|
Caribbean Islands ECONOMY
In the 1980s, Trinidad and Tobago was an upper-middle-income,
oil-exporting country that was highly dependent on the world price
of oil for its economic growth. The nation displayed the largest
gross domestic product (GDP--see Glossary) of the Commonwealth
Caribbean, one of the highest per capita GDPs among the nations of
the Western Hemisphere, and one of the highest standards of living
in the developing world. The country's GDP in 1985 stood at roughly
US$7.7 billion at current prices, or about US$6,000 per capita.
The major sectors of the economy were petroleum and
petrochemicals, construction, services, and agriculture. Petroleum
had fueled the economy since the early twentieth century and in
1985 still represented roughly 24 percent of GDP and 80 percent of
exports. Oil reserves at the current rate of extraction were
expected to last approximately ten years, but the islands enjoyed
large reserves of natural gas. New petrochemical plants, utilizing
the country's natural gas resources, came on-stream in the early
1980s and included ammonia, urea, and methanol. These large
industrial projects were located at the newly built Point Lisas
industrial park, which, along with the park's new iron and steel
plant, provided Trinidad and Tobago with an industrial base that
was unmatched throughout the Caribbean. Construction, the major
employer in the economy and often considered the bellwether of
general economic activity, expanded rapidly during the oil boom of
the 1970s but contracted greatly in the 1980s. Services, such as
financial services and utilities, also had expanded rapidly since
the 1970s and played a major role in the economy; by contrast,
tourism was rather undeveloped when compared with other Caribbean
islands. The agricultural sector was suffering from a long-run
decline, but growth in domestic agriculture in the 1980s helped to
revive that shrinking sector, albeit only partially.
In the postwar era, the economy experienced two great boom
decades, both of which were followed by decades of slow or negative
growth. Real GDP growth averaged 8 percent in the 1950s as the
economy diversified into manufacturing and construction through the
use of import substitution industrialization (see Glossary)
strategies. Growth in import substitution manufacturing and the
economy as a whole waned in the late 1960s, exacerbating the social
unrest at the end of the decade. The quadrupling of oil prices in
1973 revived the economy and created a 9.6-percent real annual
growth rate from 1974 to 1979. Trinidadians and Tobagonians,
nicknamed the "Arabs of the Caribbean," were known throughout the
region in the 1970s for the carnival of consumption that they
participated in with their instant oil wealth. The downturn in oil
prices in 1982, however, plummeted the economy into a deep
depression in 1983 from which the country had not emerged by 1987.
Negative growth peaked in 1984, when the economy contracted by
nearly 11 percent.
Even with cyclical growth, the citizens benefited from a
quality of life that surpassed that of not only most other
Caribbean islands but of other Western Hemisphere oil exporters
such as Mexico and Venezuela as well. The country also enjoyed a
literacy rate higher than Italy's, a per capita energy consumption
rate that exceeded Britain's, a per capita newspaper circulation
above that in several Western European countries, an income
distribution comparable to that of the United States, and an access
to electricity and potable water that was better than most
developing countries. Nevertheless, the country also suffered
problems associated with more developed societies, including
pollution, obsessive consumption, entrenched labor disputes, and
growing drug abuse. As in other Caribbean countries, chronic
unemployment, which had climbed to 17 percent by 1987, was the
major social problem. In addition, East Indians and women lacked
the same economic opportunities as white or black males; these
disparities were narrowing, however.
Unlike other Caribbean nations, Trinidad and Tobago benefited
immensely from the energy crisis of the 1970s. The oil boom of the
1970s flooded the national treasury, cut the unemployment rate in
half, created large balance of payments surpluses, and stimulated
the economy at large. Nonetheless, it also devastated the
agriculture sector, which declined 25 percent because of the
resulting shortages of laborers, who migrated to west coast cities
for higher wages. Although the boom was reversed in the early
1980s, Trinidad and Tobago's accumulated wealth permitted it to
weather the impact of the international recession better than most
developing countries and avoid the debt crisis that confronted its
neighbors. Although some charges of government waste and corruption
were voiced during the 1970s and 1980s, sufficient discipline in
public finance prevailed to allow the country to elude the fiscal
crisis that confronted other oil-exporting, developing nations such
as Mexico, Venezuela, and Nigeria.
In the late 1980s, Trinidad and Tobago displayed a mixed
economy that allowed for a level of government involvement second
only to that in Cuba among the countries of the Western Hemisphere.
The large role in the economy of subsidies, transfers, and joint
ventures between the government and the private sector created an
intertwining of the public and private sectors that often blurred
distinctions between them. During the 1970s, the government
purchased a share in over fifty major companies in banking,
insurance, agriculture, utilities, and manufacturing. As a
consequence, the government also became the largest single employer
in the country. Although Trinidad and Tobago was a country where
capitalism generally flourished, free enterprise, especially the
foreign sector, was highly regulated by the government.
Trinidad and Tobago was a very open economy, dependent on the
export of oil to purchase large amounts of imported food, consumer
goods, and capital goods. Oil represented approximately 80 percent
of exports, whereas food accounted for as much as 20 percent of
imports in the late 1980s. Trinidad and Tobago was the most
important exporter of oil to the United States from the Caribbean
Basin. The country supplied nearly 50 percent of that region's oil
exports to the United States, as well as 18 percent of the region's
total exports to that same market. Unlike virtually every other
Caribbean country, Trinidad and Tobago generally enjoyed yearly
trade and balance of payments surpluses. The country depended on
the United States for roughly 50 percent of its trade, but the
islands also maintained important trade relations with the European
Economic Community (EEC) and the Caribbean Community and Common
Market (Caricom--see Appendix C). Once a donor nation that aided
its poorer Caribbean neighbors, Trinidad and Tobago in the late
1980s was increasingly in need of external financing to weather its
economic adjustment period.
Data as of November 1987
|
