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Faik GURBATOV
National Coordinator of the UNDP Project for the Development of Tourism in Azerbaijan (Baku, Azerbaijan).
THE TOURIST INDUSTRY IN ECONOMIC DEVELOPMENT: AN AZERBAIJAN CASE STUDY
Abstract
Contemporary economic science regards tourism as a composite socioeconomic system, one of the components of which is a multi-sectoral production complex called the tourist industry. The article takes a look at the economic prob-
lems in the tourist industry in the social and environmental context of tourist activity, as well as at the conceptual definition of tourism, the main trends and problems of its development, and the role and place of this sector in Azerbaijan’s economy.
I n t r o d u c t i o n
Despite its long history, there is still no uniform definition of tourism; both individual specialists and the multitude of tourist organizations interpret it in different ways. The existing definitions of tourism can be divided into two groups. The first is highly specialized and applies to specific economic, social, legal, and other aspects of tourism or its particular types, and is used as a tool for solving specific tasks (for example, for statistical purposes): in statistics, tourism implies a form of population migration that does not entail a change in place of residence or work. The second group of definitions (conceptual or content-related) characterizes the internal content of tourism as a whole, revealing all the diversity of the qualities and relations inherent in it and making it possible to distinguish it from similar phenomena.
The first formulations of tourism appeared when it became a mass phenomenon; a statistical account of travelers had to be kept. The concept of “foreign tourist” was first formulated in 1937 by the Committee of Statistical Experts of the League of Nations. According to it, a tourist is any person visiting a country, other than that in which he/she usually resides, for a period of at least 24 hours, for any reason other than following an occupation remunerated from within the country visited. This definition became recognized worldwide and is still used today with certain adjustments; it has given the sphere of tourism its conceptual meaning.
In subsequent years, the definition of “tourist” was discussed at meetings of the International Union of Official Travel Organization (Dublin, 1950; London, 1957), at the U.N. Conference on Travel and Tourism in Rome, 1963, and at the WTO Congress in Manila, 1986,1 to name a few. The
1 See: M.A. Zhukova, Menedzhment v turistskom biznese, KNORUS, Moscow, 2006,
international discussions were aimed at filling out the concept “tourist” and making it more precise keeping in mind the new trends in social development.
One of the first definitions adopted by the U.N. interpreted tourism as active recreation that has an enhancing effect on human health and physical development and involves travel to and stay in places outside the tourist’s usual environment.
The Academy of Tourism in Monte Carlo gives a broader definition of this concept: “Tourism is the temporary, short-term movement of people to destinations outside the places where they normally live and work for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited,”2 that is, the main emphasis is on the activities people engage in outside their usual environment.
At present, the most widely used definition is what is known as the general theory of tourism by Walter Hunzicker and Kurt Krapf, according to which tourism is “the sum of the phenomena and relationships arising from the travel and stay of non-residents, in so far as they do not lead to permanent residence and are not connected with any earning activity.”
At a certain stage in economic development, there was an abrupt rise in the need for travel, which led to the appearance of producers of these services and the formation of a special type of commodity (tourism), which can be bought and sold in the consumer market. The producers of services intended for tourists (travelers) have joined forces in what is known as the tourist industry. Tourism is not a vital necessity, and only becomes a pressing need when society and its individual members reach a certain level of prosperity.
On the Contemporary Role of Tourism in the Economy and Society
Tourism is an important element of the economy in many countries, providing jobs for the local population, filling hotels and restaurants, increasing the number of entertainment events, ensuring an inflow of foreign currency, and so on.
Tourism is based on the use of certain local resources, and its internal economic nature presupposes that the country or locality in question receives income from tourist activity.
Immigration services are usually concerned about the problem of limiting the inflow of workers and often only allow foreign workers to be hired on the basis of a special permit. But this only happens when the country is experiencing an acute shortage of its own labor resources or does not have enough specialists of a particular profile to carry out certain jobs (for example, laborious, dangerous, dirty work, and so on).
So visas authorizing entry into a country indicate that tourists are prohibited from exercising any remunerated activity. For example, Australian visas bear a stamp that clearly states the bearer has no right to engage in remunerated work or study.
This principle is also binding on business tourists, since they receive monetary support in their country or at their place of work and, consequently, bring money into the country they are visiting. Moreover, business tourism is quite profitable (business tourists spend 3-4-fold more money on their trips than tourists of other categories).
Vice President of the Russian Academy of Tourism V. Azar3 gave the following definition of tourism: “Tourism is a large economic system with diverse ties among the various elements within the
2 Ibid., p. 10.
3 See: Ibid., p. 16.
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framework of the national economy of a particular country and of the relations between the national economy and global economy as a whole.”
Contemporary development of the economy requires not so much the development of specific branches as the functioning of different interbranch complexes, which also includes tourism. Since it joins different branches, this sphere does not lie in the customary vertical plane, but encompasses a certain horizontal space, including enterprises and organizations that belong to different sectors.
This assertion can be shown as follows. Tourists act as buyers, that is, each person tries to satisfy his need for leisure time as much as possible. Travel demand is expressed in the payment for corresponding work, services, and commodities, which ensures financing of the tourist industry.
Development of the tourist industry (building roads, hotels, and resorts, setting up new recreation areas, etc.) requires large capital investments and financing from different sources (state structures, domestic and foreign private organizations, international organizations, and so on).
