Medical Tourism in Developing Countries

30 ● Medical Tourism in Developing Countriesthey retain them. As a result, it is not surprising that they produce andexport medical tourist services.What about the tourist part of medical tourism? What is the abundantfactor of production in tourism? While nature is certainly important(including beaches, wildlife, and the native population—also known as theexotic factor or natural capital), tourism also entails investment in accommodations,airports, roads, and restaurants. Diamond’s research clearlyshowed that tourism requires capital investment (as well as skilled labor,namely human capital). 42 At the same time, however, tourism is a highlylabor-intensive sector in which personal, one-to-one services are sought out(including those of the chambermaid, waiter, prostitute, and guide). All ofthis points out that when it comes to tourism, it is difficult to identify theprincipal factors of production.For some countries, the comparative advantage in the production ofhealth services aimed at the foreign market and tied to tourism, supplementstheir long-standing trade in medical capital. They have also beenexporting their medical personnel for decades: some have provided foreignaid by sending abroad their medical teams (China did this to Asian andAfrican countries; Cuba did it in Africa and South America). Others havebeen sending capital, and making investments to establish hospitals in foreigncountries.Direct Foreign InvestmentForeign investment is growing across the globe. Indeed, the proportion ofnet financial flows from the private sector in MDCs to the private sector inLDCs rose from 18 percent in 1980 to 82 percent in 2000. 43 Perhaps moreinteresting is the fact that its composition has changed. As the importanceof the service sector grows across the world, a shift is occurring in directforeign investment: it is moving away from manufacturing and agriculture,and into services. Naturally, foreign investment responds to profit possibilitiesthat are greatest in the sector with the strongest derived demand.Profit-seeking foreign and multinational firms provide the supply thatthe tourist industry seeks by becoming part of the tourist industry, anenormous umbrella business that includes a multitude of small and notso-smallsubcomponents within the areas of travel, accommodation, foodand beverage, ground transportation, attractions, recreation, and retail.They also participate in funding the secondary demands of tourism, includingindustries that produce automobiles (for rental cars), cameras and film,sunscreens and tennis rackets. When visitors consume hotel accommodation,car rental, air travel, and food, they indirectly induce investment in these