Tourism in the Age of Globalisation

Chris Cooper, Salah Wahab

• Publisher: Routledge
• Year: 2005
• eBook ISBN: 9781134614004
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

The revolutionary progress achieved in information and communication technology is gradually transforming the world into a global village. This volume, edited by an eminent board of international specialists, evaluates the nature and resilience of the emerging global economy and its implications for tourism.

Part I
The age of globalisation

1 Tourism, globalisation and the competitive advantage of nations

Salah Wahab and Chris Cooper

Conceptual framework

We now live in a world of incredibly rapid and revolutionary change where many remarkable achievements have been reached. The reunity of Germany, the turn to democracy in the former USSR and other Eastern European countries, the peaceful end of racial discrimination in South Africa, the still cherished peace steps in the Middle East, the successful endeavours towards regional economic integrations and the economic progress achieved by many developing countries confirm this truth.

However, common sense dictates that there are still some important impediments on the way to a better future for humankind. Examples of these are:

• applying suitable and appropriate technology to improve productivity in the third world;
• organisational and managerial know-how that could contribute to create effective administrative, political and economic systems in intermediate and emerging nations;
• improvement of the performance of international institutions through reshaping their structure and operations; and
• coordinating efforts to render the world safer and more secure.

Above and beyond such goals, humankind needs a new vision, innovative and new attitudes about what can and must be done in various walks of life in response to the changing conditions economically, politically, technologically, socially, culturally and environmentally.

The close of the second millennium marks the emergence of new global trends to reshape the world economy and unveil the new, expected and unexpected happenings that would alter many of our established norms. Among these trends are:

• earnest trials to reach free trade among nations;
• territorial integrations in Europe, North America, South-East Asia; and
• alliances, mergers and acquisitions that create giant conglomerations practically in every business facet, achieve sustainable and balanced growth in third world countries, accomplish equitable distribution of resources and attain quality in most of the human endeavours.

This marked direction towards globalisation is a by-product of the revolutionary progress achieved in information and communication technology (CRS and GDS) that is gradually transforming the world into a global village. Today, we witness a global free-market economy, a global growth or recession, global companies, a global democratisation process, a global awareness of the importance of protecting the physical environment and a healthy habitat, and a global revitalisation of local communities’ expectations and participation in socio-economic change – particularly in developing countries (Axford 1995). Virtually, an international global society is in the making and is expected to accelerate. Change is proceeding at such a rapid rate that policy-makers are being forced to change their attitudes, their previous fixed ideas and review long-held policies in order to be able to keep their grip on basic socio-economic, cultural and political values and norms (Gartner 1996).

Some authors, such as Kenichi Ohmae, asserted that globalisation is the product of many converging forces – technology, transnational corporations, new methods of communication and distribution systems as well as new vistas of competition – all of which are instrumental in creating a global market, an economy conceived of as mainly the same in all its parts (Ohmae 1991 as referred to in Berger and Dore 1996).

Therefore, globalisation is an all-embracing term that denotes a world which, due to many politico-economic, technological and informational advancements and developments is on its way to becoming borderless and an interdependent whole. Any occurrence anywhere in the world would, in one way or the other, exert an impact somewhere else. National differences are gradually fading and being submerged in a homogeneous mass or a single socio-economic order (Duming and Hamdani 1997; Castells 1993).

The prevalence of globalisation raises the prospect of a world which will soon be governed by international integrated economic forces that started to shape the destiny of various countries in Europe (European Union) and North America (NAFTA) and South-East Asia (ASEAN). It is likewise spearheaded by a few hundred giant corporate entities, some of which are bigger than many sovereign states (Barnet and Cavanagh 1995).

Thus, globalisation is based on the emerging interdependence or interconnections between states of different levels, socio-economic and political systems at various developmental stages. It describes the process by which events, decisions and activities in one part of the world come to have significant outcomes for communities and individuals in quite distant parts of the globe. Accordingly, globalisation has two distinct phenomena: scope (or stretching) and intensity (or deepening). On the one hand, it defines a set of processes that operate worldwide, which means a spatial dimension; on the other hand, it implies an intensification in the levels of interaction and interdependence between the states which constitute the world community. This does not mean that globalisation entails the political unification of the world, the necessary homogenisation of culture worldwide or the total economic integration of all or most countries of the world (McGrew 1992).

