Ethnic Tourism: the Case of Cuetzalan, Mexico.

by Nancy Ojeda-Macias

ABSTRACT

Ethnic tourism refers to a kind of tourism where indigenous people are

directly involved either through control and/or by having their culture serve

as the essence of attraction. This paper analyzes the case of ethnic tourism in

Cuetzalan, Mexico. The stakeholders are the Nahua Indians, local non-Indians

who provide touristic infrastructure, tourists and local and national

governments. Three interrelated goods are identified: Indian ambiance as a

joint-impact good, the hotel industry as an economy of scale, and crafts with

high transaction information costs.

For each case the current institutions are described and changes are

suggested in the structure, shifting externalities from one group to another.

Finally I conclude that the HEC characteristic of Indian culture is one of the

central reasons that creates large differences in income distribution around

ethnic tourism. Therefore, it is important to underscore the importance of

Indian ambiance and who pays for fixed costs and whose preferences count.

ETHNIC TOURISM: THE CASE OF CUETZALAN, MEXICO

Tourism in Mexico

Tourism in Mexico has continuously grown from the 20,000 tourists visiting

the country in 1929, to more than 5,400,000 in 1987. Between 1976 and 1986

Mexican tourist arrivals increased by 48.9 percent from three million people to

over four and a half million with an average annual rate increase of 4.4

percent. Foreign exchange earnings for the same decade grew by over 114 percent

from US. $835.6 million to US. $1,791.7 million (SECTUR 1987). In the 1990s,

more than 6 million foreigners visit Mexico annually, and bring into the

country approximately $1.5 billion more than Mexicans spend abroad. The

industry generates 3 percent of the Gross Domestic Product and employs close to

one tenth of the labor force, including both direct and indirect

tourism-generated jobs (Hiernaux and RodrÆguez 1990).

All this growth has been the product of an intensive national advertising

effort by Mexican tourism agencies as well as the devaluation of the Mexican

peso after 1976. This devaluation, and the following ones in the 80s and 90s,

transformed the country into an increasingly cheap destination for

international tourists and also for the national tourism because visiting other

countries became too expensive.

About 90 percent of tourism in Mexico is of the sun-sand-and-sea type,

concentrated in a dozen or so major coastal resorts. At most 10 percent of

Mexican tourism, both domestic and international, could be described as

cultural and ethnic.

Ethnicity and Ethnic Tourism in Mexico

In Weiler and Hall's (1992: 84) definition, ethnic tourism is "travel

motivated primarily by the search for the first hand, authentic and sometimes

intimate contact with people whose ethnic and/or cultural background is

different from the tourist's." According to Hinch and Butler (1996: 9),

"indigenous tourism refers to tourism activity in which indigenous people are

directly involved either through control and/or by having their culture serve

as the essence of attraction."

In 1990, 7.9 percent of its 81.2 million total population in Mexico are

still native speakers of indigenous languages. Nearly four fifths (79 %) of the

6.4 million Indians in Mexico are bilingual in Spanish, but they represent

about one fourth of indigenous language speakers in the American continent

(INEGI 1992). The government recognizes over 50 indigenous groups, most of them

living in the Central Valley, the Isthmus of Tehuantepec, the Yucatçn

peninsula, and the highlands of Chiapas.

In Mexico, Indigenous groups are usually situated in relatively isolated

areas (high-elevations, deep inside the rain forests, etc.) where historically

they tried to avoid Spanish, and later national, control. Only rarely were

Indian groups able to escape from all contact with the non-Indians. Cultures

never stop changing, and in most cases (at least for some time) Indigenous

groups dynamically and consciously maintained their traditions to differentiate

themselves from the other groups. This gave them a sense of identity and

allowed/forced them to stay together and socially, economically and culturally

support their own communities. Under this perspective Indians have not been

isolated, but their history is strongly related to regional, national and

international evolving contexts with particular institutions.

Ethnic Tourism in Cuetzalan, Puebla.

The state of Puebla is situated to the south of central Mexico. It is

politically divided into 207 municipios. Of these, Cuetzalan del Progreso

(Cuetzalan of Progress) is an important one in the Northern, mountainous part

of the State. Agriculture (particularly coffee), livestock raising, industry

and tourism are the main economic activities.

