Creating

Resort Towns A case study of Montego Bay and Bavaro Punta Cana

By Paul-Emile Brice

Advisor: Prof. Alberto Fuentes

May 2017

SECTION 1 OVERVIEW OF TOURISM DEVELOPMENT

AND RESORT-TOWNS IN THE CARIBBEAN

I. TOURISM ECONOMY AND RESORTS IN THE CARIBBEAN

Countries with a low rate of exports, including the Caribbean ones, heavily rely on tourism to grow their economy, generate tax revenues and create jobs (UNWATO, 2017). In

2015, 29 million international tourists visited the 48 lower and middle-income countries of the world which generated around 21 billion dollars, a higher contribution to their economy than total international aid (World Bank, 2016). The significant impact of tourism on other economic activities such as construction, transportation, small businesses, and agriculture led many researchers to recognize the positive contribution of tourism on the growth of small economies like Caribbean countries (Thacker, Mejia and Perrelli 2012). The Caribbean countries are renowned recreational tourist destinations. In 2017, tourism and travel represented almost 5% of the GDP of the region, generated over 17 billion dollars, and provided over 2 million of jobs

(World Travel & Tourism Council 2018). For Caribbean countries, tourism has become a more critical source of capital accumulation and productivity (Jayawardena 2005), as agriculture is no longer the main motor of their economies since the 1960s and 1970s (Thacker, Mejia and Perrelli

2012). Agricultural land progressively disappeared to serve the primary purpose of travel to the

Caribbean that is leisure. The UN World Tourism Organization reported that 90% of the travelers to the Caribbean in 2017 visited for recreational purposes especially to enjoy the sea, sun, and sand.

The main tourist product marketed in the Caribbean is beach hotels, especially all- inclusive resorts. They offer the visitors a full package of services to maximize their sea, sun, and sand experience without the need of leaving the resorts. Therefore, customers have very limited contact with the local community which receives little economic benefit from the all- inclusive model (Shandanna 2002). This model includes the development of gated resorts along coasts with private access to beaches that are often restricted to the locals. The resorts, in turn, cluster close to an international port to form a town, which the paper identifies as a resort town.

The economy of a resort town relies heavily on the number of bedrooms available which is the main resource to capture foreign currency. Resorts are also the primary provider of employment to the community. The jobs provided are often low paid, and temporary because of the seasonality of tourism. Hotel bedrooms of a resort-town often have a higher occupancy rate compared to the ones of the overall country. The economic development of resort-towns impacts the growth not only of the tourism industry but the national GDP. However, the dependency on a core industry does not allow resort towns to have a diverse economy, as in the case of Punta

Cana, in the Dominican Republic. In contrast, the government can purposely plan the diversification of the economy of a resort town, like Montego Bay, in Jamaica. Although the economy of Montego Bay continues to rely mainly on tourism, its local government manages to support the emergence of new industries. The next paragraphs present these two resort towns, which are the cases studied in this paper.

II. TWO CASES OF RESORT TOWNS

One of the oldest tourist destinations in the Caribbean is Montego Bay. Located on the

North Coast of Jamaica, Montego Bay emerged in the late eighteenth century as a major plantation economy, exporting sugar, rum, molasses, and bananas. Plantation owners hosted the first tourists on their property in the early 20th century, when they arrived in the same vessels exporting agricultural products (William, 2004). As the number of tourists grew in the mid 20th century, local entrepreneurs built several small scale hotels. In parallel, the local population grew from 11,500 people in 1943 to 23,600 in 1960 and started to experience the exclusion from the tourism industry. The community did not have access to some beaches that local entrepreneurs reserved for wealthy white tourism. That progressively led to local resentment toward the tourism industry. This pattern of exclusivity became even more evident in the late 20th century, as Montego Bay became a mass tourism destination because of the construction of an airport and the development of the all-inclusive resorts. The development of all-inclusive resorts not only competed with agricultural land but also rapidly replaced the agriculture economy because of better-paid jobs. In the 1980s, despite the continuous growth of visitors’ arrival, the local government decided to diversify the Montego Bay economy, which was largely dependent on the tourism sector and unable to fully satisfy all the needs of a growing population. Today, Montego

Bay has a population of 122,401 people, continues to be known as a resort town, and is the second financial capital of Jamaica, which was possible through the attraction and retention of new economic activities including light manufacturing, telemarketing, and data processing.

Montego Bay was already a well-established destination when Bavaro-Punta Cana, located in the east coast of the Dominican Republic, became a popular tourist destination of the

Caribbean in the 90s. Before, Bavaro-Punta Cana was a coastal fisherman village with poor connectivity to the rest of the country and a lack of access to financial capital, basic services, and other resources much needed for development (Sauter 2014). Because of the isolation from the overall regional economy, the local population livelihood heavily relied on fishery, coal production, and subsistence agriculture. These economic activities progressively disappeared as the tourism industry emerged (Sauter 2014). This process initiated in 1971 when a local and an

American entrepreneurs partnered to open the first Hotel in Punta Cana, which only had 10 rooms. The number of rooms in Punta Cana grew exponentially in the following decades, mostly because of the investment of multinational corporations to develop all inclusive-hotels. The all- inclusive resort economy also resulted in the growth of the population and the rapid urbanization of the area. By 2010, there were over 30 thousand bedrooms, approximately 85% of them all- inclusive, and a population of 43,000 people (Sauter 2014). Today, Bavaro-Punta Cana receives approximately 60% of total tourist in the Dominican Republic. What was determinant to the rapid transformation of both Bavaro-Punta Cana and Montego Bay consists of the neoliberal system, implementation of tourism industrial policies, and construction of the airport.

III. CONSENSUS ON TOURISM DEVELOPMENT POLICIES

One of the many forms of urbanization is beach resort towns (Smith, 1992) which is part of the strategy of governments of small economies, such as Caribbean states, to develop tourism.

A strong tourist industry can compensate for low rates of exports and limited opportunity for agricultural production (Thacker et al, 2012), which is why Caribbean countries rely heavily on tourism to grow their economy, generate tax revenues, capture foreign exchange, and create jobs

(UNWATO, 2017) (BBC, 2012) (Akama, 2002). The achievement of these economic objectives requires the active involvement of Caribbean governments in planning and developing tourism, mainly because the local private sector lacks the financial resources, technical skills and experience to supply the quantity and the quality of products demanded (Knight & Sharpley,

2009; Jenkins & Henry, 1982). The governmental intervention is especially needed for mass tourism that requires important financial investment, needs large-scale infrastructure, and has a greater impact on the economy. The endeavors of these governments are, in turn, supported through the financial and technical assistance of the World Bank or the International Monetary

Fund (IMF), and other forms of bilateral and multilateral agreements (Jenkins & Henry, 1982).

