Economy of Antigua and Barbuda
Antigua and Barbuda’s economy is service-based, with tourism and government services representing the key sources of employment and income. Tourism accounts directly or indirectly for more than half of GDP and is also the principal earner of foreign exchange in Antigua and Barbuda. However, a series of violent hurricanes since 1995 resulted in serious damage to tourist infrastructure and periods of sharp reductions in visitor numbers. In 1999 the budding offshore financial sector was seriously hurt by financial sanctions imposed by the United States and United Kingdom as a result of the loosening of its money-laundering controls. The government has made efforts to comply with international demands in order to get the sanctions lifted. The dual island nation’s agricultural production is mainly directed to the domestic market; the sector is constrained by the limited water supply and labor shortages that reflect the pull of higher wages in tourism and construction. Manufacturing comprises enclave-type assembly for export with major products being bedding, handicrafts, and electronic components. Prospects for economic growth in the medium term will continue to depend on income growth in the industrialized world, especially in the US, which accounts for about one-third of all tourist arrivals. Estimated overall economic growth for 2000 was 2.5%. Inflation has trended down going from above 2 percent in the 1995-99 period and estimated at 0 percent in 2000.
The Term Paper on Sport Tourism in India
1.1 INTRODUCTION Tourism is a travel for recreational, leisure or business purpose. The World Tourism Organization defines tourists as people travelling from one place to another and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. The importance of tourism, as an instrument of economic development and employment ...
To lessen its vulnerability to natural disasters, Antigua has been diversifying its economy. Transportation, communications and financial services are becoming important.
Antigua is a member of the Eastern Caribbean Currency Union (ECCU).
The Eastern Caribbean Central Bank (ECCB) issues a common currency (the East Caribbean dollar) for all members of the ECCU. The ECCB also manages monetary policy, and regulates and supervises commercial banking activities in its member countries.
Antigua and Barbuda is a beneficiary of the U.S. Caribbean Basin Initiative. Its 1998 exports to the U.S. were valued at about US $3 million and its U.S. imports totaled about US $84 million. It also belongs to the predominantly English-speaking Caribbean Community (CARICOM).
Primary industries
Agriculture
Some 30% of land on Antigua is under crops or potentially arable, with 18% in use. Sea-island cotton is a profitable export crop. A modest amount of sugar is harvested each year, and there are plans for production of ethanol from sugarcane. Vegetables, including beans, carrots, cabbage, cucumbers, plantains, squash, tomatoes, and yams, are grown mostly on small family plots for local markets. Over the past 30 years, agriculture’s contribution to the GDP has fallen from over 40% to 12%. The decline in the sugar industry left 60% of the country’s 66,000 acres (270 km2) under government control, and the Ministry of Agriculture is encouraging self-sufficiency in certain foods in order to curtail the need to import food, which accounts for about 25% by value of all imports.
Crops suffer from droughts and insect pests, and cotton and sugar plantings suffer from soil depletion and the unwillingness of the population to work in the fields. Mango production in 2004 was 1,430 tons.
Animal husbandry
Livestock estimates in 2004 counted 14,300 head of cattle, 19,000 sheep, and 36,000 goats; there were some 5,700 hogs in the same year. Most livestock is owned by individual households. Milk production in 2004 was an estimated 5,350 tons. The government has sought to increase grazing space and to improve stock, breeding Nelthropp cattle and Black Belly sheep. There is a growing poultry industry. In 1992, the European Development Bank provided $5 million US to the government to help develop the livestock industry.
The Essay on National Government People Local Competition
The overgrowing demand for governmental agencies has grown tremendously since the 18 th century. Originally George Washington in 1789 had only three government departments, Treasury, Foreign Affairs, and War. With the end of the Civil War, many problems arose and so did the bureaucracy. In 1870 much of the problems were remedied with the creation of the Department of Justice. Starting in the 19 th ...
Fishing
Most fishing is for local consumption, although there is a growing export of the lobster catch to the United States and of some fish to Guadeloupe and Martinique. Antiguans annually consume more fish per capita (46 kg/101.4 lb) per year live weight than any other nation or territory in the Caribbean. The main fishing waters are near shore or between Antigua and Barbuda. There are shrimp and lobster farms operating, and the Smithsonian Institution has a Caribbean king crab farming facility for the local market. The government has encouraged modern fishing methods and supported mechanization and the building of new boats. Fish landings in 2000 were 1,481 tons; the lobster catch, 42 tons. Exports of fish commodities in 2000 were valued at US$1.5 million.
Forestry
About 11% of the land is forested, mainly by plantings of red cedar, mahogany, white cedar, and acacia. A reforestation program was begun in 1963, linked with efforts to improve soil and water conservation.
Mining
Few of the islands’ mineral resources, which included limestone, building stone, clay, and barite, were exploited until recently. Limestone and volcanic stone have been extracted from Antigua for local construction purposes, and the manufacture of bricks and tiles from local clay has begun on a small scale. Barbuda produced a small amount of salt, while phosphate has been collected from Redonda.
Secondary industries
Industrial activity has shifted from the processing of local agriculture produce to consumer and export industries using imported raw materials. Industrial products include rum, refined petroleum, paints, garments, furniture, and electrical components. The government encourages investment in manufacturing establishments, and most industries have some government participation.
Industry accounted for 19% of GDP in 2001. Manufacturing—which accounts for approximately 5% of GDP—comprises enclave-type assembly for export with major products being bedding, handicrafts, and electronic components. Prospects for economic growth depend on income growth in the industrialized world, especially in the US, which accounts for about half of all tourist arrivals. The industrial park, located in the Coolidge Area, produces a range of products such as paints, furniture, garments, and galvanized sheets, mainly for export.
The Term Paper on The Tobacco Issue Industry Government Smoking
The Tobacco Issue: Where the Responsibility Lies Political-Legal Issues: The legal and political issues surrounding the tobacco industry include whether or not tobacco companies should be held liable for tobacco-related deaths of smokers and those related to second-hand smoke, as well as whether or not elected officials should be accepting money from the tobacco industry in order to win elections. ...
Tertiary industries
Tourism
Tourism is the mainstay of the economy of Antigua and Barbuda and is the leading sector in terms of providing employment and creating foreign exchange. In 1999 it contributed 60 percent of GDP and more than half of all jobs. According to the Americas Review 1998, tourism contributed 15 percent directly and around 40 percent indirectly to the GDP in 1998. Real growth in this sector has moved from an average of 7 percent for the period 1985-89 to 8.24 percent for the period 1990-95. There was slow growth between 1995 and 1998.
Figures released by the East Caribbean Central Bank (ECCB) in 2000 show that total visitor arrivals increased steadily from 470,975 in 1995 to 613,990 in 1998. In 1999 total visitor arrivals declined by about 4.1 percent to 588,866, yet the number of visitors staying at least 1 night or more increased by 1.9 percent over 1998 to total 207,862. Arrivals via cruise ships in 1999 dropped to 325,195, a fall of 3.4 percent over 1998. The fall-off in cruise passengers was mainly the result of one of the larger cruise ships being out of service for a brief period. Most of the tourists in 1999 came from the United Kingdom and the United States. Visitor expenditures have increased steadily since 1990, with total expenditures of EC$782.9 million.
To combat increasing competition from other Caribbean destinations, the government and the Antigua Hotel and Tourist Association have established a joint fund to market the country’s appeal as a tourist destination. The Association has agreed to match the proceeds from a 2 percent hotel guest levy introduced by the government.
At the start of March 2001, the Antigua Workers Union (AWU), the trade union which represents close to 7,000 workers in the tourism industry, described tourism as an industry in crisis. The AWU claimed the industry is on the decline because some airlines are pulling out of the country, and government was not spending enough money to promote tourism. While the government has conceded that it was not spending enough on marketing because of cash flow problems, it has rejected the AWU’s contention that the industry is in crisis.
The Business plan on Goods And Services Gdp Economy Business
It is to my belief that no one can possibly predict the future of the economy. Because of this we are faced with many questions that cannot be easily answered. Will the economy recover drastically or simply continue to increase moderately? Or could the economy in turn go into a recession? "There's been plenty of good news about the U. S. economy... employment is expanding (2. 4 million new payroll ...
Financial services
Antigua and Barbuda is advertised as “an attractive offshore jurisdiction.” The country were thene first of sign the United Nations’ anti-money laundering act. This agreement came out of a conference in 1999 which urged worldwide offshore financial centers to introduce laws to tighten their policing of money laundering activities. The United Kingdom exerted considerable pressure on Antigua and Barbuda to reform laws to combat money laundering, even issuing an advisory in April 1999 to British financial institutions that Antigua and Barbuda’s anti-money laundering laws were wanting. Antigua and Barbuda responded to this concern, and a subsequent joint United States and United Kingdom review reported they were satisfied that the country had taken positive steps to check illegal activity in this sector. In September 2000 the government of Antigua and Barbuda announced that it had strengthened its surveillance of money laundering and drug trafficking. In March 2009, the Stanford Financial Group, based in Antigua was found by regulators there and in the United States, of be operating a massive ponzi scheme. The international bank controlled by the Stanford group is now in receivership pending the outcome of an investigation but they can have big and small of all they can have
Retail
The retail sector is dominated by the sale of food and beverages, clothing and textiles, and vegetables. The main markets are located in the capital, St. John’s. There are many street vendors and duty-free shops. The government has been taking steps to improve this sector. A US$43.5 million vendors’ mall and market has been built to provide better facilities for retailers in the capital. In addition, a US$27 million fisheries complex now provides improved facilities for fish processing and retailing. A growing area of computer business on Antigua is Internet casinos.
Statistics
GDP: purchasing power parity – $1.61 billion (2008 est.)
country comparison to the world: 189
GDP – real growth rate: 2.1% (2008 est.)
country comparison to the world: 161
GDP – per capita: purchasing power parity – $19,000 (2008 est.)
country comparison to the world: 64
The Term Paper on Comparison Of Australian Taxation System
Comparison of Australian taxation system Abstract A fundamental shift is occurring in the thinking of revenue authorities across the leading developed countries. The fear of lost revenue from international tax avoidance is giving way to the fear of lost revenue from non-competitive international tax systems. It is almost unheard of for the Deputy Secretary of the U.S. Department of the Treasury to ...
