Local Economic Development: A Geographical Comparison of Rural Community Restructuring

1. Chapter 12 Extracting local resources: The tourism route to development in Kolari, Lapland and Finland - Heikki Jussila and Jari Jarviluoma Local Economic Development: A Geographical Comparison of Rural Community Restructuring

2. Introduction Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • The weakened development of peripheral regions in Northern Europe was caused by the following: • Declining employment in agriculture and forestry • Out-migration from rural regions • An ageing population • Reduction in private services Local Economic Development: A Geographical Comparison of Rural Community Restructuring

3. Introduction Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion Regional development policies have had the task of reducing this decline by creating new jobs. - These policies are geared towards the industrialization of rural regions in Finland and other OECD countries. - Industrial development, which was regionally balanced and regionally equal, was the goal of the policies in Finland. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

4. Introduction Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • Industrialization has not paid off very well in the rural peripheries of Finland for 3 reasons: • The loss of agriculture and forestry was so rapid and intense that policy measures were not sufficient to fix the problem to any great extent. • The skills and labor practices of local people were not always in line with the endeavors of those responsible for local development. • The primary goal of authorities and financial institutions was the development of processing industries and manufacturing. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

5. Introduction Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • The first regional policy laws emphasized that Finland should be turned into a modern industrial society. • Both the state and municipalities worked towards a new regional and local structure, both in a business and social sense. • Regional policy was a tool to create new and previously unseen economic structures. • The primary target remains the diversification of local economic structure. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

6. Introduction Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion In practice, the emphasis on the development of infrastructure turned out to be a policy for developing regional municipal service systems. Policy outcomes in the 1970s and 1980s increased the magnitude and scope of the public sector by incorporating many new tasks within the social service sector, resulting in more employment opportunities. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

7. Development Policies Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion - Policies which seek to development on the new resource of “knowledge” often fail because the only real resource in a periphery is the local environment. - In Finland, the revision of the national regional policy (Ministry of the Interior 1991) made tourism one of the preferred methods of diversifying local economies in peripheral rural regions. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

8. Development Policies Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • Tourism as an industry is beneficial because it can give a huge boost to the local labor market. • Tourism has drawbacks though: • 1. It tends to keep the level of local skills low • 2. Leakage from the local economy • 3. Local inflation • 4. Seasonal unemployment • - Despite some of its criticism, tourism is a widely preferred alternative in local economic schemes because of its income and employment effects. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

9. Kolari Case Study Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • Kolari is located about 100 kilometers north of the artic circle in western Lapland, which is part of Finland. • 4700 residents • harsh environment • remote location • Kolari is an example of regional policy in peripheral Finland from the late 1960s. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

10. Kolari Case Study Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion After WWII, the economic structure of Kolari changed dramatically. 1. Agriculture and forestry diminished 2. Two large mining companies shut down completely in the late 1980s. (These two industrial units employed over 1/5 of the total labor force in Kolari.) 3. Growth of the public sector. - The number of people engaged in public sector activities increased from 500 to 800 in two decades. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

11. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion Reaction to mine closure. The closing of the mines greatly influenced Kolari because the small and medium sized businesses depended on the “big” industry. The industrial base collapsed, which was the whole existence for Kolari. However, the people recognized the potential for tourism, due to the natural environment surrounding Kolari. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

12. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion Tourism was a way to help end the economic decline in Kolari. - The government of Lapland had a committee to make sure the different regions could alleviate the economic nose-dive caused by the loss of industrial jobs. - The other committee, formed by the State Board of Tourism, was there to enhance local development. - Financial aid, loans, and grants were given to Kolari, which equaled about $4500 per capita. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

13. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • The support paid off very fast. • - New firms locate in Kolari. • Employment figures more than double. • Construction was continuous, mostly hotels for the ski resort nearby. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

14. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • There were about 100 firms in the Lapland area, all using tourism for most of their business. • The economic boom years of 1988-1990. • The Finnish mark had good strength. • Developments in the late 1980s were aimed towards international tourism, but because Finland was an expensive country to visit, it did not have much success. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

15. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • The Recession 1990 • The unemployment rate rose again (1/4 of Kolari was unemployed) • Real estate businesses and construction companies were hit especially hard. • Unemployment continued, the rate doubled during the early years of 1990s. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

16. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion Why the recession? Problems in the Finnish banking sector. “The decision of the Finnish government to bail out the banking system increased government expenditure, and thus diminished the possibility of tackling the problems of unemployment and the reduction in domestic consumption, which, in turn, increased the problems of tourist regions like Kolari.” Local Economic Development: A Geographical Comparison of Rural Community Restructuring

17. Tourism Development Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion • The upside. • The fact that Finland was a cheap tourist country, after the recession, could save tourist operations in Kolari. • Infrastructure was there and could outlast the recession. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

18. Attitudes towards tourism Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion Local attitudes. - Kolari residents were overwhelmed by the pace of economic development. - They felt all of the development came from “above” and they themselves had now say how Kolari would be developed. - However, the attitude towards tourism among the locals was fairly positive, at least in the beginning. - They liked the business tourism brought, but they didn’t like the disruption of the “natural” peace of the region. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

19. Attitudes towards tourism Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusion The problem of local resource allocation. - People did see that jobs were being created, but they realized most of them were not for the local people. - Tourism, as a service industry, requires its labor force to have some qualifications, and this was something the locals didn’t think about. (After all most of them were miners.) Local Economic Development: A Geographical Comparison of Rural Community Restructuring

20. Conclusions Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusions • In Kolari, tourism has been a good solution for certain resource communities that otherwise would probably have lost most of their population. • Tourism was key in the creation of new economic activity. • The general development and job increase did not alleviate the unemployment problem because the miners did not possess the skills needed in the service sector. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

21. Conclusions Introduction Development policies Kolari case study Tourism development Attitudes towards tourism Conclusions As a whole, tourism development in Kolari has many positive aspects. - The construction of facilities, such as hotels, creates a high quality capacity for serving tourists. “The Kolari case demonstrates that the development of tourism is dependent not only on the natural landscape, but on external impulses, social capital, and cooperation within the business.” Tourism is a gradual process and the sector is sensitive to business cycles. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

22. Chapter 13 The Development of Community-Based Rural Tourism in Ireland - Micheal O Cinneide and John Burke Local Economic Development: A Geographical Comparison of Rural Community Restructuring

23. Introduction Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion The relative disadvantage of rural areas compared with urban areas has not been overcome despite well funded policies. - Factors (for above) 1. Technological advances and capital intensification have increased the productivity of labor. This has led to reduced numbers in agriculture and other primary areas. 2. Technological change facilitated specialization in production and increasing economies of scale have led to an intensified concentration of economic activity in urban centers, largely at the expense of rural areas. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

24. Introduction Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion - Most rural areas in Europe are characterized by a spiral of decline. - Diversification of rural economy through the creation of new economic opportunities is vital to the future of rural society. - National and Supranational policies generally focus on enhancing the competitiveness of rural areas by attempting to reduce isolation of rural places through improvements in communication systems. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

25. Introduction Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion Purpose of this chapter: - To illustrate how some communities in Ireland are responding to the international forces of change that are affecting rural areas by pursuing a program of rural tourism development. - The chapter focuses on representing a model of cooperation needed when small entrepreneurs attempt to prosper in small resource communities based on tourism. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

26. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion - In 1991 tourism provided employment for 87,000 people, contributed 7% of the gross national product, and generated a net surplus of over 500 million Irish Pounds. - Tourism counts for 1 in 14 jobs in the economy as a whole and 1 in 8 in the service sector. - Its potential to create jobs is shown by the fact that employment in the industry increased by over 31,000 between 1986 and 1991. - Tourism in Ireland is a widely dispersed economic activity that makes a significant contribution to local and regional development. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

27. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion Tourism development (strengths and weaknesses) - An Irish tourist board was established in 1955 to develop and promote tourism. - The board coordinated the activities of 6 Regional Tourism Organizations (RTOs) established in 1964 as companies to service the needs of individual regions. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

28. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion The RTOs represent an attempts to decentralize tourism promotion and development functions. Their main functions relate to: a. Oversees promotion and marketing. b. Operating a network of visitor information and reservation centers. c. Encouraging environmental awareness and monitoring physical planning standards. d. Promoting the development of tourism products. -The RTOs receive some money from the board, but they have to raise most of their funding on their own. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

29. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • The strengths of Ireland as a tourism destination: • Tradition of hospitality • Unpolluted natural environment • Ancestral home of 70 million people worldwide. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

30. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • The weaknesses with Irish tourism: • Perceptual – some people see Ireland as having a bland, boring countryside, with pour quality accommodation and dull shopping facilities. • Structural – difficult and expensive access, no “high profile” attractions, expensive car touring holidays, lack of knowledge about Ireland, and inadequate marketing. • Quasi-generic – bad, unpleasant, and rainy weather. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

31. Growth of tourism in Ireland Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • Rural Tourism • Rural tourism could supplement farm incomes and provide new economic opportunities for rural communities. • This notion came from a shortage of suitable tourism accommodation in the mid – 1960s. • A swing toward “soft” or “green” tourism (horse riding, golfing, bike riding, etc.) allows rural communities to capture a large portion of this new economic activity. • The current emphasis on tourism in rural areas is happening because they realize they can not survive on agriculture alone. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

32. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion The emphasis on sustainable tourism in rural Ireland is evident in the strategies and approaches by 13 local community tourism groups. The progress of these groups shows how expertise, skills, and information can be maximized in the development and marketing of rural tourism. - An agri-tourism pilot project was established in 1988 by a national coordinating committee to stimulate the diversification of the rural economy. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

33. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • The objectives of the committee included: • Setting up rural community tourism groups. • Developing the agri-tourism product. • Developing, maintaining, and monitoring standards. • Identifying training requirements and ensuring that necessary training was provided for group members. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

34. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • Test marketing took place during the 1989 tourist season. • Marketing costs were met by the community groups and members of the national coordinating committee. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

35. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • The results suggested that action would need to take place in relation to the following 4 issues: • Formation of a national legal structure. • Planned and professional approach to marketing community based rural tourism packaged holidays on behalf of group members. • c. Development strategy to include national coordination and networking. • d. An extension of the pilot project to include more community tourism groups as members of the national organization. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

36. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • The Legal Structure • Formed in 1990 • Held monthly meetings with a forum for cooperative planning and organization. The plans of these meetings were centered on coordinating and assisting in the marketing of rural tourism. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

37. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • Marketing • The biggest challenge • Human and financial resources, combined with expertise, are considered to be essential tools in the process of achieving success. • Agriculture cooperatives, insurance companies, and financial institutions targeted as funding sources. • In 1 year (end of 1993) the number of bed nights booked increased over 3,000. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

38. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion • National Coordination • Main advantages lie in central approach to marketing. • Tourists get variety and choice in just 1 phone call. • Weaker local groups are supported by better established groups. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

39. Rural Tourism Cooperative Society Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion Rural areas affiliated to the Rural Community Tourism Cooperative Society Local Economic Development: A Geographical Comparison of Rural Community Restructuring

40. Feasibility of community-based tourism Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion The efforts of these cooperatives have allowed many marginal farmers to increase their total income by diversifying into agri-tourism products, and several new off-farm job opportunities. (craft shops, restaurants, etc.) - Rural tourism is becoming highly competitive. The products must offer quality, uniqueness, and authenticity at a competitive price. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

41. Conclusion: A model? Introduction Growth of tourism in Ireland Tourism Cooperative Society Feasibility of tourism Conclusion The Irish experiences shows that this model must be planned carefully and operate on a long term basis. - This model works when other factors (markets, price competition, legislation, etc.) create a niche for business operation. Local Economic Development: A Geographical Comparison of Rural Community Restructuring

42. Reference Neil, Cecily and Tykkylainen, Markku. Local Economic Development: A Geographical Comparison of Rural Community Restructuring. The United Nations University Press, 1998. Local Economic Development: A Geographical Comparison of Rural Community Restructuring