Another important aspect of globalisation that is worth researching is how democratic pluralism, the basis for the balance between the state and the market, could function globally. In economic theory and practice, markets allocate resources efficiently only when they are competitive and when firms, large and small, pay for the social and environmental impact of their activities as part and parcel of the costs of their production. This is usually done because strong governments do enforce the rules of the game that aim at balancing market and community interests. This is because government power should be at least equal to market power. When extending the boundaries of the market beyond national boundaries through economic globalisation, market power would, at least theoretically, go beyond the reach of national governments and fall into the hands of global firms (Daremus et al. 1998).

These global firms would be inclined to serve the interests only of their dominant shareholders (Corten 1996). Moreover, there is a marked change of the role of scientific and professional knowledge which is to be utilised as a powerful source of a new wealth-creation system. This could be called the ‘new knowledge economy’ which serves as the new force fuelling an active global competition between advanced countries. Developing nations, some of which some are still struggling with their traditional economic strategies, may find themselves still dislocated in this new global encounter.

The impact of globalisation as a megatrend on tourism

Tourism is not a clear-cut sector but an all-embracing and pervasive domain of service and industrial activities. It touches upon almost all spheres of national life within the country and that is particularly the reason why a sound state policy of tourism should be essentially formulated before any significant tourism investment projects are launched. As rightly put by MacCannell, tourism is an ideological framing of history, nature and tradition; a framing that has the power to reshape culture and nature to its own needs (MacCannell 1992).

Some writings already maintain that globalisation, as a megatrend, is changing the nature of international tourism (Keller 1996). It has become a landmark in human activities reaching 635 million international tourist visits in 1998 and registering receipts totalling US$444 billion without the cost of international transport which may reach US$180 billion. The continued expansion of tourism in the world due to world population growth, increasing affluence of many nations, the expansion and diversification of travel motivations and expectations, great technological achievements in information and communication, the fierce competition between an increasing number of tourist destinations, and deregulation movements, is an important playground for global forces. The new technologically advanced distribution channels permit anyone to receive the most up-to-date multimedia information on the best connections, and at the best prices, for most attractive destinations in the world (Keller 1996).

Populations of various countries respond to this globalisation of economies, markets, systems and cultures by looking at their own identities, as in contrast to globalisation lies localisation which is an opposing force. These two adverse forces cannot be averted by the state, the market or communities by acting alone (Cleverdon 1998).

Moreover, increased awareness of physical and cultural heritage safeguards have induced various tourist destinations to engage in the complex planning process for sustainable development in tourism. In addition, the Free Trade in Services Agreement is another difficult tunnel for globalisation to go through (Wahab and Pigram 1997).

Cultural differences between individual tourist destinations will continue to play an important role, among other factors, in the choice of a holiday destination. However, a transcending global cultural understanding might eventually emerge cutting across various cultural diversities with each having its local flavour.

Quality, production conditions, the role of public authorities, corporate structure and price strategies in tourism are likewise going to exert profound reciprocal influences on globalisation trends in tourism – but in varying proportions. Therefore, researching the future orientation of tourist-generating markets should be the point of departure in any analysis of the globalisation process. The first question to ask is what would be the behavioural patterns of potential tourists in the face of a universal supply whose various products and prices are becoming more and more transparent through the new multimedia (Keller 1996).

Competition, however, would take up a new course under the pressures of globalisation which would reshape the production conditions in various tourist destinations and change their marketing strategies.

It remains now to ask whether globalisation would finally succeed in tourism in the face of some strong anti-thesis to turn to localisation and what would be the fate of the global firm in a world that is economically based upon competitive forces and comparative advantages under an umbrella of anti-trust, anti-cartel and anti-monopoly laws prevailing in various countries.

The competitive advantage of nations within a global context

Nations of the world were classically categorised into four levels of development, namely:

• advanced or developed countries;
• countries in the intermediate level;
• developing; and
• underdeveloped or least developed countries.

This categorisation which was mainly based on monetary criteria represented by per capita income, is usually influenced by two types of factors; economic and non-economic. The economic development of a country is dependent upon its natural resources, human resources, capital accumulation, entrepreneurship, technology and scale of production and export capabilities. While these economic factors are indispensable for development, they cannot result in development as long as social institutions, political conditions and moral values in a nation do not encourage development. Some economists go even further, pointing out that the main determinants of economic development are ‘notably aptitudes, abilities, qualities, capacities and faculties, attitudes, mores, values, objectives and motivations; and institutions and political arrangements’ (Bauer 1973).

