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Caribbean Islands Sectoral Performance
By 1987 Barbados had a diversified economy, with numerous
sectors contributing to GDP. Leading sectors of the economy in
1985, as measured by percentage of GDP, included wholesale and
retail trade (20.4 percent), business and general services (16
percent), government services (14.2 percent), and tourism (9.5
percent). Contributions of productive sectors (those with tangible
output) included manufacturing (10.5 percent), agriculture (7.2
percent), and construction (5.3 percent).
Barbados' primary productive sectors were agriculture, tourism,
and manufacturing. Agriculture, including the fishing industry,
still played an important role in the development of the economy.
In the late 1980s, agricultural planners were attempting to
diversify the sector. The long-term decline in sugar production was
the natural result of increased production costs combined with
depressed world prices. In its stead, planners emphasized nonsugar
agricultural products in order to reduce food imports and free up
valuable foreign exchange for the purchase of capital goods and
technology needed for economic development. Agricultural
diversification, as outlined in the 1983-88 five-year development
plan, also contributed marginally to reducing the unemployment rate
and provided much of the society's nutritional base.
New markets in the Caribbean Community and Common Market
(Caricom--see Appendix C) for fresh vegetables, flowers, and cotton
allowed Barbados to increase foreign exchange earnings from
agriculture. Improved output of fish, peanuts, and onions also
improved its foreign exchange position by lowering agricultural
imports. Figures for 1985 suggested that the 1983-88 development
plan had succeeded in meeting diversification and production goals.
Agriculture, as a percentage of GDP, actually rose by 6 percent
in 1985, representing increases in both sugar and nonsugar
products. Sugar production rose by 20 percent in nominal terms,
whereas food crops and fishing increased 11.3 percent. Unusually
high growth rates occurred in cotton production, which rose by 400
percent. Food crops, however, experienced mixed production levels.
These were decreases in the amounts of cabbage, carrots, peas,
tomatoes, and corn produced and increases in peanuts, onions,
beets, eggplant, pumpkin, broccoli, and okra.
In spite of distinct successes in agricultural diversification
and production efforts, the sector had numerous problems to
overcome. Sugar production remained unprofitable and required
financial support through government subsidies. Analysts noted that
in 1985 nonsugar agriculture had experienced production problems
such as erosion, erratic rainfall patterns, and poor disease
control. Marketing constraints, such as poor management, were also
identified, as was inadequate coordination with external markets.
Output from the fishing industry declined by 32 percent in 1985
compared with the previous year, in spite of a marginal increase in
the number of fishing vessels. This was accounted for by a
combination of bad weather and imprecise reporting by fishermen to
avoid paying tariffs. Government efforts to improve the fishing
sector continued, however, as was evidenced by port improvements
and financial assistance provided for boat purchases.
By 1985 tourism had become Barbados' primary foreign exchange
earner. It accounted for 9.5 percent of GDP and was the leading
sector in providing employment. Additionally, tourism had developed
better economic linkages with the agricultural and industrial
sectors, providing a market for locally produced foods and
handicrafts. Production of fresh fruit and vegetables, fish, meat,
and poultry all benefited from the tourist trade, as did
handicrafts. Approximately 90 percent of all handmade goods were
sold to visitors. Production of local goods sold to tourists,
however, lagged behind demand, forcing Barbados to import 70
percent of all handicrafts sold to visitors in 1983.
Barbados was an early entrant into the Caribbean tourist market
and enjoyed above-average earnings because of early development of
its international airport. However, the change in market conditions
in the 1980s eroded Barbados' dominant position, forcing it to
consolidate gains rather than to continue to increase its share of
the regional tourist market.
The worldwide recession of the early 1980s caused Caribbean
tourism to lose ground. As the recession subsided, Barbados found
itself in an increasingly competitive environment with other small
island economies, particularly Grenada and St. Lucia. Both
countries had emerged as significant tourist attractions, largely
because of improved airport facilities.
The Barbadian government expected competition in the Caribbean
tourist market to increase through the 1980s. In order to protect
its share of the market, Barbados planned to address internal
problems that had impeded growth of the tourist sector.
Refurbishing of tourist facilities was essential if the island was
to compete with the amenities available on other islands. The
government also planned to develop a coordinated marketing plan to
attract a greater share of United States business, as well as to
dispel impressions that Barbados was expensive and less service
oriented than neighboring islands. Analysts suggested that Barbados
implement better management and financial controls.
Manufacturing, the third major productive sector, began to grow
significantly following the creation of the government-run Barbados
Industrial Development Corporation (BIDC) in 1957. The BIDC
produced a long-term plan to enhance Barbados' manufacturing
capability by taking advantage of low-cost labor, concessionary
fiscal policies, foreign capital, a solid physical infrastructure,
and political stability.
The manufacturing sector produced for both domestic and foreign
markets. Primary manufactured products for domestic and external
consumption included processed foods, clothing, beverages, chemical
products, and tobacco, all of which required foreign capital and
raw materials as primary inputs. Goods produced solely for export
included handicrafts, which were produced exclusively from local
raw materials, and electronic components and sportswear, which were
developed through multinational enterprises and relied completely
on foreign materials and capital.
Manufacturing had become a significant sector of the economy by
1985. As of this date, there were over 200 small-scale firms that
contributed to 10.5 percent of GDP and 13 percent of employment. In
spite of this established presence, manufacturing had generally not
performed up to expectations. Its contribution to economic growth
and employment had not expanded significantly in the previous
twenty-five years. In 1960 manufacturing accounted for 8 percent of
GDP, only 2.5 percentage points below the 1985 level. The sector's
contribution to employment had grown at a similarly small rate
during this same period, leading some analysts to conclude that
other sectors of the economy had done more for aggregate economic
growth and employment than manufacturing.
Manufacturing's greatest contribution to the economy appeared
to be its ability to earn foreign exchange. In 1983 electronic
assembly accounted for over half of Barbados' total domestic
exports. Nevertheless, heavy reliance on foreign raw materials and
global competition continued to hinder the island's ability to
contribute to economic growth.
In 1985 output of the manufacturing sector declined by 9.5
percent as a result of changing world market conditions. Demand for
Barbados' leading export--electronic components--fell sharply as
the world market became inundated with Japanese semiconductors and
resistors. Furthermore, regional competition was expected to
continue to restrict this sector's ability to grow so that it would
probably contribute no more than 10 to 15 percent of GDP in the
near future.
Barbados also began producing oil and natural gas in the 1980s;
it had 3.6 million barrels of proven oil reserves and 400 million
cubic meters of natural gas in 1985. Although neither oil nor gas
was extracted in sufficient quantities to export, Barbados was able
to produce over half of its crude oil requirements by 1984,
dramatically reducing its oil import bill. Natural gas was used as
a direct energy source and in the production of electricity;
however, 75 percent of all natural gas was flared at the wellhead.
Construction of a small liquefied petroleum gas plant was expected
to be completed in late 1987; the plant would improve utilization
of excess natural gas.
Data as of November 1987
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