Economy of the Cayman Islands
The economy of the Cayman Islands, a British overseas territory located in the western Caribbean Sea, is mainly fueled by the tourism sector and by the financial services sector, together representing 70–80 percent of the country's gross domestic product (GDP). The Cayman Islands Investment Bureau, a government agency, has been established with the mandate of promoting investment and economic development in the territory.
The emergence of what are now considered the Cayman Islands' "twin pillars of economic development" (tourism and international finance) started in the 1950s with the introduction of modern transportation and telecommunications.
From the earliest settlement of the Cayman Islands, economic activity was hindered by isolation and a limited natural resource base. The harvesting of sea turtles to resupply passing sailing ships was the first major economic activity on the islands, but local stocks were depleted by the 1790s. Agriculture, while sufficient to support the small early settler population, has always been limited by the scarcity of arable land. Fishing, shipbuilding, and cotton production boosted the economy during the early days of settlement. In addition, settlers scavenged shipwreck remains from the surrounding coral reefs.
The boom in the Cayman Islands' international finance industry can also be at least partly attributed to the British overseas territory having no direct taxation. A popular legend attributes the tax-free status to the heroic acts of the inhabitants during a maritime tragedy in 1794, often referred to as "Wreck of the Ten Sails". The wreck involved nine British merchant vessels and their naval escort, the frigate HMS Convert, that ran aground on the reefs off Grand Cayman. Due to the rescue efforts by the Caymanians using canoes, the loss of life was limited to eight. However, records from the colonial era indicate that Cayman Islands, then a dependency of Jamaica, was not tax-exempt during the period that followed. In 1803, the inhabitants signed a petition addressed to the Jamaican governor asking him to grant them a tax exemption from the "Transient Tax on Wreck Goods".
International finance and tourism
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The Cayman Islands' tax-free status has attracted numerous banks and other companies to its shores.
More than 40,000 companies were registered in the Cayman Islands as of 2000, including almost 600 banks and trust companies, with banking assets exceeding $500 billion. Large corporations based in the Cayman Islands such as Semiconductor Manufacturing International Corporation (SMIC). The Cayman Islands Stock Exchange was opened in 1997.
Tourism is also a mainstay, accounting for about 70% of GDP and 75% of foreign currency earnings. The tourist industry is aimed at the luxury market and caters mainly to visitors from North America. Unspoiled beaches, duty-free shopping, scuba diving, and deep-sea fishing draw almost a million visitors to the islands each year. Due to the well-developed tourist industry, many citizens work in service jobs in that sector.
The Cayman Islands is seeking to diversify beyond its two traditional industries, and invest in health care and technology. Health City Cayman Islands is a planned medical tourism hospital in East End being led by surgeon Devi Shetty. Cayman Enterprise City is a special economic zone planned for Savannah for technology, finance, and education investment. Cayman Sea Salt and Cayman Logwood products are now made in the Cayman Islands.
Standard of living
Because the islands cannot produce enough goods to support the population, about 90% of their food and consumer goods must be imported. In addition, the islands have few natural fresh water resources. Desalination of sea water is used to solve this. Despite those challenges, the Caymanians enjoy one of the highest outputs per capita and one of the highest standards of living in the world. The Cayman Islands produces gourmet sea salt.
Education is compulsory to the age of 16 and is free to all Caymanian children. Most schools follow the British educational system. Ten primary, one special education, a high school and a middle school ('junior high school') are operated by the government, along with three private high schools. In addition, there is a law school, a university-college and a medical school.
GDP: purchasing power parity - $1.939 billion (2004 est.)
GDP - real growth rate: 1.7% (2005 est.)
GDP - per capita: purchasing power parity - $43,800 (2004 est.)
GDP - composition by sector:
services: 95.4% (1994 est.)
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices): 4.4% (2004)
Labour force: 23,450 (2004)
Labour force - by occupation: agriculture 1.4%, industry 12.6%, services 86% (1995)
Unemployment rate: 1.7% (2010) Budget:
revenues: $423.8 million
expenditures: $392.6 million, including capital expenditures of $NA (1997)
Industries: tourism, banking, insurance and finance, construction, construction materials, furniture
Industrial production growth rate: NA%
Electricity - production: 441.9 million kWh (2003)
Electricity - production by source:
fossil fuel: 100%
other: 0% (1998)
Electricity - consumption: 411 million kWh (2003)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Exports: $2.52 million (2004)
Exports - commodities: turtle products, sea salt,manufactured consumer goods
Exports - partners: mostly US (2004)
Imports: $866.9 million (2004)
Imports - commodities: foodstuffs, manufactured goods
Imports - partners: UK, US, Netherlands Antilles, Japan (2004)
Debt - external: $70 million (1996)
Economic aid - recipient: $NA
Currency: 1 Cayman Islands dollar (CI$) = 100 cents
Exchange rates: Caymanian dollars per US dollar - 0.80
Fiscal year: 1 April–31 March
- Background Note: Cayman Islands. Bureau of European and Eurasian Affairs, February 2008. US Department of State. Retrieved 11 September 2008.
- Cayman Islands Investment Bureau.
- Points of Interest: The Wreck of the Ten Sails. Cayman Islands Chamber of Commerce, 2003. Retrieved 11 September 2008.
- The East End Lighthouse Park. National Trust of the Cayman Islands, 8 June 2006. Retrieved 11 September 2008.
- Smith, Roger C. (2000). The Maritime Heritage of the Cayman Islands. University Press of Florida. ISBN 0-8130-1773-4, p. 172.