GDP – composition by sector: agriculture: 3.8% industry: 22% services: 74.3% (2002 est.)
Inflation rate (consumer prices): 1.5% (2007 est.)
country comparison to the world: 14
Labor force: 30,000 (1991)
country comparison to the world: 197
Unemployment rate: 11% (2001 est.)
country comparison to the world: 130
Budget: revenues: $123.7 million
expenditures: $145.9 million (2000 est.)
Central bank discount rate: 6.5% (January 2008)
country comparison to the world: 57
Agriculture – products: cotton, fruits, vegetables, bananas, coconuts, cucumbers, mangoes, sugarcane; livestock
Industries: tourism, construction, light manufacturing (clothing, alcohol, household appliances)
Electricity – production: 105 million kWh (2006)
country comparison to the world: 188
Electricity – consumption: 97.65 million kWh (2006)
country comparison to the world: 189
Electricity – exports: 0 kWh (2007)
Electricity – imports: 0 kWh (2007)
Oil – production: 0 bbl/d (0 m3/d) (2007)
country comparison to the world: 116
Oil – consumption: 4,109 bbl/d (653.3 m3/d) (2006 est.)
country comparison to the world: 169
Oil – exports: 157.7 bbl/d (25.07 m3/d) (2005)
country comparison to the world: 132
Oil – imports: 4,556 bbl/d (724.3 m3/d) (2005)
country comparison to the world: 161
Oil – proved reserves: 0 bbl (0 m3) (1 January 2006 est.)
country comparison to the world: 99
Natural gas – production: 0 cu m (2007 est.)
country comparison to the world: 209
Natural gas – consumption: 0 cu m (2007 est.)
country comparison to the world: 209
Natural gas – exports: 0 cu m (2006 est.)
country comparison to the world: 206
Natural gas – imports: 0 cu m (2006)
country comparison to the world: 205
Natural gas – proved reserves: 0 cu m (1 January 2006 est.)
country comparison to the world: 206
Exports: $84.3 million (2007 est.)
country comparison to the world: 199
Exports – commodities: petroleum products 48%, manufactures 23%, machinery and transport equipment 17%, food and live animals 4%, other 8%
The Essay on Third World Countries
World' Countries today? Who should be held responsible for these problems? Why? What has Canada done to help 'Third World Countries'? There has always been a dominant country in the world that sets the economic standard throughout powerful countries. Canada has always been a top rated economic country, usually behind the United States and other large Commonwealth countries. Starting back in the ...
Exports – partners: Spain 34%, Germany 20.7%, Italy 7.7%, Singapore 5.8%, UK 4.9% (2006)
Imports: $522.8 million (2007 est.)
country comparison to the world: 189
Imports – commodities: food and live animals, machinery and transport equipment, manufactures, chemicals, oil
Imports – partners: US 21.1%, China 16.4%, Germany 13.3%, Singapore 12.7%, Spain 6.5% (2006)
Debt – external: $359.8 million (June 2006)
country comparison to the world: 169
Economic aid – recipient: $7.23 million (2005)
Currency: 1 East Caribbean dollar (EC$) = 100 cents
Exchange rates: East Caribbean dollars per US dollar – 2.7 (2007), 2.7 (2007), 2.7 (2006), 2.7 (2005), 2.7 (2004), 2.7 (2003) note: fixed rate since 1976
Fiscal year: 1 April – 31 March
Economy of Australia
The economy of Australia is a developed, modern market economy with a GDP of approximately US$1.23 trillion. In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted GDP, representing about 1.7% of the World economy. Australia was also ranked the 19th largest importer and 19th largest exporter. In 2011 the Australian economy is the fastest growing advanced economy in the world. The average middle aged adult has a yearly worth of over $350 000, making Australians per capita some of the wealthiest people in the world.
Australia is a member of the APEC, G20, OECD and WTO organisations. Australia has also entered into free trade agreements with ASEAN, Chile, New Zealand, Singapore, Thailand, and the United States. The ANZCERTA agreement with New Zealand has greatly increased integration with the New Zealand economy and there are now plans to form an Australasian Single Economic Market by 2015.
The Australian economy is dominated by its service sector, representing 68% of Australian GDP. The agricultural and mining sectors (10% of GDP combined) account for 57% of the nation’s exports. The Australian economy is dependent on imported crude oil and petroleum products, the economy’s petroleum import dependency is around 80% – crude oil + petroleum products.
The Australian dollar is the currency of the Commonwealth of Australia and its territories, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is also the official currency of the independent Pacific Island nations of Kiribati, Nauru and Tuvalu.
The Australian Securities Exchange is the largest stock exchange in Australia. Australia is home to some of the largest companies in the world including, BHP Billiton and Rio Tinto Group.
Overview
Australia’s per-capita GDP is higher than that of the UK, Germany, and France in terms of purchasing power parity. The country was ranked second in the United Nations 2011 Human Development Index and sixth in The Economist worldwide quality-of-life index 2005. Australia’s sovereign credit rating is “AAA”, higher than the United States of America and Australia’s four ‘Big Banks’ are among the 25 ‘Worlds Safest Banks of 2011’. Australia has highest ratio of assets to population than any country in the World. The country’s government debt to GDP is the lowest among OECD countries. The Australian government aims to run surpluses from 2012/13.
The emphasis on exporting commodities rather than manufactures has underpinned a significant increase in Australia’s terms of trade during the rise in commodity prices since 2000. Australia’s current account is approx. 2.6% of GDP negative: Australia has had persistently large current account deficits for more than 50 years. Australia has grown at an average annual rate of 3.6% for over 15 years, well above the OECD average of 2.5%. Australia’s average GDP growth rate for the period 1901-2000 is at 3.4% annually.
As of December 2009, there were approximately 10,844,000 people employed, with an unemployment rate of 5.5%. Over the past decade, inflation has typically been 2–3% and the base interest rate 5–6%. The service sector of the economy, including tourism, education and financial services, constitutes 69% of GDP.
Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the forms of liquified natural gas and coal. Although Agriculture and natural resources constitute only 3% and 5% of GDP, respectively, they contribute substantially to export performance. Australia’s largest export markets are Japan, China, South Korea, India and the USA.
In the past decade, one of the most significant sectoral trends experienced by the economy has been the growth (in relative terms) of the mining sector (including petroleum).
In terms of contribution to GDP, this sector grew from around 4.5% in 1993-94, to almost 8% in 2006-07.
Growth in the services sector has also grown considerably, with property and business services in particular growing from 10% to 14.5% of GDP over the same period, making it the largest single component of GDP (in sectoral terms).
This growth has largely been at the expense of the manufacturing sector, which in 2006-07 accounted for around 12% of GDP. A decade earlier, it was the largest sector in the economy, accounting for just over 15% of GDP.
Economic liberalisation
From the early 1980s onwards, the Australian economy has undergone a continuing economic liberalisation. In 1983, under Prime Minister Bob Hawke, but mainly driven by Treasurer Paul Keating, the Australian dollar was floated and financial deregulation was undertaken.
In 2000, the introduction of a goods and services tax (GST) sought to encourage the level of saving amongst lower income earners. To combat the consequential reduction in consumption for low income earners, income taxes were lowered as a trade-off for the introduction of the GST. The overall level of taxation in Australia has since been consistently reduced to encourage private consumption and investment, as opposed to higher government expenditure.
Current areas of concern
Current areas of concern to some economists include Australia’s large current account deficit, Australia’s current account deficit for the 2007- 2008 financial year was up 4% to $19.49 billion (according to the Australian Bureau of Statistics), the absence of a successful export-oriented manufacturing industry, an Australian property bubble, and high levels of net foreign debt owed by the private sector. Professor Steve Keen has written extensively about consumer/household indebtedness and the level of home prices relative to income. Increasing levels of government debt triggered by Federal government spending are an emerging public policy issue.
The price of housing in terms of median incomes has been highlighted by a recent Demographia survey with Australian capital city residential housing being among the most expensive in the world. A long drought and its impacts on retail food costs and export volumes of crops and meat and the possible impacts of climate change on agriculture has also been of concern.
Mergers and acquisitions
Between 1991 and 2010, 31,131 mergers & acquisitions with a total known value of US$1,811 billion with the involvement of Australian firms have been announced. In the year 2010, 2,326 transactions valued at US$183 billion had been announced which was a slight increase in terms of numbers (+3.8%) and value (+13.6) compared to 2009. The largest takeover or merger transaction involving Australian companies was the 2007 takeover of the Coles Group by Wesfarmers, totaling A$22 billion.
Taxation
Taxation in Australia is levied at the federal, state and local government levels. Taxes vary from state to state due to their different needs, populations, economics and budgetary positions.
The Commonwealth raises revenue from personal income taxes and business taxes. Other taxes include the goods and services tax (GST), excise and customs duties. The Commonwealth is the main source of income for state governments. As a result of state dependence on federal taxation revenue to meet decentralised expenditure responsibilities, Australia is said to suffer from a vertical fiscal imbalance.
State taxation
Besides receipts of funds from the Commonwealth, states and territories also have their own taxes to enable them to fund the services they provide. The types and tax rates vary from state/territory to state/territory. State taxes commonly include payroll tax levied on businesses, a poker machine tax levied on businesses who offer gambling services, land tax levied on people and businesses who own land and most significantly, stamp duty levied on sales of land (in every state) and other items (chattels in some states, unlisted shares in others, and even sales of contracts in some states).
Federal-state financial arrangements
The states effectively lost the ability to raise income tax during the Second World War. In 1942, the Commonwealth invoked its Constitutional taxation power and enacted the Income Tax Act and three other statutes to levy a uniform income tax across the Commonwealth. These Acts sought to raise the funds necessary to meet burgeoning wartime expenses and reduce the unequal tax burden between the states by replacing state income taxes with a centralised tax system. The legislation could not expressly prohibit state income taxes does not curtail the power of states to levy taxes) but the Commonwealth’s proposal made localised income tax both practically impossible and politically poisonous.
