Informal Economies

• Definition

– Often creative economic activities that take place without formal employment contracts which are used to cope in absence of other economic opportunities and make use of spaces left open by formal economy

• Many cities in Africa and South Asia: 50% of working population

• Women and children over represented

• Causes

– Long-term unemployment or underemployment

• when people work less than full-time, though they want to work more

– Population growth of cities outpace their economic growth

Informal Economies (cont.)

• Problems

– Governments have little control

• Unable to gain taxes

• Unable to regulate possible hazards

– Some activities highly corrosive of wider society (drugs, bribes)

– Subsidizes low wages for middle classes, keeps everyone poorer

– Though gives children chance to earn money, work dangerous

• Benefits

– Governments have little control

• Gets around red tape, monopolies

– In absence of other options, people can survive

– If it involves a small business, micro-credit offers opportunity to expand

Garbage Picking

• Where people search garbage for possible recyclables materials and products

– Plastics, Aluminum, Small Appliance Parts

– 25% of all Mexico City garbage ends up recycled

• Collected by:

– Families living in dump

– Walking shopping and industrial areas

– Running Ahead of Garbage Trucks

• In Cali, Columbia is Carton de Columbia

– Makes low quality paper products

– 60% of raw material from collected paper

– 1,200 people pick paper daily, sell to company as independent contractors

Traffic Congestion

Car population grown 5x faster than humans

– Traffic accidents among leading causes of death in Nigeria, Mexico

– Most urban spending on transport and infrastructure, but traffic worse than West

– Air pollution is huge problem, asthma

– Car-side vending (food, newspaper, entertainment) for those stuck in traffic a huge industry

• Many rely on shared, private transport

– Rickshaws: Common throughout Asia, bicycles which transport 2 to 4 passengers

• Great where fuel expensive, streets are narrow, keeps air clean (but slow on main roads)

• Also three-wheeled, motorized versions

– Jeepneys: Jeeps/trucks converted into mini-buses in Philippines

– Neighborhood street mechanics very common

Urban Food Systems

• Urban Agriculture

– In Central Africa, 50% of residents keep gardens

• Grown on traffic islands, roadsides, abandoned lots, rooftops

• Grow tubers, raise chickens to supplement diet, sell small surplus

• Food vending

– Depending on government permits and unionization, fairly inexpensive option for people

• Cook items at home, sell on busy streets, busy stations, markets

• Sell food/water from cart, where trucks can’t go

• Set up home front restaurant/bar, often open at night run by women

Smuggling & Pirating

Smuggling: the act of bringing in items through extra-legal means

– Way to avoid high taxes on legal items

• Alcohol, Cigarettes, Medicinal Drugs

– Way to supply illegal items

• Sometimes done to break import restrictions in closed countries like Iran

• Also a way to provide pirated items, which violate copyrights

– Knock-off clothing, watches and shoes

– CD and Video piracy is much more prevalent in non-Western world

• Recreational drug smuggling is one of the world’s most lucrative businesses

– Cocaine from North Central South America

– Heroin from Afghanistan, Thailand/Burma

Artifacts and Crafts

• Behind drugs and, probably arms, most lucrative illegally traded items are artifacts/antiques

– Anthropologist Monica Udvardy tracked down one Kenyan man’s statues in a museum in Virginia (majority of all such statues stolen)

– Much of Egyptian, Greek, Polynesian heritage outside of country in musuems and private collections

• In non-literate society, what we consider as decoration is their history

• Crafts made for tourists often one of few ways tourist dollars reach down into local economy

– Craft cooperatives w/ workshop and store often good economic option

– Increasing competition from China, which makes replicas of crafts from all over the world

• Some think meaning lost when reproduced

Other forms of informal income

• Vending in cheap goods (clothing, plastics, some pirated items)

– In Mexico, this works by

• Regional, local sellers buying from wholesalers in Tepito neighborhood in Mexico City or just across U.S. border

• Sold door to door, in markets, or out of the home front

• Piecework for garment industries

– To get around sweatshops regulations, companies hand out cut pieces for in-home assembly, pay per piece

Other activities (cont.)

