Abstract. Neoclassic economic theory suggests global market integration as a strategy to reduce poverty. In line with this paradigm, an increasing number of developing countries have focused on tourism to generate foreign exchange earnings and to meet rising workforce pressure. Coastlines in particular, have been at the forefront of tourist infrastructure development. The article describes tourism development in the village of Kiwengwa on the east coast of Unguja Island (Zanzibar), Tanzania. It is shown that changes caused by tourism are far more complex than economic theory suggests. Economically, tourism has substantially increased local income, but it has also led to a focus on individual benefit and dissolving kinship relationships, encouraged the abandonment of traditional resource-use strategies, contributed to the commoditization of local natural resources, and spread the idea that these resources can be replaced with imports. Overall, tourism has fundamentally disrupted the local socio-economic system and led to a self-reinforcing cycle of ecosystem degradation. Tourism development is nevertheless perceived as positive and sustainable, because (i) changes are complex and damage becomes perceptible only in the medium-or long-term future, (ii) the tourist industry tends to shift its impacts to remote areas, i.e. a supplying periphery, (iii) the village has become a center of resource allocation itself, with imports compensating for the losses in local ecosystem capacity. As a development option imposed by the transnational tourist industry, tourism leads to the creation of new centers (i.e. the former periphery) while simultaneously creating new peripheries. In a finite world with a limited hinterland for such a continuous expansion, this cannot be sustainable.