Instead of building the capacity of local entrepreneurs, the government themselves played an entrepreneurial role in the tourism industry in the past. They owned and operated large scale tourist facilities and air carriers (Jenkins & Henry, 1982) (Akama, 2002). These governmental tourist enterprises were often in debt because of the financial mismanagement of the overall operations, the extensive bureaucracy that negatively impacted the logistics flow, and the decision making guided by politics instead of financial criteria. For instance, governmental hotels did not consider market studies but were based on the political agenda for developing a region often not suitable for tourism for a variety of reasons, such as the difficult accessibility from an airport. Another example of mismanagement is the over-creation of jobs that meet a governmental employment target, but creates a financial burden. The poor financial track record has led many experts to conclude governments themselves should not be performing entrepreneurial activities (Akama, 2002) but should be supporting private sectors initiatives.

The consensus agrees that adequate ways for governments to support tourism development include setting national objectives, providing financial incentives, standardizing business practices, and building infrastructure. Their main objective is to attract private sector investment to develop tourist products (Ruhanen, 2013) (Akama, 2002) (Jenkins & Henry,

1982). Since the private sector often concentrates on one core product, such as beach tourism,

(Zappino, 2005), the public sector can provide complementary experiences such as natural and preserved parks, public museums, heritage preservations, local cultural activities, and other types of national attractions (Akama, 2002). However, these governmental strategies prioritize economic development over social progress, favor international investors over local entrepreneurs, and segregate coastal hotels development from local communities. Governmental actions comprise two main categories. The first one consists of industrial tourism policies to attract private investment and promote tourist products, the other category includes the provision of public goods and services, specifically, transportation, security and workforce development

(Prideaux, 2005).

IV. ALL-INCLUSIVE RESORTS AS RESPONSE TO GOVERNMENT FAILURE IN

THE PROVISION OF COMPREHENSIVE SUPPORT

In the two cases previously mentioned, the government provided effective tourism industrial policies to create attractive conditions not only to retain private investment but also to support the marketing of the destination. However, the government failed in providing public goods. For instance, they did not develop road networks that would have allowed an early stage of development to spread out the economic benefits of tourism. In contrast, the provision of international airport allowed the massive arrival of visitors to stay in the resorts town where the tourist economic activities are concentrated. Moreover, the Government failed to provide optimal security conditions which would have allowed tourist to meet locals, discover the town beyond the resort walls, and consumed in local businesses. Another failure is the lack of training of locals to prepare them for managerial positions, which are the best paid and most secure ones.

The insufficient provisions of public goods led to the development of all-inclusive resorts less reliant on public infrastructure, public space safety and qualified local workforce. The all- inclusive is, therefore, a self-sufficient model resilient enough to insecurity and inland inaccessibility which makes it financially viable and marketable. Both Punta Cana and Montego

Bay are resort-towns that emerged in areas with attractive beaches, easily accessible from international locations; poorly connected locally, and perceived as unsafe. Ironically, tourism industrial policies, because of their reactive nature, support the development of the all-inclusive model instead of enabling a more equitable pattern of tourism development. This paper illustrates, in the next three sections, how industrial tourism policies supported the development of two resorts-towns, Montego Bay and Punta Cana, in a context of relative insecurity, regional isolation, and international connectivity. A literature review follows this introduction and explores how inadequate infrastructure and insecurity combined with industrial tourism policies to contribute to the development of resort towns. The section after the literature review presents how both cases have good international connectivity, poor local accessibility, and unfavorable security conditions. The following section analyses the tourism policies that facilitate the construction of all-inclusive resorts and the general political framework that influence governmental decisions. Before the conclusion, a brief discussion contrasts the literature review, and the two cases presented.

SECTION II

LITERATURE REVIEW:

THE DRIVERS OF RESORT TOWNS DEVELOPMENT

Resort towns, and more generally tourism, typically grow in several stages depending on their capacity to increase visitors and the resources to build tourist facilities (Butler, 1980)

(Weaver, 1988). In Caribbean countries, some researchers identify four clear stages of urbanization: foundation, commencement, mass tourism, and diversification (Koster and Seaborn

2003), whose features are summarized here in Table 1. The transition from one stage to another requires transportation infrastructure to move tourists and goods, and incentives to construct hotels (Duncan and David, 2003). What can also foster the growth of resort towns is governmental policies and the political contexts that generally affect the overall state tourism economy. This chapter presents the role of transport infrastructure, safety, and industrial tourism policies in the development of tourism.

I. PROVISION OF PUBLIC GOODS

Tourist attractions and hospitality facilities cluster and expand where transportation is accessible (Kaul, 1985) (Akama & Kieti, 2009). For example, a major road often facilitates rapid access from the resorts to the airport which is one of the most critical infrastructure for tourism development (Prideaux, 2000). The easy international access make the destination more competitive, attracts private sector investment, facilitates the promotion of the destination, enhance the experience of the visitors, and contribute to increase visitors arrival (Gearing et al,

1974) (Crouch & Richie, 1999) (Churugsa & McIntosh, 2007) (Ruhanen, 2013).

While the airport and air carriers give access to the destination, road networks allow tourist to explore inland attractions, which is an opportunity rarely found in resort towns. They often lack local road networks to connect them to tourist sites, distribute the economic benefits of tourism to local communities, and expand hotel development in nearby regions, and to give access to tourist sites attraction (Akama & Kieti, 2009) (Chandana, 2002). All-inclusive resorts address the lack of inland connectivity by providing full packages of services to maximize the sea, sun and sand experience of tourists without the need to leave the resort.