The increase in production volume in the tourist industry has a direct influence on other branches of the economy in which investment activity is developing; new jobs are created, trade turnover increases, and, consequently, profit rises. Some of the income received goes to the state in the form of taxes. The funds gathered this way can be used to further finance the infrastructure of the tourist industry, as well as render material assistance to socially unprotected groups of the population.
The objectives of tourism should meet the requirements of public morals and should not go beyond the framework of a normal person’s ethic code (extend to such concepts as sex tourism or military tourism, for example). In civilized states, such concepts as “good order,” “reasonable profit,” and “public morals” are categories enforced by the law.
The present stage of tourism development is characterized by the existence of a large number of domestic and semi-domestic industries, as well as small enterprises (mainly of the family type), which coexist with influential corporations.
Small businesses prevail (in the quantitative sense) among the companies participating in market operations in tourism. In France, 70% of hotel-type enterprises have a staff of no more than five employees. Half of those employed in hotels, cafes, and restaurants work at enterprises with a staff of less than ten.
As for tourist agencies, 57.5% have less than 6 employees. They provide jobs for only 13.9% of the total number of those employed in France’s tourist sector; their trade turnover amounts to 8.4%, and added value to 9.5%. Moreover, 26 of the country’s largest tourist agencies (1.9% of their total number) with more than 100 employees (at each) account for 46.3% of all those employed in this sector, 49.2% of trade turnover, and 56.6% of added value. These figures show that large companies play an important role in the tourist service market.
Higher levels of concentration are noted in the tour operator sector. Half of the package tour market is controlled by 5 leading French tour operators (including Club Med), while 67% is controlled by 10 dominating companies.
Similar market concentration indices can be found in other developed tourist countries. The two top tour operators in Japan account for 30% of the total volume of package tour sales, in Belgium for 60%, in the Netherlands for 70%; in Germany, the market share of the top three tour operators amounts to 42%, in Switzerland to more than 60%, and in Great Britain to 75%.
The reasons for concentration in tourism are the same as in other branches of the economy; they are primarily associated with the economies of scale. Specific factors can be singled out along with them that define the dynamism and diversity of the forms of concentration of the tourist market. The short-lived nature of tourist enterprises (mainly hotels) and tourist agencies encourages its monopolization owing to the unwieldy cost structure; at times of economic crisis their frequent bankruptcies and mergers become a mass phenomenon.
Another factor (which follows from the first) is the high commercial risks of operations in travel markets. Tourist companies insure risks by expanding the geographical scope of their representative
agencies and the range of products offered. They go to the external markets of the countries that lead in terms of outbound and inbound international tourist flows, open their branches in them, and create transnational chains; for even greater stability, they have begun penetrating related sectors of tourism.
In addition to them, the companies of other branches and spheres of the economy (the food and textile industries, ferrous metallurgy, and the banking sector) often show a direct interest in tourism. These companies also receive profit from selling tourist products.
Concentration of production in the tourist industry is being realized in two ways: internal and external.
In the first case, amalgamation is occurring within the framework of a separate economic entity as the result of profit capitalization (internal growth).
In the second case, a monopoly concentrates its economic power as the result of cooperation or merging of a large number of enterprises.
The studies carried out by the World Tourist Organization (WTO) show that the state of the world tourist industry, despite the objective difficulties of recent years, is largely stable and still one of the largest, highest income, and most rapidly developing sectors of the world economy.
This is explained by the increased interest in tourism by the governments of most countries of the world that have influential executive power structures for carrying out efficient state policy to develop it.
In the next few years, the tourist markets of developed industrial countries will steadily grow owing to the greater availability of tourism for more people and greater frequency of tourist trips. New and developing tourist markets are characterized by trends toward continued dynamic growth and a corresponding increase in budget income. A gradual shift in accent is expected in the development of tourism from the traditional markets of Western Europe, the U.S., Japan, and Canada to alter-
Table 1
Forecast of the Distribution of Volumes of Inbound Tourism by Regions of the World (international tourist arrivals, million people)
Regions of the World Arrivals
1985 1990 1995 2000 2010* 2020*
Total 327.1 457.2 565.4 667.7 1006.4 1561.1
Africa 9.7 15.0 20.2 27.4 47.0 77.3
America
(North and South) 64.3 92.8 108.9 130.2 190.4 282.3
Eastern Asia
(Pacific Region) 31.1 54.6 81.4 92.9 195.2 397.2
Europe 212.0 282.7 338.4 393.4 527.3 717.0
Middle East 7.5 9.0 12.4 18.3 35.9 68.5
South Asia 2.5 3.2 4.2 5.5 10.6 18.8
* Forecast.
S o u r c e: WTO.
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native markets such as Central and Eastern Europe (including Russia), China, South Korea, Mexico, and several countries of the Middle East (see Table 1).
The tourist market is a system of global economic relations in which tourist and excursion services are transformed into money and money is transformed into tourist and excursion services. In other words, the tourist market is a sphere where economic relations between the producers and consumers of tourist commodities appear; if their economic interests coincide, buy and sell occurs.
