My Thesis Draft (For Proofreading)

Review of Related Literature

Definition

From a neoliberal perspective, globalization is an economically driven process that should proceed on first principles of private property and uninhibited market forces. Regulation should have as its primary—if not sole—function to facilitate and protect private ownership and the “free” operation of supply and demand among producers and consumers. Other economic rules and institutions are “political interferences” that undermine market efficiency and should therefore be reduced to a minimum. With a combination of privatization, liberalization and deregulation, globalization should bring maximum prosperity, liberty, democracy and peace to the whole of humankind.

Core tenets

In a nutshell, neoliberalism rests on economism and marketism, as achieved by means of privatization, liberalization and deregulation. These two premises and three attendant policies are elaborated in succession below. The influence of each of these points on contemporary governance of globalization is also described, with reference to the operation of various transworld, regional, national and subnational regulatory mechanisms.

History to date

Neoliberal doctrine has exerted a powerful hold on governing circles during the past quarter-century of accelerated globalization. Faith in free markets has formed the core of the so-called Washington consensus on policies for the global economy (Williamson 1990). The strength of neoliberalism has been such that its champions could seriously invoke the TINA clause of “there is no alternative”. The early 1990s was even a moment to announce “the end of history”—no other model but capitalism and liberal democracy seemed possible (Fukuyama 1992).

Importance of past-present study

In reflecting on the future fate of neoliberalism, it is important to understand where the doctrine has come from and what sustains it: know the past and present in order to shape the future. On this inspiration, this paper offers an account of the institutional and deeper structural forces that have given neoliberalism its primacy in shaping globalization over the past quarter-century.

Time-space compression

With these supraterritorial characteristics, current globalization has constituted more than an extension of the time-space compression that has unfolded over a number of centuries past. In this long-term trend, developments in transportation technology like motor ships, railways and early aircraft have progressively reduced the time needed to cover a given distance across the earth’s surface. Yet this time-space compression has occurred within territorial geography, whereas transworld simultaneity and instantaneity take social relations beyond territorial geography. The difference is qualitative; the change is structural.

End of territolialism

Although contemporary globalization has brought the end of territorialism—where social geography is reducible to territorial space—we have certainly not seen the end of territoriality. Territorial production, territorial governance mechanisms and territorial identities remain highly significant, even if they do not monopolize the situation as before. Territorial borders continue to exert strong influences in many areas, such as trade in material goods and movements of people (Helliwell 1998). Indeed, recent globalization has been closely connected with certain forms of reterritorialization such as regionalization and the proliferation of offshore arrangements. So the end of territorialism has not marked the start of globalism. The addition of supraterritorial qualities of geography has not eliminated the territorial aspects.

Contemporary society knows no “pure” supraterritoriality that exists independently of territorial spaces. By the same token no regional, national, provincial, local or household conditions today exist in isolation from global circumstances. This multidimensionality clearly brings greater complexity to geography—and by extension to culture, ecology, economics, politics and social psychology as well. The relative simplicity of a territorialist-statist-nationalist world is fading fast.

Homogenization of culture

This complexity suggests that it is mistaken—as many casual observers have done—to equate globalization with homogenization. The global, the regional, the national, the provincial, the local and the household dimensions of social space intertwine in infinite combinations. Indeed, people could exploit the global to further cultural diversity, as when indigenous groups have used UN mechanisms and electronic mass media to promote their particularity (Dowmunt 1993; Wilmer 1993). Moreover, global spaces themselves can host great cultural pluralism, as when multiple world religions occupy sites on the Internet. Global connectivity has also generated some new cultural forms, for example, in the area of music (Bennett 1999). If recent globalization has had some homogenizing tendencies, it is due to certain imperialistic power relations in contemporary world politics. Cultural levelling is not an inherent feature of globality itself.

Class superiority

With regard to class, the wealthy have usually inhabited global spaces more than the poor. Indeed, many millions of low-income people alive today have never made a telephone call. With respect to gender, men have linked up to the Internet much more than women (UNDP 1999:62). Other patterns of uneven access to—and benefit from—global relations can be discerned in regard to age group, civilizational heritage and race. To be sure, globality has not been an exclusively Northern, urban, elite, male, Western, white preserve; however, prevailing cultural patterns, resource distributions and power relations have produced a highly uneven spread of transworld connections.

The foregoing remarks concerning social hierarchies highlight the thoroughly political character of globalization. There is nothing intrinsic to global spaces that determines that they should promote certain kinds of social stratification. However, it is inherent in globality that, like any social space, it will house power arrangements and associated power struggles, whether latent or overt. There is thus nothing politically neutral about globalization and the policy courses that we adopt toward it.

Economistic view

On the first point, neoliberalism has an economistic worldview at its core. The doctrine regards globalization as being basically an economic process—a question of the production, exchange and consumption of resources. Neoliberal policy making therefore rests on economic analysis above all other understandings of globalization. Cultural, ecological, geographical, political and psychological aspects of globality are generally approached as functions of, and subordinate to, economics, if they are considered at all. Indeed, neoliberalism tends to treat economics in isolation from other dimensions of social relations. In particular, the doctrine supposes that economic policies toward globalization could be a culturally and politically neutral matter of technical expertise.

Focus economics

Neoliberalism focuses not just on economics, but also on economics of a particular kind, namely laissez-faire market economics. In a word, from a neoliberal perspective the global economy should be a free and open market. Production, exchange and consumption of resources should unfold through forces of supply and demand, as they emerge from the uninhibited interactions of a multitude of firms and households in the private sector. In neoliberal eyes, the role of the public sector in the economic sphere is to “enable” rather than to “do”. Multilateral institutions, national governments, and local authorities exist to provide regulatory frameworks that maximize the efficiency of global markets, for example, by securing property rights and enforcing legal contracts.

At the national level, most governments across the various continents have espoused liberal market principles as the central pillar of their approach to the global economy.

Indeed, market economics have become so pervasive in contemporary globalization that policy makers now tend to naturalize the situation. That is, they treat the market as an inherent and normal condition, while other economic arrangements are regarded as aberrations that require correction. Even many of today’s academics have forgotten that markets are historically contingent social constructions and that other modes of economic organization are possible.

Agencies for privatization

Among multilateral agencies, the prime promoters of privatization in these various forms have included the International Monetary Fund (IMF), the World Bank Group and the various regional development banks. Privatization has been a central plank in the economic restructuring policies—packaged in so-called structural adjustment programmes—that these institutions have supported. At a regional level, the development cooperation work of the EU has often urged privatization. In national and subnational government, privatization has become a main policy pillar for most major political parties, including many that carry social-democratic and even socialist labels. Some countries—especially those of the Anglophone sphere like Australia, Britain, Canada, New Zealand and the United States—have taken privatization further than others, but very few governments in the world have stood against this tide. Even Cuba has let private enterprise undertake much of its integration into global tourism.

Liberalization

Next to privatization, a second main pillar of neoliberal programmes to marketize the expanding global economy has been liberalization, that is, the removal of officially imposed restrictions on movements between countries of goods, services, money and capital. By neoliberal prescriptions, regulatory authorities should reduce—and preferably eliminate altogether—trade barriers, foreign exchange restrictions and controls on flows of direct and portfolio investments. In principle, liberalization ought also to extend to cross-border movements of labour, but in practice proponents of neoliberalism have rarely pushed for open migration. Inconsistencies and double standards have also reigned aplenty in the execution of neoliberal trade policy, of course, where powerful states have often jealously guarded protectionist measures in some sectors…

Liberalization of cross-border traffic between countries has also been a raison d’être for most regional governance structures in the contemporary globalizing economy. The East African Community, EU, Southern Common Market (MERCOSUR), North American Free Trade Agreement (NAFTA) and other such initiatives have had as a principal aim to create regional customs unions, common markets, and even single currency areas. Sometimes liberalization within a region has gone hand in hand with protectionism toward the outside world, as the CAP well illustrates. However, on other occasions interregional cooperation—for example, between the EU and MERCOSUR—has sought to reduce restrictions on exchanges between blocs.

State sponsorship

Needless to say, all of these global and regional measures for liberalization have required ratification and implementation through states. In addition, many governments have taken unilateral steps to lessen barriers to cross-border movements of productive resources. …Many governments have also removed disincentives to the FDI, for instance, by creating export processing zones (EPZs) where capital from abroad enjoys minimal taxation and low regulation. Nearly 850 EPZs existed around the world by 1999 (UNDP 1999:86).

Deregulation

Another general means of neoliberal marketization, deregulation, has also pervaded economic policies across the world during contemporary globalization. To be sure, deregulation has not in this context meant no regulation. On the contrary, as noted before, neoliberalism emphasizes the need for laws and institutions that uphold markets and promote their efficient operation. So neoliberal deregulation has only prescribed the removal of those rules and procedures that allegedly interfere with market dynamics, damage incentives and compromise efficiency. Such measures include wage and price controls, subsidies, fixed exchange rates, a number of taxes and fees on business, and progressive taxation of personal income. In addition, neoliberal logic has motivated various changes in labour legislation to allow greater flexibility in employment practices. Similarly, neoliberalism has urged limitations on environmental controls when these measures purportedly hamper a country’s global competitiveness. Removal of bureaucratic red tape for business has been another favourite neoliberal refrain. In a word, then, neoliberal deregulation has involved a shift from state interventionism toward market-enabling governance. In this sense it would be more precise to speak of “reregulation” rather than deregulation.

Consequences of Neoliberal globalization

These preliminary cautions made, a substantial accumulation of evidence from a wide range of contexts across the world suggests that neoliberalism has severe—and in some respects inherent—flaws in terms of delivering human security, social justice and democracy. Advocates of neoliberal policies have certainly tended to overstate the gains and underplay the costs. Marketization through privatization, liberalization and deregulation has not fulfilled—and shows little sign of fulfilling—a Panglossian dream of maximal well-being for all humankind. Neoliberal arguments maintain that liberated market forces would yield the most efficient production, which would in time generate the greatest collective global prosperity. This outcome will, it is said, in turn remove incentives to warfare and produce world community and peace. Many adherents of neoliberalism also assume that uninhibited global markets will have a direct positive correlation with individual freedom and liberal democracy (compare Beetham 1997). Yet in practice the record of globalization-by-marketization has not been nearly so rosy.

Effects of neoliberalism on culture and society

Similarly, economism tends to make neoliberalism underplay, if not ignore, issues of cultural integrity. This omission could have dire consequences, since human security is often as much about having a coherent knowledge framework and a community of people with whom to share that understanding—that is, about being, believing and belonging—as it is about having guarantees of material welfare. Yet untrammelled global markets could severely undermine treasured life-worlds that are not able to withstand intrusions of modern capitalism and Western consumerism. To take but one illustrative indicator, already up to half of the languages currently spoken in the world are threatened with extinction (Wurm 1996).

Further negative outcomes of neoliberalism have arisen in respect of social cohesion. These problems go beyond the previously mentioned tensions in places of work, households and public spaces consequent upon insecure employment. More generally, the neoliberal premise that social relations boil down to individuals competing in a marketplace undermines collective spirit and mutual support. This social fragmentation has occurred particularly in larger society, but also in relations among intimates. Although precise links might be hard to demonstrate conclusively, arguably the logic of competitive individualism in the market could encourage greater violence, criminality, and family breakdown where neoliberal policies have prevailed.

Likewise, an economy based on competitive individualism has unhappy implications for social justice, all the more since neoliberalism assigns priority to efficiency over equity when the two conflict. Indeed, neoliberal ideology is blind to structural inequalities of opportunity and gain in global markets—for instance, between age groups, classes, countries, races, religions, sexes and urban versus rural areas. Neoliberalism assumes that uneven distributions of benefits are natural and that any undue inequalities would be resolved through time with trickle-down processes. Yet as emphasized earlier, players have come to today’s globalizing economy with unequal—often staggeringly unequal—opportunities to participate, and laissez-faire has tended to direct the gains of free markets disproportionately to those who have started with more resources and power. Thus, for example, offshore finance has been largely reserved to large corporations and so-called high net worth individuals, and computers have mainly been available to those who can afford them. Neoliberalism rejects policy interventions to reduce gaps in opportunities and gains, and on the contrary, has prescribed that many existing redistributive mechanisms should be dismantled. Hence, we have entered the twenty-first century with some 7.7 million superrich, each holding more than $1 million in financial assets, while 2.8 billion others are living on less than $2 a day (World Bank 2001:3; CapGemini 2004:4).

Yet whatever the data problems, casual observation suffices to establish that several decades of globalization guided primarily with neoliberalism have not removed stark inequalities from the world between classes, countries, races, sexes and so on. These gaps have dubious economic rationality and political viability, let alone moral probity. Moreover, certain careful empirical studies have concluded that neoliberal policies of the last two decades have indeed—as logic would suggest—exacerbated income inequalities in many countries, whereas the period between the 1950s and the mid-1970s saw some declines in this area (Cornia and Court 2001).

Conclusion

This paper has offered a historical-sociological understanding of neoliberal globalization. Its core argument is recapitulated below.

1. Globalization is a transformation of social space that occurs with the spread of transplanetary—and in contemporary times often also supraterritorial—connections between people.

2. Globalization and neoliberalism are not the same thing: the latter is a policy approach toward the former.

3. Neoliberalism prescribes that globalization is an economic process that should be managed with marketization through privatization, liberalization and deregulation.

4. Neoliberalism has in various cases promoted gains in efficiency and material welfare, but it has also tended to neglect other important issues and to produce or exacerbate a number of cultural, ecological, economic, political and social harms.

5. Neoliberal policies have been generated by a powerful combination of forces related to decentred governance, supraterritorial capitalism, modern economic science and global elite networks.

Chapter IV. Neoliberalism in World Tourism: A World Analysis of Governance and Development through Market Liberalism

Governing Poverty

Development beyond neoliberalism?

People rise from poverty when countries act on two pillars of development: building a good investment climate in which private entrepreneurs will invest, generate jobs, and produce efficiently, and empowering poor people and investing in them so that they can participate in economic growth. What’s a good investment climate? Start with sound macroeconomic management and trade and investment policies that promote openness and raise production and growth. Add the elements of good governance, such as regulation of industry, promotion of competition, and prevention of corruption. Then set all that on a foundation of basic infrastructure and effective basic services, such as health and education.