Table 1: features of the stages of tourism development

Stages Government Intervention Features of tourism Urban features development and socioeconomic impact

- limited government intervention - limited number of - Minimal impact on the economy - A more active governmental tourist - Small tension between local and Foundation involvement ends this stage - Visitors are tourists accommodated in the - Limited change in the landscape houses of the locals - agricultural economy

- Designated public agencies - Increase of visitors - Small population growth support the promotion of tourism arrival - Increasing dissatisfaction of locals to attract visitors - Development of small not benefiting from tourism growth Commencement - Incentives, if enabled support, scale and locally owned - Start of linear development of

local entrepreneurs hotels Hotels along the coast - An airport construction with the - Privatization of seafront properties support of the State end this stage prevents local access to some beaches

- Provision of incentives for - Exponential increase - Tourism becomes the main motor of foreign investment retention of tourists the local economy and replaces - Marketing to attract visitors - Significant increase in original economic activities - Airport expansion hotels rooms mostly - A major street divides a developed - Allocation of lands for all-inclusive tourist coast from low-income Mass Tourism developing tourist facilities - Multinational neighborhoods - A formal public structure companies dominate - Population growth due to migration supports the tourism sector the market to fill the job created by the tourism - Provision of infrastructure inside industry of the resort town - Poor road network to connect the - Measures to mitigate insecurity resort town with surrounding regions

- Implementation of workforce - Increase the rate of - Harassment of tourist is a major development policies and projects visitors arrival issue - Construction of roads networks - Numbers of hotel - the coast is fully built Diversification to connect resorts to other regions rooms continue to grow - Coastal degradation - Policies to support new - Construction of tourist - Lack of basic services and industries facilities away of the infrastructure in the local - Tourism marketing strategies to shoreline neighborhood attract new markets of visitors Local economy continues to rely on tourism/emergence of new industries

Note: This table groups into three categories the features of the four stages previously defined by Koster and Seaborn (2003).

Preventing tourists from leaving the resorts also helps to ensure their safety, which is one of the main criteria for selecting a destination. In most cases, the traveler’s decision is not based on real facts, but the perception of risks shaped by the media and word-of-mouth information

(Rittichainuwat & Chakraborty, 2009). The perception of a high level of risks can harm tourism development in several ways. For instance, foreign governments can issue advisories discouraging their citizen from visiting a destination. Another threat is the cancelation of the trip, even the evacuation from a location, following negative media publicities or advisories often exaggerated (Akama & Kieti, 2009). These negative publicities cause economic loss, damage the image of the destination, and reduce the viability of investment in tourism development

(Rittichainuwat & Chakraborty, 2009) (Prideaux, 2005).

Private developers address the issues of an unsafe environment by building gated tourist facilities with private security and a large variety of entertainment to minimize the exposure of tourists to the public (Chandana, 2002). These safety measures often increase hotel prices, which could make some Caribbean places less competitive (Mansfeld & Pizam, 2006). Mansfeld and

Pizza (2006) also argue that gated tourist facilities are the source of inequalities in local communities, in which “residents mainly engage in marginal and informal business activities such as hawking and vending souvenirs along streets” (Akama and Kietie, 2009).

Governments can provide more efficient and proactive measures that would prevent the construction of gated all-inclusive resorts. They can pacify rebellious regions, eradicate narcotic traffic, fight corruption, or provide police patrol in tourist areas (Prideaux, 2005). These measures would mitigate major threats to tourism development including the violent narco- economy, high rates of crime, and unstable political systems (Mansfeld & Pizam, 2006). However, governments are often unable to create a safe environment, leading the private sector to implement strategies to maintain tourists safe within the walls of the resorts.

Another challenge for Caribbean governments is the local unavailability of the required skills and expertise needed for tourism development (Liu & Wall, 2006). Many multinational addresses these challenges by hiring expatriates for managerial and senior positions, which prevent the locals from accessing the highest paid jobs. Therefore, they occupy the jobs that are poorly paid and require few skills, lower education, and intense physical labor (Jenkins and

Henry 1982; Echtner). Even some low-skills jobs require specific knowledge that the community does not often have. Large scale private operators provide specialized training for low-skill work to improve the quality of their service, increase their level of efficiency, and be more productive and competitive (Liu and Wall 2006).

Despite the provision of basic training to unskilled employees, “It is unlikely that the potential opportunities for local employment will be fully realized without active government intervention to produce adequate tourism human resources, promote meaningful local participation and facilitate greater local representation in tourism employment” (Jenkins and

Henry 1982). In the context of a local market dominated by large scale international tourist operators, it is even more critical for governments to play a leading role in the development of human capital to ensure that the local population have the scientific and technological knowledge to serve the tourism industry (Liu & Wall, 2003; Casado, 1997). In a longer term, governments should ensure the availability of local experts to replace foreign ones, by incentivizing the capacity building, funding scholarship for professional training abroad, partnering with local universities to provide the specialized program (Jenkins and Henry 1982). The availability of local talent would further allow the country to be more competitive internationally – not only to attract more visitors, but also prestigious hotel chains (Casado, 1997).

II. TOURISM INDUSTRIAL POLICIES

What also encourages the development of resorts is the industrial tourism policies which are purposely designed to facilitate the development and expansion of the industry through foreign investment. Industrial tourism policies include two strategic actions: the attraction of investment and promotion of the destination (PWC, 2013).

● Investment Attraction

Governments attract private investors by decreasing their capital through a variety of incentives (Theobald, 1998). The incentive packages include capital grants, soft loans, equity participation, provision of infrastructure, the concession of land, and tariff exemptions on construction materials. The design of incentives has the purpose of attracting foreign investment, in particular, multinational corporations with more experience and financial resources to build and operate large scale tourist facilities (Akama, 2002). The use of foreign expertise does not only address the local capital investment scarcity but allows countries to jump “the development gap between level on indigenously available management and technical skills and the level of experience and competence needed to organize and sustain an international industry” (Jenkins and Henry 1982). Opening the market to international investors intrinsically requires the adoption of neoliberal principles, specifically if international loans from the World Bank and the

IMF support their implementations. What also determines the successful attraction of foreign investment is good political terms with the United States, since American companies are major investors in the Caribbean (Cabezas 2018; Sharpley and Telfer 2002). ● Marketing and promotion

Americans are one of the major tourist markets that visit the Caribbean. Therefore, having a regime in good terms with the United States, and the international community, facilitates the promotion and marketing of the destination, which is a task that Caribbean governments have traditionally fulfilled (Okumus et al. 2013) (Bonham & Mark, 1996). They promote the destination and provide information to potential visitors by establishing destination management organizations (DMOs). Governments usually integrate DMOs into the public administration structure to ensure that marketing contributes to the achievement of national tourism development objectives and promotes the destination as a single brand (Buhalis, 1999).

Caribbean states are branded as sand, sea, and sun destinations, which is a promotion strategy that ignores the specific requirements of entrepreneurs, reinforces the conceptual image of the destination, and excludes the communities and small local entrepreneurs (Akama and Kieti 2009)

(Smith & Godbey, 1991). Meeting the specific needs of local entrepreneurs, and guaranteeing the fair distribution of tourism benefits among regional stakeholders represents a challenge not only for DMO’s but also all the public agencies involved in tourism development (Ruhanen, 2013)

(Buhalis, 1999). Addressing this challenge requires the inclusion of promotion strategies in the early stage of the tourism planning process and policy-making (Buhalis, 1999). The variety of stakeholders, often with diverging interests, makes more difficult the task of tourism marketing and promotion, which also should differentiate the destination from their competitors, especially in the case of Caribbean islands offering similar tourist products (Okumus et Al, 2013).