The Commonwealth offered instead compensatory grants authorised by s.96 of the Constitution for the loss of state income (State Grants (Income Tax Reimbursement) Act 1942)).
The states rejected the Commonwealth’s regime and challenged the legislation’s validity in the First Uniform Tax Case (South Australia v Commonwealth) of 1942. The High Court of Australia held that each of the statutes establishing Commonwealth income tax was a valid use of the s.51(ii) power, with Latham CJ noting that the system did not undermine essential state functions and imposed only economic and political pressure upon them.
The Second Uniform Tax Case (Victoria v Commonwealth (1957)) reaffirmed the Court’s earlier decision and confirmed the power of the Commonwealth to make s.96 grants conditionally (in this case, a grant made on the condition that the recipient state does not levy income tax).
Since the Second Uniform Tax Case, a number of other political and legal decisions have centralised fiscal power with the Commonwealth. In Ha vs. New South Wales (1997), the High Court found that the Business Franchise Licences (Tobacco) Act 1987 (NSW) was invalid because it levied a customs duty, a power exercisable only by the Commonwealth (s.90).
This decision effectively invalidated state taxes on cigarettes, alcohol and petrol. Similarly, the imposition of a Commonwealth goods and services tax (GST) in 2000 transferred another revenue base to the Commonwealth.
Consequently, Australia has one of the most pronounced vertical fiscal imbalances in the world, with states collecting just 18% of all governmental revenues but responsible for almost 50% of the spending and policy areas. Furthermore, the centralisation of revenue collection has allowed the Commonwealth to force state policy in areas well beyond the scope of its Constitutional powers by using the grants power (s.96) to mandate the terms on which the states spend money in areas over which the Commonwealth has no power (such as spending on education, health and policing).
Municipal taxation
Local governments (called councils in Australia) have their own taxes (called rates) to enable them to provide rubbish collection, park maintenance services, libraries and museums, etc.
Trade and economic performance
In the second half of the twentieth century, Australian trade shifted away from Europe and North America to Japan and other East Asian markets. Regional franchising businesses, now a $128 billion sector, have been operating co-branded sites overseas for years with new investors coming from Western Australia and Queensland.
In the late 19th century, Australia’s economic strength relative to the rest of the world was reflected in its GDP. In 1870, Australia had the highest GDP per capita in the world due to economic growth fuelled by its natural resources. However, as Australia’s population grew rapidly over the 20th century, its GDP per capita dropped relative to countries such as the United States and Norway.
However, the Australian economy has been performing nominally better than other economies of the OECD and has supported economic growth for 16 consecutive years. According to the Reserve Bank of Australia, Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands. The past performance of the Australian economy has been heavily influenced by US, Japanese and Chinese economic growth.
Australia escaped the global financial crisis relatively unscathed due to high demand from China, stimulus measures by the then Rudd Government, and a buffer of surpluses created by the previous Howard Government.
Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector.
Chinese investment
There is substantial export to China of iron ore, wool, and other raw materials and over 120,000 Chinese students study in Australian schools and universities. China is the largest purchaser of Australian debt. In 2009, offers were made by state-owned Chinese companies to invest 22 billion dollars in Australia’s resource extraction industry.
Trade agreements
FTA (Free Trade Agreement) effective * FTA with New Zealand (effective January 1983) * FTA with Singapore (effective July 2003) * FTA with United States (effective January 2005) * FTA with Thailand (effective January 2005) * FTA with Chile (effective March 2009) * FTArea with AANZFTA (ASEAN, New Zealand) (effective January 2010) | FTA (Free Trade Agreement) negotiation * FTA with China (negotiation since 2005) * FTA with Malaysia (negotiation since 2005) * FTA with GCC (Cooperation Council for the Arab States of the Gulf) (negotiation since 2007) * FTA with Japan (negotiation since 2007) * FTA with South Korea (negotiation since 2009) * FTA with PACER Plus (Pacific Agreement on Closer Economic Relations) (negotiation since 2009) * FTA with Indonesia (negotiation since 2010) * FTA with TPP (Trans-Pacific Strategic Economic Partnership) (negotiation since 2010) * FTA with India (negotiation since 2011) |
Australia’s balance of payments
In trade terms, the Australian economy has had persistently large current account deficits for more than 50 years. One single factor that undermines balance of payments is Australia’s narrow export base.
Dependent upon commodities, the Australian government has endeavoured to redevelop the Australian manufacturing sector. This initiative, also known as microeconomic reform, has helped Australian manufacturing to grow from 10.1% in 1983-1984 to 17.8% in 2003-2004.
There are other factors that have contributed to the extremely high current account deficit that Australia has today. Lack of international competitiveness and heavy reliance on capital goods from overseas might increase Australia’s current account deficit in the future.
However, as Australia’s current account deficit (CAD) are almost entirely generated by the private sector as outlined in Professor John Pitchford’s ‘Consenting Adults Thesis’ in the early 1990s, there is an argument that the CAD is not a significant issue. Historically, Australia has relied on overseas capital to fill the gap between domestic savings and investment, and many of these investment opportunities could not have been pursued if Australia did not have access to foreign savings. This would suggest that Australia’s apparently low savings level and CAD are not necessarily a great problem. So long as the investment that is being funded by overseas capital inflow generates sufficient returns to pay for the servicing costs in the future, the increase in foreign liabilities can be viewed as sustainable in the longer term.
Economy of the Bahamas
From Wikipedia, the free encyclopedia
Economy of The Bahamas |
Cruise ships in Nassau Harbour |
Rank | 152nd |
Currency | Bahamian dollar (BSD) |
Fiscal year | 1 July – 30 June |
Trade organisations | WTO, CARICOM |
Statistics |
GDP | $8.779 billion (2008 est.) |
GDP growth | 1.5% (2008 est.) |
GDP per capita | $28,600 (2008 est.) |
GDP by sector | agriculture: 3%, industry: 7%, services: 90% (2001 est.) |
Inflation (CPI) | 2.4% (2007) |
Population
below poverty line | 9.3% (2004) |
Labour force | 191,595 (2008) |
Labour force
by occupation | agriculture 5%, industry 5%, tourism 50%, other services 40% (2005 est.) |
Unemployment | 7.6% (2006 est.) |
Main industries | tourism, banking, cement, oil transshipment, salt, rum, aragonite, pharmaceuticals, spiral-welded steel pipe |
Ease of Doing Business Rank | 85th[1] |
External |
Exports | $674 million (2006 est.) |
Export goods | mineral products and salt, animal products, rum, chemicals, fruit and vegetables |
Main export partners | US 20.4%, Singapore 15.5%, Spain 14.5%, Poland 14.3%, Germany 6.6%, Guatemala 5.7%, Switzerland 5.2% (2007)HI |
Imports | $2.401 billion (2006 est.) |
Import goods | machinery and transport equipment, manufactures, chemicals, mineral fuels; food and live animals |
Main import partners | US 26.7%, South Korea 14.1%, Japan 13.5%, Italy 7.5%, Singapore 5.2%, Venezuela 4.5%, Spain 4.3% (2007) |
Public finances |
Public debt | $342.6 million (2004 est.) |
Revenues | $1.03 billion (FY04/05) |
Expenses | $1.03 billion; including capital expenditures of $130 million (FY04/05) |
Economic aid | recipient: $5 million (2004) |
Credit rating | BBB+ (Domestic)
BBB+ (Foreign)
A- (T&C Assessment)
(Standard & Poor’s)[2] |
|
The Bahamas is a stable, developing nation with an economy heavily dependent on tourism and offshore banking. Steady growth in tourism receipts and a boom in construction of new hotels, resorts, and residences had led to solid GDP growth in recent years, but the slowdown in the US economy and the attacks of September 11, 2001 held back growth in these sectors in 2001-03. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. However, since December 2000, when the government enacted new regulations on the financial sector, many international businesses have left The Bahamas. Manufacturing and agriculture together contribute approximately a tenth of GDP and show little growth, despite government incentives aimed at those sectors. Overall growth prospects in the short run rest heavily on the fortunes of the tourism sector, which depends on growth in the US, the source of more than 80% of the visitors. In addition to tourism and banking, the government supports the development of a “2nd-pillar”, e-commerce.
* |
Basic Ingredients of the Bahamian Economy
The Bahamian economy is almost entirely dependent on tourism and financial services to generate foreign exchange earnings. Tourism alone provides an estimated 60% of the gross domestic product (GDP) and employs about half the Bahamian workforce. In 2004, over half a million tourists visited The Bahamas, most of whom are from the United States.
A major contribution to the recent growth in the overall Bahamian economy is Kerzner International’s Atlantis Resort and Casino, which took over the former Paradise Island Resort and has provided a much needed boost to the economy. In addition, the opening of Breezes Super Club and Sandals Resort also aided this turnaround. The Bahamian Government also has adopted a proactive approach to courting foreign investors and has conducted major investment missions to the Far East, Europe, Latin America, and Canada. The primary purpose of the trips was to restore the reputation of The Bahamas in these markets.
Financial services constitute the second-most important sector of the Bahamian economy, accounting for up to 17% of GDP, due to the country’s status as an offshore financial center. As of December 1998, the government had licensed 418 banks and trust companies in The Bahamas. The Bahamas promulgated the International Business Companies (IBC) Act in January 1990 to enhance the country’s status as a leading financial center. The act served to simplify and reduce the cost of incorporating offshore companies in The Bahamas. Within 9 years, more than 84,000 IBC-type companies had been established. In February 1991, the government also legalized the establishment of Asset Protection Trusts in The Bahamas. In December 2000, partly as a response to appearing the plenary FATF Blacklist, the government enacted a legislative package to better regulate the financial sector, including creation of a Financial Intelligence Unit and enforcement of “know-your-customer” rules. Other initiatives include the enactment of the Foundations Act in 2004 and the planned introduction of legislation to regulate Private Trust Companies.
