Tourism and Modernization in the Northern Caucasus Republics — New Opportunities for Catch-up Development

The article analyzes the impact of the tourism boom on catch-up development in the Northern Caucasus and examines how “modernization from above,” which emphasizes the state’s role in improving underdeveloped regions, and “modernization from below,” which sees the role of market-oriented private business as crucial, accommodate the increasing demand for tourism. Both models have responded quite effectively to the new opportunities and challenges presented by the tourism boom. State institutions charged with development have contributed to increased capacity at the ski resorts under their management, which have shown significantly better results than resorts that do not operate under a single company. Private business, however, was able to create a market for excursions and ethno-tours almost from scratch by providing a variety of tourist attractions and adapting services to tourists’ requirements. In order to improve the quality of tourism and counteract opportunistic behavior by contractors, businesses have applied new institutional tools. The two modernization models also exhibit some symbiotic relationships. For example, expanding ski resorts attract private businesses while entrepreneurs often compensate for mistakes made in planning resorts. Nevertheless, the weaknesses of these models when stressed by growing demand are also evident. In one instance, the development institute responsible for Northern Caucasus tourism has not yet found optimal ways to coordinate its activities with the authorities of the districts adjacent to the resorts or with private businesses. The state is also not fully capable of promoting successful development of private business, especially if this requires investment or administrative intervention above the regional level.