Chapter 19

Economic Activities
in the Caribbean
 Chapter 19: Economic Activities in the Caribbean

Types of economic activities

1. Primary industry
• First stage in the production process
• Major employer in poor countries
• Involves the exploitation of natural resources
• Includes activities such as agriculture, mining,
fishing and forestry
• Products are of low economic value
• Products are either food for human consumption
(e.g. fish) or raw materials for other economic
activities (e.g. rubber for the tyre industry)
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Main primary economic activities

 Chapter 19: Economic Activities in the Caribbean

2. Secondary industry
• Second stage in the production process
• Also called the manufacturing industry
• Involves processing raw materials from the primary
industry to add value to them
• Products are of higher economic value than those
of the primary industry
• Output is either a final product (e.g. computer) or a
part of the final product (e.g. microchip for the
computer)
 Chapter 19: Economic Activities in the Caribbean

Covered shed
where the farmer’s
tools and some
equipment are
kept

Main secondary economic activities

 Chapter 19: Economic Activities in the Caribbean

3. Tertiary industry
• Involves the provision of services to companies or
final consumers
• Includes the financial services, health care,
education and tourism sectors
• Contributes more to the economy as a country
becomes more developed
• People are the main resource
• Output is of high economic value
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Stages of economic development

 Chapter 19: Economic Activities in the Caribbean

Economic development in the Caribbean

• The capital city is usually the single prosperous core
while the hinterlands are less prosperous
• Large and successful industries tend to be located in
and around the capital
• The rural areas will have fewer and less successful or
even declining industries
• Governments have set up industrial estates in poorer
areas to reduce the income disparity
• Disparities in economic wealth between Caribbean
countries have made integration difficult
• Organisation of Eastern Caribbean States (OECS) is a
small group formed within the CARICOM to help with
the economic development of member states
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Challenges in Caribbean economic development

 Chapter 19: Economic Activities in the Caribbean

Measuring economic development

1. Gross Domestic Product (GDP)
• Total market value of goods and services generated within a
country over a given period

2. Gross National Product (GNP)

• Total market value of goods and services generated by a
country’s citizens, both domestically and overseas, during a
given period
 Chapter 19: Economic Activities in the Caribbean

Primary industry: Forestry

• The art, science and practice of studying and managing
forests and plantations, and related natural resources
• Guyana and Belize have significant forestry industries
• Trinidad and Tobago, Dominica, St Lucia and St Vincent
also have substantial forest resources
• Jamaica, Barbados
and Haiti have almost
depleted their forest
resources
 Chapter 19: Economic Activities in the Caribbean

Case study: Forestry

industry in Guyana
• Forests are the most abundant
natural resource in Guyana
• They cover about 163,000km2 or
80% of the country
• The forests range from dry
evergreen and seasonal forests
to evergreen rainforests
• Most of the valuable timber
species are found in the tropical
rainforests
• 65% of the forests is exploitable
• 17% of the forests is accessible
• The forestry industry is an
important contributor to the 0 500km
economy in terms of GDP and
employment
Forested areas in Guyana
 Chapter 19: Economic Activities in the Caribbean

• Main forestry activity is

lumbering
• Major lumbering areas are
in the northwest, in Kaow
Island and in Anarika

Main lumbering areas 0 500km

in Guyana
 Chapter 19: Economic Activities in the Caribbean

Factors influencing the location of the lumbering industry

1. Types of trees and size of the forest
• Commercially valuable trees in Guyana are greenheart,
mora, baromalli, purpleheart, kabakalli, womara and
crabwood
• 40% of the forests has been opened up for commercial
exploitation

Species Uses
Greenheart Jetties, wharves, bridges, railway sleepers, houses
Purpleheart Ceilings and floors
Wallaba Firewood, charcoal, electricity poles
Mora Railway sleepers, houses
Crabwood Furniture
Balata Resin used in making handicraft and golf balls
 Chapter 19: Economic Activities in the Caribbean

2. Demand for timber and forest products

• Europe and North America are the traditional markets
• The US is the main market for plywood
• Southeast Asia has emerged as a new market
• In 2000, 94% of the logs were exported to Southeast Asia
• More demand could come from other Caribbean countries in
future, since Guyana accounts for an estimated 90% of the
region’s forests

3. Labour supply
• Most of the workers are Guyanese
• The forestry industry employs 20,000 people
 Chapter 19: Economic Activities in the Caribbean