Agriculture and fisheries industry together account for 5% of GDP. The Bahamas exports lobster and some fish but does not raise these items commercially. There is no largescale agriculture, and most agricultural products are consumed domestically. The Bahamas imports more than $250 million in foodstuffs per year, representing about 80% of its food consumption. The government aims to expand food production to reduce imports and generate foreign exchange. It actively seeks foreign investment aimed at increasing agricultural exports, particularly specialty food items. The government officially lists beef and pork production and processing, fruits and nuts, dairy production, winter vegetables, and mariculture (shrimp farming) as the areas in which it wishes to encourage foreign investment.
The Bahamian Government maintains the value of the Bahamian dollar on a par with the U.S. dollar. The Bahamas is a beneficiary of the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), Canada’s CARIBCAN program, and the European Union’s Lome IV Agreement. Although the Bahamas participates in the political aspects of the Caribbean Community (CARICOM), it has not entered into joint economic initiatives with other Caribbean states.
The Bahamas has a few notable industrial firms: the Freeport pharmaceutical firm, PFC Bahamas (formerly Syntex), which recently streamlined its production and was purchased by the Swiss pharmaceutical firm Roche; the BORCO oil facility, also in Freeport, which transships oil in the region; the Commonwealth Brewery in Nassau, which produces Heineken, Guinness, and Kalik beers; and Bacardi Corp., which distills rum in Nassau for shipment to the U.S. and European markets. Other industries include sun-dried sea salt in Great Inagua, a wet dock facility in Freeport for repair of cruise ships, and mining of aragonite a type of limestone with several industrial uses—from the sea floor at Ocean Cay. Other smaller but more nimble players in the banking industry include Fidelity Bank (Bahamas) Ltd. (FBB) and Royal Fidelity Merchant Bank & Trust Limited (RFMBT).
FBB offers a wide range of innovative banking products including loan products with built-in savings plans. RFMBT is the only merchant bank in The Bahamas and is a joint venture with Royal Bank of Canada. It provides investment products and services and attracts the majority of the corporate business deals in The Bahamas, most recently acting as financial advisor and placement agent for the largest Initial Public Offering (IPO) ever in The Bahamas with the IPO of Commonwealth Brewery, a Heineken subsidiary.
The Hawksbill Creek Agreement established a duty-free zone in Freeport, The Bahamas’ second-largest city, with a nearby industrial park to encourage foreign industrial investment. The Hong Kong-based firm, Hutchison Whampoa, has opened a container port in Freeport. The Bahamian Parliament approved legislation in 1993 that extended most Freeport tax and duty exemptions through 2054.
The Bahamas is largely an import, service economy. There are about 110 U.S.-affiliated businesses operating in The Bahamas, and most are associated with tourism and banking. With few domestic resources and little industry, The Bahamas imports nearly all its food and manufactured goods from the United States. American goods and services tend to be favored by Bahamians due to cultural similarities and heavy exposure to American advertising.
Business environment
The Bahamas offers attractive features to the potential investor: a stable democratic environment, relief from personal and corporate income taxes, timely repatriation of corporate profits, proximity to the U.S. with extensive air and telecommunications links, and a good pool of skilled professional workers. The Government of The Bahamas welcomes foreign investment in tourism and banking and has declared an interest in agricultural and industrial investments to generate local employment, particularly in white-collar or skilled jobs. Despite its interest in foreign investment to diversify the economy, the Bahamian Government responds to local concerns about foreign competition and tends to protect Bahamian business and labor interests. As a result of domestic resistance to foreign investment and high labor costs, growth can stagnate in sectors which the government wishes to diversify.
The country’s infrastructure is best developed in the principal cities of Nassau and Freeport, where there are relatively good paved roads and international airports. Electricity is generally reliable, although many businesses have their own backup generators. In Nassau, there are two daily newspapers, three weeklies, and several international newspapers available for sale. There also are eight radio stations. Both Nassau and Freeport have a television station. Cable TV also is available locally and provides most American programs with some Canadian and European channels.
Taxation
The Bahamas has no income tax, corporate tax, capital gains tax, value-added tax (VAT), or wealth tax. Payroll taxes fund social insurance benefits and amount to 3.9% paid by the employee and 5.9% paid by the employer.[3] In 2010, overall tax revenue as a percentage of GDP was 17.2%.[4]
Areas of opportunity
The best U.S. export opportunities remain in the traditional areas of foodstuffs and manufactured goods: vehicles and automobile parts; hotel, restaurant, and medical supplies; and computers and electronics. Bahamian tastes in consumer products roughly parallel those in the U.S. With approximately 85% of the population of primarily African descent, there is a large and growing market in the Bahamas for “ethnic” personal care products. Merchants in southern Florida have found it profitable to advertise in Bahamian publications. Most imports in this sector are subject to high but nondiscriminatory tariffs.
Statistics
* “Household income or consumption by percentage share”
* highest 10%: 27% (2000)
* “Agriculture – products”
* citrus, vegetables; poultry
* “Electricity – production”
* 2,505 GWh (2007 est.) – Rank 133
* “Electricity – consumption”
* 1,793 GWh (2007) – Rank 133
* “Oil – consumption”
* 26,830 bbl/d (4,266 m3/d) (2006 est.) – Rank 115
* “Oil – exports”
* transhipments of 29,000 bbl/d (4,600 m3/d) (2003)
* “Exchange rates”
* Bahamian dollars per US dollar – 1 (2008), 1 (2007), 1 (2006), 1 (2005), 1 (2004)
The Bahamas has the 47th freest economy in the world according to The Heritage Foundation 2010 Index of Economic Freedom. The Bahamas is ranked 7th out of 29 countries in the South and Central America/Caribbean region, and its overall score is higher than the regional and world averages. Total government spending, including consumption and transfer payments, is relatively low. In the most recent year, government spending equaled 23.4 percent of GDP.
Economy of Bangladesh
Economy of Bangladesh |
Kawran Bazar, a commercial hub of Bangladesh |
Rank | 45 |
Currency | Bangladesh Taka (BDT) |
Fiscal year | 1 July – 30 June |
Trade organizations | WTO, WCO, IOR-ARC, SAFTA, D8 |
Statistics |
GDP | $104.9 billion (2010 est.) |
GDP growth | 6% (2010 est.) |
GDP per capita | $1,700 (2010 est.) |
GDP by sector | agriculture: 18.6%, industry: 28.5%, services: 53% (2010 est.) |
Inflation (CPI) | 8.1% (2010 est.) |
Population
below poverty line | 29% (2011 est.) |
Gini coefficient | 33.2 (2005) |
Labour force | 73.86 million (2010) |
Labour force
by occupation | agriculture: 45%, industry: 30%, services: 25% (2008) |
Unemployment | 5.1% (2010 est.) |
Main industries | cotton textiles, jute, garments, tea processing, pharmaceuticals, shipbuilding, leather and leather goods, ceramics, paper newsprint, cement, chemical fertilizer, light engineering, sugar |
Ease of Doing Business Rank | 122nd[1] |
External |
Exports | $22.5 billion (2011 est.) |
Export goods | garments, ocean going ships, jute and jute goods, frozen fish and seafood, leather and leather goods, ceramics, pharmaceuticals, cement |
Main export partners | US 22.1%, Germany 14.1%, UK 8.5%, France 6.8%, Netherlands 6.1% (2010) |
Imports | $30 billion (2011 est.) |
Import goods | machinery and equipment, chemicals, iron and steel, textiles, foodstuffs, petroleum products, cement |
Main import partners | China 18.9%, India 12.7%, Singapore 6%, Malaysia 4.7%, Japan 4% (2010) |
Gross external debt | $24.6 billion (31 December 2010 est.) |
Public finances |
Public debt | 35.4% of GDP (2010 est.) |
Revenues | $11.41 billion (2010 est.) |
Expenses | $15.87 billion (2010 est.) |
Economic aid | $0.957 billion (2010 est.) |
Credit rating | BB- (Domestic)
BB- (Foreign)
BB- (T&C Assessment)
(Standard & Poor’s)[2] |
|
The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was est. US$1,700 (adjusted by purchasing power parity).
According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world in 2010 in PPP terms and 57th largest in nominal terms, among the Next Eleven or N-11 of Goldman Sachs and D-8 economies, with a gross domestic product of US$269.3 billion in PPP terms and US$104.9 billion in nominal terms. The economy has grown at the rate of 6-7% p.a. over the past few years. More than half of the GDP belongs to the service sector, a major number of nearly half of Bangladeshis are employed in the agriculture sector, with RMG, textiles, leather, jute, fish, vegetables, leather and leather goods, ceramics, fruits as other important produce.
Remittances from Bangladeshis working overseas, mainly in the Middle East is the major source of foreign exchange earnings; exports of garments and textiles are the other main sources of foreign exchange earning. Ship building and cane cultivation have become a major force of growth. GDP’s rapid growth due to sound financial control and regulations have also contributed to its growth. However, foreign direct investment is yet to rise significantly. Bangladesh has made major strides in its human development index.
The land is devoted mainly to rice and jute cultivation as well as fruits and produce, although wheat production has increased in recent years; the country is largely self-sufficient in rice production. Bangladesh’s growth of its agro industries is due to its rich deltaic fertile land that depend on its six seasons and multiple harvests.
Improving at a very fast rate, infrastructure to support transportation, communications, power supply and water distribution are rapidly developing. Bangladesh is limited in its reserves of oil, but recently there was huge development in gas and coal mining. The service sector has expanded rapidly during last two decades, the country’s industrial base remains very positive. The country’s main endowments include its vast human resource base, rich agricultural land, relatively abundant water, and substantial reserves of natural gas, with the blessing of possessing the worlds only natural sea ports in Mongla and Chittagong, in addition to being the only central port linking two large burgeoning economic hub groups SAARC and ASEAN.
