In the 18th and early 19th centuries, sugar plantations in the Caribbean supported by the slave trade met high demand for the product from countries like Spain, Portugal, Britain, and the Netherlands. During an uprising in Jamaica in 1831, many sugar plantations were burned. Three years later, the British Parliament set forth the Emancipation Act which called for all British colonies of the West Indies to end slavery, although slaves were not actually emancipated until 1838.
Once slavery was abolished and the sugar beet became part of European agriculture, the Caribbean sugar industry was neither able nor required to yield such high supply, and the islands' financial growth slowed considerably for more than a century. But that dry economic spell ended with the influx of tourism in the 1990s. While sugar is still an agricultural export, the economy of the islands is not nearly as dependent on sugar production as it once was.
The rise of tourism has sparked an indirect growth in many other domestic industries such as construction and many other service- and tourism-related enterprises. Aruba, for example, currently has five times the hotel capacity it had in 1985, and its construction trade is flourishing.
The individual economies of the Caribbean islands are generally open to free trade. While their export bases are fairly limited, many islands are beginning to diversify their industries. Sugar, bananas, eggplant and flowers are exported from many islands and other crops are still grown exclusively for domestic use. The distillation of and large-scale export of rum, a well-known island product, takes place on most islands where sugarcane is grown.
Offshore banking is also an important part of Caribbean commerce, particularly in The Bahamas and Aruba. St. Croix has one of the world's largest petroleum refinery facilities, as does Aruba. Mostly all of these industries, however, rank below tourism in profitability. In the U.S. Virgin Islands, for example, tourism provides 70 percent of the island's jobs and accounts for more than 70 percent of the Gross Domestic Product (GDP).
Other islands supplement their tourism dollars as follows:
|Antigua, Barbados, and Guadeloupe||bedding, handicrafts, textiles, electronic components|
|Dominican Republic||coffee, tobacco|
|Puerto Rico||dairy, livestock, coffee, tobacco|
Because most of the Caribbean's import-export business is with the United States and the majority of Caribbean tourists are U.S. citizens, the influence the U.S. economy has on the islands, economy is significant. So when the U.S. economy is in recession, investment ventures on the islands decline and fewer Americans travel, which negatively affects the primary industry of the region - tourism. To lessen the severity of such setbacks in the future, many islands of the Caribbean are beginning to expand their export base and privatize government-controlled industries.
Based on per capita income, the islands of the Caribbean are classified as middle-income countries except for Guyana and Haiti, which are classified as low-income countries. Mexico and the Dominican Republic have significant income bracket disparity with both low-income and high-income populations; in the Dominican Republic, the poorest half of the population receives less than one fifth of the Gross National Product (GNP) while the richest 10 percent benefits from nearly 40 percent of the national income.
The Caribbean's tourism-driven economy is thriving. Many of the individual islands' governments face the challenge of increasing their economic independence while enjoying the benefits of economic partnerships.
In an effort to stimulate the growth of their economy, some of the islands have followed the European Union's lead and formed economic alliances under a single currency. The Eastern Caribbean Currency Union, for instance, uses the Eastern Caribbean Dollar (EC$), and counts Antigua & Barbuda, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, Montserrat, Anguilla, and St. Vincent & The Grenadines among its members.
Because the Caribbean economy is so closely linked to the performance of the U.S. economy, the U.S. dollar is also widely accepted in the region. A few of the islands even have their own currencies fixed to the U.S. dollar at a constant exchange rate: One Bahamian dollar equals one U.S. dollar, for example, and two Barbadian dollars equal one U.S. dollar.
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