The tourist market performs a multitude of functions: informative, mediatory, regulatory, price-forming, stimulating, creative-destructive, and differentiating; however, the following can be singled out as its main functions:
(1) ensuring realization of the value and consumer value in the tourism product;
(2) organizing the process that brings the tourism product to the consumer (tourist);
(3) providing economic incentives to work.
When the tourist market performs the first function, the value moves, which is reflected as exchange of money for tourism product.
When this exchange is complete, it means that commodity-money relations are over, the value in the tourism product has been realized, and its consumer value socially recognized. This results in the normal process of social reproduction; funds appear and are accumulated for tourism development.
Positive and Negative Aspects of Tourist Activity
The tourist industry has a unique structure; it is characterized by many elements that include different branches of services: small restaurants, motels, hotels, guest houses, laundries, stores, and so on.
So government investments in infrastructure and sometimes also in an expensive material and technical tourist base are stimulating numerous small businesses. Over time, the initial investments in tourism attract even more investments into the auxiliary and supporting branches of the economy: hotels, restaurants, shopping centers, ports, airports, and so on.
The region’s improved tourist infrastructure, to which numerous small business enterprises belong, is also used by local residents; the takings from tourism are quickly distributed among the broadest strata of the population of the host region, that is, the whole of society reaps an economic benefit.
Tourists usually come from other countries and regions, and their spending means an expanded tax base for the government of the host country; in addition to usual sales tax, they sometimes pay less direct taxes. Airport and visa fees, entry and customs duties are just some examples of the ways employed to tax tourists.
Apart from these special cases, ordinary taxes are increased by tourist spending. In this way, tourism raises the region’s income, increases employment, investments, and so on.
Nevertheless, there are limits to which the government of the host region can maximize profit from these aspects of tourism. There are two types of these limitations: social and economic.
Social limitations arise from the increase in taxes imposed on local residents during development of the tourist industry in the region.
Economic limitations come in the form of potential costs created by untapped opportunities (alternative spending) that arise from development of the tourist industry. They deserve an in-depth
study aimed at achieving the deepest understanding of the optimization problem the government of the host country faces.
Along with the positive consequences of the development of tourism, we should not ignore its negative effects, the so-called monoculture of tourism. In the competitive struggle for land, resources, and capital, tourism is crowding out agriculture and other traditional sources of income of the local residents. The higher salaries offered in the tourist industry are luring workers away from agriculture. This is leading to a decrease in the volumes of farm produce, while consumption volumes are growing due to the arrival of vast numbers of tourists. At the same time, the traditional way of life and natural landscape in places of mass tourism is being disturbed or entirely destroyed.
Diversity is the basis of economic stability. While one branch undergoes an abrupt economic slump, another prospers, and this reduces the likelihood of a crisis. If a crisis nevertheless emerges, its consequences are eased. Consequently, instead of promoting diversification of the economy, tourism is sometimes superseding the agricultural industry.
But this is not a desirable turn in events, and there are many reasons why it should be avoided.
■ First, tourism is a seasonal phenomenon, with respect to which there may be unavoidable fluctuations in demand. So if tourism becomes the main industry in a region, the off season will bring serious employment problems.
■ Second, travel demand largely depends on the income and tastes of tourists, and these factors are beyond the control of the host region. In other words, it is very undesirable that a region depends entirely on just one industry.
Moreover, tourism gives rise to certain social costs and additional spending on maintaining the environment, which the host region and its residents will need to bear. If tourism develops too tempestuously and the region depends entirely on it, this could create a dilemma.
On the one hand, halting further development threatens an economic slump. However, if further development of tourism is not curbed, the country’s natural and cultural resources may become impoverished, unfit for use, and devaluated.
Obviously it is hard to make the right decision.
Sometimes the governments of developing countries are too optimistic about tourism. They launch active investment programs aimed at developing tourism that are of a priority nature. In certain cases, this approach could lead to denial of the country’s more pressing need for investments in other spheres. For example, the money invested in tourism could have been spent on education, public health, and other social needs.
At times, tourism generates an increase in inflation in the region where it is developing; increased budget revenue from tourist money could hike inflation. The price of basic commodities, food, clothing, housing, and transport, goes up. Land prices usually grow particularly rapidly in tourist regions (inflation can reach 20,000%). The price foreigners are willing to pay to stay in a tourist area (during their vacation) can dramatically lower the solvent demand for housing among the local residents (who have relatively low incomes anyway), and they are simply squeezed out of the housing market in areas with a developed tourist industry.
So although tourism also has significant potential as a tool of economic development, it is not a panacea against all economic ailments. The government should exert every effort to optimize (but not maximize) profit from tourism, keeping in mind the costs that its development might entail.
It should be noted that the developing countries are much more at risk with respect to the appearance and volume of tourism costs. The developed countries have healthy economies by definition that are capable of easily covering all tourism costs. But the economy of such countries is diversified, and government investment programs do not entirely concentrate on development.
For instance, the advantages of developing tourism for every country are the following:
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■ an increase in monetary inflow into the region, including an inflow of foreign currency;
■ an increase in the gross domestic product;
■ the creation of new jobs;
■ modernization of the recreation structure that can be used both by tourists and the local population;
■ attraction of capital, including foreign;
■ an increase in tax collections of the host region.
The disadvantages of tourism development are that it:
■ causes an increase in the price of local goods and services, land, and other natural resources and real estate;
■ promotes an outflow of money abroad in the event of tourist import;
■ causes environmental and social problems and can be detrimental to the development of other branches of the economy.