In 1990, Mexico's census recorded a population of 35,676 inhabitants in

Cuetzalan. For 1995 it was estimated in 41,610 dwellers. Cuetzalan is formed by

143 towns of different sizes where Nahua Indian population accounts for 71% of

the total inhabitants. About 65% of the people 15 years and older were

alphabetized in Spanish; while 57% of them were men, among women 68% cannot

read or write. In general, only 15 % of the people in the municipio have a

high school education or higher. Among economically active people in 1990, 58%

earn less than the minimum wage (agricultural laborers, etc.), and 23% receive

no pay for their work (men and women working in household economies). An

average of 5.48 people live in each dwelling. Drinkable water at home is

accessible in 47% of the houses, while drainage exists in 27.14%, and electric

energy in 41.2% of them (INEGI 1992).

In this paper I will focus on ethnic tourism in Cuetzalan. After

identifying the relevant groups or stakeholders, I will proceed to analyze

three interrelated goods: Indian ambiance as a joint-impact good, the hotel

industry as an economy of scale, and crafts women organizations and the ways

they deal with transaction costs.

First of all, the Indian population, Nahuas, play a significant role in

this topic. Also, hotel owners (and related service-providers), tourists, and

the local and national governments, influence the situation through different

kinds of institutions resulting in particular performances.

The Indian or 'touree' is the native-turned-actor while the tourist is the

spectator. The middleman is the broker who mediates and profits by the

interaction of tourist and touree and in many cases manipulates ethnicity. The

locals non-Indians or mestizos occupy the strategic towns while controlling

economic resources to provide the infrastructure of tourist services. Their own

culture and language skills facilitates access to tourists, and their

traditional power over the Indians enables them to control tourist access to

tourees. Finally, their knowledge of both outside and local conditions puts

them in a privileged position to discover, create, and exploit ideas around

ethnic tourism, to manipulate indigenous cultural symbols for commercial gain

altering indigenous culture for tourist marketing.

Why do tourists go to Cuetzalan? They are travelers in search of different

cultures, in a quest for "the other". Even though the present situation of

Mexican Indians can only be understood in the context of three centuries of

colonial rule and almost two hundred years inside a national/international

economic system, the official tourism strategy and tourists in general see

Indians as a picture from the past: pure, pristine and unchanging cultures,

living museums that can show us how was life in Mexico decades or centuries

ago. It is precisely this view that makes Indian culture so exotic in the eyes

of national, but mainly international tourists.

Indian Ambiance: A Joint-Impact Good

Hypothesis: In a situation of joint-impact good, with high exclusion costs

where several groups benefit from different aspects of a good and costs are

unequally shared; an administration structure can control income distribution

if the importance of the good and the group producing it is recognized.

"Cuetzalan: Magic and Charm" is the slogan used to promote this

destination. The most fundamental good in ethnic tourism is the Indian culture

and more precisely Indian ambiance. This is a joint-impact good (JIG) because

the interdependence is created by marginal cost being zero (MC=0), where the

number of users can be incremented without subtracting from the quantity of the

good available to other user(s) over some range (Schmid 1987: 75). Also, Indian

ambiance is highly preemptive and has high avoidance cost for the locals, but

low for tourists because they can go elsewhere.

After the Nahua Indians have covered the fixed costs of the Indian

ambiance, the marginal costs of more people enjoying it are zero. The Indians

use the ambiance for their own identity benefits, but they also take advantage

of it to sell their crafts, charge tourists for taking pictures, and work as

guides (particularly children). 'Tourees' modify their behavior and their

cultural artifacts in response to tourist demand, putting themselves and their

products on show in strategic tourist locations, such as outside hotels and

restaurants.

The good is also used by hotel owners, tourists and the government; but

it's not consumed. Mestizos in general benefit, directly or indirectly, from

ethnic tourism. Apart of the owners and managers of hotels, restaurants, shops,

travel agencies, taxis and buses, and their numerous personnel, a whole artisan

class benefits from the construction and remodeling that accompanies the

expansion of tourism facilities. Bricklayers, stone masons, painters,

carpenters, cabinet markers, electricians, plumbers and others, who are mostly

local mestizos, work in tourism-related establishments.