Rostow’s five stages of economic development

Walt Rostow proposed one of the most important theories of economic development distinguishing between five stages of economic growth, viz:

• the traditional society;
• the pre-conditions for take-off;
• take-off;
• the drive to maturity; and
• the age of high mass-consumption.

Without going into details, it suffices to say that according to Rostow, the rapid growth of the leading sectors of any national economy depends upon the presence of four basic factors:

1. First, there must be an increase in the effective demand of their products generally brought about by dishoarding, reducing consumption, importing capital, or by a sharp increase in real incomes.
2. Second, a new production function along with an expansion of capacity must be introduced into these sectors.
3. Third, sufficient initial capital and investment profits for take-off in these leading sectors.
4. Fourth, these leading sectors must cause expansion of output in other sectors through technical transformations.

While Rostow’s theory, ‘The Stages of Economic Growth’ is the most widely circulated and highly cited piece of economic literature in the last thirty years, economists are almost agreed in doubting the authenticity of the division of economic history into five distinct ‘stages of development’ as presented by Rostow. To maintain that every economy follows the same course of development with a common past and an identical future is to over schematise the complex forces of development and to give the sequence of stages a generality that is unwarranted. Many nations gave valid examples of the unnecessary sequence of Rostow’s stages of development. Japan, which became the third advanced economy in the world, achieved this in less than half a century; South Korea became one of the leading economic powers in South-East Asia in almost thirty-five years. Singapore, Malaysia and Thailand likewise provide good examples of exemplary economic standing irrespective of the recent economic difficulties that some of them have endured.

In general, we could safely say that Rostow’s theory of stages of development may soon fall into obsolescence if not amended to accommodate the intervening global events represented by the accelerated technological and scientific knowledge of the information age. In the wake of the present technological upheaval, entire industries and lifestyles are being overturned, only to give rise to entirely new ones. But these rapid, bewildering changes are not just quantitative. They qualitatively mark the birth pangs of a new era.

Porter’s stages of national competitive development

Michael Porter introduced his theory of competitive advantage to explain economic development within nations and national differences in growth and prosperity. He said that there are many conflicting explanations for why nations are competitive and others are not.

Some think of national competitiveness ‘as a macroeconomic phenomenon, driven by such variables as exchange rates, interest rates, and government deficits’, while ‘others argue that competitiveness is a function of cheap and abundant labour’. Another viewpoint sees competitiveness as dependent upon owning ‘bounteous’ natural resources. A more recent theory resides in the argument that ‘competitiveness is most strongly influenced by government policy’. All these explanations, and others, fall short of rationalising the competitive position of a nation’s industries. As put by Porter ‘each has some truth but will not stand up to close scrutiny’ (Porter 1990).

The acceleration of science, technology and the expansion of territorial economic integrations into the third millennium will necessarily exert vast repercussions on the wealth of nations and our quality of life. As enunciated before, in the past three centuries, wealth was usually accumulated by those nations which were endowed with natural resources or by those which colonised them. The rise of the great powers of Europe of the nineteenth century and the United States of America in the twentieth century follows this classical textbook principle.

Some leading economists consider that in the twenty-first century there will be a great movement in wealth away from nations with natural resources and capital. Information, brainpower and imagination, the organisation of new technologies and the management of international global communication systems will be the key strategic ingredients. In fact, many nations which are richly endowed with abundant natural resources will find their wealth greatly reduced because, in the marketplace of tomorrow, despite all disparities between nations, consumer goods will be cheaper, trade will be global, and markets will be linked electronically. Many nations which are devoid of natural resources will flourish in the next century because they placed a premium on those technologies which can give them a competitive edge in the global marketplace. Some writers assert that in the ...

Table of contents

• Cover Page
• Tourism in the Age of Globalisation
• Routledge Advances in Tourism
• Title Page
• Copyright Page
• Figures
• Tables
• Contributors
• Preface
• Part I: The age of globalisation
• Part II: The globalisation of tourism demand and marketing
• Part III: Globalisation and competitiveness in tourism
• Part IV: Globalisation of tourism’s approach to sustainability