In conclusion, the provision of public goods and industrial policies is the adequate way for government to assist tourism development. However, providing public goods requires more financial and technical capacities than Caribbean governments often have. As a result, they provide mostly attractive investment conditions through tourism industrial policies, and the private sector compensates with the lack of public goods by developing a model resilient to the lack of inland roads, security and human capital. The next section presents the implementation of this model in two resort towns: Montego Bay and Bavaro-Punta Cana.

SECTION III

THE EMERGENCE OF TWO RESORT TOWNS:

MONTEGO BAY AND BAVARO-PUNTA CANA

I. INSUFFICIENT PROVISION OF PUBLIC GOODS

Two famous tourist destinations in the Caribbean are Montego Bay (MoBay), located on the north coast of Jamaica, and Bavaro Punta Cana (BPC) in the east cost of Dominican Republic.

Tables 2 and 3 present the different stages of tourism development in MoBay and BPC. In the late 60s, Bavaro-Punta Cana was still a coastal fisherman village with “no roads, nor airport, provision for water, electricity, healthcare, education or security” (Sauter 2014, p124). Because of the isolation from the overall regional economy, the few hundred people of the village were surviving from fishery, coal production, and subsistence agriculture. In contrast to BPC,

Montego Bay had a more established economy before tourism. Montego Bay emerged in the late eighteenth century as a major plantation economy, exporting sugar, rum, molasses, and bananas.

Although poorly connected with the surrounding regions, the town had a port that served agricultural export. This port received the first tourists in the early 20th century, when they arrived in the same vessels that exported agricultural products (William, 2004). Although the port remained the primary mode of tourist arrival during the early twentieth century, the infrastructure that really allowed MoBay to become a resort town was the construction of an airport, which also had the same effect in Bavaro Punta Cana.

Although built in different periods and for distinct purposes, the airport of Puerto Plata as well as the one in Montego Bay significantly contributed to transform their landscape, boost the development of tourism, and change the economy. The construction of the Montego Bay airport during the WWII was part of the Churchill-Roosevelt lend-lease agreement (Thraves 2003).

After the war, the airport quickly became the preferred method of travel to Montego Bay. For instance, a decade after the construction, the numbers of visitors in MoBay doubled and the stock of hotels passed from a few hundred rooms to approximately 1350 (Koster and Seaborne, 2003). Table 2 Stage of Tourism Development in BPC stage of socio-economic Factors impacting tourism tourism development in BPC development impacts/conditions - DR moves gradually from authoritarian regimes to democracy. - t's a fishermen village, with a - despite the creation of the - B-PC does not exist as a resort few hundred people and poor tourism organic law of 1969 and destination connectivity to the country in stage 1 the incentives law of 1971, there - first Hotel of 10 rooms opened term of infrastructure and foundation is no tourism development in B- in 1971 economy before 1980 PC. - Tourist arrival is poorly - the main economy is based on - The economic crisis limited documented the fishery, charcoal production, the provision of infrastructure and subsistence agriculture. and services especially in the rural areas

- 89 hotel rooms in 1980 - The tourism economy - Opening of the airport in 1984, progressively substitutes the other policy: built by private stakeholders of original local economic activities - in 1986, the government The Grupo Punta Cana. - the area is connected classified BPC as a tourist - Around 2500 hotels room by stage 2: internationally through the airport development pole eligible for 1990 Commencement but remains poorly connected to the 1971 incentives. - Around 7500 hotels rooms by 1980-1995 the rest of the country. - the increase of state revenue, 1994 - gated tourist resorts create especially through international - Rapid "resort urbanization" of spatial segregation patterns: loans BPC without the public wealth VS poverty, International provision infrastructure and VS local. regional development plan

- Creation of over 85,000 direct - A shift to an extreme and indirect jobs in the tourism neoliberal system leading to the - more than 15,000 rooms by sector- Population growth from DR-CAFTA free trade 2000 15,000 people in 2002 to 43,000 agreement, the creation of new - close to 25,000 rooms by 2004 people in 2010. - Reinforcement incentives packages, and the - low density builds up and of urban segregation patterns and provision to TNCs the same scattered urban growth not obey Increase of unequal wealth Stage 3 level of protection as local any planning criteria. distribution. Mass tourism businesses -2.5 million nonresidents - the municipality has a private 1995-2010 - Allocation of a large budget for arrivals since the opening of the hospital, public polyclinics, the marketing of DR as a tourist airport in 1984 public schools, a power plant, destination - A unit of a special police churches, a police station, a - By 2007, BPC became the tourist (POLITUR) is assigned POLITUR station, several gas and municipal district of Verón- to Punta Cana propane stations, various Punta supermarkets and several housing developments. - the newly established local government has little political - in 2010, 67 hotels with a total power in the decision-making of 30,223 rooms, the equivalent - tourism is the source of major process of 45% of all rooms in the DR social exclusion - adoption of the Territorial - 85.7% of the Hotel is all - the community does not benefit Tourism Land-Use Plan for inclusive from tourism, since the Stage 4 Punta Cana - Bavaro - Macao - Punta Cana has 167 consumption of tourist outside of diversification (resolution 007-2012) led by the rooms/km2 VS Puerto Plata has the resort is limited after 2010 tourism ministry 269 rooms/km2 - most of the land/front beach is - Road networks expansion to - 284,879 tourist arrived at BPC privately owned except protected improve the connectivity of BPC airport in 2015 areas and spread out the economic - 335,425 tourists arrived at BPC - Coastal degradation? benefit of tourism in the region. airport in 2018

Table 2 Stage of Tourism Development in Montego Bay stage of government intervention Tourism development socio-economic impacts development

- visitors are accommodated in - racial tensions between the plantation system visitors and the local population stage 1 because of colonial practice foundation no government intervention - Visitors exclusively arrived by before 1900 boat- limited data on tourism arrival

- by 1910, a group of private - in 1945, there is around 14 - the arrival of more tourist and stakeholders funded a tourism locally owned and managed the development of hotels promotion board, and the hotels and boarding housing brings a lot of economic government became involved in with the capacity to development such as it by 1922 accommodate around 400 restaurants, beach club, shops, stage 2: - by 1955, the government people and other tourist facilities Commencement created the Jamaica Tourism - by 1926, there were 11,619 - the local population can still 1900-1955 Board (JTB) arrivals in MoBay access to the finest beach - construction of the airport in - by 1940, there were 15,147 although the pressure of local the late 1940s that encourages tourists arrival owners to privatize seafront more visitor arrival by the mid- - visitors continue to arrive properties 1950 primarily by boat

