The Economy of the Cayman Islands

Offshore financial institutions and tourism power the economy of the Cayman Islands

Photo credit: © Brett Critchley | Dreamstime.com

The Economy of the Cayman Islands
 

Despite their small size and lack of agricultural resources, The Cayman Islands has one of the highest standards of living in the world. The current economy on the islands is one of the strongest in the Caribbean and is driven by offshore financial institutions and upscale tourism.

Despite having a quality of life that ranks among the best in the world, the Cayman Islands have not historically had a strong resource on which to base its economy. The small size and geographical location of the three islands limited local economy's development. While crops such as cotton, corn, yams, sweet potatoes, melons, and limes can grow on the island, the islands could only sustain residents when the population was minimal. Today, 90 percent of the food and consumer goods on the Cayman Islands are imported.

In addition to cotton production, the early economy relied on supplying sailors with food in the form of agricultural crops and turtles. Turtles were ideal for keeping on board ships on long voyages, as the meat provided sailors with sustenance. Unfortunately, due to this harvesting, sea turtles are rare on the islands today. Fishing and shipbuilding were important components of the economy until the 20th century. Early inhabitants also salvaged remains from vessels that shipwrecked on the surrounding coral reefs, and legend says that the assistance of Caymanians during the Wreck of the Ten Sails is what granted the island its tax free status.

The 1950s signaled the development of the two industries that now drive the islands' healthy economy: offshore finance and tourism. There is no direct taxation in the Cayman Islands, making it an irresistible location for financial institutions. Banking assets on the islands are in excess of $500 billion (USD). In addition to 40,000 registered companies, 600 banks and trust companies are present on the islands.

Upscale tourism is another powerful force in the local economy and provides 70 percent of the nation's gross domestic product and 75 percent of the foreign currency earnings. A large percentage of the population is employed in the service industry, and the island annually attracts close to one million visitor looking to take advantage of excellent scuba diving or a safe and peaceful island environment.

Despite the small size of the Cayman Islands, their high quality of life is testament to both the strength of the local economy and the quality of the residents.

 

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