Best economic development strategy: tourism or finance?

When Oregon was having its lifeblood shut off by the Clinton Administration, dismayed small town residents were told they could make up for the loss of their timber-related jobs if they placed their hopes on tourism.

State and federal bureaucrats, paid to go out and calm the angry natives, assured townspeople that tourism was a clean and wonderful industry. Visitors longing for the beauty of small towns on the edges of forests, or wanting a bucolic camping and fishing experience, would spend tons of money there, replacing the lost logging and mill working jobs. Didn’t happen. Most tourists are from Oregon and they are the same ones who were coming BEFORE the forests and mills were closed down.

This was the 1980s, and environmentalists had just found a grad student to write a paper (citing little to no actual evidence) linking the survival of the threatened Northern Spotted Owl to “old growth forests.” That idea has been debunked many times since then. Studies showed that other owls were pushing out the NSO and that the NSO could live in reforested areas just as well as in old-growth forests.

No matter. There’s essentially no logging in federal forests in the West Coast. When fires ravaged those neglected, unmanaged forests, loggers were not even allowed to do salvage logging, to get some value for the public out of what good timber was left in the blackened vegetation.

This summer, we drove through many little logging towns in the Coast Range and the Cascades. They are just rotting hulks, fading memories of their formerly family-friendly, socially productive selves. How about tourism now?

Now, comes another bit of evidence in The Atlantic that tourism is a very weak reed to hang your hopes for economic prosperity on.

“…Singapore developed a set of indigenous human capital strategies that radically altered its economy. In 1960 Singapore had a per capita GDP of $2,300, roughly equal to Jamaica’s. Singapore focused on becoming a financial services and research hub, while Jamaica concentrated on tourism. Fifty years later Singapore’s per capita GDP was $43,100, while Jamaica’s is slightly above $5,000.”

Investment lesson: government policies are critical to economic development, but not all policies are equally valuable.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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