سرمایه‌گذاری خارجی و توسعه شهری: چشم‌انداز شهرهای گردشگری

While most of the economists defend the positive role of foreign investors in economic development, the literature addressing urban settings show divergent views on the local impact of foreign investment. The author takes the approach of political economy, illustrating how the interests and preferences of foreign investors and the host community on the openness of a tourist city greatly diverge in the presence of side effects. Foreign investors tend to influence the tourist city’s policy to exhibit a higher degree of openness than is optimal. So it is the government’s responsibility to regulate foreign investment in a way that is conducive to the tourist city’s sustainable development. Macao is adopted as a case study.

International organizations such as the International Monetary Fund (IMF), the World Bank and the World Economic Forum enthusiastically urge cities to seek competitive advantages to ensure their survival and prosperity. Based on the assumption that inter-city competition for foreign investment is escalating, these organizations encourage cities to create market conditions that attract foreign investors to exploit local competitive advantages. The desirability of foreign investment is backed by a large volume of economic literature. According to these studies, foreign capital has various advantages, such as promoting growth (Coe and Wrigley, 2007 and Xafa, 2008), fostering competition (Edwards, 2001 and Sheng, 2010), transferring technology and management skills (Lopez-Mejia, 1999 and Thompson, 2008), enhancing policy transparency and market discipline (Ivarsson, 2002 and Moreno, 2001), strengthening efficiency in financial institutions (Claessens, Demirguc-Kunt, & Huizinga, 2001) and smoothing inter-temporal consumption across cities (Eichengreen et al., 1999). In the extant urban literature, the term ‘foreign investment’ is associated with positive attributes. Wei, Leung, and Luo (2006) find that foreign investors made significant contributions to external trade, to the formation of global cities and financial centers, as well as to the more general rapid economic growth in the city of Shanghai. Wu (2001) finds significant contributions by foreign investors to finance development in China. This makes possible large-scale infrastructure and prestigious, high-profile projects and helps to change land usage in Chinese cities from mixed, cellular patterns to more highly differentiated ones. Sit and Yang (1997) find that foreign investors have played a significant and positive role in transforming the Pearl River Delta from a closed, self-reliant agrarian region into an industrialized and urbanized area, enabling it to become an integrated part of the international division of labor. Turnock (1997) argues that foreign investors help to accelerate urban restructuring, exploit comparative advantages and situate Eastern European cities within the global division of labor. Foreign investment also stimulates competition by encouraging innovation among domestic enterprises. Positive evaluations of the role of foreign investors are also provided by Wu, 2000, Wu, 2003, Dick and Rimmer, 1998 and Bullard et al., 1998 and Shi and Hamnett (2002). A considerable selection of the urban literature, however, documents the negative impacts of free capital mobility and excessive foreign investment from economic, social, environmental, and political perspectives. Chan, 2001a, Chan, 2001b, Chan and Senser, 1997, Chan and Wang, 2004, Chan and Zhu, 2003 and Chen and Chan, 1999 report and comment on serious worker rights violations in China’s booming coastal cities, including unpaid wages, unsafe working conditions, corporal punishment, compulsory overtime, imposition of monetary penalties, and bonding of labor through mandatory deposits. The fact that many foreign firms are actively involved in the abuses raises concerns about the negative impacts of rapid globalization and urbanization in countries where human rights are ignored and legal systems are weak. Examining the lives of female Chinese workers in factory dormitories, Pun, 1999, Pun, 2004a, Pun, 2004b, Pun, 2005a and Pun, 2005b) explores the meaning of globalization for the laborers of global capitalism. She finds that production and consumption imperatives of the global capitalist market together with the authoritarian Chinese government and patriarchal Chinese culture lead to violent coercion and exploitation of women in the urban factories. Lee, 1995, Lee, 2000, Lee, 2007a and Lee, 2007b) identifies increasing labor unrest amidst the brutal exploitation and coercion characterizing China’s integration into the global capitalism system. She provides a broad political and economic analysis of this social struggle, opening a critical perspective on the death of socialism and the rebirth of capitalism in China as it emerges as the world’s factory. Besides the serious human rights problems accompanying the urban growth driven by foreign investment, other negative socio-economic impacts, such as foreign dominance (Stoneman, 1976), a widening social divide (Sheng & Tsui, 2009a), inflation (Zheng, Kahn, & Liu, 2010), human resource shortages (Fortanier & Wijk, 2010), asset bubbles (Zhang, 2006) and pollution (Güneralp & Seto, 2008), are also well documented in extant literature. More broadly in the context of the social sciences, particularly in Marxist scholarship, scholars are intensely critical of foreign investment due to the hypermobility of capital. Applying Marxist analysis to Neoliberal economic doctrine, which urges the free mobility of capital, Harvey (2005) finds that promotion of Neoliberalism by international lending institutions since 1980s has reformed the world economic system and restored political and economic power to the upper classes. He points out that the world economy has not performed well under Neoliberalism, an ideology that has been wrongly represented as the most desirable alternative. In fact, while multinational enterprises extract remarkable benefits from their investments in the process of globalization, host communities do not gain as much as people assume they do. Consequently, inequality increases worldwide. His critical point of view on Neoliberalism in the urban context is elaborated in more detail in Harvey, 1989, Harvey, 2003 and Harvey, 2008). Dickens (2000) finds that a new spatial division of labor is developing based on Neoliberal doctrine, so that each nation is attributed a specialized role. Such divisions depend on globalization, and they are good for capitalist profit, but they also separate the people from the land. Dickens argues for the fusion of perspectives emphasizing political economy with those focusing on peoples’ urban lives. His critical opinions on the role of capitalism in the globalized, urban context can also be found in Dickens, 1989 and Dickens, 2004 and Dickens, Duncan, Goodwin, and Gray (1985). Castells defines ‘urban’ as the processes of socialization of production, the realization of surplus value, and the collective production of labor power in capitalist societies. He finds that Neoliberalism marks the end of the democratic phase of urban development, and stresses the role of social struggles in the conflicting transformation of the city (Castells, 1978, Castells, 1979 and Castells, 1983). Elaborating on Joseph Schumpeter’s ‘capitalism’s phase of creative destruction’, Klein (2007) argues that liberal economic doctrine rises to prominence in countries where the citizens are in shock from disasters. Policies under that doctrine, such as capital mobility, privatization, and free trade, however, often result in depressions, mass poverty, and private corporations looting public wealth. Using the case study of Macao as a tourist city experiencing spectacular economic growth from foreign investment, the author illustrates how the interests of foreign investors and host communities might diverge in the presence of side effects. In this paper, the term ‘tourist city’ refers to a city in which the tourism sector occupies a large or dominant space in the local economy, and where the host community is mainly the provider and not the consumer of tourism services. The host community in Macao has been suffering from serious socio-economic consequences despite the apparently positive boom after its gaming sector was liberalized and opened to foreign investors. By critically evaluating the negative impacts of free mobility of capital under liberal economic doctrine, this paper aims to inspire city planners to formulate more comprehensive foreign investment policies. As there are many tourist cities across the world with characteristics similar to those of Macao (rapid expansion, foreign dominance and serious side effects), this paper has practical relevance. The rest of the paper is organized as follows: Impacts of increasing tourism: a review of literature section reviews the literature on the impact of tourism; The case of Macao section illustrates the case of Macao; and Conclusions section provides concluding remarks.