This good is high exclusion cost because stopping people from looking and

wandering through the area would be too expensive even if a majority of Indians

could get organized to figure out applicable institutions (fees, policing,

etc.) to control access to the good and people making profits from it. The

performance is one where Indians do not get organized (free riders and high

transaction costs coming from the HEC) and the other groups (entrepreneurs,

tourists, governments) are also free riders benefiting from the costs Indians

covered. Status quo remains the same.

As mentioned before, the number of users creates no additional cost up to a

certain range (in tourism commonly called carrying capacity). Beyond a limit

the situation changes from JIG into incompatible use good (IUG) where each

tourist becomes the enemy of every other tourist, because tourism causes

inflation, overcrowding, shortages of accommodation, etc. Initially, a number

of tourists sharing preferences around the good is required to develop and

sustain tourism, but too many of them is a problem. This is the irony of ethnic

tourism: it can be self-destroying because the presence of tourists 'spoils'

the authentic natives and transforms them into 'tourees'. In this way the

tourist quest for authenticity is condemned by the very presence of tourists.

(van den Berghe 1994).

In the case of IUG, property rights and competition would make the

difference. An administration structure could control the number and quality of

tourists. For instance, only the people willing to pay higher prices and taxes

would have access to the area, or only educated visitors in natural and

socio-cultural issues on the region would receive permission to travel and stay

following appropriate behavior. A market structure could also produce similar

performances if supply and demand of the good increased prices, even though

competition may lower prices again.

In any case, it is important to understand whose preferences count in

ethnic touristic development, deciding on the quantity and quality of the good

and the quantity of use of it. In this case Indian ambiance is difficult to

measure, but I consider that it has prevailed in most communities in Cuetzalan

and in general it is growing because of tourists demand. Dances such as the one

of los Voladores (the flying people) and Los Quetzales or Cuetzalines (the

Quetzales, a kind of bird), traditionally with rich Indian meanings, are now

performed every Friday and Saturday in local bars to entertain tourists. The

bar owners benefit (clients come) as well as the performers (collect

contributions at the end), but once again the Indians cover fixed costs and the

non-Indian only marginal costs.

Concerning the quantity of use, among Indians all have access to the good.

Because it is a JIG with local HEC, hotel owners, tourists, and governments

also use it at low cost and the quantity meets their preferences. The question

of quality deserves special attention and it will be discussed at the end of

this section.

In JIG situations, the pricing rule, form of ownership, set boundaries,

type of transaction, and level of administration are institutions that will

affect performance. Pricing in JIG is special because a particular user of the

same output cannot be traced to a particular unit of input. This situation

"requires a pricing rule (property right) to allocate the advantages of doing

something together" (Schmid 1987: 89-94).

Currently, the structure around Indian ambiance in Cuetzalan is one of

administration. According to government regulation, tourists pay taxes and in

this way they share a part of the fixed costs of the good. The problem still is

what are these taxes used for? Along with general taxes, a part of it is

redistributed in the region, but according to the preferences first of the

non-Indians, and second for the benefit of the Nahuas. This means that the

government invests for instance in infrastructure for the modernization of the

regional economy (which not necessarily but probably benefits Indians), and

secondly in services for a few communities. The performance of income

distribution favors the non-Indian groups the most, while probably creating

some unwilling riders (tax payers).

Also, fees are collected by the government at archaeological sites and

museums. The government has the property rights over these sources of income,

because the investment to excavate the sites and build the required facilities

came from the National Institute of Anthropology and History (INAH). Even

though Indian culture is once again the source of income (prehispanic ancestors

built the sites and museum exhibits are formed by pieces of ancient and modern

Indian art), property is denied to Nahuas and appropriated by the government

through the historical construction of nationalism. All the money from sites

and museums is sent to Mexico City to the Ministry of Finance and later this

income is directed to other areas of the economy considered as "priorities for

the country" as defined by elite interest groups in Mexico. Each year a budget

is assigned to the municipio only to cover maintenance costs.

A specific example at the local level is the Feria Nacional del CafÄ

(Coffee National Fair) organized for the first time in 1949. This fair takes

place every year between the 10th and 15th of October. Its main purpose is to

promote this important cash crop nationally and internationally. In 1962, the

Feria Nacional del Huipil (National Huipil Fair) was instituted too. The

huipil is the Indian women's traditional costume. This fair takes place

between the 1st and the 8th of October and formally, its goal is "to rescue

Indian roots". In practice, both events are combined and they overlap each

other. An impressive amount of visitors arrives in Cuetzalan every year

enjoying either the coffee or Indian events, or both. The hotels are full and a

lot of people have to stay in the nearby city of Zacapoaxtla.