Influence of Tourism on the Environment
Tourist activity inevitably has an effect on the environment. The effect of tourism on the environment can be direct, indirect, and stimulating, as well as positive and negative. Tourism cannot develop without interacting with the environment, but with proper management and precise planning, its negative influence can be reduced and positive effect increased.
The positive effect of international tourism is expressed in the protection and restoration of historical monuments, the creation of national parks and preserves, the protection of shores and reefs, the preservation of forests, and so on.
But in many developing countries no steps are being taken to protect and preserve the environment; this is because there is no financial support, while tourist revenue is pumped into other economic spheres that are considered more advantageous.
When evaluating the influence of tourism on the environment, it is important to keep in mind the perspective it is coming from; what is good for tourists may prove utterly unacceptable for the local residents. For example, the creation of parks could lead to a reduction in grazing land for livestock and, as a result, lead to a drop in the manufacture of foodstuff.
Keeping in mind its environmental effect, finding an intelligent tourism development policy is becoming increasingly urgent, and the WTO is offering a multitude of different environmental protection programs.
At present, most European countries are engaged in certification of natural and historical treasures, which has led to trying to find ways to develop tourism without causing detriment to national assets.
In recent years, serious measures have been adopted in several countries aimed at protecting the environment and creating new national parks and preserves. Various scientific studies are being carried out aimed at determining the permissible loads on the environment. The negative aspects of tempestuously developing international tourism must be neutralized as much as possible while simultaneously creating the most favorable conditions for it and preserving and enhancing the natural and
geographical environment. Such undertakings as urban landscaping, noise reduction, and cleanup are particularly important.
International tourism has contributed to the intensified forest protection and restoration efforts in several European countries, as well to the creation of the Hawaiian Paradise Park that has more than 1,000 species of tropical birds, the wildlife sanctuary on Saa Nane Island on Lake Victoria, etc.
The protection of natural resources requires creating special technical means.
■ First, it means introducing various kinds of machinery into the resort business for cleaning beaches, inflowing water, seas, lakes, and reservoirs.
■ Second, there should be broader use of technology for keeping an eye on the state of the environment and the behavior of holiday-makers.
■ Third, tourists should be provided with means of transportation, gear, and equipment that will not be detrimental to the environment.
Influence of Tourism on the Economy
Investment of money in tourist enterprises, financial support of tourist industry employees, and the creation of new jobs can be named as the direct impacts on the economy.
Apart from the direct influence of tourist spending on the region’s development there is also an indirect influence, or multiplier effect. The principle of the multiplier was introduced into economic science by English economist Richard Kahn in 1931.4 The effect of the income multiplier from tourism can be demonstrated using the following provisional example. A group of foreign tourists travelling around the Valdai resort area spend a certain amount of money on goods and services. The income of the tourist enterprises is their takings from selling the tourists services and goods, while the income of the region is the taxes received from these takings (they remain at the region’s disposal).
Tourist money begins to fully work for the region’s economy when a tourist company buys local (regional) goods and services. After receiving money from tourists, the sellers of these goods and services pay their employees wages, which they, in turn, spend on purchasing goods, paying for services, and so on. But if, after receiving their wages, the employees spend it on purchasing imported goods or vacations abroad, the cycle is closed and there is a drainage of monetary resources from the region.
The combination of direct and indirect impact of tourist spending determines its effect on the local economy as a whole. Usually not all the income received in each cycle of tourist spending is lost, part of it is put aside, while another part is spent outside the region. The higher the amount of income spent within the region, the greater the multiplier effect.
The ability to keep tourist income within the region depends on its economic circularity and the independence of the local economy; if it is capable of producing goods and services that enjoy demand among tourists, the multiplier effect will be very significant. And, vice versa, the more goods imported from other regions, the smaller the multiplier effect.
4 See: R.F. Kahn, “The Relation of Home Investment to Unemployment,” The Economic Journal, Vol. 41, No. 162,
1931.
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The Tourist Industry in the System of Azerbaijan’s Economic Development
At present, the WTO makes a distinction between internal and international tourism, whereby the first predominates. Internal tourism accounts for 75-80% of the total number of tourists in the world, and correspondingly it is much higher than international in terms of the financial results in many countries.
Azerbaijan has immense potential both for developing internal tourism and for receiving foreign travelers. The country has a rich historical and cultural heritage and pristine, unexplored wildernesses.
Inbound and internal tourism in Azerbaijan is extremely diverse. Ecological, sport, educational, business, therapeutic and health-improving, fishing, hunting, event-related, and gastronomical types of tourism are developing the most actively.
Infrastructure
Underdevelopment of the tourist infrastructure is the most significant problem requiring keen attention and a serious approach.
The development of the tourist infrastructure cannot be limited to creating a new and reconstructing the existing hotel room stock. It is vitally important that there not only be widespread construction of new places of accommodation, but also related infrastructure that includes transport, catering enterprises, the entertainment industry, tourist sights, and so on.
The allocation of newly built tourist complexes should keep in mind supply and demand, which is directly related to tourist resources and conditions for staff support. Moreover, environmental requirements and the economic expediency of creating new facilities should be kept in mind.
