Tourism: Sacred Cow or Silver Bullet? Unravelling the Myths

Abstract

This study of governance is at the nexus of the public and private sector. New business models combined with poor local governance is negatively impacting social and environmental outcomes in economies dependent on mass tourism. Using longitudinal data of Cancun, social indicators combined with the public finances demonstrate that until 1995 Cancun’s contribution is positive in terms of employment creation, living standards, foreign currency generation and tax revenue. Since 1995 the change of tourism models to All-Inclusive hotels and cruise ships, and the mounting hubris of sub-national authorities have conspired to reduce tax effort and employment security while increasing uninsured workers and income disparity. Quintana Roo state and Cancun are average at best in terms of social outcomes despite investment in social programs far exceeding sub-national tax capture. Through a variety of mechanisms, All-Inclusives prey on local institutional weaknesses and ineffective governance much of which is engendered by the myth of tourism wealth. For more than a decade, Mexico´s federal government subsidized these tourist zones and international tourists. Moreover, Mexico is no exception because Cancun’s dynamics are those of mass tourism itself.