World Bank, States and Markets, 2002

Development Reinvents Itself

‘The Bank’, the saying goes, ‘always knows best’. But, says the rejoinder, ‘what the Bank knows, changes’. Certainly the agendas set by the world’s leading Development institutions, the World Bank included, have varied markedly over time. In this they have both led and, more often, reacted to wider political and economic changes, and especially to crises. (Craig and Porter 2006)

Poverty Reduction Development would from 2000 roll out on a broad, three-legged agenda of promoting economic opportunity through global market integration, and enhanced social and economic security and empowerment through innovative governance arrangements for local delivery of health, education and other poverty-reducing services. (Craig and Porter 2006: pg. 4)

Markets…could do just what Polanyi said they would: disembed social relations from their existing conditions, and turn things previously regarded as social goods into commodities. But for markets themselves to survive…they need to be embedded in regulatory and constitutional frameworks…They could be disembedded from corrupt, territorial patrimonialism, and secured through Liberal institutional frameworks, such as the universal rule of law (which governs everyone alike, and provides security for the poor). This security could be supported by other Liberal governance measures, such as freedom of information, participation in politics, and basic education and health services. It could also be reinforced by the social capital of ‘softer’ institutions: community participation and civil society partnerships, creating trust and providing institutional support for the market. (Craig and Porter 2006: pgs. 9-10)

Part I: Liberal Development and governance from free trading to ‘neoliberal institutionalism’

In poor countries, Liberal Development has usually been aligned with security concerns, and can, we argue, be seen as in part a means of containing the poor politically. This we show was apparent in the processes of ‘Indirect Rule’, in nation states aligned to security blocs, in local communities serviced by some NGO, or in the localized, ‘quasi-territories’ popular in decentralized governance today. (By the end of this book, ) it should be clear that Poverty Reduction and Good Governance deviate very little from this historical Liberal ambit: ‘What the Bank knows, changes’: true but within crucial Liberal parameters. (Craig and Porter 2006: pg. 11)

Part II: Cases from Vietnam, Uganda, Pakistan and New Zealand

In Vietnam and elsewhere, PRAs (Poverty Reduction Agreements) offered a new, apparently participatory way of framing the poor in their places: hearing the voices of the most marginal, representing poor communities in globally legible ways, and in so doing, presenting poverty as something ‘inclusive’ neoliberalism could fix locally. The LDF (Local Development Funds), on the other hand, offered a direct means for donors and central government to channel to localities, resources for palliative services and basic infrastructure. And, at the same time, a way to get local buy-in for their efforts to deal with socially disembedding consequences of market-led transformation. (Craig and Porter 2006: pg. 15)

By cobbling together an accommodating donor-Communist Party Litany of ‘growth with stability’, market socialism’ and ‘community participation’, the intention was to create ‘policy windows’ that justified by passing intervening levels of government, which were often seen as an opportunistic corrupter of efforts to respond to local needs. In fact, these approaches tended to be seen by donors as a way of achieving democratization by stealth: achieving change through administrative, executive or technical means what had proven difficult through political channels. Adherents of local PRAs hoped these instruments would clasp together community and government and foster a new accountability to Poverty Reduction that reflected a consensus about what the poor needed. (Craig and Porter 2006: pg. 16)

Earlier moves towards privatization may be seen as ‘horizontally’ disaggregating government: taking government functions at say local (or other) level, and contracting them out. In Development, NIE approaches argued for wholesale engagement of NGOs and private sector in service delivery. The result was an efflorescence of private provider, acting as NGOs and masquerading as ‘civil society’. Public agencies too joined in acting as private contractors, competing to provide the state’s regulatory, policy, enforcement and service delivery functions. (Craig and Porter 2006: pg 17). (emphasis supplied)

But NIE reforms also implied a ‘vertical’ (sic) dis-aggregation, in which the political, administrative and fiscal functions of the central state were delegated or devolved up or down governance hierarchies. Delegating up meant separating rule making and policy framing from executive and implementation, by shifting the former into separate, often internationally sanctioned frameworks and domains (such as the World Trade Organization (WTO) and its global rules). Devolving ‘down’ meant shifting mandates and tasks (and hopefully funding) to multiple levels of local, regional, state/provincial authorities. If it could be done locally, the principle of subsidiary urged, it should be. Locally, enhanced voice, participation and multiple points of client exit would ensure resources were allocated efficiently and make the whole operation for accountable. And thus the proliferation of local ‘accountabilities’ was seen as the prerequisite for achieving greater accountability of the whole. (Craig and Porter 2006, ibid)

This Book’s Analysis: Political Economy, Polanyi, Liberal and Territorial Governance

The wider issues and practices at work are those of economic and political Liberalism, more recently reconfigured as ‘neoliberalism’, which we consider itself as a moving target, subject to on going hybridizations, from the frank, conservative neoliberalism of Structural Adjustment to the ‘inclusive’ neoliberalism of Poverty Reduction. The much longer historical pattern involves the extension of Liberal economic and governance modes to the poorest peripheries of the planet- the (neo) liberalization, perhaps, of peripheral governance.

But the study involves a counter-perspective, equally important, that requires the fraught relationship between these traveling Liberal modes of governance and the actual local realities of patrimonial and territorial power, the territorially ensconced poverty where they end up… we need to consider that it has been overwhelmingly in authoritarian, one-party states, and for political reasons, that ‘poverty reduction-related decentralized governance has rolled out. Here we show how the IFIs (International Financial Institutions) and authoritarian government have aligned in headline countries, reinforcing core doctrines and techniques, enabling them to be projected onto less able and stable states. (Craig and Porter 2006: pgs. 21-22)

Table 1. Liberal and Territorial governance of poverty

	Liberal governance of poverty: the (universal) market	Territorial governance of poverty: the (particular) place or society
Basic Focus Obligations of governance Relation to space and place Preferred governing techniques Opportunity Security, stability and boundaries Security, stability and subjects Empowerment and subjects: wellbeing and capability Empowerment and subjects: rights and entitlements View of property	Market mechanisms and their operation: universality, efficiency and security of these, integration of all into these Getting the rules right: universal, technical, transparent, market enabling, non-restrictive of movement: enhancing power of the market and active subject Universal, place in relation to local and global markets Compliance with universal laws and contracts; separation of powers; state out of markets, and marketized decentralization; authoritarian government or ‘technopols’, some participatory democracy Comes from integration into markets Enforcement of rules wherever capital is circulating; risks managed Security for market actors: capital, property and contract rights, asset ownership Enabling market actors, through services, voice, education to be individually capable in safe communities Universal Rights: freedom to contract and circulate, freedom to own accumulated wealth Due to market failure, lack of market integration, lack of market capability, vulnerability to shocks	Actual territorial resource, production, market and population processes and their outcomes: position of social/demographic group viz. these Engaging outcomes through distribution of power, assets and resources on the ground: in specific local/market/geographic conditions Place specific, territorial, historical, population oriented Political, state or patrimonial power, accommodated with markets; distributive control over resources via taxes and transfers; autocracy or representative democracy; plans strategies; devolved authority, funds Comes from position in markets and in relation to place, assets, resources Security, stability, wealth and poverty of (particular groups in) territorial domain Security of place (e.g. work) in market/ other contexts. Ability to strengthen this vis others, bargaining, political power Wellbeing via adequate resource/income base (e.g. water, land, capital) for that place, and relative access to it Territorial entitlements: citizen’s share of territorial wealth, services Weak position vis international/local markets, and vis political and historical distribution of assets, resources

(Craig and Porter 2006)

Financial Crisis and the Rise of Neoliberalism: Structural Adjustment and the Washington Consensus

By the early 1980s, speculative mobile capital came to drive the world financial order in ways not seen since the 1920s and 1930s and the dearth throes of a previous Liberal order…National governments found themselves unable to reasonably manage production, demand and employment only at the level of the territorialized nation state. As the 1980s progressed, national governments had to face up and out to a global logic that required them to secure their interests on an expanding terrain in which the need to attract mobile capital in a globally networked system of production, and international market competitiveness was paramount (Craig and Porter 2006: pg.54-55).

As we will see, the molten deterritorializing caused by new engagement within the global economy was matched by local fragmentation, as the marketizing of governance by NPM, NIE and the likes saw battles formerly waged in public institutions begin to be fought in the extra-institutional space of the social market…What emerged, painfully and inadequately, was a set of crisis alert, risk-averse and IFI-endorsed national policies. These are remembered since 1989 as the Washington Consensus, and the chillingly technocratic enactments of Structural Adjustment.

But in the early 1980s, the lack of upfront analytic or political clarity about the destabilizing effects of financialized and footloose capital in practice was matched by the incapacity of the major players to analyze its systemic effects. Where regulatory moves were implemented they were reactionary, immediate and short-term (Craig and Porter 2006: pg. 55).

The scene was set for the radical reopening of nations to the perversities of capital flows and exchange rates, the roll back of regulation and state ownership, the apparent discrediting of national productive strategies, and the quick restructuring of industry.

Despite the global mobility of capital, the focus on national economies persisted. But this too was gutted as these strategies moved into the guillotine framework of neo-classical New Political Economy (NPE)…Salient indicators shifted from gauges of national production and wealth to policy settings which focused on the current account, the capital account and interest and currency rates, all assessed in terms of their scope for attracting and securing capital. In this new regatta the most spectacular reformers, the semi-peripheral countries like Chile, New Zealand, the Asian Tigers, had their moment in the international spotlight. Here it was thought, Liberalized global integration had been empirically implemented. The Asian Tiger Reality was quite different, but the extent of the deviance wasn’t clear until it ran into frontal assault from larrikin capital and its neoliberal agents in the late 1990s(…)In fact, then as now, capital reached some of its best accommodations with authoritarian governance (Craig and Porter 2006: pg. 56).

But few could have anticipated what a potent yet blunt and perverse political instrument debt would become. Structural adjustment’s lopsided first-generation solutions paraded in the technical clothes of policy based lending, and were implemented by technocrats apparently only concerned that policy should be visible and confidence engendering, technical and measurable(…) The debt crisis was a result not of policy but of underpinning capital and human realities, precisely of the kind Keynes feared. It was a matter of lots of money being about, …’inept borrowing country policies made worse by vested interests of governing elites’; and ‘commercial bank cupidity and naivety’.

Reactions and roller coasters followed, as regional economies entered a semi-peripheral spiral that made post-war dependency relations look beneficent. Debts were socialized wholesale, deficits monetized, leading to ore inflation. As in the 1990s, the semi-peripheral, unevenly integrated countries would be the high profile winners and losers from the shakeout. The truly peripheral would have debilitating experience of having different, but still second-hand, mis-scaled doctrines ineffectively applied to them(Craig and Porter 2006: pg. 59).

Neoliberalism institutionalism: the new political economy of the state, and the governmentalizing of civil society

Policy reform, it turned out, was the first phase in a longer period abstract governance thinking Development practice. Here, from 1981-2005, in governance reform programs in OECD and Development contexts, neoliberal policy formulae would be rolled out and embedded not in Polanyian social contexts, but in increasingly elaborate convolutions of what Liberal economic historians called ‘institutions’… The ‘hollowing out’ of functions that had been scaled to the nation state illustrates to two features of the 1980s orthodoxy, both part of a determined displacement of state institutions from the roles earlier accredited to them as ‘the engines of development’. One, already apparent, was ‘external delegation’ of state functions to international regulatory bodies like the IMF. As second was ‘internal delegation’ to non-state organizations in the form of NGOs and private sector agencies(…)But NGOs fed the hope with ample evidence that they indeed had a ‘comparative advantage’ –as always, despite that these claims were seriously contested by empirical evidence. . (Craig and Porter 2006: pg. 61)

The immediate effect of these developments was to circumscribe the practical autonomy and shake any remaining sense of critical sovereignty for the nation state. NGOs ironically became neoliberalism’s shock troops in the process… And only later, as we see, did the unanticipated fragmenting effects that occurred as this orientation visited on poor, distant countries become apparent…As a shadow of its former self, to be sure, but also as a useful and sometimes critical framing device, into which all the new armatures of NIE could be plausibly pitched from a distance, owned, implemented and ultimately joined-up to reconfigure the state in the interests of the markets…Soon these developing country states would be rearmed with depoliticized, partially reterritorialized Good Governance ambits that would reconstitute localities, governance and poverty in ways that made it possible for Liberal developmentalism to once again plausibly position itself as a comprehensive, inclusive and joined-up address to Poverty Reduction. (Craig and Porter 2006: pg. 62)

Crisis and Re-embedding: international politics, economy and development 1990-2005

…the IFIs would be overwhelmed by the repercussions of another capital bubble in emerging Asian economies, and in the thick of this crisis, conflate institutional reform needs with (short-term liquidity) crisis management. This would more than repeat the 1980s scenario, where financial crisis was ironically used to reinforce the overall ‘open economy’ orientation, further opening capital markets and facilitating the narrow bankerization (with it’s ‘easy in, desperately out’ penchants) of capital movements…Now, ‘securitized’ capital, speculative and financialized as never before, would bring ‘ratings agencies’ sharp and narrow rationalities into the heart of political economy, and financial security fears would drive political commitment to economic conservatism with a vengeance. Meanwhile, short and long-term private capital flows into emerging economies would, like popularized technology and wider share markets, boom and bust, and come to be seen as both an aid-dwarfing savior and an aid-destroying devil. (Craig and Porter 2006: pg. 65)

The 1990s was for all that a contradictory decade, as both marketization and reaction played out, sometimes within the same political and institutional settings…NGOs commitments to participatory processes were beginning to be taken up by multilateral agencies and IFIs(…)Moves by states to re-regulate the market gathered conviction and political support, especially in natural resource management, transport and utilities (Craig and Porter 2006: ibid).

In retrospect, neoliberalism in the 1990s sat on a seesaw. Liberal projects both conservative and social democratic swayed between the deeper disaggregations of government wrought by privatization and NIE on the one-hand and, on the other, shallow re-embeddings of market-based welfare regimes around community and individual responsibility. Often, these reforms were driven by the same political and institutional agencie, their broadly Liberal programme able to hybridize both inclusive/positive and market neoliberal positions. The result was unevenness, and often just plain dysfunctional governance: in the absence of a comprehensive and authoritative Liberal project, (things took on what Ash Amin has called a ‘heterarchic and topological’ aspect: multilevel governance, interagency arrangements, wildly differing in their composition from place to place (Craig and Porter 2006: pg. 66).

Finessing the MDB (Multilateral Development Banks) charters: not politics, but the rules of the game

The World Bank’s Long Term Perspective Study published in 1990 defined governance in explicitly political terms: ‘the exercise of political power to manage a nation’s affairs’, This political rendering of the ‘governance’ agenda was later finessed in favour of a more technical presentation. Though explicitly aware of the political nature of governance problems’, the Bank’s first treatise on ‘the governance dimension’, Managing Development, in 1991 set out the problem in the moral and technical terms of ‘misgovernment’. (Craig and Porter 2006: pg. 69)

In the meantime, it was corruption that set poor countries apart from the rest:

It tends to thrive when resources are scarce, and governments rather than markets allocate them; when civil servants are underpaid; when rules are unreasonable or unclear; when controls are pervasive and regulations are excessive; and when disclosure and punishment are unlikely. (Naim 1994)

Later, the World Bank became the self-declared champion of the anti-corruption cause. In 1996 the World Bank’s President pledged to commit to fighting ‘the cancer of corruption’. In 1999, James Wolfensohn took it further, claiming that ‘[a]s far as our institution is concerned there is nothing more important than the issue of corruption’

When Liberal governance theory is harnessed to policy, analysis usually begins and ends with normative assumptions, so that what happens in between is anticipated as mere contingency. Then as now, structural, historical and political economic explanations of corruption were rarely entertained: corruption is a moral problem for now, not the product of, say, (post) colonial experiences which centered productive resource and security-pushed loan transfers on the state, creating enormous incentives for rent seeking. So, good governance became synonymous to technocratic systematization: ‘sound development management’, and ‘creating a sound investment environment’. (Craig and Porter 2006: pg. 70)

Considerable skill was needed at the operational level too, where careful delineation of separate domains for the political and the technical might allow for the separation in government in ways that would let each get on with business. As Governance and Development made clear, reflecting a caution by its General Counsel, the agency’s Articles of Agreement prohibit the World Bank from interfering in the political affairs of the member states. Article IV, Section 10 of these Articles reads ‘the Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned’. Governance and Development quotes Webster’s New Universal Unabridged Dictionary, to find that governance has three distinct aspects: (a) the form of political regime; (b) the processes by which authority is exercised in the management of a country’s economic and social resources; and (c) the capacity of governments to design, formulate, and implement policies, and in general, to discharge government functions. ‘The first aspect’ guided the General Counsel, ‘clearly falls outside the Bank’s mandate. The Bank’ focus is, therefore, on the second and third aspects’. But here, a shift can be seen:

[B]eyond building the capacity of public sector management, to encouraging the formation of the rules and institutions which provide a predictable and transparent framework for the conduct of public and private business and to promoting accountability for economic and financial performance. (from the World Bank Articles of Agreement)(Craig and Porter 2006: pg. 71)

[The Bank] cannot be influenced by the political character of a member; it cannot interfere with the partisan politics of the ,member; it must not act on behalf of industrial member countries to influence to borrowing member’s political orientation or behavior; it cannot be influenced in its decisions by political factors that do not have a preponderant economic effect; and its staff must not build their judgments on the possible reactions of a particular Bank member or members. (from a memo of the counsel identifying five aspects of governance lying beyond World Bank’s mandate)

With these provisos, General Counsel held that ‘governance’ was quite consistent with the World Bank’s mandate as it was restricted to the promotion of order and discipline in the management of a country’s economic transformation…Good Governance opened a breech in poor country sovereignty potentially far bigger than anything since Lugard. Looking back, the road from Lugard’s mandate is quite clear. Looking ahead to Poverty Reduction strategies, we are already well on the way to Development as ‘security’, in the name of ‘opportunity’ and ‘empowerment’. (Craig and Porter 2006: pg. 72)

Good Governance: the tools of a crisis manager

By pushing accountability, management, laws, regulatory surveillance and ownership up front, those building on Governance and Development established a firm utilitarian basis for operations that finessed the vexed problem of ‘politics’. This was backed up by evaluation results purporting to show a ‘strong correlation’ between various indicators of this litany and ‘satisfactory’ outcomes. Here was a classic case of driving political ends that could not be approached directly, through utilitarian technical means. Thus interpreted, good governance could defensibly reflect a legitimate concern about the efficiency of the state—what would soon be reshaped as a question of lowering ‘transaction costs’. Alongside these indicators, it was still possible to maintain a rhetorical commitment to deal with the equity effects of the economic system and the legitimacy of the power structure. But these classic concerns of ‘territorial’ modes of governance would be judged in terms of the adoption (or ‘ownership’) of these technical, efficiency oriented, good governance precepts: in sum, institutional strengthening. It would take time to connect all dots at an operational level, as we will see, and find a way through to far wider political engagement, ‘but the General Counsel’s advice in 1992 provided a durable basis for an unprecedented expansion of international agencies administrative ambits.