An analysis of the contemporary state of tourism in Azerbaijan shows that in recent years this sphere has been largely developing dynamically and steadily; there is an annual increase in the internal tourist flow.
The quickly growing demand for tourist services within the country has given rise to a building boom of small hotels, mainly in resort areas, as well as to an increase in the number of international chain hotels in Baku. Moreover, domestic hotel brands are being created.
The number of investment offers from both foreign and from domestic investors for building hotels in the country’s regions has sharply increased.
At present, more than 50 different types of hotels are being built in the country, while in Baku hotels that belong to world chains, such as the Marriott, Hilton, and Four Seasons, are going up. Whereas in 2001, there were 86 hotels in Azerbaijan, now their number has reached more than 450.
In recent years, road building has been thriving: major highways have been built along the main arteries, which also include tourist routes.
As for tourist infrastructure facilities such as aqua parks, entertainment centers, transportation, and so on, there is clearly not enough of them. It is also obvious that the country’s tourist potential is being far from fully tapped, and creating conditions for high-quality vacationing in Azerbaijan requires a more active state tourism policy.
The necessary regulatory and legal base has been created for developing this industry. In 2001, the first state structure was created that is responsible for the development of tourism, the Ministry of
Youth, Sport, and Tourism (in 2006, it became the Ministry of Culture and Tourism), and reforms have been carried out in the corresponding legislative system.
At present, the legislation on tourist activity largely corresponds to the regulations and principles of international law; it is in harmony with the law of the European Union and the legislation of well-developed tourist states.
Azerbaijan has many cultural and natural sights, as well as other tourist attractions: 223 museums, 29 theaters, as well as almost 6,308 historical and cultural monuments.
At present, 27 historical and cultural preserves function in Azerbaijan, two of which (the Go-bustan Rock Art Cultural Landscape and the Shirvanshah’s Palace and Maiden Tower ensemble) are on the UNESCO World Heritage List. In keeping with this, Azerbaijan’s network of museum preserves, as centers of international and domestic tourism, requires constant improvement and development.
The most promising types of tourism in the world tourist market that are developing at accelerated rates are:
—cultural-educational tourism, which covers 10% of the total international flow of tourists and is characterized by a high average level of spending;
—active types of tourism, such as sports and adventure, which are acquiring increasing popularity in the world;
—specialized tourism, which has several categories: ecological, scientific, educational, event-related, therapeutic and health-improving, and so on;
—business tourism, which covers the so-called MICE industry (Meeting Incentive Conferences Events).
Keeping in mind the nature of Azerbaijan’s tourist resources and the state of its infrastructure, the following types of tourism could be of special interest for developing inbound tourism into our country: cultural-educational, business, and specialized tourism (event-related, ecological, rural, hunting and fishing, active, health-improving, ethnic, educational, and in the future, mountain-skiing, scientific, and so on).
The development of beach, health-improving, and ecological tourism is particularly important for the domestic market.
Beach tourism is one of the most popular types of vacation: most local tourists prefer to go to the sea on vacation. This vector is actively developing on the Absheron Peninsula and in the tourist zone of Nabran (in the north of the country).
There are also good prospects for developing beach holidays in Azerbaijan’s southern regions, but the absence of a hotel and other tourist infrastructure is holding back progress.
In recent years, mountain-skiing tourism has become very popular and in demand. This has launched the Shakhdag project in the Gusar district of Azerbaijan, at the completion of which a modern skiing complex with hotels, transportation, and an environmentally safe infrastructure (water, energy, and road system, ski lifts and other equipment, as well as high-quality service) will be put into operation.
Since the beginning of the 1980s, there has been a shift in the priorities of travelers. Instead of hot sun, people are heading for shady forests. They are trying to diversify their vacation time, leaving the large cities for traditional rural settlements. This is prompting talk about so-called ecological tourism that, according to some assessments, already encompasses more than 10% of the tourist market, and its growth rates are 2-3-fold higher than the corresponding indices throughout the entire industry of this sector.
The epithet ecological, as in ecological tourism, or ecotourism as it is also called, is not the only one used in the English language and, consequently, in American, Canadian, English, and Australian literature, as well as that of many other countries to designate the new vectors in tourism that have
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formed in the past decade as a result of the ideas of the Green Movement and the development of a corresponding world outlook.
For example, such terms as “green tourism” and “natural tourism” are found; the last, along with a wide range of others, is also widespread in German-speaking countries where the adjective “ecological” is used very rarely, and in certain green tourist industries is hardly used at all. The term “Sanfter Tourismus” has gained the widest popularity, which can be translated into English as “soft tourism.”
Five criteria can be singled out, to which ecological tourism should correspond:
(1) it involves travel to natural destinations and is based on the use of primarily natural resources;
(2) it minimizes impact on the environment, that is, it is environmentally sustainable;
(3) it builds environmental awareness and helps to promote an equal partnership with nature;
(4) it respects the local culture;
(5) it provides direct financial benefits for conservation, as well as empowerment for the local people.
In correspondence with these criteria, even sailing on a liner down a river may be considered an ecological tour provided that in terms of technology this vessel is state-of-the-art and tourists can frequently leave it, continuing their journey by boat, foot, or on horseback. It may also be considered such if they are able to familiarize themselves with the local countryside, the native culture, and the ecological problems of the region and make a certain contribution to resolving them, albeit in the simplest way, by means of donations to environmental protection projects.