- creation of JTB of international and regional JTB offices i.e. in - a clearly defined belt of - in 1965, tourism exceeds Mobay tourism land stretched agriculture in term of foreign - provision of major northward along with the cost exchange earning infrastructure such as the from the port to the airport - by 1985, tourism is the construction/upgrade of the primary foreign exchange - in 1956 MoBay has 1350 earner over bauxite airport, improvement, and beds, Stage 3 - increasing dissatisfaction from expansion of highway systems - in 1985, MoBay has 10,401 Mass tourism the local entrepreneurs and works Tourist arrival 1955-1980 population - provisions of incentives to - 23,302 tourist arrivals by 1956 attract foreign investment like that do not really benefit from the Hotel act of 1968 and the - by 1985, 584,758 tourists the growth of the industry resort cottage act of 1971 arrival - creation of the Ministry of - Tourists arrive mainly by air, - resentment of local against tourism in 1980 for instance, in 1956, arrival by tourism because of a racist air is 23,278 VS 8,407 by boat tradition

- major investment in tourism -in 1997, locally owned hotels - a major portion of the local marketing, mostly to attract new only account for 25% economy is tied to the tourism visitors from undeveloped - by 1985, 450,194 arrival by industry market air VS 72,251 by cruise ship - efforts to educate the local Stage 4 - 85% of the JTB is spent to population for employment in diversification attract new visitors the industry 1980 - development of other industrial options (such as services) - harassment of tourist has become a significant issue

The government purposely expanded the airport in the 60s and the 70s to transform MoBay into mass tourism that in return encouraged the construction of resorts. The World Bank supported the expansion undertaken in the 70s, which also included the privatization of Jamaica Air, an air carrier that the state funded (World Bank, 2010). In 1985, because of these expansions, over ten thousand bedrooms, mostly all-inclusive, were available and more than 585,000 tourists arrived at MoBay (Koster and Seaborn, 2003). More recently, the government planned to invest an additional $190 million to update the airport by adding terminals to allow the arrival of 6 million passengers a year.

Similarly to MoBay, the construction of the airport transformed BPC into a mass tourism destination, catalyzing significant foreign investment into development. In contrast to the airport of MoBay, a group of private stakeholders, the Grupo Punta Cana, led the construction. They implemented this construction project to give international access to the luxurious beaches of

Bavaro-Punta Cana with difficult local accessibility because of the limited paved road networks and the remote location. Four years before the opening of the airport, only 89 hotels rooms were available. In 1990, six years after the opening of the airport, BPC already had around 2500 hotels rooms, which tripled by 1994, reached around 15,000 in 2000, and was approximately

25,000 by 2004 (Sauter 2014). The exponential growth of the hotels' rooms in BPC was due to the investment of multinational corporations that owned over 80% of the stock. Ironically, the

Government, which financed the construction of airports for other local tourist destination like

Puerto Plata, only recognized BPC as a tourist pole two years after the opening of the airport

(Punta Cana Tourist Pole act, 1986). Today, the airport of Punta Cana receives more than 60% of the visitors that arrive in the DR (Sauter, 2004) and offers a direct flights from 64 cities around the world (Punta Cana International Airport). While MoBay and BPC became well connected internationally, both the Jamaican and the Dominican Governments built few roads to serve the tourist facilities and the expansion of the towns. Because of the lack of roads, all-inclusive resorts development cluster close to the airport. In MoBay, resorts agglomerated along the shoreline between the port and the airport

(Thraves, 2003). In PBC, all-inclusive resorts grew with no formal urban plan along the coast, on both sides of the airport with no official urban logic. The closest hotels are less than 2 miles from the airport and the furthest one within 12 miles approximately. In both cases, a major road facilitates access from the airport to the resorts and divides the resorts area from the local neighborhoods. The lack of local roads does not allow tourists access to attraction sites, for instance, la Romana and the National Cotubanama Park, located in the same region as BPC.

Only in recent years, the Dominican Government initiated construction of roads and highways to link Punta Cana with the capital and other tourist poles like la Romana, and to spread the economic benefits of the tourism sector (Sauter 2014). Recently, the government of Jamaica also realized that MoBay could offer more than the beaches and they proposed the implementation of major infrastructure projects to give access to more variety of tourist activities and cut the travel time to other local tourist destinations (Master Plan for Sustainable Tourism Development,

2002).

What traditionally restrained tourists from visiting attraction sites and motivated the construction of all-inclusive resorts was insecurity. In Jamaica, crime and other forms of violence often accompanied elections (Sullivan, 2004). For instance, in 1976, the violent General

Elections led the government to declare a state of emergency, which they lift only one year later.

The overseas press portrayed Jamaica as an unstable and crime-ridden destination which negatively affected the arrival of tourists to the island (Chambers and Airey, 2001). Political instability has also affected tourism arrivals in the Dominican Republic because of the succession of several authoritarian regimes in the first half of the 20th century. The perception of insecurity lasted until the seventies, when tourism was slowly emerging in BCP. Another source of insecurity is the exclusion of local communities from the tourism economy, which causes tourist harassment. This context led developers of Mobay and BPC to build gated all-inclusive resorts with private security as a strategy to guarantee the physical safety of tourists, to mitigate the effect of political instability, the impact of the high rate of crime, and more generally to develop a tourism product that was resilient to the unstable local business environment.

In summary, the development of all-inclusive resorts was the most economically viable option considering the lack of infrastructure, security and primary services in an attractive tourist location like Mobay and BPC (Fawcett 2014). The fast resort urbanization of these locations was also possible through the support of the state. The next sections present the political context and compare the tourism policies that The Jamaican and Dominican states respectively implemented to develop the tourism economy.

Table 4 Selected policies affecting directly or indirectly tourism development in Bavaro-Punta Cana policy / plan brief description of plan/policy

Creation of the National Direction of Tourism with the main objective to plan and The organic law of tourism (law oversee the development of the tourism sector, especially to promote tourism and 541-69) of 1969 ensure compliance with national standards

Organic Law of the tourist Creation of a public corporation to develop and manage tourism facilities, as well to hospitality and development be in charge of the tourist workforce development. Corporation of 1969)

Tourism promotion and Provision of incentives and benefits to support the private sector investment in the incentive/law of 153-71 of 1971 tourism sector. This incentive regulations remain valid until 1992.

Creation of INFRATUR, a financial institution in charge of the development of Infratur organic law of 1972 tourism infrastructure under the Dominican Central Bank.