A new generation of conditionality, labeled ‘structural conditionality in the case fo the IMF and ‘governance conditionality’ in the case of MDBs, was being confidently advanced. So defined, from 1996 to 2000, the World Bank alone initiated over 600 governance related programmes in 95 countries and was underwriting explicitly focused governance reforms in 50 countries. By 2002, governance featured in the bulk of the conditions attached to IFI financing (on average, 72 percent in Africa, 58 percent in Asia, 59 percent in Central Asia and Eastern Europe, and 53 percent in Latin America and the Caribbean).

In spite of this finessing in the mid-1990s, broader political economy questions about equity, the achievement of population-wide outcomes and the fallout of global structural power in local markets all continued to surface. But these had little operational effect. By mid-1990s, governance policy was being articulated mostly by a new cadre of public administration specialists recruited to operationalize governance policy. By and large, this reinforced the narrowing of focus. From the mid-1990s there was a palpable sense of technical tautology, with one agency, be it the ADB (Asian Development Bank), the African Development Bank, or bilateral agencies (and none too few NGOs), quoting back on each other’s good governance definitions and refining a view of governance that highlighted the conservative discipline of transparency and predictability, accountability to the law, and the ‘positive’ Liberalism of participation. (Craig and Porter 2006: pgs. 73-74)

For the ADB, Good Governance was ‘sound development management’ and rested on four interrelated ‘pillars’: accountability, transparency, predictability and participation’ (…) Good governance provided an illusion that things can be fixed by donor and IFI leverage, mainly applied via threats of aid withdrawal. Recipient governments quickly became adept at playing this game of weak threat and symbolic reform, playing on the need of donors to move the money their way for wider political reasons, aware of the few occasions when aid is actually withdrawn. (…) This game playing in itself undermines political commitment, by representing the problem as being attended to, and not requiring significant action. (…) The effect of this is to insulate wider politics from the wrath of the classes that have historically had most success in demanding accountable governance: especially the small, growing middle classes. (…) This would require a politicization of IFI’s own position that would have wider ramifications and risks.

(…) But much more was at stake than corruption and mismanagement, or the internal workings of poor countries. A wider concern kept resurfacing, around security and containment of risk: ‘the concept of global security must be broadened from the traditional focus on the security of states to unclude the security of people and the security of the planet’. For this reason governance ‘now involves not only governments and intergovernmental organizations, but also NGOs, citizen’s movements, transnational corporations, academia, and mass media. As later developed with far greater sophistication through the High Level Harmonization Forums of 2004-2005, poor country governments were being urged to align to global norms in the interests of global growth and security, and then of course to show their commitment to this responsible by micro-managing, integrating and disciplining multiple local actors in accordance with these global regulatory regimes. (Craig and Porter 2006: pgs. 74-75)

Asian Currency Crisis and the Rise of the Poverty Reduction Strategy Paper

Into the Crucible again: the 1997 Asian currency crisis

Notwithstanding the fact that the techniques they employed have been largely outlawed by the Liberal juridical arrangements of the WTO, Asian Tiger governments’ successes in managing sustained growth over decades is now well established: arguably, their work with managed markets constitutes the only successful model for capitalist development of poor countries over the last 50 years. Nonetheless, the heady days of the mid-1990s when their growth rates stupefied everyone’s imagination are now recognized as a classic speculative bubble, albeit with fatal local characteristics. But more broadly, the scope and nature of over-investment in South East Asian economies had political economic rather than governance causes, and needs to be traced to the emergence of the Asian Tigers on the back of Japanese capital and, of course strategic, security driven state led industrial development in Korea, Taiwan and Singapore. (Craig and Porter 2006: pg. 75)

Of the IFIs, the World Bank was by 1997 the furthest along in realizing the need to secure markets, and in lining up the institutional machinery now seen as necessary in the light of the tragic Eastern bloc experience of the marketing reform (…) the precipitous combination of the all too clear Washington Consensus imperatives (maintain fiscal prudence, raise interest rates), with much less effectively articulated institutional prescriptions (sort out corruption and the weak banking sector, what’s needed are unspecified microeconomic institutional and political reforms), ultimately proved lethal in dealing with the Asian currency crisis. This combination powerfully obscured realities, prompted misdiagnosis, sent mixed signals to already panicked markets, and precipitated a ruinous collapse in confidence in currencies, banking sectors, governments and IFIs alike. (Craig and Porter 2006: pgs. 76)

Internationally, in both core and peripheral countries, aligning local responsibility to blobal risk was taken forward in three ways (…) it is achieved through a resurgent moralizing about the poor’s responsibility: second, by innovations that fixed the poor, and poverty, in particular, localized places (most favored being the ‘local community’) while, third, being seen to give the poor in these places a crucial voice in legitimating the whole enterprise. Ownership was securely pinned to a renewed emphasis on ‘rights and responsibilities’ at a very local, individual level of ‘real people in (local) places’. Here, the OECD antecedents and parallels are striking. The incoming New Labour government of Tony Balir in 1997 expressed this most clearly. According to Blair, ‘the rights we enjoy reflect the duties we owe: rights and opportunity without responsibilities are engines of selfishness and greed’. ‘Community’ was to provide the main, disaggregated, ‘etho-political’, domesticated domain that could be invested with moral and other responsibility for achieving pro-poor results. In Blairite terms, ‘opportunity plus responsibility equals community’. So locality, along with labour markets, became a preferred container for responsible ‘inclusion’. Here was where the vulnerable poor, the child, the family were most visibly in need of the vulnerable poor, the child, the family were most visibly in need of protection, and it was at this scale that rights and responsibilities could be brought to bear in firm, disciplining ways. This appealed to adherents of the communitarian Left and Right, and it chimed well with the heartland of NGOs who had romanticized ‘community’ as the site of moral responsibility for all Development (…) this also occurred because interventions at the national scale (such as redistribution of wealth and opportunity) were being actively set aside in policy, which was beginning to focus on narrowly targeted, highly disaggregated approaches and techniques for governing poverty (…) As will become clear, the later development of Participatory Poverty Assessments involving NGOs and participatory research methods constituted a classic ‘inclusive’ neoliberal approach to framing poverty in ‘local vulnerability’ rather than political economic terms. These extended the qualitative reach of Liberaral framing and surveillance of poverty, and had the effect of turning potential civil society critics into consensual governing partners. (Craig and Porter 2006: pgs. 78-79)

Does trade Lead to a Race to the Bottom in Environmental Standard? Another Look at the Issues

“Economic growth is not a panacea for environmetal quality; indeed, it is not even the main issue. What matters is the content of growth—the composition of inputs (including environmental resources) and outputs (including waste products).” – Arrow et. al. (1995)

The issues between trade and environment are found in various areas of concern. One is the area of governance. The debate here focused on how international trade influenced environmental regulations (…) Another set of issues relate to competitiveness. This is of course linked to the influencing manner of governance. Strict environmental regulation will affect a country’s competitive advantage (…) On the other hand , it is also argued that increased trade and growth could eventually lead to better environmental protection (…) Another major concern is with regards to corporate strategy, specifically the issues of transboundary environmental management and corporate standards applied by TNCs in their subsidiaries located in the developing countries (…) Finally we go back to the issue of governance-at the global level. What is the state of the global environmental regime that could govern these issues in trade and environmental linkages? (Medalla and Lazaro 2005)

Trade and Environmental Linkage: Some Theoretical Underpinnings and Literature Findings

(…) Birdsall and Wheeler (1993 cited in Busse 2004) find that pollution intensity in developing countries grew fastest when environmental regulations in high-income countries were toughened, suggesting that different environmental standards could create pollution havens (…) Mani and Wheeler (1998 in Busse 2004) later indicate that these havens may exist only temporarily if at all from analyzing import-export ratios for five heavily polluting industries. Regressing measures of environmental regulations (in addition to other control variables) on dirty exports of 24 OECD and non-OECD countries, Wilson et al. (2002 in Busse 2004) find a significant negative linkage from some industries. On the other hand, there are various other studies finding very little or no evidence that differences in environmental regulations across countries are a significant determinant of trade flows. (Medalla and Lazaro 2005: pg. 2)

Nonetheless, while empirical results from different studies might vary, the basic theoretically hypothesis underlying the policy interrelationship is more definite—that there should be no conflict between good economic policy and good environmental policy. A good economic policy should not prevent the adoption and implementation of good environmental policy, and vice-versa. Indeed, ideally both should be present.

In general, there is a consensus that a relatively open trade policy is good economic policy. Trade theory suggests that for a small country, in the absence of market imperfections (e.g., the case of externalities), the use of trade barriers (whether in the form of tariffs or in the form of quantitative restrictions) creates market distortions that reduce overall welfare (…) environmental concerns almost invariably involve externalities that cannot be captured by market forces alone. And so, in general, a good environmental policy is one that leads to the internalization of these externalities, whether through command-and-control measures or market-based instruments.

Hence, translating the above-stated basic hypothesis, there should be no conflict between an open trade policy and good environmental policy. A liberal trade policy should not prevent the adoption and implementation of good environmental policy, and vice versa. Ideally, both should be present. This is when goods and resources are properly priced and the market would work more efficiently, leading to optimum welfare.

(…) (L)ax environmental policy would provide unintended (and unjustified) subsidies. In the real world, there is often lack in policy or policy administration which could lead to either outcome. In many instances, there is a tendency to mix and match policy tools in an attempt to make up for this deficiency. When nothing is done about the level and quality of environmental protection, there is fear that unrestrained international trade could lead to environmental degradation. In addition, there is worry that competition for trade and investment itself could encourage a “race to the bottom” in environmental standards, or the creation of pollution havens in developing countries (Medalla and Lazaro 2005: pg. 3)

(…) What does a good environmental policy imply? Generally it is one that leads to a correct pricing of environmental resources, i.e. one that reflects relative scarcities and value to society. Hence as in the case of capital and labor, the relative price of environmental resources depends on relative factor endowments. If one country has a lower environmental standard than another, it could simply be a true reflection of the country’s adsorptive capacity and not necessarily evidence of a “race to the bottom” or existence of pollution havens. Indeed there is a growing recognition that environmental standards should not necessarily be harmonized across locations, whether nationally or internationally. This is true even across locations where the same conditions apply, since different nations may have different valuation of environmental resources. (WTO 1999; see also Dion et al. 1997)

In the case of developing countries in particular, the arguments for the race-to-the-bottom and pollution haven hypotheses lead to the contention that growth in these countries must necessarily be accompanied by severe environmental degradation. Busse (2004) finds some evidence suggesting that the level of environmental regulations is influenced by income level and that the primary effect appears to come via income itself. This is more or less supports the environmental Kuznets curve which posits that growth harms the environments at low levels of income and helps at high levels (Frankel and Rose 2001).

Environmental Kuznets Curve

Kuznets curve is the graphical representation of Simon Kuznets's theory ('Kuznets hypothesis') that economic inequality increases over time while a country is developing, then after a critical average income is attained, begins to decrease. Another situation where Kuznets type curves appear is the environment. It is claimed that many environmental health indicators, such as water and air pollution, show the inverted U-shape: in the beginning of economic development, little weight is given to environmental concerns, raising pollution along with industrialization. After a threshold, when basic physical needs are met, interest in a clean environment rises, reversing the trend. Now society has the funds, as well as willingness to spend to reduce pollution. This relation holds most clearly true for a many pollutants, such as sulfur dioxide, nitrogen oxide, lead, DDT, chlorofluorocarbons, sewage, and many other chemicals previously released directly into the air or bodies of water. (date retrieved February 24, 2008, at http://en.wikipedia.org/wiki/Kuznets_curve )

In the same way, as real income rises, the demand for environmental quality also rises. This translates into environmental progress given the right conditions, effective regulation, and externalities, which are largely confined within national borders and therefore amenable to national regulation (Frankel 2003). Recent evidence however suggests that even at the lower income level, there already exists a more subtle and complex relationship between economic development and environmental protection. It appears that many developing countries are becoming more environmentally aware and have started the fight against pollution at much lower levels of income ahead that of the rich countries (WB 2000).

There is also evidence of a positive correlation between openness to trade and some measures of environmental quality. Although this may be due to endogeneity of trade rather than causality, trade may indeed have a generally beneficial (although not very significant) effect on certain measures of environmental quality. At the very least, there is no evidence that trade has the detrimental effect on the environment which the race-to-the-bottom theory would lead one to expect (Frankel and Rose 2001). In addition, openness can indeed provide developing countries with both the incentive to adopt, and the access to, new technologies, which may provide a cleaner or greener way of producing the good concerned. In the case of the companies with foreign market clienteles as well as foreign investors in the offshore countries, their environmental standards are made at par with that of the developed countries. The quality requirements in those markets encourage use of the latest technology, which is typically cleaner than old technologies (WB 2000).

(…) Is there more direct evidence of a (sic) ‘race to the bottom’ in environmental standards as countries fight to attract foreign capital, and the creation of pollution havens? This hypothesis is analogous to tax havens which apply low rates in order to attract financial capital. It implies a deliberate strategy on the part of host governments to purposely (sic) ‘undervalue’ the environment in order to attract new investment (Jenkins et al. 2002).

Hence for the most part, studies find no evidence that the cost of environmental protection has been the determining factor in foreign investment decisions. Environmental regulations do not seem to pose as the determining factor in international location decisions (WTO 1999). Factors such as labor and raw materials costs, transparent regulation and protection of property rights are likely to be much more important investment considerations. This is true even for polluting industries. In fact, countries do not become permanent pollution havens because along with increases in income go increased demands for environmental quality and a better institutional capacity to supply environmental regulation (WB 2000).

Five Main Environmental Effects of Trade Liberalization Scale effects: These are associated with the overall level of economic activity resulting from trade liberalization. Positive scale effects may result from higher economic growth particularly when appropriate environmental policies are present. Negative scale effects may occur when higher economic growth bring increased pollution and faster draw-down of resources due to the absence of appropriate environmental policies. Structural effects: These are associated with changes in the patterns of economic activity resulting from trade liberalization. Positive structural effects may result when trade liberalization promotes an efficient allocation of resources and efficient patterns of consumption. Negative structural effects may occur when appropriate environmental policies do not accompany changes in patterns of economic activity. Product effects: These are associated with trade in specific products which can enhance or harm the environment. Positive product effects may result from increased trade in goods which are environmentally-beneficial like energy-efficient machinery while negative product effects may result from increased trade in goods which are environmentally-sensitive like hazardous wastes. Technology effects: These are associated with changes in the way products are made depending on the technology used. Positive technology effects may result when the output of pollution per unit of economic product is reduced. Regulatory effects: These are associated with the legal and policy effects of trade liberalization on environmental regulations, standards and other measures. Source: OECD 1994/1995 from Aldaba and Cororaton 2001

Although the WTO has always held sustainable development to be a principle of trade liberalization, it has had to face a rising number of MEAs that often conflict with WTO principles. Several significant MEAs provide that parties are obliged to use trade ban to enforce the environmental objectives of the treaties, and are even required to ban trade with countries which are not parties to the MEAs. On the other hand, the WTO however does not permit any member to impose its own policies extraterritoriality under the threat of trade bans (the MEAs say we will not trade with you unless you apply our policies and standards) and it does not permit any member of the WTO to discriminate amongst each other in their trade policies (Oxley 2002). So also in the case of MEAs, the proliferation of amendments, protocols or annexes to various MEAs not only keeps the Party- non-Party nexus alive, but also might make it more subtle and confusing (Medalla and Lazaro 2005: see also Hoffman 2003).