The fairs are organized by the local government in combination with coffee

producer associations and Indian authorities. The fixed cost of the event is

shared by these groups, although the local government covers a larger part,

capturing most of the profits as well. The Indians perform a number of

different dances and rituals, and a contest to find the "Indian Queen" is held.

Most of the Indian events are organized by the municipio official authorities.

It is quite possible that the Indian communities end up spending large amounts

of money and resources compared to the revenues from tourists contributions and

crafts sales. This expenses in cultural public event follow the patterns of the

expensive Catholic celebrations that under neoclassic standards of rationally

would make no sense, but when considered in a context of bounded rationality

and standard operation procedures can be seen with different eyes.

The HEC of Indian ambiance is a determinant feature that makes it difficult

for Indians to control the derived profits from their 'product' and with time

increase their participation in other areas of ethnic tourism that are more

profitable. An administration structure could regulate and favor their

interests, collecting taxes from the hotel revenues and, recognizing the

importance of Indian ambiance, redistributing the taxes among the Indian

population to cover their costs of production plus rents. Of course, this does

not mean automatic benefits for Indians because the political conflict inside

and outside the communities could exclude some groups from these resources.

More detail matters in this case. Also, the number of unwilling riders would

most likely grow because the locals non-Indians used to benefit from taxes and

now the externality is shifted against their interests.

Another structural aspect of this situation is the status relationship

between tourists and Indians. As mentioned before, tourists visit Cuetzalan in

their search for otherness. The good is preemptive but low exclusion cost for

tourists, who can go somewhere else if their preferences change or if they do

not agree with quantity and/or quality. In many cases tourists in Cuetzalan

perceive the harsh economic conditions under which Nahua families live and

they buy crafts they would not buy elsewhere and they give larger donations

than suggested for pictures and for watching dances and rituals. In this way it

could be said that tourists are joy riders, paying for taxes and extra

donations because they believe transferring this money to Indians is the 'right

thing to do'.

Returning to the context of quality, a common critique on tourism is the

issue of 'commoditization' vs. 'authenticity'. Tourists (and social scientists)

are concerned with this issue and while they search for authenticity, they are

the cause of its extinction. In this way the information costs of authenticity

are high (HIC) because the question of quality is one of meaning behind things

and events. It is not easy in every case to tell how authentic Indian ambiance

looks like or even feels like (if considered an experience), especially for

outsiders, because information is asymmetrical.

Rituals, ceremonies, costumes, etc. commonly become commodities when

exposed to ethnic tourism. For example, arts and handicrafts change colors,

forms, materials and of course meanings and the uses of these things change

too. At this point they can be called 'tourist arts' (Graburn 1984).

The tourist can solve this problem alone searching for information

(educating herself or himself), or communicating with other tourists who share

their preferences (even organizing clubs or associations). Also, returning

several times to Cuetzalan can give the tourist the perspective of how

authenticity is transformed. In any case, the result is that each of these

tourists is undermining the quality (authenticity) that they prefer through

their search of it: they fall in a social trap. In the process, the search

costs can be high.

It is worth mentioning that the objectification of local culture via

tourism does not always destroy it; sometimes it transforms and even stimulates

its presence and growth in a dynamic changing way. The transformation process

of the image of a place, the creation of community events for the tourist, and

the organization of history in touristic settings change the cultural and

historical life of communities as well as the place itself (Greenwood 1989:

180-183).

The now tourist-oriented products have new meanings for the indigenous

groups, but these products are some of the main vehicles of self-representation

before the 'others', the outsiders. In many situations of commoditization, the

performers themselves do not necessarily perceive that such a transformation

has occurred, their perspective is more processual: they interpret new

situations in traditional terms, and see continuity instead of change (Cohen

1988).

In general, Indian ambiance as a JIG can be compared to other goods such as

national defense, ambient air for breathing, flood control, use of air waves

for music, etc. All are JIG, highly preemptive and unavoidable. In these cases,

pricing rules in the structure define much of the resulting performances

(Schmid 1987: 75-94).

