silva, Dakshina and Zhen 2007, 63-64).
Even as De Silva, Dakshina and Zhen argue that the IMF, WTO and WB are not as bad
as some documents (including this paper) suggest, the authors do say the policies and strategies
used by the organizations are ethnocentric and employ an “economic determinist approach”,
meaning they do not take into account anything other than what they believe will work in
providing economic “creditworthiness” and possible expansion (2004). This approach follows
the “trickle-down” theory. It opens up an economy’s market to already successful businesses.
This model is based on the idea that if an economy does well, the wealth the top businesses
accrue will eventually make its way down to the smaller businesses near these big, financially
secure businesses (Merriam-Webster 2014).
As stated by De Silva, Dakshina and Zhen, these organizations are not run by
anthropologists or sociologists, but by economists who are interested in their mission to provide
what is deemed necessary for a government to have the potential to revive their failing economy
(2007, 62-67). This means economic determinists are not taking into account how cultures that
differ from western culture might react to their tactics, are not assuming responsibility for what
happens to the country after they have provided their assistance, and not drawing upon humane

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measures with regards to hiking up interest rates beyond what their loanees are able to afford.
One example of these vicious and blatantly unsuitable policies is prevalent in Mexico, and is
discussed below.
IMF, WTO and WB Policies as Used in Mexico
Prior to late 1970s, Mexico was one of Latin America’s most promising countries in the
international sphere. It had its own international policies that differed from all others during that
time and was using its newfound growing economy to its advantage. Unfortunately for Mexico,
this new economy was based upon oil exportation; once prices on oil collapsed in 1982, Mexico
was forced to reconsider its strategy. Mexico then looked to the IMF for help. As with all who
rely on the IMF to bail them out of unfortunate circumstances, Mexico began to follow the
IMF’s rules and allowed foreign markets to wash over the most basic economic policies that had
before given rise to Mexico’s economic success. By 1987 the Mexican economy was still failing,
and many extenuating factors and new policies began to further exacerbate its economic
downfall (La Botz 2000).
In the midst of the economic alterations required by the IMF, Mexico’s agricultural sector
crashed. Pre-IMF Mexico was reliant upon its peasant-farmer-based agricultural sector and had
generated sufficient amounts of revenue from their corn industry. The policies put in place to
please IMF requirements left peasant farmers unable to access electricity, fertilizer, and water –
all of which they needed to be successful farmers (Ho and Loucky 2012, 18-21)1. After the IMF
policies left Mexico’s farmers in despair, it decided to enforce a hike in interest payments from
1
Interestingly enough around this time NAFTA had been initiated, and the United States was beginning to
push its own corn-led agenda. Now Mexico is forced to buy its corn from the US because it cannot afford to
reopen its own corn industry, and the subsidized US corn has proven to be too cheap for Mexican farmers to
compete with. All the while Mexican workers are being exploited by US corporations running along the US-
Mexico border (called maquiladoras) for little to no benefit for the people or their government (Bello, Rau and
Cunningham 1999; Ho and Loucky 2012, 18-21).

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19% to a whopping 57% in 1998. Now the Mexican economy is in significant debt to its IMF
lenders and cannot rely on the sector that had previously held the economy afloat to help
generate enough money to pay off the high debt (Bello, Rau and Cunningham 1999; Ho and
Loucky 2012, 18-21).
Community Based Tourism as Used in Stilbaai
Unlike Mexico, areas of South Africa have taken on a more bottom-up approach through
the Local Economic Development Fund (LEDF). LEDF is an organization that provides funds to
communities that are seeking to engage in communal economic development through
entrepreneurialism and local tourism. Such developmental strategies are also funded by the
government’s poverty relief fund that provides support to tourism infrastructure and productions
in particular. A specific example of a town in South Africa that was able to use tourism as a
primary means of economic development during a significant economic decline comes from
Stilbaai, a former small fishing town.
Stilbaai was a highly segregated town with mostly aged white people living in large
homes on one end of town and Black people living in a settlement on the other. The town’s
primary means of income was based on fishing, but once 1970 rolled around, the industry hit a
downfall due to overfishing. Twenty years later, 80% of the town’s people were unemployed and
the town had become one of the poorest in the nation. In 1985 the townspeople came together to
work out local economic development initiatives that would bring their town out of despair.
Through local fundraising activities and donors from various places, the people were able to
open the Jagerbosch Community Care Centre that housed very old white people and brought jobs
to those that needed them. Its success brought on more initiatives to better the town, which gave
rise to the local Tourism and Economic Forum (TEF) (Rogerson 2002).

