British Virgin Islands, Anguilla and Montserrat - Economy

British Virgin Islands, Anguilla and Montserrat - Economy

Like most of the West Indies, the British dependencies traditionally depended on agriculture, some fishing, and a few light industries such as straw and basket work. Tortola, in the British Virgin Islands, was also the site of rum distilleries. Unemployment was high, because much of the work was seasonal. As a result, all three territories have worked hard to build up year-round tourism and attract light industries.

The gross domestic product (GDP--see Glossary) of the British Virgin Islands in 1985 was US$84.5 million, of which tourism accounted for approximately 50 percent and other services and government for approximately 50 percent. Per capita GDP in the British Virgin Islands in 1985 was estimated at US$7,260, a higher figure than that of many neighboring Caribbean states. Most of the work force was employed in the United States Virgin Islands. Tourism (26 percent), government service (20 percent), and construction (18 percent) were the principal employers of the domestic work force in the mid-1980s.

In the late 1980s, tourism was the principal economic activity in the British Virgin Islands, generating about 50 percent of the national income. The number of tourists visiting the islands increased from 70,287 in 1976 to 161,625 in 1984. The major characteristic of the islands' tourist industry was that it was based largely on yachting. Sixty-three percent of the arrivals chartered or lived on yachts. Seventy percent of the visitors came from the continental United States, 11 percent from Canada, 10 percent from Puerto Rico and the United States Virgin Islands, 7 percent from Western Europe, and 2 percent from elsewhere in the Caribbean.

Offshore financial services were also a rapidly growing part of the economy in the late 1980s. A direct result of the enactment in July 1984 of the International Business Companies Act was the incorporation of about 3,000 companies in the British Virgin Islands between July 1984 and December 1986.

Agriculture remained moderately important in the British Virgin Islands but was limited by the islands' poor soil. Farms, generally located on the larger islands, tended to be small, averaging just over seven hectares. In general, the soils of the islands were poor, and food crops were rotated with pasture. Raising cattle for export was the main agricultural industry, but some sheep and goats also were raised. Crops included sugarcane, used locally for the production of rum, and fruits and vegetables, often sold to customers in the United States Virgin Islands.

Overall, 60 percent of the total land area was in private ownership. The remainder was owned by the crown. Of the privately owned land, 75 percent belonged to native British Virgin Islanders, 18 percent to foreigners, chiefly United States citizens, and 7 percent to nonindigenous British subjects. The government used 3 percent of crown lands for its own purposes and rented 31 percent of its land to native islanders and some 7 percent to British subjects and foreigners. Fifty-nine percent of the crown lands were not in use. Nationals of other countries, including Britain, had to obtain a license to buy land.

The coastal waters of the British Virgin Islands abound in various species of fish, which provided one of the largest sources of protein in the islands and the largest export. In 1983 fish exports contributed US$216,000 to the economy. By the late 1980s, traditional sloops had given way to motorized fishing boats. Deep- sea sport fishing also had been developed and was part of the growing tourist industry in the islands.

Exports from the British Virgin Islands were negligible in comparison with imports. In 1985 exports stood at US$2.5 million and imports at US$91.4 million. Fresh fish, rum, gravel and sand, fruits, vegetables, and livestock were the primary exports. The United States Virgin Islands received about 50 percent of the exports. Other Caribbean islands accounted for most of the rest. There was negligible export trade with the United States or Britain. The islands imported building materials, automobiles, machinery, fuel, foodstuffs, manufactured goods, and chemicals, primarily from the United States (about 50 percent), the United States Virgin Islands (13 percent), and the rest of the Caribbean (27 percent). The trade deficit was made up in three ways--by remittances from British Virgin Islanders working overseas, tourist receipts, and foreign investment.

Although Anguilla was less prosperous than the British Virgin Islands, it sustained steady economic growth for the five years ending in 1986. In 1983 GDP was US$6 million and per capita GDP a respectable US$6,000. Services and tourism contributed heavily to GDP; this was reflected in the distribution of the labor force, 46.3 percent of which was in the service sector. Industry accounted for 35.2 percent of all employment, and agriculture accounted for 8.5 percent. Unemployment on Anguilla was 30 percent in 1985.

Anguilla's economic growth in the 1980s was a direct result of its improved standing as a tourist attraction. The total number of visitors rose by 16 percent from 1985 to 1986 and provided revenue for the private sector through tourist-related services and for the public sector through increased duties. In 1986 the Caribbean Development Bank (CDB) outlined new projects that would help Anguilla sustain the growth of tourism. These projects included construction of a modern, forty-four-room hospital and a new airport terminal.

Salt, a traditional export, remained Anguilla's second most important source of foreign revenue in the mid-1980s. Most of the salt was used in oil refinery operations in Trinidad. Salt production had been temporarily suspended in the late 1970s after most of the yield was destroyed by rains.

Workers' remittances from abroad also formed a large part of the island's income; 20,000 people of Anguillian ancestry lived abroad, concentrated in Slough, England, and South Amboy, New Jersey. Because there was no income tax in Anguilla, customs duties, license fees, and revenue from postage stamp sales were important sources of government income.

Domestic agriculture was a high priority on Anguilla, although the island had little arable land. Only 13 percent of Anguilla's total area was cultivable, and only a third of that was truly arable. Crops were grown primarily for domestic use. The British government has invested in irrigation and water projects, including desalination plants. Legumes, sweet potatoes, and sorghum were the main crops, mostly grown in "backyard garden-scale" plots averaging little more than one-quarter of a hectare. When rainfall was good and crop surpluses resulted, the territory exported small amounts of vegetables and fruits to neighboring islands.