Macao/Punta Cana Tourism Pole Classification area of Macao/Punta Cana as a priority tourist pole, to allow (Decree 1256-86-479) of 1986 developers to use the 1971 incentive law for tourism development in the area.

Foreign Investment law (law 16-95) Attraction of foreign investment by providing them the same rights and protection of 1995 as domestic corporations.

Mixed Fund for the Promotion of Allocation of fond, to develop and implement a national tourist marketing plan with Tourism (Decree 212-96) of 1996 the objective of improving the image of DR by the international community

Direction General of Tourism Creation a special police workforce to protect and assist national and international Police (decree 1301-00) of 2000 visitors

Broader tourism promotion and Creation of new packages of incentive, especially to attract investment and promote development (law 158-01) of 2001 tourism in underdeveloped tourist poles, and to prevent coastal degradation

Decree 336-05, Execution the 336-05 create a committee with the responsibility to plan and implement critical Committee of infrastructures in infrastructure projects necessary for tourism development Tourist Zones of 2005

Territorial Tourism Land-Use Plan for Punta Cana-Bavaro - Macao Plan led by the planning department of the ministry of tourism (Resolution 007-2012) of 2012

Table 5 Major tourism policies and plan in Montego May policy / plan brief description of plan/policy the Jamaica Hotels act of 1904 allow goods and services required by the hotel industry to be imported duty-free, and the provision of government grants for the hotel expansion. the tourism board Act of 1955 this policy established the Jamaica Tourist Board (JTB) responsible for the island promotion and market development the Beach Control Act of 1956 provision of tools to manage seafront property for the development of hospitality and tourist facilities Hotels (Incentives) Act of 1968 Provision of tax incentives and duty concession to stimulate investment in hotel accommodations Resort Cottages Act of 1971 provisions for retroactive application of incentives for investment to develop cottage style accommodation facilities Master Plan for Sustainable tourism the main goal of this tourism economic development plan includes: development (2002) - diversification of the tourism products, and the visitor experience - development of community based tourism - making Tourism a more inclusive industry - Environmental sustainability the tourism enhancement act (2004) established a special fees for air and boat travelers which serve for the implementation of the 2002 Master Plan for sustainable tourism.

II. POLITICAL CONTEXT OF THE DOMINICAN REPUBLIC WHEN BPC

EMERGED

Prior to 1990, notwithstanding the Punta Cana tourism industry’s incipient development, the area remained unattractive to both private developers and visitors. The overall political context did not favor tourism development in this zone in many ways. During the nineteenth century, several dictatorships succeeded in the DR, culminating with the most repressive one, the regime of Rafael Trujillo, from 1931 to 1960. During that era, the international community perceived the

DR as an unstable political system and a violent place that was unable to ensure the physical safety of tourists (Cabezas 2018). What also paralyzed the development of the tourism sector at a national level was the lack of policies to channel private investment. Instead of supporting private development, the Government of Trujillo used public funds to build and manage hotels and tourist facilities. The government completed the construction of these hotels by 1956. These governmental projects were not successful not only because of the political instability and the lack of security in the DR, but also because of the inaccessible location (Meyer-Arendt et al,

1992). For instance, the government built many hotels far from international airports and urban centers including in the mountains, which tourists do not favor over beaches like those of the

Bahamas and Jamaica (Meyer-Arendt et al, 1992). Because of the incapacity to respond to tourists demand and the failure of direct government intervention, Joaquin Balaguer, the president that succeeded to Trujillo, changed entirely the tourism political economy.

The political economy of tourism of the government of Joaquin Balaguer, an anti- communist ally of the United States, mainly focused on providing infrastructural support and tax incentives to the private sector (Duffy, et al. 2015). This support was possible through international loans contracted from the FMI and the World Bank. To obtain these international loans, the Dominican Republic had to comply with some prime requirements, including opening of the borders to international trading, lowering trade barriers and government controls, and implementing new policies to integrate the DR in the global market (Duffy, et al. 2015; Cabezas

2018; Sauter 2014). Complying with these requirements was the evident solution for Balaguer to address the economic crisis the country was facing primarily because agriculture, the main national economic driver until the 70s, was not generating as much revenue. Other economic challenges included the increase of the unemployment rate, the devaluation of the Dominican currency and a deterioration of the overall living conditions because of the state incapacity to provide social assistance (Duffy, et al. 2015). To address these challenges the government prioritized the use of international loans to diversify the economy through the attraction and retention of foreign investment to develop new economic activities including tourism. To achieve this goal Balaguer channeled private foreign investment in some key tourists poles strategically located. One of them is Bavaro Punta Cana where transnational companies (TNCs) took advantage of the overall economic structural adjustment and the cheap labor force to start developing large all-inclusive hotel chains (Cabezas 2018). The business environment became even more friendly to TNCs when Leonel Fernandez came into power. He adopted pure neoliberal policies that allowed international companies to fully dominate the market, as the current case of BPC with 85% of the hotel rooms owned by foreign companies and with the coast dominated by large scale gated tourism development (Duffy, et al. 2015). Another change the tourism sector brought to Punta Cana is the fast growth of the population because of the migration of individuals and households to fill the employment that the tourist sector created.

Because of the growing economy and population, the fast consumption of land by multi stories development construction, the increasing need of the local communities mainly living in informal neighborhoods, in 2007 the area became the Municipality of Veron-Punta Cana which was until then part of the municipality of Higuey. It is in this political context that BPC got urbanized rapidly, and some specific industrial policies facilitated this process.

III. BPC AND DOMINICAN TOURISM POLICIES

As the Dominican Republic moved from authoritarian regimes to democratic ones, the governments successively implemented a series of policies to ensure a business-friendly environment that would attract and retain mostly private foreign investments through robust incentive packages and strong marketing strategies. Table 4 presents selected policies that impacted tourism at a National level, and in particular, at the level of the BPC. One of the first comprehensive tourist policies, known as the organic law of tourism of 1969, mainly focused on the promotion of tourism through a decentralized public structure and the regulation of privately own tourism business such as travel agencies, tourist guides, restaurants, etc. The national tourism department, which later became the Secretary of State of Tourism, was the public agency in charge of the implementation of the organic law of 1969. Another policy enacted the same year is the Constitutional Law for the Promotion of the Hotel Industry and the Development of

Tourism which created a public corporation with the charge of acquiring, constructing, financing, improving, and maintaining hotels and other tourism facilities (Fawcett 2014).

