Economist slams Jamaica’s reliance on tourism as economic pillar

– urges more investment in manufacturing

Despite a reported steady annual increase in the country’s earnings from its tourism industry, Jamaica’s reliance on tourism as a tool with which to improve the country’s economy continues to come under scrutiny.

The latest expression of concern in this regard has been made in a recent pronouncement by Jamaican economist Dr Davidson Dawey who is reported in the February 28 edition of the Gleaner as asserting that the country has been mistaken in relying so heavily on tourism to improve its economic fortunes.

Sunset Beach Resort, Jamaica

According to Davidson, while tourism is marketed as Jamaica’s number one product, it has failed to bring the desired economic benefits to the country.

At the end of 2010, Jamaica’s then Minister of Tourism Edmund Bartlett reported that earnings to the country deriving from tourism had increased by 3.2 per cent, from J$1.92 billion in 2009 to J$1.98 billion in 2010. The increase in earnings, according to Bartlett was due mainly to a 4.7 per cent increase in tourist arrivals.

Those numbers, however, may not provide a true reflection of the contribution of the tourist industry to the Jamaican economy since, according to Dawey most of the earnings from the sector do not remain in the economy. Additionally, Dawey is concerned that many of Jamaica’s small industries which are linked to the country’s tourist industry, including the craft industry, have suffered from limited tourist patronage as a result of the all-inclusive concept through which hotels provide goods and services that encourage tourists to spend most of their money on the premises.

Dawey is also reportedly critical of the extent of tax breaks and other concessions from which the country’s tourism industry benefits asserting that such concessions should instead be directed to the country’s manufacturing sector.

Dr Dawey’s comment raises, not for the first time, the issue of the real impact of tourism on the heavily-dependent island territories of the region. While, globally, tourism is touted as the world’s foremost export earner, an estimated 80 per cent of visitors’ spending in the Caribbean goes to airlines, international hotel chains, metropolitan food suppliers and other external companies and not to local businesses or workers.

In 2010, the region’s estimated US$3billion food import bill, much of which was expended on importing foods to satisfy tourist tastes sparked alarm at the level of Heads of Government though not a great deal has been done since then to stimulate the food import substitution programme which had been advocated at the level of the Caribbean Community (Caricom)

Dawey’s concern over the ‘leakage’ of tourist earnings extends beyond the cost of acquiring imported foods. Some countries in the region whose tourist industries depend heavily on cruise ship arrivals have also expressed concern over trends towards the same all-inclusive policy which effectively limits tourist spending in host countries. Additionally, overseas investors in the regional tourism sector repatriate much of their profits to their home countries.

Other studies of the impact of tourism in the Caribbean have also alluded to the high costs associated with the acquisition of imported materials and expatriate skills to upgrade local infrastructure to meet tourist demands.

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