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Caribbean Islands Economy
In the late 1980s, Grenada was in the midst of a lengthy
economic transition following the downfall of the PRG government in
October 1983. Although somewhat limited in choice by the country's
economic resource base, the PRG and the parliamentary government of
Blaize that followed opted for two distinct economic development
strategies. The PRG's economic strategy was based on a centrally
governed economy dependent on substantial Cuban assistance. The
Blaize strategy was one that allowed market forces to regulate the
economy, with financial assistance from the United States.
Bishop's PRG guided the economy into a phase aptly described as
"foreign aid socialism," a form of socialism maintained by
financial dependence on other socialist countries. Early PRG
economic philosophy espoused a strong, diversified agricultural
sector and government control of industry through cooperative
management and nationalization. What actually developed was a
program dependent on the construction industry for growth and on
foreign grants for capitalization. Analyses following the removal
of the PRG government suggested that the attempt at socialist
transformation did not produce a revolution in economic
development; there was no change in the distribution of income, and
the standard of living actually declined slightly. This occurred
because the PRG failed to develop a well-defined economic plan,
managed economic enterprises poorly, and became overly concerned
with political, rather than economic, priorities.
The Blaize government, by contrast, undertook a change in
economic orientation emphasizing tourism and agriculture as the
leading economic sectors. Private control of economic enterprises,
attraction of both public and private foreign capital, and pursuit
of a strong export trade were the fundamental elements of the
development policy. This approach was in keeping with the economic
realities of an island nation with natural resources limited to
small amounts of arable land, natural tourist attractions, and an
underutilized labor force. Because of this resource restriction, as
well as limited domestic consumption, cultural and historical ties,
and easy market penetration, Grenada's economy was naturally linked
to the import markets of the United States, Britain, and the
Caribbean Community and Common Market (Caricom--see Appendix C)
countries.
Data as of November 1987
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