WTO and multilateral environmental agreements At Doha, members agreed to launch negotiations on the linkage between trade and environment. However, these negotiations are circumscribed to four issues: the need to clarify the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs); the exchange of information between the WTO and MEA secretariats; the criteria for granting observer status to other international organizations; and the liberalization of trade in environmental goods and services. How do WTO rules apply to WTO members that have also signed environmental agreements outside the WTO? Suppose a WTO member government puts into place a trade measure to protect its environment that is provided for in an environmental agreement that it ahs signed. Should it fear being challenged in the WTO dispute settlement procedure? The new negotiations aim to clarify the relationship between trade measures taken under the environmental agreements and WTO rules. Focus on actual obligations, or broader principles? Some members advocate identifying individual ‘specific trade obligations’ that the WTO should examine. Others prefer a more general approach that would look at the principles governing the relationship between WTO and the environmental agreements, and how the environmental agreements’ trade measures might be accommodated in the WTO. For example, some advocate the principle that there should be no ‘hierarchical’ relationship between the two legal regimes—neither the WTO nor the environmental agreements should be dominant. In the meantime, proposals to grant observer status in the WTO to other international governmental organizations are currently blocked for political reasons. In the Trade and Environment Committee’s special sessions, eight requests are pending, including four from multilateral environmental agreements. The negotiations aim at developing criteria for allowing these organizations to be observers in the WTO. Source: Abridged from WTO Briefing Notes on Trade and Environment. WTO websites.

(…) (P)robably the best way to address environmental issues is to remove obstacles to incomplete markets. The vast majority of environmental degradation can be attributed to situations in which environmental resources are not properly valued, leading to so-called positive or negative externalities. Above all, these arise due to inefficient property rights systems, imperfect or asymmetric information, and government failure policy focuses more on special interest groups rather (sic) than the general public (Busse 2004 as quoted by Medalla and Lazaro 2005)

Developing countries also lack capacity to build credible certification bodies with the result that their firms often encounter problems in certifying compliance with international standards. Enforcing environmental standards and norms and monitoring them is also an enormous problem for developing countries and thus requires continued assistance from developed countries (Jah and Vossenaar 1999 as quoted by Medalla and Lazaro 2005).

It is not trade per se which would lead to the ‘race to the bottom’ in the environmental regulations. It is more of the lack of awareness or prioritization of the environment as well as the laxity and capability in the implementation of existing mechanisms which would have detrimental effects on the environments, no matter what kind of trade policy regime exists (…) openness to trade could even be positively related to environmental quality. In addition, developing countries may even be able to achieve higher levels of environmental performance even long before they reach the income levels of the industrialized countries. (Medalla and Lazaro 2005)

A Comparison of Tourism Policy Frameworks: The Philippines and Thailand

In the 2001-2004 Medium-Term Philippine Development Plan (MTPDP), the Arroyo administration devotes a separate chapter to tourism, entitled, “Putting the Philippines on the International Tourism Map”. The administration aims to implement reforms that would meet the industry’s development requirements; rebuild the country’s image; strengthen its competitiveness in attracting foreign visitors; and further stimulate domestic travel while protecting and preserving the environment, its (sic) socio-cultural heritage, and the welfare and rights of women and children.

As part of its policy framework, the plan will continue to implement the 1991 Tourism Master Plan (TMP) to optimize the economic contributions of tourism and develop it on environmentally sustainable basis. The TMP’s primary objective include:

• Optimizing the contribution of tourism to economic growth at a national and regional level;
• Enhancing and contributing to social cohesion and cultural preservation at a local level, develop tourism on an environmentally sustainable basis; and
• Developing a diversity of destination and markets to minimize exposure to major internal and external threats to tourism activity.

In April 2002, the Department of Tourism (DOT) initiated the implementation of a National Ecotourism Strategy as framework for sustainable development, described as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED 1987). While sustainable development builds on the old principles of conservation and stewardship, it offers more proactive stance that incorporates continued economic growth in a more ecological and equitable manner.

The DOT recognizes that for tourism to become truly competitive in attract ting visitors, the Philippines should measure its performance, practices, and processes for improvement. The future competitiveness of tourism depends on organizations getting close to their markets and developing responsiveness to market needs, and an ability to counter threats and to exploit opportunities. Benchmarking provides a useful tool for increasing competitiveness and learning from the mistakes of others.

The Philippines lags behind its Southeast Asian neighbors in terms of volume of arrivals due to higher costs of tourism products and services in the Philippines relative to Thailand and Malaysia, insufficient air access, and the lack of variety in attractions and products (MTPDP 2001-2004)

Even the Philippines used Thailand as a benchmark for policymaking on air access (Limlingan 1999; MTPDP 2001-2004) and infrastructure development (McKinsey 2002).

Role of Policies in sustainable tourism

In 1987 the World Commission on Environment and Development (WCED) presented a report entitled Our Common Future, which placed the concept of sustainable development at center stage and promoted it as a vehicle for deliverance. It described sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (WCED 1987). Thus, it is not simply a matter of temporal tradeoffs and intergenerational transfers. While sustainable development builds on the old principles of conservation and stewardship, it offers a more proactive stance that incorporates continued economic growth in a more ecological and equitable manner. Sustainability is not sustainable without economic growth. It requires poverty alleviation of poverty and an effective demand for environmental quality—changes that cannot take place on a sustainable basis without growth (Rodolfo 2005; Panayotou 1993)

Tourism reflects the diversity of the multidimensional concept of sustainable development. Toruism Canda (1990) states that sustainable tourism development leads to management of all resources in such a way that the economic, social, and aesthetic needs are met while maintaining the cultural integrity, essential ecological processes, biological diversity, and life support systems. Resource management should reaffirm that tourism is an economic activity capable of making a profit to survive and benefit the community. Panayotou (1993) argues that the costs of development are rooted more in market policy failures rather than economic growth. (as quoted by Rodolfo 2005)

Who should assume a bigger role in tourism development? Issues such as the economic importance of tourism as an activity (Go and Jenkins 1997); market failures, as in the case of monopoly and entry barriers (Johnson and Thomas 1992); negative externalities (Johnson and Thomas 1992; Go and Jenkins 1997), or the “tragedy of the commons”; social costs borne by local and traditional communities, as in the case of Thailand and Mexico (Elliott 1997); and socially unfavorable distribution of income have been put forward as strong cases for some form of intervention (Roy and Tisdell 1998). Such interventions are proposed to correct market failures and ensure that markets fully and accurately respond to consumer preferences (Hartley and Hooper 1990) Only government can provide political stability and the legal and financial framework required by tourism (Elliot 1997).

Roy and Tisdell (1998) (as quoted by Rodolfo 2005) argue that the effectiveness of state control and management can be limited due to ineffective implementation delegated power and other administrative difficulties such as lack of willingness or capacity to enforce rules and regulations as well as the openness to bribery and corruption by officials.

While the private sector can be assigned rights of ownership of certain areas, such management can lead to the creation of greater monopoly power and the underutilization of linkages among industries. The role of the state, therefore, in the struggle for sustainable development is critical and fundamental—not one of direct management or command and control but one that establishes new rules of the game and creates an environment that fosters competition, efficiency and conservation (Panayotou 1993).

The government’s role is more important in developing countries or transition economies, where government support is needed to jumpstart the industry’s growth. In contrast, there is less need for public sector for the tourism industry of countries that are at a high level of economic development.

However, overdevelopment by the private sector eventually led to environmental degradation, exploitation of culture, prostitution, and cutthroat competition, which induced governments to moderate growth in supply by introducing legislation. Overregulation also spawned fewer investments. Over the past decade, the pendulum has again swung back toward a more laissez-faire attitude. Governments now see their role more as a facilitator or stimulator of private sector investment through fiscal and other incentives. In almost all countries surveyed by WTO (1998), government had divested itself of its direct interests in tourism planning and services. Industry legislation and regulations are less and less common, except where they relate to consumer protection or to national heritage and environment conservation.

According to the WTO (1998) the trend now is toward disengagement from tourism by the public sector and more private-public partnership, especially at the local level. In addition to easing budget constraints, a public sector-led marketing organization is often less entrepreneurial and effective than one managed by, or in collaboration, with the industry itself. In most countries, semi-public tourism organizations have been established or recognized to promote and, in some cases, market inbound international tourism. In countries with high degrees of decentralization, the partnership involves not only central governments as public partners but also provincial authorities.

In the past two years, institutions such as the World Travel and Tourism Council (WTTC), the World Bank, and the Asian Development Bank have examined and promoted the link between tourism and poverty eradication agenda. The economic impact of travel and tourism cuts across several aspects of the policy spectrum—employment, transport, communications, regional development, infrastructure, taxation, trade and the environment. However these government policies are not consistent with each other and with the overall thrust for sustainable development.

Five-year medium term Philippine development plan (1987-1992)

(…) While development was driven primarily by the need to maximize economic benefits, the government also saw the need to strike a balance between economic growth and environmental and cultural sustainability.

The major policies and strategies of the new administration were directed toward development of high-impact markets such as East Asia; the review of air agreements to make them more responsive to the requirements of the industry; the improvement of international and national airports; deregulation and self-regulation of the private sector; people empowerment through local tourism councils; emphasis on the environmental (sic) socio-cultural welfare of local communities in the development of tourism areas; and regional dispersion of economic benefits through an expanded list of priority areas.

A bottom-up approach to planning and development was intended for the tourism industry (…) In 1991 tourism functions were devolved to the local government units, thereby empowering the local communities from planning to implementation. A one-year National Tourism Plan was produced by both DOT and the private sector. The objectives of sustainable development became more explicit in the 1991 Tourism Master Plan (The blueprint for tourism development over the next 20 years). However, the administration was criticized for not really prioritizing tourism despite the strategies set under the MTPDP, as evidenced by the reluctance of NEDA (National Economic Development Authority) to seek funding for the plan. (Rodolfo 2005; Rieder 1997).

Five-year medium term Philippine development plan (1992-1998)

The government aimed to achieve greater contribution of tourism to economic growth and regional development as part of its macroeconomic goals of industrial restructuring for worldwide competitiveness, increasing incomes and stronger links between agriculture and industry (MTPDP 1993-98) (…) It adopted the cluster development approach embodied in the 1991 TMP and heavily supported infrastructure development to link air, sea and land transport services. It is focused on the triple Ts (tourism, transport and telecommunications) for economic growth and strongly pursued deregulation of these sectors (…) As a member of the WTTC, the Philippines signed the Villamoura Declaration of 1997, which aimed at using tourism as vehicle for employment generation. (Rodolfo 2005: pg. 34)

1997 Asian Financial Crisis

The vulnerability of the industry to external shocks became evident when the Asian financial crisis in 1997 dampened demand for tourism from major markets such as Japan (…) Most operators continued charging dollar-denominated prices for their services because they were protecting themselves from the escalating costs of imported inputs. While the industry expanded in the mid-‘90s, the rising costs of development became more evident with cases of pollution (as in the colliform issue of Boracay), rampant prostitution in Manila and in other key cities such as Cebu, Olongapo, Laguna and Baguio, and marginalization of community residents in (sic) large-scale tourism projects, among others. (Rodolfo 2005: pg.34)

Angat Pinoy MTPDP (1998-2003)

(…) A transportation and Tourism Summit was held in 1999 to formulate resolutions by the private and government sector on transport issues, marketing and product development, among others (…) Its strategies covered (…) encouraging local government units (LGUs) and local communities to venture in projects in tourism priority areas; developing and implementing standards and guidelines for physical infrastructure development to minimize tourism’s impact on the environment; promoting domestic and international tourism and upgrading tourism training institutes and academic programs for travel and tourism. (Rodolfo 2005: pg. 35)

Four-year medium term Philippine development plan (2001-2004)

The Arroyo administration aimed to implement reforms to meet the industry’s development requirements, rebuild the country’s image, strengthen its competitiveness in attracting foreign visitors, further stimulate domestic travel while protecting and preserving the environment and its socio-cultural heritage, and secure the welfare of women and children.

To meet these targets, the government set the following strategies:

• Improve accessibility of tourist destinations by developing tourism hubs (Manila, Cebu, Davao, Laoag); liberalizing civil aviation to increase weekly air seat capacity at par with Thailand, Malaysia, and Singapore and to liberalize visa requirements; encouraging investments;
• Enhance tourist products and services by making products better and affordable through discussions with private sector and LGUs; investing in human resource development by reviewing existing curricula to produce better graduates; conducting niche and mass-marketing programs;
• Instill a culture of tourism by advocating stronger law enforcement, conducting information campaigns, integrating environmental considerations and promoting ecotourism; intensifying LGU participation and establishing representation and participation of women in tourism; and
• Work for the recognition of tourism by establishing the Tourism Satellite Accounts; tapping resources for development; reviewing and assessing tourism development plans.

(…) However, the lack of an updated and comprehensive data on domestic tourism flows and behavior revealed an industry that still heavily favored foreign tourism and reflected the neglect or lack of priority for domestic tourism in the past decades (…) It has missed its targets a number of times due to a combination of policy and market failures (Rodolfo 2005: pgs. 36-37)

Market focus: domestic vs. international tourism

In most Asian countries, the tourism policy caters to international markets because they do not have a strong domestic base for earning the same amount of revenues as they do from foreign visitors. For many years, both the Philippines an Thailand focused on foreign markets. Today, external shocks (economic and political) have heightened the need to support the development of domestic tourism, which generated business for both countries during those turbulent times. (Rodolfo 2005: pg. 47)

Market dependency

The Philippines has greater dependency ratios two markets (US and Japan) compared to Thailand. It strongly competes with Thailand for the Japanese market. (Rodolfo 2005: pg. 48)

Public-private ownership

Promotional activities in the Philippines have been undertaken mostly by the private due to budget constraints of the DOT. In 2000 Congress allocated only 0.13 percent of the total national budget to the DOT. The same amount represented only 0.9 percent of the revenues generated by tourism during that year, In contrast, TAT extends a relatively higher budget to the private sector operators in Thailand, which aggressively conduct promotions. (Rodolfo 2005: pgs. 52-53)

Returns from marketing expenditure

In terms of returns from the marketing expenditure, the Philippines spent only $0.35 per visitor arrival in 2000. Thailand, on the other hand, spent higher on a per capita basis, around $4.60. Furthermore, the $600,000 budget of the DOT generated around $2.3 billion dollars of revenues, or $3, 600 per dollar of marketing expense. The figure is $157 for Thailand.

Given its relatively scarce marketing budget, the DOT approached the private sector seeking financial support for its marketing programs. (Rodolfo 2005: pg. 60)

Safety and security constraints

In the Philippines, tourist perceptions about safety and security issues persist, particularly in Mindanao due to the Abu Sayyaf kidnappings. While some destinations like Cebu, Batangas, and even Palawan appear to have the capability to deal with such threats, they lose potential tourists as a result of sensationalized news. (Rodolfo 2005: pg. 61)

Air Access

Air access provides a crucial component of tourism development in the Philippines since 98 percent of arrivals travel by air. The 1991 Tourism Master Plan, acknowledging the need to develop air access, pushed for the liberalization of the airline industry. This came about through the issuance of Executive Order No. 219 in January 1995 and the Implementing Rules and Regulations in 2001. (Rodolfo 2005: pg. 63)

Transportation network

The transportation network in the Philippines lags behind that of Thailand (Malaysia and Singapore). The hubs-and-spokes system being promoted by DOT is based on the 1991 Tourism Master Plan, which aims to bring tourists to satellite destinations via at least one gateway. The development of an efficient transportation network must be accelerated to allow tourists to move with reasonable costs from one destination to another at the shortest time possible (…) If more gateways like Palawan can be developed, tourists (domestic and foreign) will no longer be obliged to fly back to Manila for an international or even domestic flight. A liberal transportation policy is needed to make this happen. (Rodolfo 2005: pg. 64)

Visa Requirements

One of the resolutions of the National Socio-Economic pact in December 2001 for the tourism agenda was the liberalization of visa requirements and fess for Chinese tourists. In February 2002, visa application procedures for Chinese nationals were simplified. Visa fees were reduced by 20 percent and the processing period shortened.

In a similar bid to boost tourism and attract investments, foreign nationals have been allowed to extend their stay to the Philippines for a period of six months to one year from the date of arrival (Rodolfo 2005; UN ESCAP 2001).

Defert’s Index of sustainability

For the Philippines, high indices have been computed for Davao, Cebu and the NCR. The NCR has the highest concentration of tourists per square kilometer while Davao has a high tourist concentration per 1,000 host population.

(…) The liberalization of the airline industry was also a major factor behind the growth of tourism (Rodolfo 2005: pg. 68)

Infrastructure (summary of points)

• Pursuing liberalization of airline access, especially to other ways with high and medium tourism potential. The Philippines should consider removing restrictions in capacity through bilateral open-skies with major markets such as Japan, South Korea, and the United States; and opening up the secondary gateways to link them with more established hubs in the region and generate third-country tourism traffic.
• Supporting infrastructure improvement for the nautical highway and the network of road, land, and air transportation systems within the Philippines to reduce costs and improve mobility.
• Removing barriers to individual and business travel such as stringent visa rules.
• Addressing the taxation issue for international airlines to reduce their costs of doing business in the country.

