The Economy of the USVI

The Virgin Islands has changed its economy from agriculture to tourism

Photo credit: © Ramunas Bruzas | Dreamstime.com

The Virgin Islands' Economy
 

As with many other islands in the Caribbean, the introduction of sugarcane farming and the import of African slaves helped the Virgin Islands establish their early economy. After the abolition of slavery, there was a shift toward a more industrial economy and more diversified agriculture. Now, both the United States and British Virgin Islands rely heavily on the tourism industry as well as on government aid as a major part of their economy.

Economic History

The first of the islands' inhabitants, the Arawaks, who many believe arrived on the islands around 500 A.D., relied on fishing and farming to fuel their culture. These indigenous people successfully grew cotton crops as well as tobacco, fruits, and vegetables. In the 16th and 17th centuries, several years after the arrival of Christopher Columbus in approximately 1493, European settlers established major ports in the West Indies. The first major cash crop in the settlements was tobacco. Then other crops were introduced to the territories, including cotton, coffee, and the highly profitable sugarcane, which was brought to the West Indies by the Spanish. The Spanish also brought bananas, pineapples, and cotton, which became the basis for many West Indies economies, but sugarcane was by the far the most significant cash crop introduced to the region.

Because the farming of sugarcane was a tedious and labor-intensive process that did not rely on plows and animals, slave labor was used to support the sugarcane farming industry. African slaves were imported to the islands in substantial numbers to work on sugarcane plantations, and it was slave labor that led to the West Indies, domination of the sugarcane industry. Because of their great agricultural profit, the Virgin Islands became hot commodities that were heavily fought over by the Dutch, Spanish, French, and English, and possession of the islands fluctuated among these countries. Because of these European rivalries, and the fortunes made from slave labor in Caribbean agriculture, plantocracies and sugar reigned in the region. More than 10 million slaves were brought to the Americas and forced to work on plantations in places that sought to further their economic growth, such as the Virgin Islands.

Many Europeans were anti-slavery, and several abolitionist movements and protests called for an end to slavery in the Caribbean. After much conflict and debate, slavery began to dissipate, and the Danish West Indies, followed by the Virgin Islands, abolished the practice in 1792. With the end of slavery came the end of planter life, and large plantations began to go belly-up because of production costs and the inability to keep up with competition from other countries.

Present Day Economics

Today, the U.S. Virgin Islands' economy relies on aid from the Unites States government, U.S.V.I. citizens living abroad, and the tourism industry. The majority of the jobs on the islands are provided by tourism or local and federal government. Government jobs make up about one-third of the work force on the islands, while tourism and retail trade are the next largest employer. In St. Croix, a Hess oil refinery and aluminum plant as well as some agricultural work from employers such as Senepol cattle breeders do provide some jobs, but they do not constitute a majority in the U.S.V.I. Minimum wage in the U.S. territories is the same is on the mainland, and the standard of living is higher than that of the majority of the neighboring islands in the Caribbean. The unemployment rate is about 6 percent in a workforce of approximately 50,000.

The government of the British Virgin Islands also relies on funding from its home-country government, as well as the European Economic Community and associated grants, and of course the tourism industry, which receives a large part of its income from yachting, boating, and charters. At least 320,000 visitors call on the British Virgin Islands each year, by boat or by plane, and two-thirds of these visitors stay on the islands overnight. Other visitors to the islands are day-trippers or passengers from cruise ships. The tourism industry adds up to about $185 million(USD) every year to the country's gross domestic product.

 

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