This example is evidently ecotours in the broadest sense of the word, although it is expedient to distinguish between two types of ecotourism: narrow (classical) and broad.
The narrow interpretation of ecotourism prevails in countries with vast expanses of territory, such as Canada, the U.S., and Australia (this interpretation is also supported and developed primarily by representatives of the Green Movement).
The broad interpretation is upheld by experts in tourism and its researchers from Western European countries that have extremely limited “wilderness” resources.
So although ecotourism is a broad and developing vector in the tourist industry, it is not always understood in the same way in different countries. Its forms are dynamic, it penetrates primarily into areas of tourist activity that are far from ecological, and it is not worth trying to place it in too tight a framework or define it too specifically.
The development of ecotourism is based on the desire to have as little impact on the environment as possible. Since it does not require as much tourist infrastructure (hotels, restaurants, and entertainment establishments), this type of tourism is characterized by a lower level of resource intensity.
It should be noted that ecological tourism is inseparable from environmental awareness; tourists learn to have a solicitous attitude toward nature. But the present-day world insists that ecotourism be endowed with broader meaning. By focusing attention on environmental awareness and education, the temptation is created to relate all trips made for environmental purposes to ecotourism. For this reasons, visiting natural museums is almost always equated with a form of ecological tourism. Real ecotourists are unlikely to find themselves admiring stuffed animals or hunting trophies; their main objective is not environmental education, but the consumption of ecological resources, including informational.
Ecological resources are properties of the natural balance of components of the environment (animals, plants, soil, climate, relief, and so on) that was formed without the active impact of human activity. It is precisely primordial nature that draws tourists out of the cities where people constantly
feel the negative impact of the environment, noise, and social conflicts. By consuming ecological resources, vacationers reap health-improving and educational benefits.
The second characteristic of ecological tourism is its sustainability. Ecological tourism at all levels of management of the tourist complex is perceived (just like at the level of the ordinary consumer) in too simple terms. If any man in the street were asked what ecotourism is, he would reply that it is travel around the countryside, visiting a national park or museum. However, ecological tourism should promote the restoration and preservation of the traditional lifestyle of the local population, its culture and ethnographic features. Development of sustainable ecotourism is only possible provided that special ecotourist (landscaped) parks are created in the localities next to environmentally protected areas, where the local residents are given incentives to sell tourists services and their home-produced goods.
So in order for ecological tourism to have a positive impact on the country’s economy and social sphere, as well as become a real priority vector, it must meet three basic criteria:
(1) direct tourists toward the consumption of environmental resources;
(2) preserve the natural environment;
(3) support the traditional way of life of the population of the periphery regions.
Geographical Scope of Ecological Tourism
The spread in present-day international tourism is distinguished by a fair amount of territorial unevenness. In the most general way, it reflects the different levels of socioeconomic development of the North and the South (the center and the periphery of the world economy). For example, according to the available estimates, post-industrial countries currently account for 57% of all inbound tourists, while the developing countries account for 30%, and countries with a transition economy for 1.3% (WTO).
The geographical scope of ecological tourism is unique. The main international flows of traditional tourists go from developed countries to developed countries (France, the U.S., Spain, and Italy lead among the host countries). Ecological tourists, on the contrary, mainly go from developed to developing countries, primarily tropical, the natural environment of which is exotic and attractive to the residents of moderate latitudes. In this case, the leaders are Kenya, Tanzania, Ecuador, Costa Rica, Nepal, Australia, New Zealand, and South Africa.
Europe is the main tourist region of the world. This continent boasts the countries where tourism is most developed, which have the most favorable natural and climatic conditions, and which are abundant in attractions.
Europe is almost entirely situated in the moderate zone, only its far north extends into the subArctic and Arctic zone, and its south into the sub-tropical latitudes. The three peninsulas next to the Mediterranean, the Pyrenean, Apennine, and Balkan, are the most favorable for vacationing.
Ecological tourists from Europe and America very frequently travel around their own countries too: the national parks of the U.S. are bursting at the seams and often have to been booked in advance. The fragile environmental balance in wilderness territories cannot withstand the growing loads; in this respect, the need is arising for new recreation zones.
Ecological tourists want to go to places with pristine natural conditions, but these are becoming few and far between on our planet, and many have to satisfy themselves with quasi-natural (artificially natural) secondary landscapes that have been much changed by human activity.
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The Social and Humanitarian Context of Tourism Development
The development of rural tourism (one of the branches of ecotourism) in Azerbaijan is giving many people the opportunity to turn their farmsteads into vacation homes and provide the necessary level of comfort and services. This is creating favorable conditions for developing business in rural areas, upgrading municipal, everyday, and commercial services, expanding technical and medical services, as well as providing tourists with legal protection of tourists and ensuring that they enjoy peace and quiet.
As the experience of European countries shows, organizing rural tourism promotes efficient management and improvement of public services and the sanitary state of population settlements, particularly peasant farms, social sphere facilities, and tourist vacation zones. This raises employment of the rural population, revives handicrafts, and boosts production.
Work experience shows that rural tourism allows rural residents to make money from providing tourists with accommodations and services. A rural resident interested in earning money will try to make his farmstead more attractive, investing money in making it more comfortable, equipping the yard with amenities, and so on. Over time, a certain part of the income the landlord receives will be handed over to the rural council to be spent on organizing public services, law and order, transportation, communication, and so on.