The Philippines: The Forgotten Destination of Southeast Asia (Sevilla 2003)

Government Policies and Regulations

The intensity of government involvement in Philippine tourism policy has been dependent on the level of priority accorded to it by the different administrations (Sevilla 2003).

A 20-year Tourism Master Plan (TMP) for the country was drawn up in 1991, and in a statement made to the UNDP, the Undersecretary for Planning described the plan as follows:

The TMP provides the blueprint for the rational and integrated development of the tourism sector in the sixteen regional subdivisions of the country. The basic philosophy of the TMP is to promote a kind of tourism that will improve the quality of life of the Filipinos and strengthen their national identity and unity, promote the conservation of the environment and the preservation of cultural heritage and provide a high quality of tourism experiences for both foreign and domestic visitors.

Each region also has their own ‘master plan’ for tourist development and tourism has been part of the country’s regularly updated Medium-Term Development Plan at varying levels of priority.

There is marked division of opinion as to whether or not the government has had its act together with regard to tourism. This likely has much to do with the fact that the Department of Tourism actually has much less control over the development of the country’s tourism facilities than it would like. A lack of funds plays a role, but more than that, it is the structure and lack of committed coordination between government agencies that has been the primary cause of confusion. This is manifested in two distinct areas: the local government code and infrastructure development.

The Local Government Code and Tourism Policy

The passage of the Local Government Code in 1992 meant that the implementation of the programs and guidelines outlined in the Tourism Master Plan were in the hands of the local municipalities and government units. While on one hand it meant that direct control was given to the people who had to live with the effects of tourism development on a daily basis, it also allowed for more development on a daily basis, it also allowed for more deviation from the national plan to accommodate the sometimes politically and economically motivated needs of the local unit. The DOT has had some difficulty in terms of convincing LGUs to implement national guidelines, particularly in the area of environmental regulations and other issues related to sustainable development.

Case Study: Boracay

The tiny island of Boracay (…) is a classic example not only of the effects of development on the fragile ecosystem, but more importantly, of the tenuous relationship between the central government and local government units in the area of sustainable development. This lack of coordination and failure to enforce guidelines has put the beautiful island on the brink of environmental ruin.

In 2000, Boaracay generated an income of Php1.7 billion, a figure that increased to Php2.2 billion in 2001.

But this was all put into jeopardy in 1997 when the Department orf natural Resources (DENR) released its findings of coliform contamination in the waters just off the shore.

Representatives of the Canadian Urban Institute reported that the island’s threshold had been reached as aearly as 1990, but adequate responses were not undertaken to address this until the deterioration reached critical levels.

Only months later, the DOT announced that it had fastracked its Php 436 million Boracay Environmental Infrastructure Project (BEIP) and President Ramos led a marketing blitz to invite tourists back to the island (…) Tourists flocked back to Boracay after the intervention of the central government and growth has continued unabated since then.

In the late 2000, however, a new study done on the island’s water supply showed that the bacteria was still present in the groundwater, there was saltwater intrusion in the aquifers, and the septic tanks were not managing the task at hand. Urban planners and environmentalists spoke of the “warning signs” and stated that the “real impacts of poor solid waste management are hidden from view (Trousdale/Gentoral, canurb.com)

The probability appears high that the continued disregard of sustainable development practices will lead to yet another round of environmental problems for the island. It seems to be a case of recent history about to repeat itself.

(…) In fact a tourism master plan for the term goal of sustainable development as its main objective. The Boracay Island Master Development Plan set specific guidelines on construction restrictions, zoning, and development density.

Unfortunately, soon after the plan was finished, the passage of the Local Government Code devolved the responsibility of implementation from the DOT and transferred it to the municipality. Trousdale (119) notes that:

Since the LGC was enacted, the municipality has been slow to review, revise and enact ordinances that affirm the original guidelines. In 1997 the municipal council finally took a major step to amend the ordinances in this direction, but only after years of confusion and violations.

The DOT was still given the responsibility over the accreditation of business establishments and implementation of major tourism infrastructure projects but was left will little or no say into the day governance and maintenance of the area. The local council did adopt some of the guidelines, but for the most part did not make use of the plan.

The island’s local government has been slow to react to these and other reports, however, and seem not to feel the urgency of the situation. The Philippine media has in fact published reports that members of the municipal council themselves, who happen to also be resort owners, are among the ranks of the violators, ignoring structure height codes and overruling the no-building codes on some areas (Manila Times 2003).

(…) Governance is critical in sustainable development and yet the national government appears not to have the either the influence or political will to enforce its policies, while local governments are either ill-equipped or unwilling to implement them. The DOT cannot fully realize its objectives because it is not empowered to do so, and for the most part has been unable to extend a culture of tourism to its local counterparts.

Based at least in part on the recommendations from the Trousdale study, the Boracay Master Plan was resurrected in 2001 and a proposal for the establishment of the Boracay Development Authority to directly oversee the Plan’s implementation was made. But unwilling to relinquish their control over the island, both the governor and the mayor objected, proposing instead that the BDA fall under their jurisdiction.

UNESCAP data shows that the Philippines has committed itself to ecotoyrism and sustainable development, and indeed the Philippine Tourism Master Plan seeks to develop tourism on an environmentally sustainable basis. There is a partnership between the DOT and the DENR, there is aid from foreign governments and international organizations—the missing link lies in the people who are tasked with the daily implementation of the guidelines. Policies exists; they only need to be implemented.

The DOT and Infrastructure Development

Infrastructure development has been another gray area for the DOT. The nature of the projects involved dictate that they fall under the responsibility of other Departments or private parties and yet theyr are vital to the continued growth of the tourism industry. While the DOT itself acknowledges that the lack of or low quality of infrastructure in the country has contributed to the low visitor arrivals, it has little direct control over infrastructure projects. A report aptly titled “Neglected Gems” in the Far Eastern Economic Review had the following to say:

…there are only scattered references to tourism in the government’s 1999-2004 development plan, a 300-page tome that lays out the administration’s economic strategy. According to Secretary of Tourism Gemma Cruz Araneta, that’s because infrastructure and the modernization of airports, though critical to tourism, are “not really in our realm of authority”.

The responsibility of infrastructure and accessibility is under the aegis of the Department of Public Works and Highways (DPWH) and the Department of Transportation and Communications (DOTC) as well as the Civil Aeronautics Board (CAB). The DOT also heavily relies on private sector investment in infrastructure, which was the rationale for the proposed tourism enterprise zones under the supervision of yet another department, this time, the Philippine Economic Zone Authority (PEZA).

This makes sense in the national context of development, but in structure where the tourism culture has yet to gain acceptance, it also means that tourism-related infrastructure is left at the discretion of other departments that have a multitude of other projects to spend on and a private sector that must be convinced over the viability of its investments in the industry.

It must be said that the government has tried to provide an inviting and attractive investment incentives plan to bring investments in. During the Marcos years this entailed numerous government subsidies, tax breaks and exemptions, and even direct funding of certain projects. This was modified in later years and today the laws and incentives covering tourism investments revolve around seven laws. Executive Order No. 63, the Omnibus Investment Code (Executive Order No. 226), the Foreign Investment Act of 1991 (Republic Act 7042) as amended by Republic Act 8179, the Build-Operate-Transfer Law (Republic Act 7718), the Special Economic Zone Act of 1995 (Republic Act 7916), and the Trade Liberalization Act 2000 (Republic Act 8762)

The World Economic Forum: Tracing Philippine Competitiveness in a Neoliberal Framework

The World Economic Forum has been actively engaged in studying issues related to national competitiveness for

nearly three decades, motivated by a desire to better understand the drivers of growth and prosperity. Over the

years, our goal has been to provide benchmarking tools that enable countries to identify key obstacles to competitiveness, and to provide a platform for dialogue among government, business, and civil society to discuss the best ways of removing them. In this light, given the importance of the Travel & Tourism (T&T) industry to the world economy, the fundamental objective of the Travel & Tourism Competitiveness Report (TTCR) is to explore

the factors driving T&T competitiveness worldwide.

the World Economic Forum has developed the first Travel & Tourism Competitiveness Index (TTCI), which is at the core of this Report.The aim of the TTCI, which covers 124 economies, is to provide a comprehensive strategic tool for measuring “the factors and policies that make it attractive to develop the Travel & Tourism sector in different countries.” By providing detailed assessments of the T&T environments in countries worldwide, the

results can be used by all stakeholders to work together to improve the industry’s competitiveness in their

national economies, thereby contributing to national growth and prosperity.

The Travel & Tourism Competitiveness Index

The Travel & Tourism Competitiveness Index (TTCI), described in Chapter 1.1, aims to measure the factors and

policies that make it attractive to develop the T&T sector in different countries.The TTCI is composed of a number of “pillars” of T&T competitiveness, of which there are 13 in all.These are:

1. Policy rules and regulations

2. Environmental regulation

3. Safety and security

4. Health and hygiene

5. Prioritization of Travel & Tourism

6. Air transport infrastructure

7. Ground transport infrastructure

8. Tourism infrastructure

9. ICT infrastructure

10. Price competitiveness in the T&T industry

11. Human resources

12. National tourism perception

13. Natural and cultural resources

The pillars are organized into three subindexes capturing broad categories of variables that facilitate or drive T&T

competitiveness.These categories are (1) T&T regulatory framework, (2) T&T business environment and infrastructure, and (3) T&T human, cultural, and natural resources. The first subindex captures those elements that are policy related and generally under the purview of the government (policy rules and regulations, environmental

regulation, safety and security, and prioritization of Travel & Tourism); the second subindex captures elements

of the business environment and the infrastructure of each economy (air transport infrastructure, ground

transport infrastructure, tourism infrastructure, ICT infrastructure, and price competitiveness); and the third

subindex captures the human and cultural elements of each country’s resource endowments (human capital,

national tourism perception, and natural and cultural resources).

Within Asia, Hong Kong is measured as the economy with the strongest T&T competitiveness (ranked 6th

overall), followed closely by Singapore (8th).These economies have excellent infrastructures: both their

ground transport infrastructures are assessed as among the top three in the world, and their air transport infrastructures also get high marks. They also have top-notch human resources, providing healthy and well-educated

people to work in the sector. With regard to the policy environment, they hold the top two places out of all

economies, with regulatory environments that are extremely conducive to the development of the T&T

industry (policies facilitating foreign ownership and foreign direct investment, well-protected property rights,

few visa restrictions). Further, they are among the safest countries of all assessed with regard to crime and security

issues. Hong Kong is unsurpassed in the quality of health and hygiene, and Singapore is ranked second in the

overall prioritization of Travel & Tourism.

Malaysia, ranked 31st, has good ground transport infrastructure and excellent price competitiveness—it is

ranked 2nd overall on this indicator, with very low ticket taxes and airport charges, low comparative fuel prices,

and a favorable tax regime. The country is perceived as quite safe (24th), although health and hygiene indicators

lag behind many other countries in the region, with in particular a low physician density. The country’s policy

environment is measured as relatively conducive to the development of the sector (ranked 26th), and the government

is prioritizing Travel & Tourism, with one of the highest T&T fair attendances in the world (ranked 2nd) and an excellent evaluation for its destination marketing campaigns (ranked 6th).

Thailand is ranked 43rd in the TTCI, just behind Korea (ranked 42nd).Thailand benefits from a very friendly attitude toward tourists (ranked 6th), and the sector is indeed prioritized by the government (ranked 14th) with excellent destination marketing campaigns and an effort to ensure national presence at major travel and tourism fairs internationally. However, important weaknesses remain, particularly regarding the quality of transport and tourism infrastructure, both of which remain relatively underdeveloped. India is ranked 65th overall. The country has some clear strengths, linked mainly to cultural endowments. It ranked a very high 7th overall with regard to the number of World Heritage sites in the country, and it also benefits from a famously welcoming attitude toward foreign travelers. The country also benefits from excellent price competitiveness, ranked 6th overall, with very low ticket taxes and airport charges as well as low prices in the economy as a whole. With regard to the policy environment, property rights are indeed well protected and foreign ownership is authorized, although the stringency of visa requirements places India a very low 106^th overall. However, the tourism infrastructure remains underdeveloped. Furthermore, despite government and industry efforts to promote the country abroad (India is ranked 4th with regard to tourism fair attendance) and the exposure given to recent promotional campaigns, the assessment of marketing and branding to attract tourists remains mediocre (ranked 59th).

China is ranked 71st in the TTCI. Although China is ranked 3rd in terms of World Heritage sites and 11th

in terms of price competitiveness, it has a policy environment that is not at all conducive for T&T development

(ranked a low 97th), with property rights that are not sufficiently protected, strong foreign ownership restrictions,

and stringent visa requirements. Environmental regulation also gets low marks, with the government not

seen to be prioritizing the development of the sector in a sustainable way. China has a relatively good air transport

infrastructure (ranked 36th), and ground transport infrastructure that is ranked 45th overall. However, its

tourism infrastructure remains highly underdeveloped (ranked 113th).There are also some safety and security

concerns (83rd), as well as issues related to health and hygiene (84th), with a low physician density and access

to improved sanitation and drinking water that is low by international standards.

Brazil is ranked 59th overall. The country clearly benefits from some excellent cultural and natural

resources, in particular many World Heritage sites. And the air transport network gets relatively high marks (28th),

as well as measures of the dedicated tourism infrastructure (also 28th), such as the presence of major car rental

companies. However, the general ground transport network remains underdeveloped with the quality of roads,

ports, and railroads ranked 96th, 88th, and 81st respectively. Safety and security also continues to be of serious

concern, ranked 90th overall, as it is for a number of countries in the region. More generally, the overall policy

environment is not particularly conducive to the development of the sector, ranked 75th, with, for example,

highly stringent visa requirements and foreign ownership restrictions.

In their chapter “Taking Travel & Tourism to the Next Level: Shaping the Government Agenda to Improve

the Industry’s Competitiveness,” Jürgen Ringbeck and Stephan Gross of Booz Allen Hamilton---The authors identify liberalization and deregulation of the T&T industry as key factors for improving the

industry’s competitiveness—showing that countries that have liberalized have increased demand and industry efficiency and, hence, have achieved overall economic growth.

They elaborate a framework for nations trying to build a highly competitive T&T sector, composed

of several evolutionary steps. To begin, governments must first make sure the appropriate infrastructure

capacity is in place to provide access for domestic and international travelers. Once the infrastructure is in

place, governments should ensure that market demand is fully met—in terms of both service quality and quantity. They then argue that to increase performance efficiency of the T&T sector, governments should engage in deregulation and privatization to stimulate demand and growth. Following domestic deregulation, they favor a cross-border liberalization of a whole region’s policy framework, which can effectively attract new market entrants and improve the industry’s overall performance. In their view the last step would be a full intercontinental liberalization of travel regulations. Although this has not yet been reached, they hope this may become a reality in coming years. To succeed, governments must make a determined effort to work together hand-in-hand with the private sector to be able to fully leverage the T&T sector’s potential to stimulate economic efficiency and growth.

Introductory statement (Statistics of World Tourism)

By 2006, the T&T sector accounted for 234 million

jobs or 8.2 percent of total employment worldwide, as

well as 10.3 percent of world GDP.4 And the sector

continues to grow. The World Travel & Tourism Council

(WTTC) estimates that in 2006 the T&T sector contributed

2.5 million new jobs worldwide. When taking

into account both the direct and indirect impact of the

industry as described above, Travel & Tourism created

nearly 10 million new jobs globally.5

Behind these revenue and employment figures is

the large and growing number of international travelers.