Anguillians raised cattle, goats, sheep, and pigs for domestic use and for export. The island also exported lobsters, although overfishing had depleted the once valuable lobster beds. In 1983 Anguilla exported fish and shellfish valued at US$49,000.

Exports from Anguilla in 1981 had a total value of US$5.4 million. Most of Anguilla's exports were to other Caribbean islands; little was destined for either the United States or Britain. Import statistics were not available, but the United States accounted for a large proportion of Anguilla's imports.

The per capita GDP of Montserrat was far lower than that of the other two island groups, standing at only US$3,130 in 1985. GDP was US$37.1 million in 1985, of which 79 percent was generated by services, 15 percent by manufacturing and industry, and 6 percent by agriculture. Tourism alone generated about 25 percent of Montserrat's GDP. Because of tourism's significance, large amounts of the available foreign aid, mostly from Britain, were used on such projects as the improvement of airport and dock facilities.

Like the labor forces of Anguilla and the British Virgin Islands, the Montserratian work force was concentrated primarily in services. Sixty-four percent of the labor force was employed in the service sector, 25.7 percent in industry, and 10 percent in agriculture in 1983. Thirty-five percent of the island's women were active in the labor force in 1982. Unemployment was estimated at 5.3 percent in 1985.

Thirty-five percent of the island's annual income came from remittances by overseas citizens; between 1959 and 1962, one-third of the population left for Britain. Expatriates living on the island contributed 25 percent of GDP. The government has attracted foreign light manufacturing (mainly of plastic bags, textiles, and electronic appliances), which accounted for 90 percent of the total value of exports in 1984. The sea island cotton industry was also important. In addition, more than twenty offshore banks (see Glossary) had been established. These were subject to strict government controls.

Barely 18 percent of Montserrat's total area is suitable for crops and pasture. Soils are poor, and scant rainfall and periodic droughts frequently limit yields. As on Anguilla, the British government invested in irrigation and water projects. Montserrat's farmers grew limes, bananas, vegetables, and some cotton. When rainfall was good and crop surpluses resulted, Montserrat also exported small amounts of vegetables and fruits to neighboring islands. In general, however, agriculture was declining on Montserrat; the island's Ministry of Agriculture estimated that only twenty farmers were consistent producers. Montserrat also raised livestock for domestic use and export. Seafood, mostly fish, also was exported.

Like Anguilla and the British Virgin Islands, Montserrat imported far more than it exported. In 1985 exports were valued at only US$2.8 million, while imports amounted to US$18.3 million. Most of Montserrat's imports came from the United States (33 percent) and the European Economic Community (32 percent). Exports went mainly to other Caribbean islands (59 percent) and to Western Europe (18 percent).

In the mid-1980s, communication and transportation networks in the British Virgin Islands were among the least developed in the Commonwealth Caribbean. The islands had about 3,000 telephones; interisland service was poor, although a submarine cable provided somewhat more reliable international connections. One AM radio station on 780 kilohertz and a television transmitter using Channel 5 provided limited service on Tortola. The Island Sun, published weekly, was the British Virgin Islands' only local newspaper. There were just over 100 kilometers of surfaced roads, but they were generally narrow and in poor condition. Virgin Gorda and Road Town on Tortola had the only two paved airfields. Regularly scheduled flights linked Road Town with San Juan, Puerto Rico, and St. Thomas in the United States Virgin Islands. The port at Road Town could handle large ships. The islands had no railroads or inland waterways.

The communication and transportation systems on Anguilla were small but modern and met the needs of the island's population. The island had 890 fully automatic telephones with international service available. The government-owned Radio Anguilla broadcast on 1505 kilohertz; Caribbean Beacon, a religious organization, had strong transmitters on 690 and 1610 kilohertz and a small FM station on 100.1 megahertz. There were no television transmitters or local newspapers. About sixty kilometers of all-weather roads reached all areas of the island. Regularly scheduled flights from neighboring islands landed at Wallblake Airport on the south coast. Road Bay, on the north-central side of the island, was the principal port. The island had no rail or inland water facilities.

Communications on Montserrat were excellent. A subsidiary of Cable and Wireless, a British telecommunications firm, had just over 3,000 telephones with good islandwide and international service. The number of broadcast facilities, considering the size of the island, was quite high. Radio Montserrat, owned by the government, broadcast on 880 kilohertz. The commercial Radio Antilles had two FM transmitters on 99.9 and 104.0 megahertz, a station on 740 kilohertz that relayed Radio Canada programs in the evening, and a powerful transmitter on 930 kilohertz with programming in English and French that could be heard throughout the Eastern Caribbean. Deutsche Welle, the official shortwave service of West Germany, operated a relay on Montserrat for programming to the Western Hemisphere. The television station on Channel 7 could be received throughout the island as well as on Antigua and St. Kitts. No local newspapers were published.

Development of Montserrat's transportation infrastructure was hindered by the mountainous terrain. A 200-kilometer paved road ran along the west, north, and east coasts; 80 kilometers of gravel roads linked smaller villages. Plymouth was the island's principal port. The only airfield was about ten kilometers from Plymouth; it had regularly scheduled flights to neighboring islands. There were no railroads or navigable inland waterways.

The British Virgin Islands and Anguilla supplied electricity at the United States standard of 120 volts, whereas Montserrat used the European standard of 220 volts. Currencies in the territories varied. Although the British Virgin Islands was part of the British pound sterling system, the only currency in actual use was the United States dollar, a situation related to the territory's proximity to Puerto Rico and the United States Virgin Islands. Both Anguilla and Montserrat used the British-sponsored Eastern Caribbean dollar, although United States dollars circulated freely on Anguilla. The Eastern Caribbean dollar was pegged to the United States dollar at a rate of EC$2.70 to US$1.00 in 1987.

Country Studies main page | Caribbean islands Country Studies main page