Tourism is having an impact to one extent or another on the life of the local population, its material and spiritual activity, value system, social conduct, and interests. In regions where tourism is traditional, its impact is not particularly felt (particularly if the number of visitors is less than the size of the local population, and the cultural level of the guests and the hosts is the same).
But in some industrially developed regions, the increase in tourism could lead to significant changes in the social structure, environment, and local culture; the problems associated with interaction between different cultures requires special study.
Tourists and local residents are the bearers of different cultures, and they meet while the first are on vacation and second are working; this interaction is temporary.
The impact of tourism on the life of the local population can be both positive and negative.
The positive aspects are as follows:
■ creating jobs;
■ raising income and, as a result, the standard of living of the local population;
■ accelerating urbanization, developing urban services and infrastructure and augmenting the potential of cultural organizations;
■ accelerating social and cultural processes;
■ reviving local cultural values, developing national creativity, traditions, customs, and handicrafts;
■ raising demand for agricultural products and locally manufactured goods;
■ protecting and restoring local cultural monuments;
■ expanding natural complexes;
■ raising the appeal of the region;
■ reviving local cultural life.
The negative aspects include:
■ polarization and commercialization of the interests of different groups of the population;
■ a greater number of unqualified workers;
■ an increase in the number of deviations from social norms of behavior (alcoholism, hooliganism, and prostitution);
■ erosion of the family (divorces, an idle attitude of young people toward life);
■ commercialism of culture;
■ loss of uniqueness of the specific tourist vector;
■ conflicts between the local population and tourists.
The negative effect of tourism can be caused primarily by its spontaneity and lack of preliminary preparation and corresponding control; in such conditions it is difficult for the local population to adapt to the changes going on.
Conflict of interests can serve as an example of the negative attitude toward tourists: local residents have an aggressive attitude toward visitors, since they “catch their fish, hunt in their forests,” and so on. Local residents may feel indignant about differences in material status, differences in value systems, feelings of inequality, and so-called social discrimination.
In some countries, the income of local residents working in the tourist industry is much higher than those employed in other spheres. For example, a tourist could give a young porter one dollar as a tip for delivering his luggage, while the porter’s father has to keep his nose to the grindstone for several days to earn the same amount. This situation creates social conflict created by the illusion of the possibility of earning easy money.
Both the positive and negative aspects of the impact of tourism on the local population are manifested at different levels—national, local, and personal. Tourist needs should not be satisfied to the detriment of the social and economic interests of the population of the host countries and regions, cultural and historical values, the environment, and natural resources.
Most of the negative aspects can be avoided by comprehensive planning of tourism development and introducing modern management methods (increasing control over the use of territory and resources, carrying out an awareness policy among the local population, etc.), as well as by defining the criteria of its most efficient vectors, which are the basis of their choice and consistent development. In order to glean the maximum benefit from tourism, each country should develop its own tourist policy (it is one of the forms of socioeconomic policy).
One of the most significant trends in the development of world tourism is the abrupt increase in competition in the tourist supply market. Various ambitious plans are appearing to attract tourists, which is leading to oversaturation of the market with the same type of supply.
In order to fortify the position of a particular country in the international market, tourism should be planned on the basis of principles of sustainable development that envisage long-term investment in the specific sphere within the framework of a clear government development strategy. This enhances the role of the country’s tourism development policy as a whole, as well as promotes the targeted advance of certain tourist products in the domestic and international market.
The main components of the strategies used in world practice are as follows: a detailed analysis of one’s own markets with an evaluation of the correlation between the traditional and prospective vectors; keeping an account of world trends and the multiplier effect from the development of tourism; holding annual international campaigns under memorable slogans; and making broad use of the possibilities of advanced information technology as the basic platform for communicating with the consumers of tourist services.
Before 2001, Azerbaijan experienced essentially no non-commercial progress as a tourist vector abroad or within the country. The efforts undertaken at the end of the 1990s boiled down to visiting specialized exhibitions abroad with absolutely no national exposure or budget financing.
Since 2001, comprehensive undertakings have been carried out aimed at showing the tourist potential of the Azerbaijan Republic in all its splendor in the international and domestic market:
Organizing a single national Azerbaijani exposition at the largest international tourist exhibitions. At present, such expositions are being organized at the largest industrial exhibitions of Russia,
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Spain, Italy, Germany, China, Japan, France, Greece, Poland, Great Britain, UAE, and Qatar. Parallel business undertakings are also being organized within the framework of these exhibitions: press conferences, presentations of the tourist potential of Azerbaijan’s regions, meetings with the heads of foreign national tourist administrations, round tables, and so on.
The international tourist exhibition AITF, which is held annually in Baku (since 2002), is an important step toward promoting Azerbaijan’s tourist product within the country and positioning the country in the world market of specialized exhibition services. This exhibition is included in the schedule of official events of the WTO and Council of CIS Member States on Tourism.
Moreover, since 2003, an exhibition of domestic tourism has been held every year in Baku.
Azerbaijan’s different regions were represented for the first time in the expositions of the above-mentioned exhibitions: among these regions are both those that have a developed tourist infrastructure and those with good potential for tourist pursuits.
