TAKE CARE OF YOUR CAPITAL: A LETTER TO THE ECONOMIST (May 20, 2008)

In your leader on tourism and development you are advising governments in emerging economies not to copy the mistakes of mature markets (“Asia, beware Benidorm,” May 17, 2008), but you fail to mention that governments in mature markets were very much involved in the mistakes you denounce. This applies especially to local governments. “Take care of your capital,” you emphasize. “The bay, the ancient site, the coral reef, and the fresh water have no single owner to protect them.” In fact, the local governments in Spain, Portugal, Italy, and Greece colluded with developers and investors as though they were the single owners protecting them. For this they had the legal clout, at least. As a result, all sorts of corruption reigned. This “mistake” is now typical of many emerging economies, even those very close to the above mature markets, and thus supposedly forewarned. Take the Adriatic coast of ex-Yugoslavia, for example. It is precisely the local governments in Slovenia, Croatia, and Montenegro that have learned the racket in a jiffy. The developers and investors from mature markets know the game already, and they spread it far and wide without any remorse. “The hotelier who raises a thousand-room monstrosity will pay for the bricks and mortar,” as you rightly say, “but not for scarring the view or wrecking an historic monument.” What you forgot to mention is that the same hotelier will also pay a little more than for the bricks and mortar to bribe the willing local officials.