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

• 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

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
3
Introduction
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
4
Introduction

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
5
Introduction

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
6
Introduction
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
7
Development Policies
- 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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
8
Development Policies

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
9
Kolari Case Study

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
10
Kolari Case Study
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
11
Tourism Development
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
12
Tourism Development
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
13
Tourism Development

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
14
Tourism Development

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
15
Tourism Development

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
16
Tourism Development
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
17
Tourism Development

• 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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
18
Attitudes towards tourism
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
didnt like the disruption of the natural peace
of the region.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
19
Attitudes towards tourism
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
didnt think about. (After all most of them were
miners.)
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
20
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.

Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusions
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
21
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.
Introduction Development policies Kolari case
study Tourism development Attitudes towards
tourism Conclusions
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
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
24
Introduction
- 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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
25
Introduction
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
26
Growth of tourism in Ireland
- 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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
27
Growth of tourism in Ireland
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
28
Growth of tourism in Ireland
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
29
Growth of tourism in Ireland

• The strengths of Ireland as a tourism
  destination
• Tradition of hospitality
• Unpolluted natural environment
• Ancestral home of 70 million people worldwide.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
30
Growth of tourism in Ireland

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
31
Growth of tourism in Ireland

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
32
Rural Tourism Cooperative Society
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
33
Rural Tourism Cooperative Society

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
34
Rural Tourism Cooperative Society

• Test marketing took place during the 1989 tourist
  season.
• Marketing costs were met by the community groups
  and members of the national coordinating
  committee.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
35
Rural Tourism Cooperative Society

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
36
Rural Tourism Cooperative Society

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
37
Rural Tourism Cooperative Society

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
38
Rural Tourism Cooperative Society

• 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.

Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
39
Rural Tourism Cooperative Society
Rural areas affiliated to the Rural
Community Tourism Cooperative Society
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
40
Feasibility of community-based tourism
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
Local Economic Development A Geographical
Comparison of Rural Community Restructuring
41
Conclusion A model?
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.
Introduction Growth of tourism in Ireland Tourism
Cooperative Society Feasibility of
tourism Conclusion
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