Tourism dilemma - Lecturer says approach to sector unsustainable

Carl Gilchrist, Gleaner Writer

A University of the West Indies (UWI) lecturer has urged a new approach to tourism to ensure that its effect on the economy is not merely short term.

Diaram Ramjee Singh, a lecturer in the department of management studies, said the industry is "totally anaemic" as a large part of the earnings stay overseas.

"Tourism has the ability to make a positive impact on the economy, but we cannot rely on it in its current form. Something has to be done," Singh said.

The UWI lecturer was speaking at a Tourism Policy Seminar put on by the UWI's Tourism Research Programme and the HEART Trust, at the Runaway Bay Heart Academy in St Ann yesterday.

In his presentation titled 'Tourism and Economic Growth, The Jamaica Experience', Singh said Jamaica's leakage rate (percentage of earning that remains abroad) was at 50 per cent.

He said this was too high to sustain long-term economic growth and suggested that if this problem is solved things would be better.

In 2009, Jamaica earned approximately US$1.9 billion from tourism, a figure that tourism officials had predicted would have been surpassed last year.

Top foreign exchange earners

Tourism, along with bauxite and remittances, is the leading foreign exchange earner for Jamaica.

In presenting his paper, Singh drew reference to the Granger Causality Test that measures the impact of tourism on economic growth from 1970 to 2008. The test concluded that the industry has short-term impact on the economy.

Singh said that while several studies have posited tourism to be a driver of economic growth in many tourism jurisdictions, there is no evidence of co-integrating relationship between tourism receipts and per capita GDP for the Jamaican economy.

"Thus, there is an unambiguous inference that tourism, as currently configured, is not expected to stimulate growth in the long term. The Granger Causality Test, however, does lend support to the idea that tourism influences growth in the short run," he concluded.

In his paper, Singh said the apparent implication is that after four decades of intense activities, the industry has failed to produce the much-anticipated spillover effects.

"The inability of the industry to facilitate the development of these requisite economic impulses points to the inherent weaknesses of the current laissez-faire environment on which the industry's development is premised," he concluded.