According to the World Tourism Organization

(UNWTO), the number of international arrivals grew

from 25 million in 1950 to an estimated 763 million in

2004, corresponding to an average annual growth rate

of 6.5 percent.6 In the first eight months of 2006, international

tourist arrivals totaled 578 million worldwide,

up by 4.5 percent from 553 million in the same period

of 2005—a year that saw a record 806 million people

traveling internationally. This growth is expected to

continue in 2007 at a pace of approximately 4 percent

worldwide.7

The industry is one of the world’s largest economic

activities: it is the main industry in many countries, as

well as the fastest-growing economic sector in terms of

foreign exchange earnings and job creation according to

the UNWTO. In other words, Travel & Tourism is an

important driver of growth and prosperity and, particularly

within developing countries, the sector is also

important for poverty reduction. The World Trade

Organization (WTO) estimates that developing countries

derive over 43 percent of their total services trade

Philippines

Key indicators

Population (millions), 2005............................................................................83.1 Surface area (1,000 square kilometers) ......................................................300.0 Gross domestic product (US$ billions), 2005 ...............................................98.4 Gross domestic product (PPP, US$) per capita, 2005 ................................4,923 Real GDP growth (percent), 2005...................................................................5.0

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .........................................................4,327...................3.9...................5.0 Employment (1,000 jobs).............................................................1,250...................4.1...................2.6

T&T economy, 2006 estimates

GDP (US$ millions) ..........................................................9,985...................9.1...................5.1 Employment (1,000 jobs).............................................................3,336.................10.8...................2.4

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................2,623 International tourism receipts (US$ millions), 2005 ...........2,130

Source: United Nations World Tourism Organization

Malaysia

Key indicators

Population (millions), 2005............................................................................25.3

Surface area (1,000 square kilometers) ......................................................329.7

Gross domestic product (US$ billions), 2005 .............................................130.8

Gross domestic product (PPP, US$) per capita, 2005 ..............................11,201

Real GDP growth (percent), 2005...................................................................5.2

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................6,739...................4.6...................5.6

Employment (1,000 jobs).......................................................492...................4.6...................3.0

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................21,403.................14.6...................5.9

Employment (1,000 jobs)....................................................1,345.................12.6...................3.1

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ........................16,431

International tourism receipts (US$ millions), 2005 ...........8,543

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................31 4.8

T&T regulatory framework ..............................................................................27 5.1

Policy rules and regulations..............................................................................26 5.3

Environmental regulation ...................................................................................20 5.3

Safety and security .............................................................................................26 5.3

Health and hygiene .............................................................................................62 4.7

Prioritization of T&T strategies .........................................................................21 5.0

T&T business environment and infrastructure............................................27 4.4

Air transport infrastructure ...............................................................................31 3.9

Ground transport infrastructure .......................................................................15 5.6

Tourism infrastructure ........................................................................................60 3.1

ICT infrastructure ................................................................................................37 3.7

Price competitiveness in T&T industry .............................................................2 5.9

T&T human, cultural, and natural resources ...............................................57 4.8

Human resources................................................................................................34 5.4

Education and training.................................................................................29 5.3

Availability of qualified labor ......................................................................45 4.6

Workforce wellness .....................................................................................73 6.2

National tourism perception..............................................................................26 5.6

Natural and cultural resources.......................................................................101 3.5

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

5,000

10,000

15,000

20,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

261

2.1: Country/Economy Profiles

Malaysia

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ........................12

1.04 Visa requirements ..............................................................15

1.02 Property rights....................................................................24

Environmental regulation

2.03 Government prioritization of sustainable T&T ......................8

2.02 Clarity and stability of environmental regulations ..............23

2.01 Stringency of environmental regulation .............................25

Safety and security

3.02 Reliability of police services ...............................................19

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ..........8

Prioritization of Travel & Tourism

5.04 T&T fair attendance..............................................................2

5.03 Effectiveness of marketing and branding ............................6

5.01 Government prioritization of the T&T industry.....................8

Air transport infrastructure

6.01 Quality of air transport infrastructure .................................16

6.02 Available seat kilometers....................................................21

6.06 International air transport network .....................................24

6.05 Number of operating airlines..............................................27

Ground transport infrastructure

7.03 Port infrastructure ..............................................................13

7.01 Road infrastructure.............................................................15

7.02 Railroad infrastructure ........................................................17

7.04 Domestic transport network ..............................................23

ICT infrastructure

9.01 Extent of business Internet use.........................................27

Price competitiveness in the T&T industry

10.01 Ticket taxes and airport charges...........................................8

10.04 Fuel price level .....................................................................9

10.03 Extent and effect of taxation..............................................12

Human resources

11.03 Quality of the educational system .....................................10

11.05 Extent of staff training........................................................17

11.04 Local availability of research and training services.............22

National tourism perception

12.03 Recommendation to extend business trips .......................16

12.01 Tourism openness ..............................................................20

Natural and cultural resources

13.04 Business concern for ecosystems .....................................22

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.05 Openness of bilateral Air Service Agreements ..................51

1.01 Foreign ownership restrictions...........................................49

Safety and security

3.01 Business costs of terrorism ...............................................65

3.03 Business costs of crime and violence................................32

Health and hygiene

4.02 Physician density................................................................86

4.04 Access to improved drinking water ...................................45

Prioritization of Travel & Tourism

5.02 T&T government expenditure ............................................94

Air transport infrastructure

6.04 Airport density ....................................................................75

6.03 Departures per 1,000 population........................................34

Tourism infrastructure

8.02 Presence of major car rental companies............................66

8.03 ATMs accepting Visa cards ................................................48

8.01 Hotel rooms........................................................................42

ICT infrastructure

9.03 Telephone lines...................................................................63

9.02 Internet users .....................................................................32

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................56

Human resources

11.01 Primary education enrollment ..........................................112

11.02 Secondary education enrollment........................................86

11.10 Tuberculosis incidence .......................................................78

11.09 Malaria incidence................................................................77

11.08 HIV prevalence ...................................................................69

11.06 Hiring and firing practices...................................................59

11.11 Life expectancy ..................................................................53

11.07 Ease of hiring foreign labor ................................................38

National tourism perception

12.02 Attitude toward tourists .....................................................36

Natural and cultural resources

13.05 Risk of malaria and yellow fever ......................................103

13.02 Carbon dioxide damage......................................................93

13.01 Number of World Heritage sites ........................................73

13.03 Nationally protected areas..................................................73

Singapore

Key indicators

Population (millions), 2005..............................................................................4.4

Surface area (1,000 square kilometers) ..........................................................0.7

Gross domestic product (US$ billions), 2005 .............................................116.8

Gross domestic product (PPP, US$) per capita, 2005 ..............................28,368

Real GDP growth (percent), 2005...................................................................6.4

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................3,365...................2.7...................4.9

Employment (1,000 jobs).........................................................61...................2.7...................3.0

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................13,126.................10.3...................5.5

Employment (1,000 jobs).......................................................191...................8.3...................3.4

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................7,080

International tourism receipts (US$ millions), 2005 ...........5,740

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index........................................................................................................8 5.3

T&T regulatory framework ................................................................................1 5.8

Policy rules and regulations................................................................................1 5.8

Environmental regulation .....................................................................................6 5.9

Safety and security ...............................................................................................7 6.0

Health and hygiene .............................................................................................29 5.8

Prioritization of T&T strategies ...........................................................................2 5.6

T&T business environment and infrastructure............................................11 5.0

Air transport infrastructure ...............................................................................10 4.9

Ground transport infrastructure .........................................................................3 6.5

Tourism infrastructure ........................................................................................44 3.7

ICT infrastructure ................................................................................................18 4.9

Price competitiveness in T&T industry ...........................................................26 5.1

T&T human, cultural, and natural resources ...............................................42 5.1

Human resources..................................................................................................2 6.2

Education and training.................................................................................14 5.9

Availability of qualified labor ........................................................................1 5.9

Workforce wellness .....................................................................................25 6.8

National tourism perception..............................................................................47 5.2

Natural and cultural resources.........................................................................79 3.9

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

3,000

4,000

5,000

6,000

7,000

8,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

317

2.1: Country/Economy Profiles

Singapore

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ..........................1

1.01 Foreign ownership restrictions.............................................3

Environmental regulation

2.03 Government prioritization of sustainable T&T ......................1

2.02 Clarity and stability of environmental regulations ................7

Safety and security

3.02 Reliability of police services .................................................3

3.03 Business costs of crime and violence..................................4

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ..........1

4.03 Access to improved sanitation .............................................1

4.04 Access to improved drinking water .....................................1

Prioritization of Travel & Tourism

5.03 Effectiveness of marketing and branding ............................3

5.01 Government prioritization of the T&T industry.....................6

5.02 T&T government expenditure ..............................................8

Air transport infrastructure

6.01 Quality of air transport infrastructure ...................................1

6.06 International air transport network .......................................2

6.02 Available seat kilometers....................................................10

Ground transport infrastructure

7.01 Road infrastructure...............................................................1

7.03 Port infrastructure ................................................................1

7.04 Domestic transport network ................................................5

7.02 Railroad infrastructure ..........................................................9

Price competitiveness in the T&T industry

10.03 Extent and effect of taxation................................................7

Human resources

11.09 Malaria incidence..................................................................1

11.03 Quality of the educational system .......................................2

11.06 Hiring and firing practices.....................................................2

11.07 Ease of hiring foreign labor ..................................................6

11.11 Life expectancy ....................................................................8

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.05 Openness of bilateral Air Service Agreements ..................28

1.04 Visa requirements ..............................................................15

1.02 Property rights....................................................................11

Environmental regulation

2.01 Stringency of environmental regulation .............................18

Safety and security

3.01 Business costs of terrorism ...............................................77

Health and hygiene

4.02 Physician density................................................................63

Prioritization of Travel & Tourism

5.04 T&T fair attendance............................................................48

Air transport infrastructure

6.04 Airport density ..................................................................101

6.05 Number of operating airlines..............................................22

6.03 Departures per 1,000 population........................................18

Tourism infrastructure

8.02 Presence of major car rental companies............................66

8.01 Hotel rooms........................................................................30

8.03 ATMs accepting Visa cards ................................................26

ICT infrastructure

9.03 Telephone lines...................................................................29

9.01 Extent of business Internet use.........................................21

9.02 Internet users .....................................................................12

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................97

10.04 Fuel price level ...................................................................38

10.01 Ticket taxes and airport charges.........................................34

Human resources

11.01 Primary education enrollment ..........................................109

11.08 HIV prevalence ...................................................................48

11.10 Tuberculosis incidence .......................................................46

11.02 Secondary education enrollment........................................31

11.04 Local availability of research and training services.............17

11.05 Extent of staff training........................................................12

National tourism perception

12.03 Recommendation to extend business trips .....................100

12.01 Tourism openness ..............................................................23

12.02 Attitude toward tourists .....................................................12

Natural and cultural resources

13.01 Number of World Heritage sites ......................................107

13.03 Nationally protected areas..................................................81

13.02 Carbon dioxide damage......................................................61

13.04 Business concern for ecosystems .....................................26

Thailand

Key indicators

Population (millions), 2005............................................................................64.2

Surface area (1,000 square kilometers) ......................................................513.1

Gross domestic product (US$ billions), 2005 .............................................173.1

Gross domestic product (PPP, US$) per capita, 2005 ................................8,368

Real GDP growth (percent), 2005...................................................................4.5

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) ...........................................................13,558...................6.5...................4.9

Employment (1,000 jobs)....................................................1,842...................5.2...................1.1

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................29,587.................14.3...................5.2

Employment (1,000 jobs)....................................................3,820.................10.7...................1.4

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ........................11,567

International tourism receipts (US$ millions), 2005 .........10,108

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................43 4.6

T&T regulatory framework ..............................................................................41 4.8

Policy rules and regulations..............................................................................55 4.8

Environmental regulation ...................................................................................39 4.6

Safety and security .............................................................................................42 4.9

Health and hygiene .............................................................................................59 4.8

Prioritization of T&T strategies .........................................................................25 4.8

T&T business environment and infrastructure............................................35 4.1

Air transport infrastructure ...............................................................................25 4.1

Ground transport infrastructure .......................................................................28 4.7

Tourism infrastructure ........................................................................................53 3.4

ICT infrastructure ................................................................................................58 2.8

Price competitiveness in T&T industry .............................................................4 5.7

T&T human, cultural, and natural resources ...............................................59 4.8

Human resources................................................................................................75 5.0

Education and training.................................................................................48 5.0

Availability of qualified labor ......................................................................81 4.1

Workforce wellness .....................................................................................90 5.8

National tourism perception..............................................................................35 5.4

Natural and cultural resources.........................................................................77 4.1

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

6,000

8,000

10,000

12,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

341

2.1: Country/Economy Profiles

Thailand

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.04 Visa requirements ..............................................................15

1.02 Property rights....................................................................40

Environmental regulation

2.03 Government prioritization of sustainable T&T ....................37

2.02 Clarity and stability of environmental regulations ..............38

Safety and security

3.03 Business costs of crime and violence................................40

3.02 Reliability of police services ...............................................41

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ........34

4.03 Access to improved sanitation ...........................................36

Prioritization of Travel & Tourism

5.04 T&T fair attendance..............................................................4

5.03 Effectiveness of marketing and branding ..........................11

5.01 Government prioritization of the T&T industry...................14

Air transport infrastructure

6.05 Number of operating airlines..............................................11

6.02 Available seat kilometers....................................................14

6.01 Quality of air transport infrastructure .................................31

6.06 International air transport network .....................................41

Ground transport infrastructure

7.01 Road infrastructure.............................................................28

7.04 Domestic transport network ..............................................31

7.03 Port infrastructure ..............................................................37

7.02 Railroad infrastructure ........................................................40

Tourism infrastructure

8.03 ATMs accepting Visa cards ................................................42

ICT infrastructure

9.01 Extent of business Internet use.........................................28

Price competitiveness in the T&T industry

10.01 Ticket taxes and airport charges.........................................11

10.04 Fuel price level ...................................................................19

10.03 Extent and effect of taxation..............................................22

10.02 Purchasing power parity.....................................................27

Human resources

11.05 Extent of staff training........................................................30

11.03 Quality of the educational system .....................................41

National tourism perception

12.02 Attitude toward tourists .......................................................6

12.01 Tourism openness ..............................................................26

12.03 Recommendation to extend business trips .......................28

Natural and cultural resources

13.03 Nationally protected areas..................................................28

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.01 Foreign ownership restrictions.........................................104

1.03 Rules governing foreign direct investment ........................58

1.05 Openness of bilateral Air Service Agreements ..................58

Environmental regulation

2.01 Stringency of environmental regulation .............................44

Safety and security

3.01 Business costs of terrorism ...............................................80

Health and hygiene

4.02 Physician density................................................................97

4.04 Access to improved drinking water ...................................70

Prioritization of Travel & Tourism

5.02 T&T government expenditure ............................................69

Air transport infrastructure

6.04 Airport density ..................................................................104

6.03 Departures per 1,000 population........................................64

Tourism infrastructure

8.02 Presence of major car rental companies............................55

8.01 Hotel rooms........................................................................44

ICT infrastructure

9.03 Telephone lines...................................................................80

9.02 Internet users .....................................................................61

Human resources

11.08 HIV prevalence ...................................................................96

11.01 Primary education enrollment ............................................91

11.10 Tuberculosis incidence .......................................................88

11.09 Malaria incidence................................................................86

11.07 Ease of hiring foreign labor ................................................84

11.02 Secondary education enrollment........................................77

11.11 Life expectancy ..................................................................75

11.04 Local availability of research and training services.............66

11.06 Hiring and firing practices...................................................65

Natural and cultural resources

13.05 Risk of malaria and yellow fever ......................................102

13.02 Carbon dioxide damage......................................................97

13.01 Number of World Heritage sites ........................................48

13.04 Business concern for ecosystems .....................................46

Taiwan, China

Key indicators

Population (millions), 2005............................................................................22.9

Surface area (1,000 square kilometers) ........................................................36.2

Gross domestic product (US$ billions), 2005 .............................................346.2

Gross domestic product (PPP, US$) per capita, 2005 ..............................27,721

Real GDP growth (percent), 2005...................................................................4.1

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................4,681...................1.2...................3.4

Employment (1,000 jobs).......................................................170...................1.7...................0.6

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................17,718...................4.6...................4.3

Employment (1,000 jobs).......................................................529...................5.2...................1.3

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................3,378

International tourism receipts (US$ millions), 2005 ...........4,977

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................30 4.8

T&T regulatory framework ..............................................................................45 4.7

Policy rules and regulations................................................................................8 5.7

Environmental regulation ...................................................................................21 5.2

Safety and security .............................................................................................32 5.2

Health and hygiene .............................................................................................85 4.1

Prioritization of T&T strategies .........................................................................78 3.5

T&T business environment and infrastructure............................................28 4.4

Air transport infrastructure ...............................................................................52 3.2

Ground transport infrastructure .......................................................................14 5.7

Tourism infrastructure ........................................................................................74 2.7

ICT infrastructure ................................................................................................14 5.3

Price competitiveness in T&T industry ...........................................................15 5.3

T&T human, cultural, and natural resources ...............................................23 5.3

Human resources................................................................................................15 5.7

Education and training.................................................................................17 5.9

Availability of qualified labor ......................................................................47 4.6

Workforce wellness .....................................................................................41 6.6

National tourism perception..............................................................................17 6.0

Natural and cultural resources.........................................................................63 4.3