* |
Economic history
East Bengal—the eastern segment of Bengal, a region that is today Bangladesh—was a prosperous region of South Asia until modern times. It had the advantages of a mild, almost tropical climate, fertile soil, ample water, and an abundance of fish, wildlife, and fruit. The standard of living compared favorably with other parts of South Asia. As early as the thirteenth century, the region was developing as an agrarian economy. It was not entirely without commercial centers, and Dhaka in particular grew into an important entrepôt during the Mughal Empire. The British, however, on their arrival in the late eighteenth(18th) century, chose to develop Calcutta, now the capital city of West Bengal, as their commercial and administrative center in South Asia. The development of East Bengal was thereafter limited to agriculture. The administrative infrastructure of the late eighteenth and nineteenth centuries reinforced East Bengal’s function as the primary agricultural producer—chiefly of rice, tea, teak, cotton, cane and jute—for processors and traders from around Asia and beyond.
After its independence from Pakistan, Bangladesh followed a socialist economy by nationalizing all industries, proving to be a critical blunder undertaken by Awami League’s Mujib Government following India’s policy. Education policies of the British dating back from colonial era deprived education to millions of Bangla’s Muslim peoples setting them back by decades. Some of the same factors that had made East Bengal a prosperous region became disadvantages during the nineteenth and twentieth centuries. As life expectancy increased, the limitations of land and the annual floods increasingly became constraints on economic growth.[5] Preponderance on traditional agricultural methods became obstacles to the modernization of agriculture. Geography severely limited the development and maintenance of a modern transportation and communications system.
The partition of South Asia and the emergence of India and Pakistan in 1947 severely disrupted the economic system that had preserved East Bengal (now Bangladesh) as a producer of jute, rice and other agro commodities for the rest of India. East Pakistan had to build a new industrial base and modernize agriculture in the midst of a population explosion. The united government of Pakistan expanded the cultivated area and some irrigation facilities, but the rural population generally became poorer between 1947 and 1971 because improvements did not keep pace with rural population increase. Pakistan’s five-year plans opted for a development strategy based on industrialization, but the major share of the development budget went to West Pakistan, that is, contemporary Pakistan. The lack of natural resources meant that East Pakistan was heavily dependent on imports, creating a balance of payments problem. Without a substantial industrialization program or adequate agrarian expansion, the economy of East Pakistan steadily declined. Blame was placed by various observers, but especially those in East Pakistan, on the West Pakistani leaders who not only dominated the government but also most of the fledgling industries in East Pakistan.
Since Bangladesh followed a socialist economy by nationalizing all industries after its independence, it underwent a slow growth of producing experienced entrepreneurs, managers, administrators, engineers, and technicians. There were critical shortages of essential food grains and other staples because of wartime disruptions. External markets for jute had been lost because of the instability of supply and the increasing popularity of synthetic substitutes.
Foreign exchange resources were minuscule, and the banking and monetary systems were unreliable.[6] Although Bangladesh had a large work force, the vast reserves of under trained and underpaid workers were largely illiterate, unskilled, and underemployed.[6] Commercially exploitable industrial resources, except for natural gas, were lacking.[6] Inflation, especially for essential consumer goods, ran between 300 and 400 percent.[6] The war of independence had crippled the transportation system.[6] Hundreds of road and railroad bridges had been destroyed or damaged, and rolling stock was inadequate and in poor repair.[6] The new country was still recovering from a severe cyclone that hit the area in 1970 and cause 250,000 deaths.[6] India, by a heavily poor nation and without any ability of giving aid to other nations, let alone to its suffering masses, came forward immediately with critically measured economic assistance in the first months after Bangladesh achieved independence from Pakistan.[6] Between December 1971 and January 1972, India committed US$232 million in aid to Bangladesh from the politco-economic aid India received from the USA and USSR. Official amount of disbursement yet undisclosed.[6]
After 1975, Bangladeshi leaders began to turn their attention to developing new industrial capacity and rehabilitating its economy.[4] The static economic model adopted by these early leaders, however—including the nationalization of much of the industrial sector—resulted in inefficiency and economic stagnation.[4] Beginning in late 1975, the government gradually gave greater scope to private sector participation in the economy, a pattern that has continued.[4] Many state-owned enterprises have been privatized, like banking, telecommunication, aviation, media, and jute.[4] Inefficiency in the public sector has been rising however at a gradual pace; external resistance to developing the country’s richest natural resources is mounting; and power sectors including infrastructure have all contributed to slowing economic growth.[4]
In the mid-1980s, there were encouraging signs of progress.[4] Economic policies aimed at encouraging private enterprise and investment, privatizing public industries, reinstating budgetary discipline, and liberalizing the import regime were accelerated.[4] From 1991 to 1993, the government successfully followed an enhanced structural adjustment facility (ESAF) with the International Monetary Fund (IMF) but failed to follow through on reforms in large part because of preoccupation with the government’s domestic political troubles.[4] In the late 1990s the government’s economic policies became more entrenched, and some of the early gains were lost, which was highlighted by a precipitous drop in foreign direct investment in 2000 and 2001.[4] In June 2003 the IMF approved 3-year, $490-million plan as part of the Poverty Reduction and Growth Facility (PRGF) for Bangladesh that aimed to support the government’s economic reform program up to 2006.[4] Seventy million dollars was made available immediately.[4] In the same vein the World Bank approved $536 million in interest-free loans.[4]In the year 2010 Government of India extended a line of credit worth $ 1 billion to counter-balance China’s close relationship with Bangladesh.
Bangladesh historically has run a large trade deficit, financed largely through aid receipts and remittances from workers overseas.[4] Foreign reserves dropped markedly in 2001 but stabilized in the USD3 to USD4 billion range (or about 3 months’ import cover).[4] In January 2007, reserves stood at $3.74 billion, and then increased to $5.8 billion by January 2008, in November 2009 it surpassed $10.0 billion, and as of April 2011 it surpassed the US $12 billion according to the Bank of Bangladesh, the central bank.[4] In addition imports and aid-dependence of the country has systematically been reduced since the beginning of 1990s.
Macro-economic trend
This is a chart of trend of gross domestic product of Bangladesh at market prices estimated by the International Monetary Fund with figures in millions of Bangladeshi Taka. However, this reflects only the formal sector of the economy.
Year | Gross Domestic Product | US Dollar Exchange | Inflation Index
(2000=100) | Per Capita Income
(as % of USA) |
1980 | 250,300 | 16.10 Taka | 20 | 1.79 |
1985 | 597,318 | 31.00 Taka | 36 | 1.19 |
1990 | 1,054,234 | 35.79 Taka | 58 | 1.16 |
1995 | 1,594,210 | 40.27 Taka | 78 | 1.12 |
2000 | 2,453,160 | 52.14 Taka | 100 | 0.97 |
2005 | 3,913,334 | 63.92 Taka | 126 | 0.95 |
2008 | 5,003,438 | 68.65 Taka | 147 | |
Mean wages were $0.58 per manhour in 2009.
Economic sectors
Agriculture
Map showing the growing areas of major agricultural products.
Most Bangladeshis earn their living from agriculture.[4] Although rice and jute are the primary crops, maize and vegetables are assuming greater importance.[4] Due to the expansion of irrigation networks, some wheat producers have switched to cultivation of maize which is used mostly as poultry feed.[4] Tea is grown in the northeast.[4] Because of Bangladesh’s fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas.[4] Due to a number of factors, Bangladesh’s labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions.[4] These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks.[4] With 28.8 million metric tons produced in 2005-2006 (July–June), rice is Bangladesh’s principal crop.[4] By comparison, wheat output in 2005-2006 was 9 million metric tons.[4] Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat.[4] Foreign assistance and commercial imports fill the gap,[4] but seasonal hunger (“monga”) remains a problem.[7] Underemployment remains a serious problem, and a growing concern for Bangladesh’s agricultural sector will be its ability to absorb additional manpower.[4] Finding alternative sources of employment will continue to be a daunting problem for future governments, particularly with the increasing numbers of landless peasants who already account for about half the rural labor force.[4] Due to farmers’ vulnerability to various risks, Bangladesh’s poorest face numerous potential limitations on their ability to enhance agriculture production and their livelihoods.
These include an actual and perceived risk to investing in new agricultural technologies and activities (despite their potential to increase income), a vulnerability to shocks and stresses and a limited ability to mitigate or cope with these and limited access to market information.[7]
Manufacturing & Industry
Many new jobs – mostly for women – have been created by the country’s dynamic private ready-made garment industry, which grew at double-digit rates through most of the 1990s.[4] By the late 1990s, about 1.5 million people, mostly women, were employed in the garments sector as well as Leather products specially Footwear (Shoe manufacturing unit).
During 2001-2002, export earnings from ready-made garments reached $3,125 million, representing 52% of Bangladesh’s total exports. Bangladesh has overtaken India in apparel exports in 2009, its exports stood at 2.66 billion US dollar, ahead of India’s 2.27 billion US dollar.[8]
Eastern Bengal was known for its fine muslin and silk fabric before the British period. The dyes, yarn, and cloth were the envy of much of the premodern world. Bengali muslin, silk, and brocade were worn by the aristocracy of Asia and Europe. The introduction of machine-made textiles from England in the late eighteenth century spelled doom for the costly and time-consuming hand loom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived.
Other industries which have shown very strong growth include the chemical industry, steel industry, mining industry and the paper and pulp industry.
Textile sector
Bangladesh’s textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation’s number one export earner, accounting for 80% of Bangladesh’s exports of $15.56 billion in 2009.[9] Bangladesh is 2nd in world textile exports, and China which exported $120.1 billion worth of textiles in 2009. The industry employs nearly 3.5 million workers. Current exports have doubled since 2004. Wages in Bangladesh’s textile industry were the lowest in the world as of 2010. The country was considered the most formidable rival to China where wages were rapidly rising and currency was appreciating.[10][11]
After massive labor unrest in 2006[12] the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010,[9][13] a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30.[11][14] On July 28, 2010 it was announced that the minimum entry level wage would be increased to 3,000 taka, about $43.[15]
The government also seems to believe some change is necessary. On September 21, 2006 then ex-Prime Minister Khaleda Zia called on textile firms to ensure the safety of workers by complying with international labor law at a speech inaugurating the Bangladesh Apparel & Textile Exposition (BATEXPO).