• Corruption/Bribery

– Many local officials, police officers poorly paid, use paperwork as chance to exchange money for speed

• Begging

– Often “begging syndicates” to establish territories, exchange part of money for protection

A Snap Shot of Tourism

Tourism: A Great Big Industry

• One of the largest items of world trade (along with oil)

– Adds $3 trillion to the world economy

– 842 million international trips taken in 2006

• Hospitality is the largest employer outside of agriculture

– 1 out of every 15 workers worldwide

• Another hot topic in geography

– About defining and changing places, movement of people

Keep in Mind

• Tourism inverts the logic of economic location theory

– Most products are assembled in diverse places, shipped to consumers

– Tourism, you must ship the tourist to where the product is in order to try it

• Thus tourism is inordinately dependent upon marketing

– Much of which focuses on the “four S’s”: sun, sea, sand and sex

» Now “shopping” is often included; WD mentions “servility” in that tourists never want to be troubled while on vacation

• Tourists want “experiences,” often away from other tourists, or “behind the scenes”

– Tricky to let tourists into a wilderness area, and for it to still be called wildnerness

Tourists: Who Are They, Where Do They Go

• Top Five International Tourist Receivers:

– France: 77 mil. people, $32 billion

– Spain: 52 mil. people, $33.6 billion

– United States: 42 mil. people,$66.5 billion

– Italy: 40 mil. people, $26.9 billion

– China: 36.8 mil. People, $20 billion

• Top Five International Tourist Spenders:

– U.S.: $58 billion

– Germany: $53.2 billion

– U.K.: $40.4 billion

– Japan: $26.7 billion

– France: $20 billion

• China has just started sending large number of tourists

• But…

– 80% of trips within region

– 10% of Americans have passports

– 20% of countries make 70% of trips

Origins of Tourism: Some British Wanting to Leave Their God-forsaken Island

• The Grand Tour – A trip around Europe taken by British people

– 17^th century young members of British upper-class tour “The Continent” to learn from masters in various fields

– Later linked to cataloguing exercises (describing and classifying everything in the world)

• Foundations of anthropology, geography, botany, zoology

– Finally becomes individualistic, romantic “re-creation”

• Ideal is “alone amongst beauty”

Origins of Tourism: Many British making the most of their frozen Island

• Mass Tourism

– 17^th cent.: Seaside & hot springs seen as medicinal by wealthy

• Evolve into leisure class hangouts

– 19^th cent.: Extension of vacation to all

• UK from rural to urban

• Some industrialists realize time off and recreation increase productivity

• Unions demand raises and leisure

• Whole towns go on vacation at once, to same place

– British Seaside undeveloped except for fishing, trains can take people there – Blackpool, Brighton

• Similar to New Jersey Shore, East Coast of Lake Michigan

Origins of International Mass Tourism: Northern Europeans Look For Hassle Free Sun & Culture

• Thomas Cook – Makes travel easy

– 1841: Secured group rate train tickets to transport church groups to temperance meetings

• Moves to organizing group leisure excursions within Britain, writing guide books

– 1863: Begins group tours of Italy and Alps

– 1868: First uses predecessors of package vacation & travelers check

– 1869: First trip up Nile to see antiquities and non-Westerners, establishes international offices

– 1950’s: Moves into booking air tickets for Mediterranean Sun, Sea, Sand Holidays

International Tourism and Development

• The lowering of airfares has made once remote locations accessible

– Franco began Spain’s economic turn-around through fly-in tourism

– Africa, Asia and Latin America now make up 1/8 of market

• Why is Tourism seen as good choice for development?

– Often least developed places (no mining, no manufacturing) are most attractive to tourists

• Way of recognizing and preserving minority cultures

• Less environmentally destructive and safer for workers than mining or plantation agriculture

– Requires only a basic infrastructure and little pre-job training

• Transport networks have multiple uses

– Brings in foreign currency, meaning more money floating in the local economy, which might get re-spent

Different Bases for Attractions

• Wildlife

– Southeastern Africa: Safari

• Mountains

– Nepal: Trekking, Chile: Skiing

• Beaches

– Pacific, Caribbean Islands

• Shopping

– Hong Kong, Singapore, Dubai

• Urban Life

– Istanbul, Rio De Janeiro

• Folk Culture and World History

– India, China, Egypt

• Sex

– Thailand

Tourism Will Eat Itself

• In becoming popular, what made a destination attractive often become degraded

– Isolated or peaceful locations become over-run

– Exotic locations become too routine

• New Zealand and Nepal saw surges, then stagnation

– Tourists, like all people who gather in large numbers, damage ecosystems and sites

• Divers kill coral by touching, sun block

• Hikers cause foot-path erosion

• Lack of waste disposal infrastructure brings pollution, and animal scavengers

• Light fades paintings, visitors erode pyramids

– Infrastructure needs constant updating

• Hotel rooms get battered, sites get graffiti, become less attractive

Tourism Will Eat Itself (cont.)