Hotel Industry as an Economy of Scale

Hypothesis: When a good's situation is an economy of scale, who has the

economic resources and political power to compete in the production of the good

matters. Changes in institutions from market to administration structures can

make a difference shifting externalities and transforming status quo.

Ethnic tourism, in its hotel industry (good) aspect, is an economy of scale

where unit or average cost falls as more units are produced. The consumers are

interdependent because they are better-off if more people share their

preferences while quality is not reduced. Prices go down with standardization

(Schmid 1987: 62-63). Also, the exclusion costs are low because if for instance

someone does not agree with the price, it is easy to stop them from spending

the night in one of the hotel rooms.

In Cuetzalan, hotels and related services offer quality and quantity that

tourists are used to enjoy in their urban original environments, but that was

not common in the area before tourism was seen as a source of income and then

developed. Tourists may be interested in Indian culture, but most of them are

not willing to sleep on the floor and eat food that might make them sick. This

is an advantage for hotel owners who standardize their services and increase

the amount of clients taking a room for the week or weekend. This situation is

also good for tourists' income because a price-variety trade off takes place

and they save money while meeting their preferences.

At the same time, there are different kinds of tourists. Some ask for

higher hotel quality and there is a number of four stars hotels that can

provide the service with the right price. But there are also tourists with a

more limited budget, such as national tourists and students. There are also

three stars hotels with lower prices and quality. If all tourists shared

preferences the economy of scale would be more fully developed, but still each

of the two kinds of hotels form an economy of scale in themselves.

In this context, the 'stars' system saves information costs for tourists

who would have a harder time searching for quality, quantity and reasonable

prices. This kind of regulation provides valuable information for the tourists

who are outsiders and would otherwise have an asymmetrical access to

information. With this institution they save transaction costs. Ultimately, the

tourism industry also benefits because if the costs and hassle of the search

were too high, tourists might go elsewhere because of their low avoidance

costs.

The hotel industry as an economy of scale has a market structure where

entrepreneurs decide on price differentiation. They charge more of the fixed

costs on international tourists and weekend travelers, particularly during

October, December and the summer months, because both groups are willing to pay

more. Exchange rates favor internationals and during weekends national tourists

with relatively high incomes take a few days to rest from urban stress.

Cuetzalan is also a famous weekend destination for undergraduate students from

the cities of Puebla and Mexico City whose family's income is high and they can

afford higher prices.

Because it is an economy of scale, after the fixed costs are covered,

marginal cost pricing can be offered to other groups to increase markets and

revenues. In this case cheaper prices are offered to groups of tourists (30

people), Mexican students, and senior citizens. The so called 'discounts' are

offered in 'low' seasons (spring or fall), during weekdays, etc. Here we find

an example of interdependence where peak-load periods typify a situation in

which some tourists can enjoy marginal prices while others will cover higher

costs in a peak-load pricing scheme (Schmid 1987: 137).

The observed performance distributes income differently, some pay the fixed

costs and some only marginal. In general, people meet their quality and

quantity preferences and agree with pricing rules. The hotel owners are able to

make profits and it is their preferences that make a difference in the pricing

rule. Tourism, as an economy of scale, is also a very unstable industry;

characterized by unpredictable outcomes which have been historically diverse

but largely categorized as negative externalities for groups concerned with

natural resources and culture.

While most of the hotel owners are non-Indians, an institutional change is

transforming this situation. The government has loaned an important amount of

money to an Indian women organization (Maseualsiuamej Mosenyolchikauanij) who

for ten years have stayed together lowering their transaction costs when

producing and selling hand woven blouses and other crafts. Recently, they have

expressed their interest in building and running a small hotel in Cuetzalan

that would be owned by 50 of them. With their savings they will provide 50% of

the economic resources, and the loan will pay for the rest. The state

government reply was positive and the hotel was supposed to start receiving

guests in late December.

In this way an organization is changing institutions and with them,

performance. Perhaps with time more Indian groups will build hotels and a

transformation in Indian income will start shifting the externalities due to

HEC in Indian ambiance; but it should also be seen in a historical context of

class differentiation inside and outside Indian groups. Increases in income

could be exclusive of a few Indian organizations.