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The TEF began to advertise Stilbaai as a “family holiday destination” with unique and
naturally beautiful attractions (Rogerson 2002, 110). The private sector invested in the marketing
of the town and provided assistance with infrastructure development and various marketing
strategies. The newfound industry created 191 new businesses and over 700 permanent jobs in
the area. According to Christian Rogerson in his article “Tourism Led Economic Development:
The South African Experience” (from which this section is derived), “the Stilbaai LED strategy
embodied a dual focus; first, a market-led and business driven growth strategy oriented around
tourism, and second, a market-critical and community driven thrust towards addressing poverty
alleviation” (2002, 111). As one can see, the strategies implemented by Local Economic
Development (LED) organizations differ greatly from those used by the WTO, WB and IMF.
If the South African government had cut spending on education, health care, and the
environment, the community would not have been able to raise enough money to open the first
community health centre that started Stilbaai’s economic boom. Government spending was
“Stilbaai is a charming seaside
village which forms part of the
famous “Garden Route” with its
close neighbours Jongensfontein and
Melkhoutfontein. It is situated along
the banks of the Goukou River
estuary where it meets the Indian
Ocean on the Southern Cape coast of
South Africa”
(http://www.stilbaaitourism.co.za/)

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necessary for Stilbaai to get back on its feet.2 In addition to this, if the government had devalued
South African currency the locals of Stilbaai would have been forced to pay higher start up costs
and would have been in need of even more assistance than necessary without devaluation
occurring3 (De Silva, Dakshina and Zhen 2004). As for tariff deregulations, Stilbaai did not need
to rely on imports or exports of anything other than tourists once they were fairly established as a
tourist town. Unlike the ‘IMF, WB and WTO, tourism based LED keeps their markets open to
either those within the country so that money remains relatively close to home, meaning it is
more likely to be put back into the local’s economy, or open to private foreign direct
investments. Little speculation occurs, and the likelihood of instability is decreased, but the
underlying concept is virtually the same (Cavanagh and Mander 2004).
Requirements for a Successful Tourism Industry
The policies set forth by IMF, WB and WTO would not have worked for Stilbaai’s
tourism based economy, but would Stilbaai’s policies work for anyone else? There are a few
fundamental necessities that an area must have if it is to become a successful tourist destination.
According to Lohmann and Beer in their article “Fundamentals of Tourism” there are three
things a region must have to become a potential tourist destination: assets, amenities, and
accessibility. The five factors that play into a region’s ability to provide and use assets, amenities
and accessibility are the economy, technology, society, demography and politics. As shown in
the diagram below taken from Lohmann and Beer’s article (87), the three fundamentals can be
achieved in various ways.
2 Although government spending was needed in Stilbaai’s situation, it is not always a necessity for all situations –
particularly those in areas that do not have a government with the ability to lend. This idea will be addressed further
on in this paper.
3 De Silva, Dakshina and Zhen’s article concluded with the notion that devaluing currency results in an automatic
plummet of an area’s economy. This article shows that the economy does bounce back after a decade or so, though
they fail to take into account social aspects that may have aided in long term economic growth after devaluation
occurs.