In 1971, the Central Bank established a department for the promotion of tourism development, supported through loans and technical expertise provided by the World Bank and

Inter-American Development Bank. The 1971 law did not only establish provision for tourism marketing but also included strong regulations to attract and retain large tourist corporations through generous packages of incentives. These packages included a long-term lease of beachfront property, a specialized labor code for the tourism sector, and more importantly, tax exemptions. The tourism and promotion law of 1971 also provided private developers several tax credits: 100% exemption from income taxes, construction taxes, incorporation taxes, municipal taxes on patents and public performances, import taxes including customs duties, products, and materials that are not available in the local market.

Despite the creation of many policies, few private developers targeted Bavaro-Punta Cana, because the 1971 law was only applicable to the tourist poles that the government identified. In

1986, the Balaguer government finally declared Bavaro-Punta Cana as a priority tourist pole, allowing the area to benefit from governmental incentive and tax credits for tourism development. Approximately a decade later, on top of the incentives and other advantages for international investors, the government of Leonel Fernandez provided foreign companies the same right and the same level of protection afforded to local ones. It is during this period that most of the development happened in BPC, which became the most successful national tourist pole with a coast full of gated multi-story resorts, a clear physical separation of the local community from resorts, and a market dominated by TNCs - 80% the hotel rooms of BPC are owned by international chains. This rapid development of the area, the foreign control of the bedrooms stock and the exclusion of communities are the consequences of an open market governed by neoliberal principles, a lack of economic policies to support local investors, and insufficient social assistance for the local population. Despite the obvious social crisis resulting from unplanned resort urbanization in BPC and other tourist poles, the government did not address these social issues when it enacted a new law in 2001 to establish new packages of incentives, revoking the 1971 law. The socioeconomic challenge brought by tourism can hardly be addressed by the newly established local government which has little influence in the decision-making process because of a well-organized powerful private sector and the importance of the BPC for the overall national tourism economy (Sauter 2014). For instance, the local government had little participation in the development of the territorial land use plan for BPC, a process led entirely by the planning department of the ministry of tourism.

IV. MOBAY AND THE JAMAICAN POLITICAL CONTEXT

Following the independence of Jamaica from the British Commonwealth in 1962, the

Jamaica Labour Party (JLB) governed the island for 10 years and fostered tourism development that rapidly became the most important national industry after bauxite. During that decade,

Montego Bay was already emerging as one of the main tourism centers dominated by beach hotels that excluded Jamaicans from the finest beaches and the best paid jobs. In 1972, the

People National Party (PNP) that had a strong socialist democratic ideology, won the election and led the country until 1980. When Michael Manley, the PNP elected prime minister, came into power, the country was facing a severe economic crisis and a high rate of unemployment. Although tourism was not aligned with the PNP’s political philosophy of putting the Jamaican people at the center of their programs, they saw the industry as a prime solution to revitalize the economy and create employment. The successful implementation of such a solution was difficult to achieve considering their extremist socialist posture and their close relationship with Cuba, which ruined the relationship with the USA, the country of origin of their main tourist market.

What also emerged as a major barrier to tourism development during that period was the rise of crime and violence, exacerbated during the 1976 General Elections, which led the government to declare a state of emergency that lasted one year and produced international bad press. This context led developers to build gated all-inclusive resorts with private security as a strategy to guarantee the physical safety of tourist, decrease the impact of the high rate of crime on the occupancy rate, and more generally, develop a tourism product that was resilient to the unstable local business environment.

The overall decline of the economy, the high rate of violence and the anti-American political posture are part of the reason why the PNP was not re-elected in 1980. The JLP succeeded them and their government program focused on restoring a capitalist system, focusing on trade liberalization, foreign investment retention, and structural adjustment of the economy (World

Bank 2010). They entirely rejected the socialist political agenda, even expelling the Cuban ambassador from the island. The new political posture of the government played a critical role in reestablishing an economic and trading relationship between Jamaica and the US, by that time led by President Ronald Reagan. This is one of the main actions that allowed the recovery of the tourism industry. Another strategic action to foster tourism development was the creation of the separate Ministry of Tourism which was previously under the Ministry of Industry, Tourism and

Foreign Trade. The Ministry of Tourism had the two main goals of maximizing revenue from the sector and creating a business-friendly environment for tourism growth. The main challenge to accomplish these goals was the economic contraction that Jamaica was facing. To address this challenge, the JLP contracted international loans from the IMF and agreed to tightly control the fiscal budget and strictly limit commercial credit, especially from the Central Bank. These structural adjustments resulted in an increase of the external debt and hardship for the low- income population. Many authors argue that during that period the decrease in the quality of living conditions was one of the main reason for the increased harassment of tourists. The high performance of the all-inclusive resorts boosted the performance of the overall tourism economy.

By the end of the PNP government in 1989, the regime was highly criticized for prioritizing economic affairs over the social wellbeing of the population (Chambers and Airey, 2001). When

Michael Manley returned to Power in 1989, his PNP governments and the following ones adopted a similar pro-business agenda as the JLP (Sullivan, 2006). The good relationship with the United States in the 90s facilitated the receipt of over $500 million in the form of U.S. foreign assistance (Sullivan 2006).

Because of the vulnerability of the industry to political instability and crime, the local government of Montego Bay, which became a city in 1980, saw the urgent need to diversify the local economy. The city saw the dependency on the tourism industry as a threat to MoBay’s economy. This is the main reasons why the local government focused its endeavors on diversifying the local economy since 1980, in parallel to the growth of the tourism sector.

V. MOBAY AND JAMAICAN TOURISM POLICIES

One of the first policies to stimulate nascent tourist economic activities at the beginning of the 20th century was the Jamaica Hotels act of 1904. This law exempted hotels of forty or more bedrooms from paying taxes on construction materials and increasing taxation for 10 years, and provided grants for hotel expansions (JTB, 2016; Koster and Seaborn, 2016). Another important action of the colonial government was the establishment of a Tourist Trade Development Board in 1922 to disseminate information about the island’s facilities and assist hotels and shipping companies (JTB, 2016). These policies probably played a main role in shifting from accommodating tourist in the colonial plantation system, and into hospitality establishments locally owned and managed. For instance in Montego Bay, by 1945, they surveyed 14 small scale hotels and boarding houses able to accommodate approximately 400 visitors (Koster and

Seaborne 2003). As the number of tourists grew, the colonial Government created the Jamaica

Tourism Board (JTB) in 1955, a more structured version of the Tourist Trade Development

Board, with the responsibility to promote the island and develop the tourist market (JTB,206)

(Tourist Board Act, 1955). An office of the JTB was obviously located in Montego Bay which was rapidly becoming a major tourist center not only for the northern region but for the overall island. Another important policy during the colonial period was the Beach Control Act of 1956 to manage the beachfront property for tourist purposes. This policy was the main redlining tool to exclude Jamaicans from targeted beaches for international visitors (Chamber and Airey,

2001). This law impacted the development of Montego and initiated the process of urbanization and the privatization of the beachfront. This process accelerated when Bustamente came into power following the independence of Jamaica. His government passed two laws, successively in

1968 and 1971, to encourage the development of hotels (Hotel Incentives Act, 1968). The enforcement of these laws resulted in the entrance of transnational companies (TNCs) in the

Jamaican tourism market, especially in Montego Bay, which was quickly becoming a mass tourism destination in the Caribbean following the shutdown of the Cuban tourist industry. To respond to the increase of tourists in MoBay, the government undertook a major zoning project to allocate lands for tourism development. For instance, they created 940 ha of land for tourism and industrial development, and they also freed 20ha of land and 1000 linear meters of sandy beaches by removing the old waterfront wharves and warehouses (Koster and Seaborn, 2016).