Investment
The stock market capitalization of the Dhaka Stock Exchange in Bangladesh crossed $10 billion in November 2007 and the $30 billion dollar mark in 2009, and USD 50 billion in August 2010. Bangladesh had one of the best performing stock markets in the world during the recent global recession, due to relatively low correlations with developed country stock markets.
Major investment in real estate by domestic and foreign-resident Bangladeshis has led to a massive building boom in Dhaka and Chittagong.
Recent (2011) trends for investing in Bangladesh as Saudi Arabia trying to secure public and private investment in oil and gas, power and transportation projects, United Arab Emirates (UAE) is keen to invest in growing shipbuilding industry in Bangladesh encouraged by comparative cost advantage, Tata, an India-based leading industrial multinational to invest Taka 1500 crore to set up an automobile industry in Bangladesh, World Bank to invest in rural roads improving quality of live, the Rwandan entrepreneurs are keen to invest in Bangladesh’s pharmaceuticals sector considering its potentiality in international market, Samsung sought to lease 500 industrial plots from the export zones authority to set up an electronics hub in Bangladesh with an investment of US$1.25 billion, National Board of Revenue (NBR) is set to withdraw tax rebate facilities on investment in the capital market by individual taxpayers from the fiscal 2011-12.
2010-11 market crash
The bullish capital market turned bearish during 2010, with the exchange losing 1,800 points between December 2010 and January 2011.[16] Millions of investors have been rendered bankrupt as a result of the market crash. The crash is believed to be caused artificially to benefit a handful of players at the expense of the big players.[16]
External trade
Bangladeshi exports in 2006
The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has predicted textile exports will rise from US$7.90 billion earned in 2005-06 to US$15 billion by 2011. In part this optimism stems from how well the sector has fared since the end of textile and clothing quotas, under the Multifibre Agreement, in early 2005.
According to a United Nations Development Programme report “Sewing Thoughts: How to Realize Human Development Gains in the Post-Quota World” Bangladesh has been able to offset a decline in European sales by cultivating new markets in the United States.[17]
“[In 2005] we had tremendous growth. The quota-free textile regime has proved to be a big boost for our factories,” said BGMEA president S.M. Fazlul Hoque told reporters, after the sector’s 24 per cent growth rate was revealed.[18]
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) president Md Fazlul Hoque has also struck an optimistic tone. In an interview with United News Bangladesh he lauded the blistering growth rate, saying “The quality of our products and its competitiveness in terms of prices helped the sector achieve such… tremendous success.”
Knitwear posted the strongest growth of all textile products in 2005-06, surging 35.38 per cent to US$2.82 billion. On the downside however, the sector’s strong growth came amid sharp falls in prices for textile products on the world market, with growth subsequently dependent upon large increases in volume.
Bangladesh’s quest to boost the quantity of textile trade was also helped by US and EU caps on Chinese textiles. The US cap restricts growth in imports of Chinese textiles to 12.5 per cent next year and between 15 and 16 per cent in 2008. The EU deal similarly manages import growth until 2008.
Bangladesh may continue to benefit from these restrictions over the next two years, however a climate of falling global textile prices forces wage rates the centre of the nation’s efforts to increase market share.
Prior to the Wage Board’s announcement of its recommended minimum wage of $24, Tk1,604, in 2006, the rate had remained unchanged at Tk950, about $15, for more than 12 years. Although the government may allow up to three years for the new wage to be implemented, and inevitably there will be compliance issues as manufacturers drag their feet, it seemed politically untenable for wages to remain at those levels given the unprecedented industrial unrest.
In response to the Wage Board’s initial draft recommendation of a minimum wage of Tk1,604 to be increased to Tk1,800 after eight months, the BGMEA declared over 50 per cent of factories would be ruined within three months. While this claim is no doubt an exaggeration, the capacity of Bangladesh’s textile industry to absorb a significant wage hike as margins become tighter is a key question which hangs over the future of the industry. Bangladesh’s textile sector is concentrated in export processing zones in Dhaka and Chittagong. These zones, which are administered by the Bangladesh Export Processing Zone Authority, aim to offer “a congenial investment climate, free from cumbersome procedures”m according to Bangladesh Export Promotion Bureau’s website.[19]
They offer a range of incentives to potential investors including 10 year tax holidays, duty free import of capital goods, raw materials and building materials, exemptions on income tax on salaries paid to foreign nationals for three years and dividend tax exemptions for the period of the tax holiday.
All goods produced in the zones are able to be exported duty free, in addition to which Bangladesh benefits from the Generalised System of Preferences in US, European and Japanese markets and is also endowed with Most Favoured Nation status from the United States.
Furthermore, Bangladesh imposes no ceiling on investment in the EPZs and allows full repatriation of profits.
The formation of labour unions within the EPZs is prohibited as are strikes.[19]
Bangladesh’s exports to the U.S. surpassed $1.9 billion in 1999. Bangladesh also exports significant amounts of garments and knitwear to the EU market.
Bangladesh also has significant jute, leather, shrimp, pharmaceutical, and ceramics industries.
Bangladesh has been a world leader in its efforts to end the use of child labor in garment factories. On July 4, 1995, the Bangladesh Garment Manufacturers Export Association, International Labour Organization, and UNICEF signed a memorandum of understanding on the elimination of child labor in the garment sector. Implementation of this pioneering agreement began in fall 1995, and by the end of 1999, child labor in the garment trade virtually had been eliminated. The labor-intensive process of ship breaking for scrap has developed to the point where it now meets most of Bangladesh’s domestic steel needs. Other industries include sugar, tea, leather goods, newsprint, pharmaceutical, and fertilizer production.
The Bangladesh government continues to court foreign investment, something it has done fairly successfully in private power generation and gas exploration and production, as well as in other sectors such as cellular telephony, textiles, and pharmaceuticals. In 1989, the same year it signed a bilateral investment treaty with the United States, it established a Board of Investment to simplify approval and start-up procedures for foreign investors, although in practice the board has done little to increase investment. The government created the Bangladesh Export Processing Zone Authority to manage the various export processing zones. The agency currently manages EPZs in Adamjee, Chittagong, Comilla, Dhaka, Ishwardi, Karnaphuli, Mongla, and Uttara. An EPZ has also been proposed for Sylhet.[20] The government has given the private sector permission to build and operate competing EPZs-initial construction on a Korean EPZ started in 1999. In June 1999, the AFL-CIO petitioned the U.S. Government to deny Bangladesh access to U.S. markets under the Generalized System of Preferences (GSP), citing the country’s failure to meet promises made in 1992 to allow freedom of association in EPZs.
Sylhet is fast becoming a major center of retailing in Bangladesh,[citation needed] with many shopping centres being built by expatriates to serve fellow expatriates visiting Sylhet and the emerging middle class. Many of these developments hark back to Britain.[21]
Overview
Bangladesh has made significant strides in its economic sector performance since independence in 1971. Although the economy has improved vastly in the 1990s, Bangladesh still suffers in the area of foreign trade in South Asian region. Despite major impediments to growth like the inefficiency of state-owned enterprises, a rapidly growing labor force that cannot be absorbed by agriculture, inadequate power supplies, and slow implementation of economic reforms, Bangladesh has made some headway improving the climate for foreign investors and liberalizing the capital markets; for example, it has negotiated with foreign firms for oil and gas exploration, better countrywide distribution of cooking gas, and the construction of natural gas pipelines and power stations. Progress on other economic reforms has been halting because of opposition from the bureaucracy, public sector unions, and other vested interest groups.
The especially severe floods of 1998 increased the flow of international aid. So far the global financial crisis has not had a major impact on the economy. The World Bank predicted economic growth of 6.5% for current year. Foreign aid has seen a decline of 10% over the last few months but economists see this as a good sign for self-reliance.There has been 18% growth in exports over the last 9 months and remittance inflow has increased at a remarkable 25% rate.
Fiscal Year | Total Export | Total Import | Foreign Remittance Earnings |
2007–2008 | $14.11b | $25.205b | $8.9b |
2008–2009 | $15.56b | $22.00b+ | $9.68b |
2009-2010 | $16.7b | ~$24b | $10.87b |
2010-2011 | $22.93b | $32b | $11.65b |
Economy of Barbados
Economy of Barbados |
Currency | Barbadian dollar (BBD) |
Fiscal year | 1 April – 31 March |
Trade organisations | WTO |
Statistics |
GDP | PPP: $5.466 billion
Nominal: $3.157 billion (2008)
Rank: 157th (2008) |
GDP growth | 1.5% (2008 est.) |
GDP per capita | PPP: $19,300 (2008 est.) |
GDP by sector | agriculture (6%), industry (16%), services (78%) (2000 est.) |
Inflation (CPI) | 5.5% (2007 est.) |
Population
below poverty line | N/A |
Labour force | 128,500 (2001 est.) |
Labour force
by occupation | agriculture (10%), industry (15%), services (75%) (1996 est.) |
Unemployment | 10.7% (2003) |
Main industries | tourism, sugar, light manufacturing, component assembly for export |
External |
Exports | $385 million (2006) |
Main export partners | Trinidad and Tobago 15.5%, Jamaica 13.5%, UK 9.4%, US 9.3%, Brazil 8.3%, Saint Lucia 7.2%, Saint Vincent and the Grenadines 4.5% (2007) (2004) |
Imports | $1.586 billion (2006) |
Main import partners | U.S. 30.5%, Trinidad and Tobago 27.6%, UK 6.5% (2007) |
Gross external debt | $668 million (2003) |
Public finances |
Revenues | $847 million (including grants) (2000) |
Expenses | $886 million, including capital expenditures (2000) |
Economic aid | $9.8 million (recipient; 1995) |
Credit rating | BBB- (Domestic)
BBB- (Foreign)
BBB (T&C Assessment)
(Standard & Poor’s)[1] |
|
Since achieving independence in 1966, the island nation of Barbados has transformed itself from a low-income economy dependent upon sugar production, into an upper-middle-income economy based on tourism and the offshore sector. Barbados went into a deep recession in the 1990s after 3 years of steady decline brought on by fundamental macroeconomic imbalances. After a painful re adjustment process, the economy began to grow again in 1993. Growth rates have averaged between 3%-5% since then. The country’s three main economic drivers are: tourism, the international business sector, and foreign direct-investment. These are supported in part by Barbados operating as a service-driven economy and an international business centre.
