Local impacts and perceptions of tourism foreign direct investment (TFDI): a conceptual framework

Foreign Direct Investment (FDI) is viewed as a tool for economic growth but also often as a panacea for all ills. It comes with both costs and benefits. While it has the potential to raise productivity, generate employment, enhance competitiveness of the domestic economy through transfer of skills and technology, reinforce infrastructure and contribute to the long-term socio-economic development of places, the effects on host populations must be considered and local resident perceptions must also be acknowledged to provide a more holistic picture. This chapter is based on a wider PhD study undertaken by Jönsson, supervised by Palmer. It determines the impacts of tourism-related FDI (TFDI) on local people, taking into consideration experienced realities of TFDI impacts. It examines background information on topics relating to FDI in tourism, drawing upon existing academic studies as well as practitioner reports. Key debates in TFDI are emphasised and research gaps are identified to establish this chapter’s contribution to academic knowledge. The chapter is organised into two thematic sections. The first section focuses on TFDI, its micro and macro level impacts, types and trends. The second section concentrates on local resident perceptions of TFDI and links these to its impacts. Theoretical approaches used to examine local resident perceptions of tourism per se are discussed and applied specifically to TFDI impacts. The chapter is concluded by emphasising the value of intersecting economic theories and the perceptions of affected local communities in analyses of TFDI. The relevance of Dunning’s (1979) OLI framework and Social Exchange Theory in the examination of local perceptions of social and economic TFDI impacts is highlighted. Opportunities for further research that support a shift away from neo-liberalist tenets to consider stewardship of more inclusive economic development are suggested.