Non-commercial advertizing of Azerbaijan’s tourist potential. Non-commercial advertizing abroad is currently shown on popular world television channels—CNN, BBC, and EURONEWS.
National and regional television is currently running a wide campaign to encourage Azerbaijani citizens to vacation in the country, and programs about the advantages of vacationing in Azerbaijan for foreign tourists are broadcast on the radio and TV. The largest printed publications are also involved in this work.
Manufacture of advertizing and informational image products. Advertizing and informational products in printed and electronic publications are issued in large circulations in the nine languages of the main outbound markets and intended for non-commercial distribution at international tourist exhibitions, through Azerbaijani representative structures abroad, the WTO, and other international organizations, at official meetings with the leadership of national tourist organizations of foreign countries, and similar undertakings.
Carrying out international event-related undertakings. Such undertakings are stimulating Azerbaijan’s advance as a country of business tourism with the corresponding infrastructure, personnel, and tourist product. They include annual international conferences, seminars, and other forums devoted to the most urgent problems of tourism development.
At present, a realistic approach toward tourism is being formed in the country as one of the spheres of the economy that has significant benefits for the socioeconomic development of Azerbaijan’s regions. This is shown by the growing interest of both local and foreign investors, who, after analyzing the market, are investing in different vectors of tourism.
The immense support from the country’s state structures and president should also be mentioned, the latter noting the importance of developing tourism as a non-oil sector. In this respect, it is worth mentioning the State Program on Tourist Development in Azerbaijan in 2010-2014, which was adopted on 6 April, 2010. It defines the vectors necessary for developing new types of tourism and the corresponding infrastructure, improving services and resolving personnel issues, as well as creating a favorable business environment for entrepreneurs.
The present state of tourism in the Azerbaijan Republic, as well as measures aimed at its development are making it possible to evaluate the country’s specific advantages and shortcomings.
The specific advantages primarily include our country’s cultural-historical and natural heritage combined with its pristine wildernesses that have been little explored, which is of particular interest to sophisticated foreign tourists. Moreover, Azerbaijan’s specific advantages are promoting the appearance in recent years of new tourist products in different regions of the country.
Azerbaijan’s indubitable competitive advantages are its political stability and higher level of security, increase in personal income, and stability of the national currency. It should also be noted that the unique natural resources and cultural heritage that Azerbaijan enjoys cannot be regarded as the only and a sufficient condition for ensuring the successful development of tourism, since this is only one of the elements of tourist supply.
Azerbaijan’s resource possibilities make it possible, at a corresponding level of development of the tourist infrastructure, to promote a manifold increase in the number of inbound tourists the country can host (see Table 2).
Table 2
Computation of the Arrival of Foreign Tourists in Azerbaijan
Year « C e ■S C 0 £ = s wg 1 s £< 3 ■- o .Q c c ‘(5 .Q er N < 1 c o c o £ (/) c e N *3 o c a o Foreign citizens who cross the border and work in the country an average of four entries and exits ry tr n u o c e h t in g in yi d u t s s t n e d u t s n ig rei o F Foreign students in the country who cross the border an average of two times Foreign citizens engaged in trade in border areas (50% of the total number of citizens of Iran and Georgia crossing the border) Arrival of foreign tourists in Azerbaijan Funds from tourists entering the country’s money circulation (on average)
© © © © T = A - BCD
2002 834,373 2,104 8,416 1,976 3,952 246,005 576,000 $432.0m
2003 1,013,811 3,138 12,552 2,077 4,094 229,633 767,532 $575.6m
2004 1,348,655 4,428 17,712 2,054 4,108 338,078 988,757 $741.5m
2005 1,177,277 1,850 7,400 3,437 6,874 301,748 861,255 $645.9m
2006 1,193,742 1,315 5,260 5,376 10,752 273,841 903,889 $677.9m
2007 1,332,701 1,700 6,800 6,358 12,716 302,393 1,010,792 $758.0m
2008 1,898,939 4,367 17,468 7,110 14,220 458,263 1,408,988 $1,056.7m
2009 1,830,367 5,784 23,136 6,813 13,626 363,780 1,429,825 $1,122.4m
S o u r c e s: Data of the Ministry of Culture and Tourism of the Azerbaijan Republic. Funds from tourists that enter the country's money circulation are calculated according to the data of a sociological study conducted by the State Statistical Board in June 2009 (on average 1 tourist spends $785 a week in Azerbaijan).
o u u c V) 3 o n
To sum up the above, it should be noted that contemporary economic science regards tourism as a composite socioeconomic system, one of the components of which is a multi-sectoral production complex called the tourist industry.
Tourism is a large economic system with diverse relations among the individual elements within the framework of both the national economy of a certain country and of the relations between the national economy and the world economy as a whole. In addition, the objectives of tourism should meet the requirements of public morals and good order.
An analysis of the current state of the development of tourism in the world and in our country, as well as of the measures undertaken by the Ministry of Culture and Tourism of Azerbaijan (since 2001), makes it possible to evaluate the competitive advantages and shortcomings of our country as a tourist vector among the main inbound tourist markets. Based on statistics, it can be confidently said that Azerbaijan’s resource potential makes it possible (at a corresponding level of development of the tourist infrastructure) to turn the tourist industry into one of the most efficient branches of the country’s economy.