Crafts Women Organizations: Transaction Costs

Hypothesis: In a situation of transaction costs where information is costly,

integration under status structures affects performance, lowering costs and

increasing incomes.

In Cuetzalan, approximately ten organizations of Indian women have been

formed during the last ten or fifteen years. Selling crafts for them has high

transaction costs. Particularly because information is imperfect and

asymmetric, and especially considering most women in the municipio cannot read

or write in Spanish, which is required when bargaining for craft inputs and in

the process of selling the 'tourists arts' to visitors.

Under a status structure, women agree to collaborate to lower their

transaction costs. A minority of them are able to speak, read and write

Spanish, and they also have a basic arithmetic knowledge. These women are

usually chosen as leaders and they agree to invest time to buy large amounts of

the required materials (cloth, thread, etc.) at lower prices. Transportation

costs are lowered because instead of having all women traveling from their

communities to larger cities, a group of them goes to the state capital city of

Puebla once a month. The women agree to sell these materials at a slightly

higher cost and after costs have been recovered, the revenues are saved for

future projects or personal loans in case of family emergencies. Some groups

have started productive projects such as small chicken farms, corn mills, etc.

The groups also organize women so that each week or weekend small groups

are in charge of selling the crafts of all the women in Cuetzalan, head of the

municipio. In this way they save time and money. Also, they try to keep

themselves informed of important fairs or events related to Indian culture,

where they will be able to sell their crafts. Some times they travel outside

the region or the state.

Because it is a status structure, trust and honesty are important values

that keep women together. Most of them have known each other for years and they

are related by family ties, or old and new friendship bonds. Conflict and

misunderstandings exist, of course, but not to an extent that would make the

organizations unviable options to lower transaction costs. In this case, women

do not show themselves as opportunistic individuals in a permanent search for

optimization. As Dawes, van de Kragt, and Orbell write: "group solidarity

increases cooperation independently of the side payments -either external or

internal- often associated with [group] identity" (Dawes et al 1990: 99).

Through women organizations, we observe a performance in which women integrate

and increase their access to information, while saving costs and increasing the

revenues obtained from their Indian crafts.

These women organizations are good examples of the advantages of

integration where members know each other very well (i.e. shared identity,

personal ties) and where they have a sense of ownership over their group

projects. This case can be compared to others such as Fulani cotton workers in

Sudan, zanjeras of the Philippines (Ostrom et al. 1993), and the village of

Mola, Zimbabwe selling hunting permits (Richards 1996).

Finally, another alternative for these groups would be to organize tie-in

sales where women would design packages including crafts and perhaps Indian

guided tours. These would be tied to hotels, preferably owned and run by

Indians. The quality of this service could be such that tourists would demand

it and in some way the high exclusion cost of Indian ambiance would be

controlled through the tourists preference for local authentic knowledge. The

performance would show an income increase for Indian women.

Conclusions

Probably most of the ethnic tourism's benefits in Mexico are enjoyed by the

local elites, the government and the tourists. The locals non-Indians or

mestizos, having noticed the economic benefits of tourism commonly invest in

hotels, restaurants, and other services for tourists. They posses the economic

resources and the knowledge useful in managing and marketing this kind of

tourism. The government has also been able to collect a part of the revenues

and directs them to the balance of payments or to other areas of the national

economy that are perceived as more important. At the same time, nationalism is

supported and that contributes to keep the country together through hard

recurrent economic crises. Also, most tourists satisfy their 'quest for the

other', their interest for what is different, pure, and authentic according to

their standards or at least enjoy a weekend away from the cities. Finally, the

Nahua Indians derive benefits from their culture as well, but they cover most

of the fixed costs and their revenues are low so change is hard to achieve.

Ethnic tourism, in general, can be seen as a group of goods (Indian

ambiance, hotel and infrastructure, authenticity, crafts, etc.) that are

closely interrelated. At the center of this case, Indian ambiance and touristic

infrastructure are interdependent goods because without one of the two ethnic

tourism would not be possible. In this context, the fact that the former has

high exclusion costs and the latter does not, makes a big difference that

results in economic and power differentials.

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Prepared for

AEC 810 Institutional and Behavioral Economics

Fall Semester, 1996

A. Allan Schmid, Professor