H. Tourism

EAEU member States have recently experienced negative FDI flows in some areas that foster innovation and economic growth, such as the R&D and ICT sectors. The fact that such divestment was especially notable in Kazakhstan, Kyrgyzstan and the Russian Federation shows its political roots, such as the sanctions against the Russian Federation and the deteriorating financial opportunities for Russian investors that followed. Current geopolitical tensions open opportunities for LAC investors. Collaboration between the two regions in the area of R&D is deeply rooted in the Soviet period and has been repeated in recent years. Consider, for instance, the Russian-Nicaraguan vaccine research and production venture Mechnikov’s Latin American Biotechnology Institute. Elsewhere, especially in communication technologies, the EAEU is still catching up, which may offer LAC firms investment opportunities.

Both regions have developed a substantial tourism sector through the years that constitutes a key economic engine in some countries. The sector was responsible for around 4% of total employment generated in both regions (WTTC, 2019). The LAC region offers multiple types of tourism such as medical and sports tourism while in some specific regions, such as the Caribbean, sun and surf seekers arrive from all over the world throughout the year. Some EAEU countries are also very active, with Kyrgyzstan promoted as the Switzerland of Central Asia due to its beautiful mountainous terrain (Traveller, 2015).

The clear benefits of tourism and the appealing landscapes both regions have to offer are not enough to guarantee the sector can thrive and results from the ambitious establishment of a visa-free regime between the Russian Federation and all Latin American countries are not yet clear. So, in order to expand interregional tourism, authorities should recognize the importance of their respective markets and use advertising to broaden the regions’ appeal. Since this is generally organized at the national level, it may be difficult to encourage regional-level advertising. However, there are certain country groups that consider moving towards common advertising, such as Central America (organized through the Central American Tourism Integration System, known as SITCA), where the development of regional-level value chains is considered a high-priority. In the Caribbean, there is also some movement towards intraregional cooperation through CARICOM. Still, it is not just bureaucratic hurdles or a lack of knowledge preventing mutual tourism. The impediments are three-fold. First, tourists may not be satisfied with the quality of infrastructure or the level of security in the country of destination. Second, since there are no direct flights between the two regions, airfares tend to be relatively expensive. To illustrate, the lowest prices for return, off-season airfares between Moscow and Mexico with a transfer in Istanbul reach as high as 50,000 roubles (roughly US$ 700) (Aviasales, 2020), which exceeds the average monthly wage in the Russian Federation. In other EAEU States (GKS, 2020), the situation is even worse. A third factor limiting tourist flow is the lack of cultural or historical bonds, except for Cuba, with both regions having their own dominant common language. Addressing either of the mentioned challenges requires promoting touristry-related investments. The EAEU organizers of recreational activities are close to their customers, thus ensuring the necessary expertise in the quality of infrastructure demanded by prospective voyagers to the LAC region. The EAEU tourist sector’s participation in the construction of hotels

and recreational areas in LAC or logistics enhancement might improve the chances of their customers developing a LAC preference. It should also be noted that the LAC region offers a very broad range of products, from relatively low cost to extreme high-end luxury and private EAEU operators will have to get acquainted with the breadth of what is on offer. On the other hand, the absence of interregional investments in tourism infrastructure leads to the second risk, of weak and expensive air connectivity. It appears that should the two regions manage to negotiate the launch of direct flights, tourist exchange will increase. The decision whether to open and operate specific point-to-point flights is principally a corporate one made by airlines but is strongly influenced by governments’ lobbying efforts. This is another policy action worth exploring. If a no-transfer option is unavailable, it might be suggested that the stimulus for visiting the distant region might be provided via translating the necessity of long-hours transfer into an opportunity: it may be worth investigating the opportunities of multiple-location trips. Central America, SITCA and SIECA are currently investigating the possibilities of such common regional value chains in the tourism sector. Tourism that respects the environment —also known as eco-tourism— and the cultural heritage of both LAC and EAEU, is highly encouraged. The stimuli for visiting protected areas, national parks, marine reserves will not only contribute to popularizing carbon-neutral tourist destinations, but also generates economic opportunities for indigenous populations and communities living in or around them. Whereas all countries appear to be beneficiaries of the eco-tourist inflow increase, Small Island Developing States (SIDS) appear to be especially interested.