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Caribbean Islands Sectoral Performance
In the late 1980s, the economic aspirations of St. Kitts and
Nevis were only partially realized; a completely diversified
economy had not yet been developed, and economic productivity was
still highly dependent on the unreliable sugar industry. Although
the number of economic sectors in 1984 seemed to indicate a growing
economic base, most of the foreign and domestic earnings were still
coming from sugar and related products. Key economic sectors of the
economy included government services (18.3 percent of GDP),
agriculture (16.6 percent), manufacturing (12.8 percent),
transportation and communications (12.5 percent), wholesale and
retail trade (10.9 percent), and construction (7.9 percent). Other
sectors that contributed to the remaining 21 percent of GDP
included banking, real estate, utilities, and other service
activities.
St. Kitts and Nevis' primary productive sectors were
agriculture, manufacturing, and tourism; sugar represented
significant portions of both agricultural and manufacturing output.
In 1984 sugar took up 90 percent of the land under cultivation,
supported 30 percent of the active labor force, constituted 15
percent of GDP, and made up half of total commodity exports.
Processed sugar, molasses, and other sugar derivatives also
constituted much of the manufacturing output.
The national economy's dependence on sugar has been the primary
impediment to further economic development because of the
commodity's steady decline in profitability since the 1960s. On St.
Kitts, sugar production began falling in 1965 and was abandoned
altogether on Nevis because of rising production costs and
declining prices. Long-standing quotas with Britain and the United
States sustained minimal profitability a while longer, but by the
mid-1970s the sugar industry could no longer operate profitably,
and its operations were assumed by the government.
The government attempted to revive the sugar industry by
reorganizing its functions under the National Agricultural
Corporation and the St. Kitts Sugar Manufacturing Corporation,
which coordinated production and marketing, respectively. These two
organizations were merged in 1986 to streamline operations further;
the unpredictable availability and high cost of labor, however,
combined with persistently low sugar prices, required that a more
efficient harvesting and processing system be developed for the
industry to turn a profit. Uncontrollable factors, such as weather,
would occasionally aggravate already untenable conditions.
Although the sugar industry required substantial subsidization
in the 1980s, the government was unable to drop it altogether
because of its pervasive influence on the national economy. Because
a long-term transition was considered the only alternative, the
government developed a two-pronged strategy for replacing sugar as
the leading revenue producer. First, the agricultural sector was to
be diversified so that St. Kitts and Nevis could enter promising
regional markets, such as that for cut flowers. Import substitution
was also emphasized, especially the production of fruits and
vegetables that were previously purchased abroad. Second, the
economy was to be redirected toward tourism and manufacturing in
order to take advantage of foreign exchange earning industries that
were succeeding in other Caribbean economies, such as vacation
resorts and electronic component assembly.
Lack of available land was a major constraint on the
diversification of the agricultural sector. The government's
appropriation of the sugar industry included confiscation of
growers' land, much of which was to be set aside for production of
alternative crops. As of 1987, however, no formal settlement had
been reached, and the government had not yet obtained clear title
to the property. Until land titling and redistribution problems
could be solved, crop diversification was expected to remain an
elusive goal.
Manufacturing played an increasingly important role in the
Kittitian economy in the 1980s. An aggressive government program
focusing on labor-intensive export manufactures attracted foreign
firms, allowing the sector's output to reach about 13 percent of
GDP in both 1984 and 1985. In the late 1980s, the government
continued its energetic effort to attract foreign investment, in
the hope that it would help pave the way for economic growth and
absorb some of the workers laid off from the retrenching sugar
industry.
Besides refined sugar products, industry included numerous
kinds of firms specializing in assembly work. Garment, shoe, and
electronic component assembly firms were the largest employers;
smaller concerns produced processed metal, handicrafts, furniture,
pottery, and boats. Although the sector as a whole was stable in
the 1980s, individual industries and firms experienced variable
success, some being forced to shut down shortly after production
began. Nonsugar manufacturing actually experienced no growth in
1986, in spite of new factory start-ups. This was a continuing
problem caused by external factors such as regional trade
restrictions that often disrupted St. Kitts' export markets,
especially for textiles and electronic components.
Faster growth in the industrial sector was also frustrated by
internal restrictions in the 1980s. A lack of stable financing and
factory space inhibited investors' interest. Government marketing
strategies and the creation of the Industrial Development
Corporation were expected to address these problems, as was
financial assistance from the CDB.
Tourism grew by two-thirds from 1980 to 1984 and positively
affected numerous areas of the economy, including construction,
hotels, restaurants, and the wholesale and retail trade, among
other services. Tourism's success was attributed to government
programs that facilitated infrastructure development, hotel
construction, and marketing strategies. Continuing efforts in these
areas were a government priority, and tourism was expected to be
the main component in the country's future economic growth.
Growth of the tourist sector was linked directly to improved
accessibility. The opening of Golden Rock International Airport
brought direct flights from Canada and the United States, and a
large increase in the number of cruise ship calls accompanied the
completion of Basseterre's deep-water port. Total ship calls jumped
from six in 1979 to fifty in 1984. Although cruise ship calls
declined in 1985 and 1986 because of the loss of a major carrier,
the long-term expectation was for continued growth in this area of
the tourist trade.
Tourist facilities were added quickly in the late 1980s to
augment the small-scale accommodations that existed previously.
Major resorts, such as the Royal St. Kitts Hotel and the Frigate
Bay Resort, offered modern conveniences, and development of the
southern peninsula would open previously uninhabited beach areas.
Nevis was also planning the expansion of tourism, including the
construction of new hotels and an eighteen-hole golf course.
Data as of November 1987
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