* |
History
Pre-independence
Since the first settlement by the British in 1625, through history the economy of Barbados was primarily dependent on agriculture. It had been recorded that minus the marshes and gully regions, during the 1630s much of the desirable land had been deforested across the entire island. Quickly Barbados was then divided into large estate-plantations and using indentured labour mainly from the British Isles for the cultivation of tobacco and cotton crops were first introduced. The island, facing a large amount of competition from the North American colonies and the neighbouring West Indian islands, switched to the crop of sugar cane. Cultivation of sugar cane was quickly introduced by the exiled Jewish community which immigrated into Barbados from Dutch Brazil during the mid-17th century. The introduction of sugar cane became the single best move for the Barbados economy at the time, the economy boomed and Barbados had become populated with so many windmills that the island had the second highest density of windmills per square mile in the world, second only to the Netherlands [1]. For about the next 100 years Barbados remained the richest of all the European colonies in the Caribbean region due to sugar. The prosperity in the colony of Barbados remained regionally unmatched until sugar cane production caught up in geographically larger countries such as Haiti, Jamaica and elsewhere. Despite being eclipsed by larger makers of sugar, Barbados continued to produce the crop well into the 20th century and to this day.
With the emancipation of African slaves in the British Empire in 1834, thereafter many Bajans started to place more emphasis on upward mobility and strong education to combat plantation living.
During the 1930s, politicians in Barbados started a push for more self-government along with Barbados seeking to retain more of the profits from economic growth within the country. Much of the profits were being repatriated by the British government to the United Kingdom. As the 1940s-1950s rolled around, Barbados moved towards developing political ties with neighboring Caribbean islands. By 1958 the West Indies Federation was created by Britain for Barbados and nine other Caribbean territories. The Federation was first led by the premier of Barbados, however the experiment ended by 1962. Later Barbados tried to negotiate several other unions with other islands, yet it became likely that Barbados needed to move on. The island peacefully negotiated with Britain its own independence and became a sovereign nation at midnight on 30 November 1966.
Post independence
The GDP per capita of Barbados from 1960 to 2002 in contstant year 2000 US$
Following independence from the United Kingdom on 30 November 1966 sugar cane still remained a chief money-maker for Barbados. The island’s politicians tried to diversify the economy from just agriculture. During the 1950s-1960s visitors from both Canada and the United Kingdom started transforming tourism into a huge contributor for the Barbadian economy. The man-made Deep Water Harbour port at Bridgetown had been completed in 1961, and there-after the island could handle most modern ocean going ships for shipping sugar or handling cargoes at the port facility.
As 1970s progressed, global companies started to recognize Barbados for its highly educated population. In May 1972 Barbados formed its own Central Bank, breaking off from the East Caribbean Currency Authority (ECCA).
By 1975 the Barbadian dollar was changed to a new fixed / constant rate of exchange rate with the US$ with the rate being changed to present day US$1 = BDS$1.98 (BDS$1.00 = ~US$0.50).
By the 1980s a growing manufacturing industry was seen as a considerable earner for the Barbados economy. With manufacturing then being led by companies such as Intel Corporation[2] and others,[3] the Manufacturing industry contributed greatly to the economy during the 1980s and early 1990s.
Under the 1993 Wage and Price Protocol, workers and unions assented to a one-time cut in real wages of about 9 percent and agreed to keep their demands for future pay raises in line with increases in productivity. Firms promised to moderate their price increases, the government maintained the parity of the currency, and all parties agreed to the creation of a national productivity board to provide better data on which to base future negotiations.[4]
In the early 1990s the country’s economy was hid hard when real GDP per capita declined by 5.1% per year between 1989 and 1992 partly due to the 1990 oil price spike. Barbados entered into an agreement with the International Monetary Fund financial assistance after a long and hard period of negotiations between the IMF, the government of Barbados, labour unions and employers. This led to a protocol on wages and prices in 1993. This helped prevent an inflationary spiral and restored the island’s international competitiveness thereby leading to a period of long term economic growth of 2.7% between 1993 and 2000.[4]
As one of the founding members, Barbados joined the World Trade Organization on 1 January 1995. Following the membership in the World Trade Organization (WTO), the Government of Barbados aggressively tried to make the Barbados economy fully WTO compliant. This led to collapse of much of the manufacturing industry of Barbados during the late 1990s in favour of many companies like Intel and others moving to lower cost Asian economies. During the late 1990s more companies started to become interested in Barbados’ offshore sector, until it over took sugar as the new chief money maker. In 1999-2000 the Organisation for Economic Co-operation and Development (OECD) “blacklist” was circulated with Barbados listed in error. The negative fallout stymied new investment into Barbados’ offshore sector Barbados for near two years as Barbados authorities acted swiftly successfully proving that Barbados’ economy was regulated sufficiently to ward off financial criminal activity and that it was not a “tax haven” as charged, but instead a low-tax regime.
As the global recession hit in 2001, the offshore sector in Barbados slightly contracted further thereby making Tourism as the new chief money maker, after having earlier eclipsed manufacturing and sugar cane. The Government of Barbados further changed legislation to transform the Barbados economy into one which fosters investment. Leading to several new Hotel developments. The government continues to try maintaining constraint from personal involvement in the Hotel activity and instead seeks private investment into the Barbados economy for future growth.
Several large hotel projects like the Port Charles Marina project in Speightstown helped the tourism industry continue to expand in 1996-99, and more recently the new Hilton Hotel on Needhams Point, Saint Michael in 2005.
Various firms from Wall Street in New York provide routine economic analysis of the Barbadian economy. This has included such firms as Standard & Poor’s[5] and Moody’s.[6]
Current
Offshore finance and informatics are important foreign exchange earners, and there is also a light manufacturing sector. The government continues its efforts to reduce the unacceptably high unemployment rate which it met in the 1990s, encourage direct foreign investment, and privatize remaining state-owned enterprises.
The main factors responsible for the improvement in economic activity include an expansion in the number of tourist arrivals, an increase in manufacturing, and an increase in sugar production. Recently, offshore banking and financial services also have become an important source of foreign exchange and economic growth.
Economic growth has led to net increases in employment in the tourism sector, as well as in construction and other services sub-sectors of the economy. The public service remains Barbados’ largest single employer. Total labor force has increased from 126,000 in 1993 to 140,000 persons in 2000, and unemployment has dropped significantly from over 20% in the early 1990s to 9.3% at the end of 2000.
The Barbados government encourages the development in: financial services, informatics, e-commerce, tourism, educational and health services, and cultural services for the future. In 2000 based on Barbados’ level of growth – (at the time) Barbados was supposed to become the world’s smallest developed country by 2008. This had then been restated as being achievable by around 2025.[7]
Wages
Barbadians have ranked as being on the high end of wages in the Americas.[8] The only legislated minimum wage in Barbados is for shop assistants, where wages can be no less than BDS$5.00 (~ US$2.50) per hour.[9]
In October 2009, Dr. Delisle Worrell, who is slated to become the replacement Governor of Barbados’ Central Bank of Barbados and current Executive Director of the Centre for Money and Finance at the UWI Cave Hill Campus revealed that “the average Barbadian now earns between BDS$200 and BDS$499 per week….”[10]
Overall estimates of his finds showed that:[10]
* There was a roughly 4,400 workers, who earned less than BDS$200 per week.
* There were 32,800 workers who earned between BDS$200 and BDS$499 a week.
* About 19,100 workers who earned from BDS$500 to BDS$999,
* 3,700 workers who earned between BDS$1000 and BDS$1300, and
* 4,100 who earned more than BDS$1300 a week.
Taxation
General
In 1997 Barbados implemented a general taxation which covers most items. Known as the Value-Added Tax (“VAT”) it covers almost all items at a 15% tax rate and a 7.5% for hotel accommodations. Exported goods and services, prescription drugs and a few other specific items are zero rated under the legislation. The VAT replaced several other taxes such as: the Consumption Tax, Stamp Duty, Surcharge, Excise Tax and an Environmental Levy.
The island continues to wean off of taxes outside of the VAT system. In 2002 the Barbados government increased the level of people in Barbados who are exempt from having to pay taxes on their homes. This has steadily grown with the island heading for a possible rate of 0% taxation in all other areas.
The government has also toyed with the idea of making retirement savings as tax exempt, to encourage Barbadians to spend less on goods and to encourage Barbadians to save more income as they once used to.[11]
Bilateral treaties
Barbados has several bilateral tax treaties, mostly aimed at removing double taxation on companies that operate in the Barbados economy. Since Barbados is at times considered an expensive place to conduct business, the treaties are mainly a measure to provide some savings to international businesses operating in Barbados. Some of the countries which Barbados has taxation agreements with are:
* Botswana,
* Canada,
* China,[12]
* CARICOM,
* Cuba,
* Finland,
* Malta,
* Mauritius,
* Mexico,
* Norway,
* Sweden,
* Switzerland,
* the United Kingdom,
* the United States and
* Venezuela.
The bilateral tax treaty negotiated with Canada in particular has been a political-football for the government of that country. The treaty was made to allow the profits for IBCs and offshore banking companies to be repatriated to Canada tax-free after paying taxes in Barbados. The aim was mainly for companies like the Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC), and Scotiabank, which (along with Barclays of the United Kingdom), when-combined control a healthy majority of Barbados’ local Commercial Banking sector. In essence the treaty makes the economy of Barbados almost an unofficial part of the Canadian economy and it was aimed at allowing Canadian companies to extract profits back to Canada more easily. During the Canadian national elections of 2003 and 2006, it was cited that the former Minister of Finance and later Prime Minister Paul Martin had international shipping companies that operated in Barbados’ offshore sector under the bilateral treaty possibly saving his company from higher taxes in Canada.