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Assets can be anything from landscapes to human made features, from culture to weather; as
long as someone is able to sell the idea that what they have is special, an asset has been obtained
(Lohmann and Beer 2013; Rogerson 2002). Amenities can become a part of the asset a region
can provide, as amenities can be used to draw tourists in for a new experience (such as living in a
hut with a local family or staying at a hacienda to be served by locals). As long as a region is
able to provide basic necessities – or provide good enough reason to neglect to give tourists
typical western necessities – they have amenities covered. Lastly and possibly most important is
accessibility. If people cannot get to a location there is little potential for the region to become a
tourist destination. As it stands, people have the technology to be able to get anywhere so long as
they have enough incentive to go (Lohmann and Beer 2013).
The factors of the described assets are a bit trickier. If a place does not have the
technology to advertise or to connect with those who can help put forth the funds necessary to

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start a tourism trade, their chances of success lessen. In addition to this, a society must exist in an
area (this is where the demographics portion fits in because without people there would be no
town to travel to), and the society must be willing to put effort into going along with or
contributing to the potential tourism industry. Possibly most importantly, the political system of
the region must be willing to, at the very least, not prohibit any potential for an area to become a
tourist destination. This means the politicians must be willing to provide laws that will not get in
the way of an area’s tourism potential. Lastly, the economy plays a role in the success of a new
tourism industry. It can be much easier for a place to build a new industry with funds provided
by their own government (Lohmann and Beer 2013). However, if the economy is struggling, and
the funds are hard to come by within a region’s own system, there are other options out there.
Organizational Aid for Community Based Tourism
Tourism Cares is one such organization. It provides loans and grants to communities that
show interest in building or restoring tourism destinations in their area, and it does so by working
with locals to ensure the everyday people of a region get the help and resources they need.
According to their website, Egypt’s tourist intake has dropped 35% since 2010 and the industry
is facing tough times. Tourism Cares plans to work with smaller communities to ensure they
keep a competitive advantage, and to aid those who are most at risk with the recent drop in the
industry. Although Egypt is still well off due to the billions they’ve earned in past years, their
political system is still very fluid which points toward the argument that even unstable political
situations can still potentially yield a decent tourism industry. Unfortunately this particular
example is still new and it cannot be accurately stated whether or not their tactics will work, but
Tourism Cares has been around for many years and has various other regions in which they have
successfully started up or revamped tourism (“Tourism Cares” 2014).

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Another organization that helps with loaning money at low interest rates is Kiva. This
not-for-profit organization uses money gathered from various donations to help impoverished
areas get back on their feet. With a 98.81% repayment rate, Kiva loans money at an affordable
cost to those who need it most. Since its founding in 2005, Kiva has lent $633,027,425 in loans
and has helped 83 different countries. Their lending system is not geared toward tourism in
particular, but the organization funds nearly any project for economic development in areas of
need. Their ‘social performance’ clause helps those who donate money, and those who borrow it,
to adhere to social performance condoned by the organization. There are six areas (which Kiva
refers to as “badges” that lenders and loanees can earn) where a loanee can focus their money to
helping make their area a better place while adhering to Kiva standards. These badges consist of
anti poverty focus, vulnerable group focus, client voice (feedback from third party members who
are being helped), family and community empowerment, entrepreneurial support, and facilitation
to savings (“Kiva - Loans That Change Lives.” 2014). Of course, there are factors that make
tourism a difficult path to take in terms of economic advancement no matter how many resources
exist within an area.
The Limitations of Tourism and this Research
The scope of the issue regarding international regulatory and loaning organizations as the
readily accepted, main source of economic growth is a vast one that this paper cannot explore in
its entirety. In the same sense, not every aspect of community based tourism as an alternative is
given in this paper. To be clear, this paper is in no way saying that community based tourism is a
perfect, stand-alone solution to economic problems in any area. In theory, community based
tourism could potentially be successful anywhere, but the reality of the matter is that there is
more to starting up a tourism industry than having the fundamentals necessary to create the