This paper has analyzed the diverging preferences of foreign investors and the host community with regard to the economic openness of a tourist city in the presence of side effects. Tending toward profit maximization for their investment, foreign investors have somewhat opposing interests to those of the host city. If foreign investors dominate a city’s policy making, the result may not be desirable for the host community. Foreign investors’ profits are made at the expense of the majority of local inhabitants and the sustainability of the city’s development. Under certain circumstances, foreign investment may lead to adverse impacts on a tourist city’s urban development, causing social unrest and political instability as well as damage to the interests of all parties involved. The case of Macao makes a unique contribution to our understanding of urban policy making, since the role of foreign investors cannot be overlooked or underestimated in reality. As illustrated by Sheng and Tsui (2009a), the host community is never homogenous or harmonious in the face of the rapid growth of tourism. While beneficiary groups may profit substantially from a boom in tourism and thus be better equipped to shoulder the side effects, non-beneficiary group may experience the contrary. Therefore, different preferences with regard to the liberalization of a tourist city arise: beneficiaries prefer more openness while non-beneficiaries prefer less. This being said, foreign investors and local beneficiaries may find common interests and cooperate with each other to a certain extent. Also, regional (one level up from the city) and central governments may have their own preferences with regard to the city’s liberalization. They consider the issue in a broader regional and national context, and in many cases it may not coincide with the preferences of the vast non-beneficiary groups in the city. Moreover, foreign investors, especially mega-multinational enterprises, possess considerable political influence on their international partners. Backed by their own governments, they may put considerable political pressure on invested cities and countries to bargain for preferential treatment. If this is the case, a host community’s interest may even be ‘betrayed’ for political deals at the international level. Although the present study focuses on the ‘dark side’ of foreign investment in the context of urban development, we do not want to give the impression that foreign investment should only be seen negatively. We simply attempt to counterbalance a widely accepted liberal doctrine with regard to foreign investment. It is understandable that foreign investors are profit-driven and prefer broad openness for the cities in which they invest. Foreign investment can be a positive, a negative or a neutral thing to the city concerned. The role of the decision makers in the city itself is what must be addressed. They can choose to either pursue broader liberalization by reinforcing and facilitating foreign investment efforts, or they can place certain restrictions on openness in order to regulate the city’s overall growth. While the former may result in serious side effects, the latter can facilitate sustainable development of the city. In terms of the current case study, as one of China’s SARs and the largest casino city in the world, Macao has many characteristics that are different from other tourist cities. Yet, like Macao, many tourist cities are highly dependent on foreign investment and suffer from various side effects, thus this case study is representative to a certain extent. Hopefully, the results presented here will inspire others to pursue their research in this area and make more practical suggestions for the sustainable development of tourist cities.