Will Brazil benefit from an increase in tourism?

Beedie research highlights the risks of tourism entrepreneurship.

With its booming economy, investment in national infrastructure and hosting of future global events like the Summer Olympics and World Cup, Brazil is poised to enjoy healthy growth in tourism in the years ahead.

Tourism boosters in that country and other emerging economies are likely to view associated entrepreneurship as a means to promoting inclusive economic growth, especially in underdeveloped regions. However, a recent study from the Beedie School of Business shows that associated growth doesn’t always result in across-the-board gains for tourist destinations. In some cases, the commercial activity associated with tourism could actually backfire on some communities.

The research, entitled “Entrepreneurship and Innovation at the Base of the Pyramid: A Recipe for Inclusive Growth or Social Exclusion?” was published in the Journal of Management Studies in February 2011. The article was authored by Professors Jeremy Hall and Stelvia Matos from SFU’s Beedie School, along with Lorn Sheehan (Dalhousie University) and Bruno Silvestre (University of Winnipeg).

Tourism is one of the world’s largest and fastest growing industries and an economic driver in emerging economies. However, the researchers note, the industry has been recognized at times for causing detrimental economic, environmental and social impacts on local communities.

When conducting the research, they analyzed different tourism entrepreneurship policies in order to improve the understanding of how some policies in underdeveloped regions generated positive outcomes, while others did not. Drawing on data collected from Brazilian tourism destinations with varying entrepreneurship, innovation and social inclusion policies, the researchers argue that weak institutions, coupled with alert entrepreneurs, encourages destructive outcomes.

“Although tourism entrepreneurship can provide the Base of Pyramid with opportunities to improve social welfare, it can also be the cause of wider social problems,” said Jeremy Hall. “Policies addressing both economic and social perspectives are likely to foster more productive entrepreneurial outcomes, although at the expense of a more constrained pace of economic development.”

A particularly interesting case is the development of naturally coloured, sometimes organic cotton by the Brazilian Agricultural Research Corporation (Empresa Brasileira de Pesquisa Agropecuária, EMBRAPA) in Campina Grande, Paraiba, used in garments, hammocks and other textile products for tourists. With support from SEBRAE (the Brazilian Micro and Small Business Support Service, an industry sponsored agency to assist entrepreneurs through non-financial measures), informal and formal networks involving EMBRAPA, local cotton farmers, trade associations, co-operatives, textile workers and other participants have emerged, allowing for greater participation of BOP entrepreneurs and craftspeople.