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Caribbean Islands Industrial Sector
In the late 1980s, the Bahamian industrial sector consisted of
several large-scale activities (chemicals, pharmaceuticals, and
oil) and a variety of small-scale industries (food processing,
paints, purified water, rum and other alcoholic beverages, salt,
and soft drinks). The large-scale activities were located on Grand
Bahama, whereas small-scale industries were concentrated in both
Grand Bahama and New Providence. The industrial sector experienced
setbacks in the early 1980s, when declining demand caused steel and
cement plants to close. In mid-1985 the Bahamas Oil Refining
Company (BORCO), the fourth largest refinery in the world, shut
down its refining operations in response to the oil glut on the
world market. BORCO continued its oil transshipment operations,
however, importing large quantities of oil from the Middle East and
Africa for transshipment and for domestic use. In the Bahamas, oil
exploration by several international companies began in the early
1980s; marine geologists believed vast deposits of oil and natural
gas might be found.
Chemical and pharmaceutical plants fared well in the early
1980s. Exports of chemical products increased by over 100 percent
in the 1980-84 period. Several large chemical and pharmaceutical
industries were located in Grand Bahama. Light industrial
activities experienced slight growth in the early 1980s. Salt was
mined on Great Inagua, and small amounts of aragonite sand were
mined near the Bimini Islands for export. The rum industry grew.
Bacardi operated a major distillery in New Providence. In 1986
construction began on a brewery sponsored by a consortium made up
of Bacardi, Guinness, and Heineken to produce a new beer with a
Bahamian name.
Since the 1950s, the government had consistently encouraged
efforts to diversify the economy. Industrial incentive legislation,
however, dated back to the 1950s, when the Hawksbill Creek
Agreement allowed the Grand Bahama Port Authority to develop
industry on that island. In 1970 the Industries Encouragement Act
provided incentives for manufacturers of approved products.
Incentives included the duty-free importation of machinery and raw
materials and tax exemptions. In 1971 the Agriculture Manufacturers
Act provided similar incentives for that industry. In 1981 the
Bahamas Agricultural and Industrial Corporation was established as
a central agency for potential investors seeking advice and
assistance. Finally, in 1984 legislation created a free-trade zone
in New Providence similar to the one in Grand Bahama established by
the Hawksbill Creek Agreement.
Aside from a weak external market for oil products, the
industrial sector faced several other difficulties. The Bahamas had
a very limited market size. Wage rates tended to be high, and
skilled workers were lacking. Capital-intensive industries
developed despite the government's desire to locate labor-intensive
industries there, especially in New Providence. This development
underscored the growing problem of structural unemployment. A 1986
report by the Inter-American Development Bank (IDB) indicated that
a major task for the government would be to provide 3,000 to 3,500
jobs annually in the late 1980s and early 1990s for graduating
youths.
Data as of November 1987
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