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

1,000

2,000

3,000

4,000

5,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

335

2.1: Country/Economy Profiles

Taiwan, China

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.04 Visa requirements ..............................................................15

Environmental regulation

2.01 Stringency of environmental regulation .............................20

2.02 Clarity and stability of environmental regulations ..............20

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ........27

Air transport infrastructure

6.01 Quality of air transport infrastructure .................................20

6.02 Available seat kilometers....................................................23

Ground transport infrastructure

7.02 Railroad infrastructure ........................................................12

7.01 Road infrastructure.............................................................13

7.04 Domestic transport network ..............................................18

7.03 Port infrastructure ..............................................................20

Tourism infrastructure

8.03 ATMs accepting Visa cards ................................................10

ICT infrastructure

9.03 Telephone lines.....................................................................9

9.02 Internet users .....................................................................14

9.01 Extent of business Internet use.........................................18

Price competitiveness in the T&T industry

10.01 Ticket taxes and airport charges.........................................13

10.03 Extent and effect of taxation..............................................20

Human resources

11.01 Primary education enrollment ..............................................1

11.08 HIV prevalence .....................................................................1

11.03 Quality of the educational system .......................................9

11.05 Extent of staff training........................................................19

11.04 Local availability of research and training services.............21

11.02 Secondary education enrollment........................................27

11.06 Hiring and firing practices...................................................27

Natural and cultural resources

13.05 Risk of malaria and yellow fever ..........................................1

13.03 Nationally protected areas..................................................17

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.02 Property rights....................................................................39

1.01 Foreign ownership restrictions...........................................36

1.03 Rules governing foreign direct investment ........................35

Environmental regulation

2.03 Government prioritization of sustainable T&T ....................42

Safety and security

3.01 Business costs of terrorism ...............................................52

3.02 Reliability of police services ...............................................36

3.03 Business costs of crime and violence................................30

Health and hygiene

4.02 Physician density................................................................61

Prioritization of Travel & Tourism

5.02 T&T government expenditure ............................................94

5.01 Government prioritization of the T&T industry...................74

5.03 Effectiveness of marketing and branding ..........................60

5.04 T&T fair attendance............................................................48

Air transport infrastructure

6.04 Airport density ..................................................................104

6.03 Departures per 1,000 population........................................99

6.05 Number of operating airlines..............................................51

6.06 International air transport network .....................................43

Tourism infrastructure

8.02 Presence of major car rental companies..........................113

8.01 Hotel rooms........................................................................86

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................70

10.04 Fuel price level ...................................................................38

Human resources

11.07 Ease of hiring foreign labor ................................................75

11.10 Tuberculosis incidence .......................................................60

11.11 Life expectancy ..................................................................35

National tourism perception

12.03 Recommendation to extend business trips .......................65

12.02 Attitude toward tourists .....................................................56

Natural and cultural resources

13.01 Number of World Heritage sites ......................................107

13.04 Business concern for ecosystems .....................................37

Hong Kong SAR

Key indicators

Population (millions), 2005..............................................................................6.9

Surface area (1,000 square kilometers) ..........................................................1.1

Gross domestic product (US$ billions), 2005 .............................................177.7

Gross domestic product (PPP, US$) per capita, 2005 ..............................33,479

Real GDP growth (percent), 2005...................................................................7.3

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................6,519...................3.3...................5.9

Employment (1,000 jobs).......................................................168...................4.8...................2.2

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................33,226.................17.1...................6.9

Employment (1,000 jobs).......................................................549.................15.9...................3.4

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ........................14,773

International tourism receipts (US$ millions), 2005 .........10,286

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index........................................................................................................6 5.3

T&T regulatory framework ................................................................................4 5.7

Policy rules and regulations................................................................................2 5.8

Environmental regulation ...................................................................................24 5.1

Safety and security ...............................................................................................6 6.1

Health and hygiene ...............................................................................................1 6.6

Prioritization of T&T strategies .........................................................................13 5.2

T&T business environment and infrastructure............................................14 4.8

Air transport infrastructure ...............................................................................12 4.8

Ground transport infrastructure .........................................................................2 6.5

Tourism infrastructure ........................................................................................70 2.8

ICT infrastructure ................................................................................................16 5.0

Price competitiveness in T&T industry ...........................................................31 5.0

T&T human, cultural, and natural resources ...............................................14 5.4

Human resources..................................................................................................7 5.9

Education and training.................................................................................21 5.7

Availability of qualified labor ......................................................................13 5.3

Workforce wellness .....................................................................................29 6.8

National tourism perception..............................................................................27 5.6

Natural and cultural resources.........................................................................39 4.8

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

3,000

6,000

9,000

12,000

15,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

215

2.1: Country/Economy Profiles

Hong Kong SAR

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ..........................3

1.01 Foreign ownership restrictions.............................................4

Environmental regulation

2.03 Government prioritization of sustainable T&T ......................6

Safety and security

3.03 Business costs of crime and violence..................................8

3.02 Reliability of police services .................................................9

Health and hygiene

4.03 Access to improved sanitation .............................................1

4.04 Access to improved drinking water .....................................1

4.01 Gov’t efforts to reduce health risks from pandemics ..........4

Prioritization of Travel & Tourism

5.03 Effectiveness of marketing and branding ............................4

5.01 Government prioritization of the T&T industry.....................5

Air transport infrastructure

6.01 Quality of air transport infrastructure ...................................3

6.06 International air transport network .......................................5

Ground transport infrastructure

7.03 Port infrastructure ................................................................3

7.04 Domestic transport network ................................................3

7.02 Railroad infrastructure ..........................................................5

7.01 Road infrastructure...............................................................6

Price competitiveness in the T&T industry

10.03 Extent and effect of taxation................................................2

Human resources

11.01 Primary education enrollment ..............................................1

11.08 HIV prevalence .....................................................................1

11.09 Malaria incidence..................................................................1

11.11 Life expectancy ....................................................................1

11.03 Quality of the educational system .......................................7

Natural and cultural resources

13.05 Risk of malaria and yellow fever ..........................................1

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.05 Openness of bilateral Air Service Agreements ..................24

1.04 Visa requirements ..............................................................15

1.02 Property rights....................................................................14

Environmental regulation

2.01 Stringency of environmental regulation .............................34

2.02 Clarity and stability of environmental regulations ..............25

Safety and security

3.01 Business costs of terrorism ...............................................25

Prioritization of Travel & Tourism

5.04 T&T fair attendance............................................................48

5.02 T&T government expenditure ............................................15

Air transport infrastructure

6.04 Airport density ..................................................................118

6.05 Number of operating airlines..............................................22

6.02 Available seat kilometers....................................................11

Tourism infrastructure

8.02 Presence of major car rental companies..........................102

8.01 Hotel rooms........................................................................39

8.03 ATMs accepting Visa cards ................................................33

ICT infrastructure

9.01 Extent of business Internet use.........................................24

9.02 Internet users .....................................................................18

9.03 Telephone lines...................................................................15

Price competitiveness in the T&T industry

10.04 Fuel price level ...................................................................96

10.02 Purchasing power parity.....................................................87

10.01 Ticket taxes and airport charges.........................................23

Human resources

11.10 Tuberculosis incidence .......................................................65

11.02 Secondary education enrollment........................................64

11.07 Ease of hiring foreign labor ................................................24

11.05 Extent of staff training........................................................21

11.04 Local availability of research and training services.............18

11.06 Hiring and firing practices...................................................13

National tourism perception

12.03 Recommendation to extend business trips .......................67

12.02 Attitude toward tourists .....................................................28

12.01 Tourism openness ..............................................................15

Natural and cultural resources

13.01 Number of World Heritage sites ......................................107

13.04 Business concern for ecosystems .....................................39

13.02 Carbon dioxide damage......................................................13

Japan

Key indicators

Population (millions), 2005..........................................................................128.0

Surface area (1,000 square kilometers) ......................................................377.9

Gross domestic product (US$ billions), 2005 ..........................................4,567.4

Gross domestic product (PPP, US$) per capita, 2005 ..............................30,615

Real GDP growth (percent), 2005...................................................................2.6

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .........................................................168,501...................3.5...................2.2

Employment (1,000 jobs)....................................................2,684...................4.2...................1.3

T&T economy, 2006 estimates

GDP (US$ millions) .........................................................446,530...................9.4...................2.4

Employment (1,000 jobs)....................................................6,940.................10.9...................1.5

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................6,728

International tourism receipts (US$ millions), 2005 .........12,439

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................25 5.0

T&T regulatory framework ..............................................................................28 5.1

Policy rules and regulations..............................................................................38 5.0

Environmental regulation ...................................................................................17 5.5

Safety and security .............................................................................................23 5.4

Health and hygiene .............................................................................................28 5.8

Prioritization of T&T strategies .........................................................................63 3.8

T&T business environment and infrastructure............................................17 4.7

Air transport infrastructure ...............................................................................16 4.7

Ground transport infrastructure .........................................................................6 6.3

Tourism infrastructure ........................................................................................43 3.8

ICT infrastructure ................................................................................................17 4.9

Price competitiveness in T&T industry .........................................................107 3.8

T&T human, cultural, and natural resources ...............................................38 5.1

Human resources................................................................................................11 5.7

Education and training...................................................................................4 6.2

Availability of qualified labor ......................................................................75 4.2

Workforce wellness .....................................................................................12 6.9

National tourism perception............................................................................116 4.0

Natural and cultural resources.........................................................................14 5.7

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

3,000

6,000

9,000

12,000

15,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

233

2.1: Country/Economy Profiles

Japan

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.02 Property rights....................................................................15

1.05 Openness of bilateral Air Service Agreements ..................19

Environmental regulation

2.02 Clarity and stability of environmental regulations ................9

2.01 Stringency of environmental regulation .............................12

Safety and security

3.03 Business costs of crime and violence................................12

3.02 Reliability of police services ...............................................17

Health and hygiene

4.03 Access to improved sanitation .............................................1

4.04 Access to improved drinking water .....................................1

4.01 Gov’t efforts to reduce health risks from pandemics ........14

Prioritization of Travel & Tourism

5.04 T&T fair attendance............................................................23

Air transport infrastructure

6.02 Available seat kilometers......................................................4

6.01 Quality of air transport infrastructure ...................................8

6.06 International air transport network .....................................11

6.05 Number of operating airlines..............................................15

Ground transport infrastructure

7.02 Railroad infrastructure ..........................................................2

7.04 Domestic transport network ................................................6

7.01 Road infrastructure...............................................................8

7.03 Port infrastructure ................................................................8

Tourism infrastructure

8.01 Hotel rooms........................................................................15

ICT infrastructure

9.01 Extent of business Internet use.........................................13

9.02 Internet users .....................................................................19

9.03 Telephone lines...................................................................22

Human resources

11.01 Primary education enrollment ..............................................1

11.02 Secondary education enrollment..........................................1

11.04 Local availability of research and training services...............1

11.08 HIV prevalence .....................................................................1

11.09 Malaria incidence..................................................................1

11.11 Life expectancy ....................................................................1

11.05 Extent of staff training..........................................................3

11.03 Quality of the educational system .....................................19

Natural and cultural resources

13.05 Risk of malaria and yellow fever ..........................................1

13.02 Carbon dioxide damage......................................................14

13.04 Business concern for ecosystems .....................................14

13.01 Number of World Heritage sites ........................................15

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ........................82

1.01 Foreign ownership restrictions...........................................77

1.04 Visa requirements ..............................................................43

Environmental regulation

2.03 Government prioritization of sustainable T&T ....................55

Safety and security

3.01 Business costs of terrorism ...............................................97

Health and hygiene

4.02 Physician density................................................................53

Prioritization of Travel & Tourism

5.01 Government prioritization of the T&T industry...................98

5.03 Effectiveness of marketing and branding ..........................80

5.02 T&T government expenditure ............................................39

Air transport infrastructure

6.04 Airport density ..................................................................110

6.03 Departures per 1,000 population........................................43

Tourism infrastructure

8.02 Presence of major car rental companies............................66

8.03 ATMs accepting Visa cards ................................................46

Price competitiveness in the T&T industry

10.02 Purchasing power parity...................................................111

10.04 Fuel price level ...................................................................88

10.01 Ticket taxes and airport charges.........................................61

10.03 Extent and effect of taxation..............................................49

Human resources

11.07 Ease of hiring foreign labor ................................................76

11.06 Hiring and firing practices...................................................70

11.10 Tuberculosis incidence .......................................................45

National tourism perception

12.03 Recommendation to extend business trips .....................106

12.01 Tourism openness ............................................................103

12.02 Attitude toward tourists .....................................................82

Natural and cultural resources

13.03 Nationally protected areas..................................................62

Indonesia

Key indicators

Population (millions), 2005..........................................................................220.6

Surface area (1,000 square kilometers) ...................................................1,904.6

Gross domestic product (US$ billions), 2005 .............................................281.3

Gross domestic product (PPP, US$) per capita, 2005 ................................4,459

Real GDP growth (percent), 2005...................................................................5.6

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................9,535...................3.1...................4.9

Employment (1,000 jobs)....................................................2,579...................2.5...................3.3

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................27,047...................8.7...................4.6

Employment (1,000 jobs)....................................................7,332...................7.2...................3.0

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................5,002

International tourism receipts (US$ millions), 2005 ...........4,521

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................60 4.2

T&T regulatory framework ..............................................................................54 4.4

Policy rules and regulations..............................................................................43 5.0

Environmental regulation ...................................................................................81 3.7

Safety and security .............................................................................................50 4.8

Health and hygiene ...........................................................................................103 3.5

Prioritization of T&T strategies ...........................................................................6 5.4

T&T business environment and infrastructure............................................68 3.3

Air transport infrastructure ...............................................................................64 3.0

Ground transport infrastructure .......................................................................89 2.8

Tourism infrastructure ........................................................................................87 2.4

ICT infrastructure ................................................................................................80 2.3

Price competitiveness in T&T industry .............................................................1 6.1

T&T human, cultural, and natural resources ...............................................56 4.8

Human resources................................................................................................62 5.1

Education and training.................................................................................43 5.1

Availability of qualified labor ......................................................................42 4.7

Workforce wellness .....................................................................................92 5.7

National tourism perception..............................................................................57 5.0

Natural and cultural resources.........................................................................58 4.4

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

3,000

4,000

5,000

6,000

7,000

8,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

223

2.1: Country/Economy Profiles

Indonesia

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ..........................8

1.01 Foreign ownership restrictions...........................................12

1.05 Openness of bilateral Air Service Agreements ..................30

1.04 Visa requirements ..............................................................43

Safety and security

3.01 Business costs of terrorism ...............................................21

3.03 Business costs of crime and violence................................28

Prioritization of Travel & Tourism

5.02 T&T government expenditure ............................................12

5.03 Effectiveness of marketing and branding ..........................15

5.04 T&T fair attendance............................................................23

5.01 Government prioritization of the T&T industry...................34

Air transport infrastructure

6.02 Available seat kilometers....................................................24

6.05 Number of operating airlines..............................................33

ICT infrastructure

9.01 Extent of business Internet use.........................................48

Price competitiveness in the T&T industry

10.04 Fuel price level .....................................................................5

10.01 Ticket taxes and airport charges.........................................10

10.03 Extent and effect of taxation..............................................11

10.02 Purchasing power parity.....................................................24

Human resources

11.01 Primary education enrollment ..............................................1

11.07 Ease of hiring foreign labor ................................................14

11.03 Quality of the educational system .....................................23

11.04 Local availability of research and training services.............24

11.08 HIV prevalence ...................................................................25

11.05 Extent of staff training........................................................40

National tourism perception

12.03 Recommendation to extend business trips .........................5

Natural and cultural resources

13.03 Nationally protected areas..................................................15

13.01 Number of World Heritage sites ........................................30

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.02 Property rights....................................................................90