• Changes Culture People Come to See

– Locals stop engaging in activities tourists came to see (dances, traditional ag) and start serving tourists

– Once symbolically important performances and objects, get constantly reproduced for tourists, lose meaning

– Businesses which offer familiar services to tourists spring up (McDonalds) or sell non-local crafts (made in China)

– Crime and nuisance often increases: theft, illegal drugs, street vendors, beggars, drunk tourists

Economic growth often sudden and then tenuous

• More money in economy often raises prices for locals, and then for tourists

• Jobs are seasonal, few non-tourist jobs created

– Brings migrants, also often with few skills

– Only 40% to 2.5% of money captured by destination

– Bad weather can ruin a whole season

• Tourism susceptible to fluctuations in world economy

– Personal and Business Travel budgets often slashed during lean times

• More likely to travel less far, more cheaply

Tenuous Growth (cont.)

• Individual destinations susceptible to signs of instability

– Terrorism: Sept. 11 caused 6% drop in air passengers, world-wide

• Jordan, Egypt, and U.S. all hurt, Mexico helped

• Bali tourism absolutely decimated by bombings

– Political Instability: Coup in Fiji caused 70% drop, Castro all but eliminated tourism in Cuba until recently

– Crime: Jamaica dropped in 1980’s because of crimes against tourists

• All Inclusive Resorts saved the industry in Jamaica, putting the tourists behind barbed wire fence and taking care of every need

– Health: Contagious disease kills

• 1994: Plague in Surrat brings halts tourists to all of India

• 2003: SARS, devastates East Asia and Canada

Providers

• The 20 largest airlines carry the vast majority (75%) of international passenger traffic

– These tend to be dominated by First World Airlines

• Although HK’s Cathay Pacific, Dubai’s Emirates have grown tremendously

• Recently, legacy airlines are being undercut throughout the globe by low cost airlines (Ryanair, Easy Jet, Southwest, Jet Blue, SpiceJet, etc..) mostly through superior logistics, lower pension/salary burdens

• Hotels are dominated by international chains (the majority of all stays)

– Intercontinental, Wyndham, Marriot, Hilton, Accor

• Only three of the top 50 chains HQ’ed outside North America, Europe and Japan

– This means much of the money flows out of countries

• However, much of the construction costs are carried by local investors, who then pay for franchises/management contracts with the big chains

– Most chairs, furniture linens imported; most salary goes to top managers/chefs

Mass Tourism: Mexico (To be Covered 10/18)

• Tijuana during Prohibition

– Cross border to drink and gamble

• Acapulco

– Developed after WWII as resort for Mexican urban elite and middle class

– Full of modern high rises, luxury clubs and restaurants, as well discos and miniature golf

– Built with little planning, becoming polluted, crowded

Mexico (cont.)

• Cancun

– Built in underdeveloped, indigenous SE

• Away from Mexican urban problems and stop spread of uprisings

– Built on an island, infrastructure planned and financed by Mexican government’s develop agency, FONATUR

• Road on Lagoon side, all hotels fronted the Gulf beaches, the only attraction

• Workers lived on mainland, bused in

• Meant for foreigners, they would fly in and be taken directly to their hotel

• First was supposed to be luxury, in 1984 codes changed to mass tourism

• Lagoon, Mayans now also attractions

Ecotourism: Costa Rica

• Ecotourism: Tourism based on ideas of sustainability

– Small scale, environmentally friendly

• Use permits, guides to disturb nature as little as possible

– Local ownership and regulation, to keep profits local and fit, not clash with local culture

• Costa Rica, probably most successful

– Put 30% of territory in biosphere preserves

• Twelve Eco-Systems covered

– In 1980: 16,000 arrivals; 1995: 800,000

– Other countries have hard time implementing same scheme

• Requires wealthy tourists to pay transportation cost who likely will only come once

• Once they get their, they spend less than other tourists