However, tourism development slowed down from 1972 to 1980 because of the implementation of a socialist driven agenda which deteriorated the political and trade relationship with the USA, making it challenging to attract foreign investment and increase the number of tourist arrivals (Chamber and Airey 2001). Another challenge was the PNP policy of

“Jamaicanization of tourism” which also projected the impression that the attraction and retention of foreign investment was no longer the main strategy of Jamaica to develop tourism.

The implementation of these policies combined with an increased rate of crime resulted in the decrease in tourist arrivals and decline of hotel occupancy rates. As a consequence of the decline in tourist activities, many hotels had to close since their limited revenue could not sustain their operations (Chambers and Airey, 2001). The closure of the hotels led the government to assume the ownership and the management of the operations. By 1980, the Government, through the

National Hotels and Properties, owned 17 of the largest hotels, the equivalent of 60% of 1st class hotel rooms for the total island. The government ownership of hospitalities did not facilitate recovery from the downturn of the tourism sector. However, they accomplished their goal of changing the local perception of tourism. They justified the poor performance of the tourism sector by blaming the enemies against Jamaica which were responsible for the disturbances and the campaign of fear against communism (Chambers and Airey, 2001).

Owning and managing tourist hotels and facilities was against the Jamaican Labour Party practice which came into power in 1980. One of their first actions was the sale of government hotels in approximately two 2 years. They sold and leased most of the hotels to Jamaican stakeholders that redeveloped most of them as all-inclusive resorts to create and market a product where tourists were safe against crime, harassment, and drug trafficking. The hotel industry also responded to this challenge by including in the all-inclusive package the transfer of travelers from the airport to the hotel, to minimize the exposure to risk. On the other hand, the government addressed the issues around safety by requiring a license for all tourism operators provided by the Tourism Board. However, the JLP government removed the incentives for hotel construction, a measure contradictory to their goals of achieving tourism growth. They argued that hotels had largely benefited from the new economic policy and they did not need any more incentives. The temporary removal of incentives was probably part of the larger fiscal plan of the government to address the national debt. Most of the incentives of the twentieth century were replaced by the

Omnibus act of 2004 designed to assist foreign investment in all industries including the tourism sector by proving employment tax credits, relief on several types of taxation, capital allowances, and duty-free imports of machinery and equipment.

The policies of the central government were not the only factors that affected tourism development in Mobay. Several local initiatives led by local stakeholders were also determinant in transforming the urban environment. For instance, in 1980, because of the vulnerability of the tourism industry to hurricanes, violence, and political instability, the local authority of the City of Montego Bay made the decision to support the emergence of other types of industries. To accomplished this goal, they implemented two major actions, the enactment of Montego Bay

Free Zone Act that supported the emergence of the services sector; and the creation of the

Greater Montego Bay Redevelopment to lead urban planning initiatives. The sectors that emerged from these actions included light manufacturing (such as garments and small electrical appliances), data processing and telemarketing (Dodman, 2003). The installation of satellite communication also played an important role in creating significant employment in global data processing and telemarketing networks (Koster and Seaborne 2003). By 1990, the Government undertook no significant land reclassification for tourism expansion, which suggests the growth of the city was not exclusively relying on tourism anymore. Indeed, Montego continues to be a major resort town, but it is also recognized as an important commercial and industrial pole of

Jamaica

SECTION V

CONCLUSION

The international nature of tourism and the competition between Caribbean countries offering the same type of tourism products make it difficult for governments to provide support and some level of protection to local businesses, an issue exacerbated by prioritizing multinationals over domestic entrepreneurs through many forms of incentives (Jenkins and

Henry 1982). Policies in favor of foreign investment, for instance in BPC and MoBay, constitute unfair competition for local stakeholders that lack the financial and technical expertise to face transnational corporations (Cabezas 2018). Moreover, because of the continuous pressure to attract and retain new investment, the number of available incentives and benefits often escalates without a clear analysis of their necessity and true cost for the local economy (Theobald, 1998).

Jenkings and Henry (1982) concluded “where a country is dominated by foreign private investment over a long period of time, the effect is to distort development, to fail to produce and discourage the development of local initiative, local entrepreneurship, and local institutions for mobilizing savings, and to remove from national control powers of effective decision-making in economic matters” (p511).

This conclusion is evidenced through the case study of Montego Bay and Bavaro Punta

Cana, two markets dominated by Transnational Tourism Companies. In both cases, the government provided effective tourism industrial policies to promote tourism locally and internationally, and incentives to attract international investors well-experienced in tourism development. These policies were viable because of the succession of neoliberal regimes in both countries since the last decades of the twentieth century. The IMF and the World Bank supported the endeavors of these governments to implement their agenda and also required them to open their economy to the global market by reducing the level of protectionism which facilitates TNCs to control the tourism industry in both resort-towns. While these policies channeled economic development in Montego Bay and Punta Cana, the government failed to provide sufficient public goods including road networks, security and qualified human capital, which led to the emergence of all-inclusive resorts with rapid access from the local airport and a safe gated environment for the visitors. This is the context that allowed both Bavaro Punta Cana and Montego Bay to become resort-towns, specialized in tourism by the early 90s. However, the two towns are taking a different path. The local government of Montego has been implementing several strategies to diversify the local economy to allow the city to be economically more resilient by not relying exclusively on a tourism, although it continues to expand. The diversification of the tourism economy in MoBay is the result of several factors: the land is saturated, the market beach products are outdated, and more competitive Caribbean destinations have emerged (Master Plan for Sustainable Tourism Development, 2002). In contrast, Bavaro Punta Cana has been solely focusing on strengthening its resort economy through the diversification of entertainment activities for tourists, as the tourism industry has not yet reached its full potential.

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