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industry. Although community based tourism is a great alternative that allows for locals to get
into the decision making process of their own economies, it can only reach so far. Many
problems can come out of relying solely on tourism to sustain a region (Tammy Leland ,
personal communication 2014).
The biggest downfall to relying on tourism as a means of economic expansion is that
tourism fluctuates between regions no matter how much effort is put into maintaining the
industry. For example, no amount of preparation can prepare a tourist area from experiencing
things like natural disasters. This exact situation is shown in a study that was conducted in South
Western China on tourist visitations that compared numbers of visitors both before and after the
Wenchuan earthquake occurred. Their findings showed significant decrease in tourism after the
natural disaster occurred (Shi et al. 2013). Even simple seasonal fluctuations of tourism can bring
much hardship to areas that rely on tourists to survive.
There are many reasons as to why tourists might stop visiting an overall popular
destination. From wars to environmental disasters to a simple shift in tourist-heavy seasons,
areas all over the world have the potential to lose out on tourist generated revenue, which can
negatively affect even the most seemingly unrelated institutions. Not only is this natural
fluctuation dangerous to the tourism industry itself, but it can be dangerous for other businesses
in the area as well. A study on hospital admissions through the seasons in Switzerland says that
seasonal tourists heavily impact the emergency admission rates by up to 70.8% in surrounding
hospitals. If tourists were to begin drifting away from these typically popular regions even
seemingly unrelated businesses would be greatly impacted (Matter-Walstra, Widmer, and Busato
2006, 25). Another example of this is prevalent in the film The Refugee Show: the Plight of the
Padaung Long-Necked People, as Padaung refugees living in Thailand are forced to rely year

14. 14
round on the money tourists provide in payment for photographs taken during the three months
of tourist season (The Refugee Show 2007).
Due to the high fluctuation in tourist trends and unpredictable but unfortunate
circumstances, the tourism industry should, again, by no means be the sole attempt of a region to
achieve economic success. Tourism business should be considered an option for local
communities to be able to come together, receive funding from organizations like Kiva, start a
tourism related business, and use the money made from the new business to invest in other
means of economic stability. By not relying on tourism alone, a region can find ways to maintain
itself without becoming desperate for foreign income. Not only will this prevent further
economic devastation, but it will open up options for the posterity of a place to be able to have a
future from which to choose. In many regions reliant upon tourism alone, such as the Padaung
refugee camp, the youth have no hope that their future will deviate from the only thing they
know – dressing up for tourists to make money (Tammy Leland, personal communication 2014;
The Refugee Show 2007).
In Conclusion
The IMF, WB and WTO are not interested in the social aspect of their economic policies;
they are interested in creating an atmosphere that fosters trickle-down economic growth. On the
contrary, the smaller lending organizations as well as the examples above operate with the idea
that helping locals become successful in turn helps their surrounding economies become equally
successful in a relatively short amount of time. If one looks into the previously discussed articles
and examples, it can be seen that IMF, WB and WTO requirements are significantly less
effective on a smaller, every day level than community based tourism (De Silva, Dakshina and

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Zhen 2004, 24; Cavanagh and Mander 2004; Ho and Loucky 2012; La Botz 2000; Bello, Rau
and Cunningham 1999).
Although the examples of tourism-led economic development provided in this paper talk
mainly about small town success, the potential for greater economic salvation is possible. By
working from the ground up, countries could better ensure their entire population is taken care of
rather than having many slip through the cracks and remain impoverished. What starts as a local,
community-based tactic can result in a more widely used strategy. No matter which economic
system or developmental strategy is preferred, the reality of the matter is that there is always
more than one way to solve a problem. Just because capitalism and free market economy worked
well for the United States (which is a debatable statement in itself) does not mean it will work
well for everyone. If humanity is to advance, we must stop limiting ourselves and our potential
by enforcing generalized laws that do not benefit all, and encourage countries to find their own
way within the new globalized system (Cavanagh and Mander 2004).

16. 16
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