Primary industries
Agriculture
The cultivation of sugar cane, such as the cane growing in this field outside Saint Andrew, has always been a big part of the island’s economy.
About 16,000 hectares (39,500 acres), or 37.2% of the total land area, are classified as arable. At one time, nearly all arable land was devoted to sugarcane, but the percentage devoted to ground crops for local consumption has been increasing. In 1999, 500,000 tons of sugarcane were produced, down from the annual average of 584,000 tons in 1989–91. In 2001, sugar exports amounted to US$22 million, or 8.4% of total exports. Major food crops (“Ground provisions”) are yams, sweet potatoes, corn, eddoes, cassava, and several varieties of beans. Inadequate rainfall and lack of irrigation has prevented the development of other agricultural activity, although some vegetable farming takes place on a commercial scale. Some cotton is also grown in drier parts of the island, but until cotton can be picked by machine it is unlikely that output will rise to its former level.
Animal husbandry
Livestock rearing isn’t a major occupation in Barbados, chiefly because good pasture has always been scarce & imported animal feed is expensive.The island must import large quantities of meat and dairy products. Most livestock is owned by individual households. Estimates for 1999 showed 23,000 head of cattle, 41,000 sheep, 33,000 hogs, 5,000 goats, and 4,000,000 chickens. Poultry production in 1999 included 9,000 tons of meat and 1,000 tons of hen eggs. Apart from self-sufficiency in milk and poultry, the limited agricultural sector means that Barbados imports large amounts of basic foods, including wheat and meat.
Fishing
The fishing industry employs about 2,000 persons, and the fleet consists of more than 500 powered boats. The catch in 2000 was 3,100 metric tons. Flying fish, dolphin fish, tuna, turbot, kingfish, and swordfish are among the main species caught. A fisheries terminal complex opened at Oistins in 1983.
Forestry
Fewer than 20 hectares (50 acres) of original forests have survived the 300 years of sugar cultivation. There are an estimated 5,000 ha (12,350 acres) of forested land, covering about 12% of the total land area. Roundwood production in 2000 totaled 5,000 cu m (176,500 cu ft), and imports amounted to 3,000 cu m (106,000 cu ft).
In 2000, Barbados imported $35.3 million in wood and forest products.
Mining
Deposits of limestone and coral were quarried to meet local construction needs. Production of limestone in 2000 amounted to 1.5 million tons. Clays and shale, sand and gravel, and carbonaceous deposits provided limited yields. Hydraulic cement production totalled 267,659 tons in 2000, up from 106,515 in 1996.
Oil production is also undertaken in Barbados, with much of the on-shore activity taking place in Woodbourne, Saint Philip.[13]
Secondary industries
Manufacturing
The manufacturing sector in Barbados has yet to recover from the recession of the late 1980s when bankruptcies occurred and almost one-third of the workforce lost their jobs. Today, approximately 10,000 Barbadians work in manufacturing. The electronics sector in particular was badly hit when the U.S. semi-conductor company, Intel, closed its factory in 1986. Leaving aside traditional manufacturing, such as sugar refining and rum distilling, Barbados’s industrial activity is partly aimed at the local market which produces goods such as tinned food, drinks, and cigarettes. Many industrial estates are located throughout the island. A cement factory is located in St.Lucy.
The export markets have been severely damaged by competition from cheaper Caribbean and Latin American competitors. But domestic manufacturing also faces serious potential problems, as trade liberalization means that the government can no longer protect national industries by imposing high tariffs on imported goods. Thus, Barbadian manufacturers must compete with those from other regional economies, whose wage costs and other overheads are usually much lower.
The other significant industrial employer is the petroleum sector, where oil deposits are located in the southern parishes but oil has not been produced in commercial quantities; although the island’s small oil refinery was closed in 1998 and refining moved to Trinidad and Tobago, where labour and other costs are cheaper.
Construction
A construction boom, linked to tourism and residential development, has assisted the recovery of a large cement plant in the north of the island that was closed for some years and reopened in 1997.
Tertiary industries
Tourism
Tourism is Barbados’s crucial economic activity and has been since the 1960s. At least 10 percent of the working population (some 13,000 people) are employed in this sector, which offers a range of tourist accommodations from luxury hotels to modest self-catering establishments. After the recession years, tourism picked up again in the mid-1990s, only to face another slowdown in 1999. This drop was in part due to increasing competition from other Caribbean countries such as the Dominican Republic, and in part to a reduction in visits from cruise ships as they shifted to non-Caribbean routes or shorter routes such as the Bahamas. Cruise ship visitors totalled 445,821 in 1999, a reduction from 517,888 in 1997, but stay-over visitors rose to 517,869 in 1999, setting a new record. Overall, the country witnessed over US$700 million in tourism receipts in 1999.
The real problem for Barbados is that tourist facilities are too densely concentrated on the south coast, which is highly urbanized, while the Atlantic coast, with its rugged shoreline and large waves, is not suitable for beach tourism. There are few large brand-name hotels (the Barbados Hilton was closed for refurbishment in 2000) which makes marketing the island in the United States difficult. On the other hand, the absence of conglomerates and package tours results in a far greater trickle-down of tourist spending among the general population.
Informatics
Informatics employed almost 1,700 workers in 1999, about the same number as the sugar industry. The island has been involved in data processing since the 1980s and now specializes in operations such as database management and insurance claims processing. Costs in Barbados are higher than elsewhere in the Caribbean (although still only half of costs in the United States), but the island offers strong advantages such as a literate English-speaking workforce and location in the same time zone as the eastern United States. Despite these factors, employment has fallen in recent years, reflecting increasing mobility on the part of foreign companies, which frequently relocate to lower-cost areas.
Financial services
The financial services sector has also faced problems as licenses issued to new financial companies have slowed down since 1998. There are an estimated 47 offshore banks, as well as hundreds of other insurance and investment companies, all catering to overseas clients. Figures are hard to track, but it is estimated that these financial activities earned BDS$150 million in foreign earnings in 1995. In 1998, approximately 7,500 people were employed in the banking and insurance sector. The financial sector is also under threat of sanctions from the EU and the Organization for Economic Cooperation and Development (OECD), both of which have expressed concerns about money laundering, tax evasion, and other financial improprieties in Caribbean offshore centres.
Rum
Barbados has three commercial rum distilleries: West Indies Rum Distillers Ltd, Mount Gay Rum and Four Square. There is also St. Nicholas Abbey, a smaller boutique operation.
Retail
Retailing is an important economic activity, especially in Bridgetown where there are large department stores and supermarkets. In the countryside, most stores are small and family-run. Some 18,000 people work in the retail sector.
Facts & figures
GDP (purchasing power parity)
$5.466 billion (2008 est.)
county comparison to the world: 157
GDP (official exchange rate)
$3.777 billion (2008 est.)
GDP – real growth rate
1.5% (2008 est.)
county comparison to the world: 174
GDP – per capita (PPP)
$19,300 (2008 est.)
county comparison to the world: 63
GDP – composition by sector
* agriculture: 6%
* industry: 16%
* services: 78% (2000 est.)
Labor force
128,500 (2001 est.)
Labor force – by occupation
* agriculture: 10%
* industry: 15%
* services: 75% (1996 est.)
Unemployment rate
10.7% (2003 est.)
Population below poverty line
NA%
Household income or consumption by percentage share
* lowest 10%: NA%
* highest 10%: NA%
Inflation rate (consumer prices)
5.5% (2007 est.)
Budget
* revenues: $847 million (including grants)
* expenditures: $886 million; including capital expenditures of $NA (2000 est.)
Central Bank discount rate
12% (January 2008)
county comparison to the world: 24
Agriculture – products
sugarcane, vegetables, cotton
Industries
tourism, sugar, light manufacturing, component assembly for export
Industrial production growth rate
-3.2% (2000 est.)
county comparison to the world: 161
Electricity – production
1.003 billion kWh (2007)
county comparison to the world: 145
Electricity – consumption
939.9 million kWh (2007)
county comparison to the world: 145
Electricity – exports
0 kWh (2003)
Electricity – imports
0 kWh (2003)
Oil – production
1,111 bbl/d (176.6 m3/d) (2007)
county comparison to the world: 104
Oil – consumption
8,674 bbl/d (1,379.1 m3/d) (2006 est.)
county comparison to the world: 149
Oil – exports
1,750 bbl/d (278 m3/d) (2005)
county comparison to the world: 116
Oil – imports
10,710 bbl/d (1,703 m3/d) (2005)
county comparison to the world: 136
Oil – proved reserves
2,200,000 bbl (350,000 m3) (1 January 2008 est.)
county comparison to the world: 93
Natural gas – production
29.17 million cu m (2006 est.)
county comparison to the world: 85
Natural gas – consumption
29.17 million cu m (2006 est.)
county comparison to the world: 109
Natural gas – exports
0 cu m (2007 est.)
county comparison to the world: 200
Natural gas – imports
0 cu m (2007 est.)
county comparison to the world: 199
Natural gas – proved reserves
141.6 million cu m (1 January 2008 est.)
county comparison to the world: 101
Exports
$385 million (2006)
county comparison to the world: 170
Exports – commodities
manufactures, sugar and molasses, rum, other foods and beverages, chemicals, electrical components
Exports – partners
Trinidad and Tobago 15.5%, Jamaica 13.5%, UK 9.4%, US 9.3%, Brazil 8.3%, Saint Lucia 7.2%, Saint Vincent and the Grenadines 4.5% (2007)
Imports
$1.586 billion (2006)
county comparison to the world: 158
Imports – commodities
consumer goods, machinery, foodstuffs, construction materials, chemicals, fuel, electrical components
Imports – partners
US 37.7%, Trinidad and Tobago 22.6%, UK 5.9% (2006)
Debt – external
$668 million (2003)
county comparison to the world: 159
Economic aid – recipient
$2.07 million (2005)
Currency (code)
Barbadian dollar (BBD)
Exchange rates
Barbadian dollars per US dollar – NA (2007), 2 (2006), 2 (2005), 2 (2004), 2 (2003)
Fiscal year
1 April – 31 March