Environmental regulation

2.01 Stringency of environmental regulation ...........................101

2.02 Clarity and stability of environmental regulations ..............70

2.03 Government prioritization of sustainable T&T ....................65

Safety and security

3.02 Reliability of police services ...............................................99

Health and hygiene

4.02 Physician density..............................................................108

4.01 Gov’t efforts to reduce health risks from pandemics ......100

4.04 Access to improved drinking water ...................................87

4.03 Access to improved sanitation ...........................................84

Air transport infrastructure

6.04 Airport density ....................................................................95

6.03 Departures per 1,000 population........................................83

6.01 Quality of air transport infrastructure .................................73

6.06 International air transport network .....................................64

Ground transport infrastructure

7.01 Road infrastructure...........................................................110

7.03 Port infrastructure ..............................................................97

7.04 Domestic transport network ..............................................74

7.02 Railroad infrastructure ........................................................64

Tourism infrastructure

8.01 Hotel rooms........................................................................79

8.03 ATMs accepting Visa cards ................................................76

8.02 Presence of major car rental companies............................66

ICT infrastructure

9.03 Telephone lines...................................................................95

9.02 Internet users .....................................................................79

Human resources

11.10 Tuberculosis incidence .......................................................96

11.02 Secondary education enrollment........................................91

11.09 Malaria incidence................................................................89

11.11 Life expectancy ..................................................................83

11.06 Hiring and firing practices...................................................77

National tourism perception

12.01 Tourism openness ..............................................................57

12.02 Attitude toward tourists .....................................................54

Natural and cultural resources

13.04 Business concern for ecosystems ...................................109

13.05 Risk of malaria and yellow fever ......................................101

13.02 Carbon dioxide damage......................................................85

Vietnam

Key indicators

Population (millions), 2005............................................................................83.0

Surface area (1,000 square kilometers) ......................................................331.7

Gross domestic product (US$ billions), 2005 ...............................................51.4

Gross domestic product (PPP, US$) per capita, 2005 ................................3,025

Real GDP growth (percent), 2005...................................................................8.4

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) .............................................................1,843...................3.2...................6.2

Employment (1,000 jobs).......................................................953...................2.5...................1.6

T&T economy, 2006 estimates

GDP (US$ millions) .............................................................6,254.................10.9...................7.1

Employment (1,000 jobs)....................................................3,364...................8.7...................2.5

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................3,468

International tourism receipts (US$ millions).........................N/A

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................87 3.8

T&T regulatory framework ..............................................................................84 3.9

Policy rules and regulations............................................................................104 3.7

Environmental regulation ...................................................................................84 3.6

Safety and security .............................................................................................51 4.8

Health and hygiene .............................................................................................94 4.0

Prioritization of T&T strategies .........................................................................76 3.6

T&T business environment and infrastructure ...........................................95 2.8

Air transport infrastructure ...............................................................................90 2.5

Ground transport infrastructure .......................................................................85 2.9

Tourism infrastructure ......................................................................................121 1.1

ICT infrastructure ................................................................................................88 2.1

Price competitiveness in T&T industry ...........................................................10 5.5

T&T human, cultural, and natural resources ...............................................76 4.6

Human resources................................................................................................81 4.9

Education and training.................................................................................82 4.3

Availability of qualified labor ......................................................................52 4.5

Workforce wellness .....................................................................................83 5.9

National tourism perception..............................................................................51 5.1

Natural and cultural resources.........................................................................84 3.8

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

1,000

1,500

2,000

2,500

3,000

3,500

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

363

2.1: Country/Economy Profiles

Vietnam

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Safety and security

3.02 Reliability of police services ...............................................46

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ........15

Prioritization of Travel & Tourism

5.04 T&T fair attendance............................................................48

Air transport infrastructure

6.02 Available seat kilometers....................................................41

6.05 Number of operating airlines..............................................45

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................10

10.04 Fuel price level ...................................................................15

10.01 Ticket taxes and airport charges.........................................37

Human resources

11.06 Hiring and firing practices...................................................45

Natural and cultural resources

13.01 Number of World Heritage sites ........................................48

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.01 Foreign ownership restrictions.........................................121

1.04 Visa requirements ..............................................................94

1.05 Openness of bilateral Air Service Agreements ..................84

1.03 Rules governing foreign direct investment ........................73

1.02 Property rights....................................................................69

Environmental regulation

2.01 Stringency of environmental regulation ...........................108

2.02 Clarity and stability of environmental regulations ............101

2.03 Government prioritization of sustainable T&T ....................51

Safety and security

3.01 Business costs of terrorism ...............................................61

3.03 Business costs of crime and violence................................56

Health and hygiene

4.03 Access to improved sanitation ...........................................96

4.02 Physician density................................................................92

4.04 Access to improved drinking water ...................................83

Prioritization of Travel & Tourism

5.02 T&T government expenditure ............................................99

5.01 Government prioritization of the T&T industry...................61

5.03 Effectiveness of marketing and branding ..........................56

Air transport infrastructure

6.04 Airport density ..................................................................123

6.03 Departures per 1,000 population........................................92

6.01 Quality of air transport infrastructure .................................82

6.06 International air transport network .....................................76

Ground transport infrastructure

7.01 Road infrastructure.............................................................91

7.03 Port infrastructure ..............................................................89

7.04 Domestic transport network ..............................................77

7.02 Railroad infrastructure ........................................................70

Tourism infrastructure

8.02 Presence of major car rental companies..........................121

8.03 ATMs accepting Visa cards ................................................93

8.01 Hotel rooms........................................................................88

ICT infrastructure

9.01 Extent of business Internet use.......................................111

9.02 Internet users .....................................................................76

9.03 Telephone lines...................................................................74

Price competitiveness in the T&T industry

10.03 Extent and effect of taxation..............................................54

Human resources

11.03 Quality of the educational system ...................................100

11.01 Primary education enrollment ............................................94

11.10 Tuberculosis incidence .......................................................94

11.09 Malaria incidence................................................................83

11.02 Secondary education enrollment........................................81

11.04 Local availability of research and training services.............76

11.05 Extent of staff training........................................................71

11.08 HIV prevalence ...................................................................69

11.11 Life expectancy ..................................................................66

11.07 Ease of hiring foreign labor ................................................63

< < < (Cont’d. on bottom of left column)

(Disadvantages cont’d. from bottom of right column)

COMPETITIVE DISADVANTAGES Rank/124

National tourism perception

12.03 Recommendation to extend business trips .....................123

12.02 Attitude toward tourists .....................................................66

Natural and cultural resources

13.04 Business concern for ecosystems .....................................99

13.02 Carbon dioxide damage......................................................98

13.03 Nationally protected areas..................................................88

13.05 Risk of malaria and yellow fever ........................................79

China

Key indicators

Population (millions), 2005.......................................................................1,304.5

Surface area (1,000 square kilometers) ...................................................9,598.1

Gross domestic product (US$ billions), 2005 ..........................................2,234.1

Gross domestic product (PPP, US$) per capita, 2005 ................................7,198

Real GDP growth (percent), 2005.................................................................10.2

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) ...........................................................63,424...................2.9...................8.7

Employment (1,000 jobs)..................................................17,383...................2.3...................1.6

T&T economy, 2006 estimates

GDP (US$ millions) .........................................................301,154.................13.7...................8.5

Employment (1,000 jobs)..................................................77,600.................10.2...................1.5

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ........................46,809

International tourism receipts (US$ millions), 2005 .........29,296

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................71 4.0

T&T regulatory framework ..............................................................................78 4.0

Policy rules and regulations..............................................................................97 3.8

Environmental regulation ...................................................................................88 3.5

Safety and security .............................................................................................83 4.1

Health and hygiene .............................................................................................84 4.1

Prioritization of T&T strategies .........................................................................33 4.5

T&T business environment and infrastructure............................................61 3.5

Air transport infrastructure ...............................................................................36 3.8

Ground transport infrastructure .......................................................................45 4.0

Tourism infrastructure ......................................................................................113 1.7

ICT infrastructure ................................................................................................63 2.6

Price competitiveness in T&T industry ...........................................................11 5.4

T&T human, cultural, and natural resources ...............................................93 4.4

Human resources................................................................................................74 5.0

Education and training.................................................................................72 4.6

Availability of qualified labor ......................................................................58 4.4

Workforce wellness .....................................................................................79 6.0

National tourism perception............................................................................120 3.8

Natural and cultural resources.........................................................................60 4.4

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0

10,000

20,000

30,000

40,000

50,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

171

2.1: Country/Economy Profiles

China

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.03 Rules governing foreign direct investment ........................42

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ........24

Prioritization of Travel & Tourism

5.04 T&T fair attendance..............................................................4

5.02 T&T government expenditure ............................................44

5.01 Government prioritization of the T&T industry...................49

Air transport infrastructure

6.02 Available seat kilometers......................................................2

6.05 Number of operating airlines..............................................12

Ground transport infrastructure

7.02 Railroad infrastructure ........................................................33

7.01 Road infrastructure.............................................................45

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................15

10.01 Ticket taxes and airport charges.........................................21

10.04 Fuel price level ...................................................................27

10.03 Extent and effect of taxation..............................................46

Human resources

11.01 Primary education enrollment ..............................................1

11.08 HIV prevalence ...................................................................25

11.04 Local availability of research and training services.............46

11.06 Hiring and firing practices...................................................50

Natural and cultural resources

13.01 Number of World Heritage sites ..........................................3

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.05 Openness of bilateral Air Service Agreements ................105

1.04 Visa requirements ..............................................................94

1.01 Foreign ownership restrictions...........................................87

1.02 Property rights....................................................................82

Environmental regulation

2.01 Stringency of environmental regulation .............................97

2.03 Government prioritization of sustainable T&T ....................81

2.02 Clarity and stability of environmental regulations ..............76

Safety and security

3.01 Business costs of terrorism .............................................104

3.03 Business costs of crime and violence................................70

3.02 Reliability of police services ...............................................64

Health and hygiene

4.03 Access to improved sanitation ...........................................94

4.04 Access to improved drinking water ...................................89

4.02 Physician density................................................................79

Prioritization of Travel & Tourism

5.03 Effectiveness of marketing and branding ..........................57

Air transport infrastructure

6.04 Airport density ..................................................................121

6.01 Quality of air transport infrastructure .................................89

6.06 International air transport network .....................................89

6.03 Departures per 1,000 population........................................84

Ground transport infrastructure

7.04 Domestic transport network ..............................................64

7.03 Port infrastructure ..............................................................55

Tourism infrastructure

8.02 Presence of major car rental companies..........................102

8.01 Hotel rooms........................................................................87

8.03 ATMs accepting Visa cards ................................................85

ICT infrastructure

9.01 Extent of business Internet use.........................................75

9.02 Internet users .....................................................................75

9.03 Telephone lines...................................................................52

Human resources

11.10 Tuberculosis incidence .......................................................92

11.03 Quality of the educational system .....................................87

11.02 Secondary education enrollment........................................83

11.05 Extent of staff training........................................................76

11.07 Ease of hiring foreign labor ................................................73

11.11 Life expectancy ..................................................................53

National tourism perception

12.03 Recommendation to extend business trips .....................122

12.02 Attitude toward tourists ...................................................112

12.01 Tourism openness ..............................................................78

Natural and cultural resources

13.02 Carbon dioxide damage....................................................104

13.05 Risk of malaria and yellow fever ........................................91

13.04 Business concern for ecosystems .....................................85

13.03 Nationally protected areas..................................................56

Korea, Rep.

Key indicators

Population (millions), 2005............................................................................48.3

Surface area (1,000 square kilometers) ........................................................99.3

Gross domestic product (US$ billions), 2005 .............................................787.6

Gross domestic product (PPP, US$) per capita, 2005 ..............................20,590

Real GDP growth (percent), 2005...................................................................4.0

Source: World Bank, World Development Indicators Online Database (December 2006); IMF, World Economic Outlook Online

Database (April and September 2006 editions); national sources

Travel & Tourism indicators

T&T industry, 2006 estimates

GDP (US$ millions) ...........................................................13,068...................1.5...................4.1

Employment (1,000 jobs).......................................................477...................2.1...................0.6

T&T economy, 2006 estimates

GDP (US$ millions) ...........................................................61,035...................6.8...................5.0

Employment (1,000 jobs)....................................................1,731...................7.4...................1.2

Source: World Travel & Tourism Council, TSA Research 2006

International tourist arrivals (1,000), 2005 ..........................6,022

International tourism receipts (US$ millions), 2005 ...........5,660

Source: United Nations World Tourism Organization

Travel & Tourism Competitiveness Index

2007 Index......................................................................................................42 4.6

T&T regulatory framework ..............................................................................46 4.6

Policy rules and regulations..............................................................................56 4.8

Environmental regulation ...................................................................................37 4.6

Safety and security .............................................................................................37 5.0

Health and hygiene .............................................................................................60 4.8

Prioritization of T&T strategies .........................................................................58 3.9

T&T business environment and infrastructure............................................24 4.5

Air transport infrastructure ...............................................................................24 4.1

Ground transport infrastructure .......................................................................19 5.3

Tourism infrastructure ........................................................................................68 2.9

ICT infrastructure ..................................................................................................3 5.8

Price competitiveness in T&T industry ...........................................................84 4.2

T&T human, cultural, and natural resources ...............................................73 4.7

Human resources................................................................................................48 5.2

Education and training.................................................................................25 5.5

Availability of qualified labor ......................................................................97 3.8

Workforce wellness .....................................................................................60 6.5

National tourism perception............................................................................118 3.9

Natural and cultural resources.........................................................................37 4.9

Note: For descriptions of variables and detailed sources, please refer to “How to Read the Country/Economy Profiles.”

2007–2016

Percent annual growth

of total (%, forecast)

Rank Score

(out of 124) (1–7 scale)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

3,000

4,000

5,000

6,000

7,000

8,000

1 2 3 4 5 6 7

International tourist arrivals

(thousands)

International tourism receipts

(US$ millions)

241

2.1: Country/Economy Profiles

Korea, Rep.

T&T national competitiveness balance sheet

COMPETITIVE ADVANTAGES Rank/124

Policy rules and regulations

1.04 Visa requirements ..............................................................15

1.02 Property rights....................................................................34

1.05 Openness of bilateral Air Service Agreements ..................41

Environmental regulation

2.02 Clarity and stability of environmental regulations ..............29

2.01 Stringency of environmental regulation .............................40

Safety and security

3.02 Reliability of police services ...............................................39

Health and hygiene

4.01 Gov’t efforts to reduce health risks from pandemics ........39

Prioritization of Travel & Tourism

5.04 T&T fair attendance............................................................15

Air transport infrastructure

6.02 Available seat kilometers....................................................19

6.01 Quality of air transport infrastructure .................................32

6.05 Number of operating airlines..............................................33

6.06 International air transport network .....................................37

Ground transport infrastructure

7.02 Railroad infrastructure ........................................................13

7.01 Road infrastructure.............................................................25

7.03 Port infrastructure ..............................................................27

7.04 Domestic transport network ..............................................27

Tourism infrastructure

8.03 ATMs accepting Visa cards ................................................29

ICT infrastructure

9.01 Extent of business Internet use...........................................1

9.02 Internet users .......................................................................4

9.03 Telephone lines...................................................................14

Price competitiveness in the T&T industry

10.01 Ticket taxes and airport charges.........................................28

Human resources

11.01 Primary education enrollment ..............................................1

11.08 HIV prevalence .....................................................................1

11.05 Extent of staff training........................................................18

11.04 Local availability of research and training services.............29

11.11 Life expectancy ..................................................................29

11.03 Quality of the educational system .....................................38

Natural and cultural resources

13.01 Number of World Heritage sites ........................................30

COMPETITIVE DISADVANTAGES Rank/124

Policy rules and regulations

1.01 Foreign ownership restrictions...........................................95

1.03 Rules governing foreign direct investment ........................93

Environmental regulation

2.03 Government prioritization of sustainable T&T ....................64

Safety and security

3.01 Business costs of terrorism ...............................................63

3.03 Business costs of crime and violence................................46

Health and hygiene

4.02 Physician density................................................................58

4.04 Access to improved drinking water ...................................53

Prioritization of Travel & Tourism

5.01 Government prioritization of the T&T industry...................88

5.02 T&T government expenditure ............................................73

5.03 Effectiveness of marketing and branding ..........................73

Air transport infrastructure

6.04 Airport density ....................................................................84

Tourism infrastructure

8.01 Hotel rooms........................................................................80

8.02 Presence of major car rental companies............................66

Price competitiveness in the T&T industry

10.02 Purchasing power parity.....................................................90

10.04 Fuel price level ...................................................................88

10.03 Extent and effect of taxation..............................................72

Human resources

11.07 Ease of hiring foreign labor ..............................................118

11.10 Tuberculosis incidence .......................................................77

11.06 Hiring and firing practices...................................................66

11.02 Secondary education enrollment........................................49

National tourism perception

12.03 Recommendation to extend business trips .....................120

12.02 Attitude toward tourists ...................................................111

12.01 Tourism openness ..............................................................81

Natural and cultural resources

13.02 Carbon dioxide damage......................................................67

13.03 Nationally protected areas..................................................61

13.04 Business concern for ecosystems .....................................44