4. Accessibility
• Access to and from the main lumbering areas is via river
• Timber-cutting is carried out near the banks of navigable
rivers such as the Essequibo River and the Barama River
• The logs are thrown into the rivers and allowed to float
downstream to the sawmills

5. Level of technology
• Small lumbering companies rely on simple tools like saws
and axes
• Larger companies use higher-technology tools such as
power saws, tractors and mechanical skidders
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6. Ownership
• The Guyana government owns the forests
• The Guyana Forestry Commission (GFC) manages the State
Forests and ensures that logging is carried out in accordance
with the regulations
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Benefits of a viable forestry industry

• Given the large tracts of forests, the forestry industry
can contribute significantly to Guyana’s economy

(Protect coral
reefs)
 Chapter 19: Economic Activities in the Caribbean

Challenges for the forestry industry

1. Manpower
• The industry faces a shortage of skilled workers with
adequate knowledge
• Training can be provided to upgrade the skills of the workers
so that they can handle more sophisticated tools

2. Technology
• Outdated technology is still being used by lumbering
companies
• More advanced tools like tractors and power saws should be
used to improve efficiency and cost effectiveness
 Chapter 19: Economic Activities in the Caribbean

3. Diseases
• Good forest management, regular spraying and research are
needed to minimise diseases
• But the government does not have the know-how or the
funds to undertake these measures

4. Over-exploitation
• With increasing global demand, logging is taking place more
rapidly than the trees can grow
• Good management practices such as replanting and using
proper harvesting techniques are essential to ensure the
sustainability of this industry
 Chapter 19: Economic Activities in the Caribbean

5. Globalisation
• Globalisation has given Guyana an opportunity to be more
engaged in international trade and earn foreign exchange
through its forestry products
• But this must be balanced carefully against the need to
ensure proper management of the forests

6. Sustainability
• Steps must be taken to conserve and preserve the forest
resources
• Guyana still lacks the data necessary for forest management
• Research and development (R&D) could be carried out to
provide this data
 Chapter 19: Economic Activities in the Caribbean

Secondary industry: Food

processing
• Transformation of products from the primary
industry into food for consumption
• Methods include canning, fermentation,
dehydration, freezing and irradiation
• A component of the agri-food
industry, which involves
various stages of work done
to add value to the food that
people consume
 Chapter 19: Economic Activities in the Caribbean

Stages of work in the agri-food industry

 Chapter 19: Economic Activities in the Caribbean

Food processing in the Caribbean

• One of the oldest industries in the Caribbean
• Established during the colonial period
• Products are highly dependent on local and regional
markets
• Some niche markets are being exploited internationally
• Companies can be classified under small and micro
enterprises or medium and large enterprises
• Small and micro enterprises market products that are of
variable quality and dependent on local raw materials
• Medium and large enterprises produce beverages such
as beer, rum and soft drinks utilising local raw materials
as well as imported raw materials and semi-processed
materials
 Chapter 19: Economic Activities in the Caribbean

• Major crops include sugar cane, bananas, cocoa,

coffee, citrus, coconuts, nutmeg, rice and arrowroot

Processed food Source

Alcoholic punches Lime, passion fruit
Banana chips Banana
Cocoa sticks Cocoa bean
Crystallised fruit Paw paw
Dried sorrel Sorrel
Fruit wines Cherry, pomerac
Orange marmalade Orange
Snacks, cereals, tofu Soya bean
Some processed foods and their sources
 Chapter 19: Economic Activities in the Caribbean

Benefits of the food processing industry

1. Export earnings for the country
• It has become a more important source of foreign
exchange in recent years with the implementation
of trade liberalisation
2. Reduce wastage of agricultural produce
3. Increase the income of the rural population
4. Food security for the country
 Chapter 19: Economic Activities in the Caribbean

Problems facing the industry

 Chapter 19: Economic Activities in the Caribbean

Case study: Food processing

industry in Trinidad and
Tobago Number of
Type of processed food
• One of the largest manufacturing sectors in companies
the country
• Meat / Fish 50
Contributes over 50% of total manufactured
output Ice cream 12
• Employs 1% of the population
• Accounts for about 3% of GDP (2006 Fruits and vegetables 29
estimate)
Bakery products 188
• Consists of more than 400 companies,
ranging from small family-run businesses to Confectionery products 16
multinational enterprises
• Multinational companies like Nestle have their Alcoholic beverages 5
HQs in other countries but the factories are
Non-alcoholic beverages 15
located in Trinidad and Tobago where labour
is relatively cheap Others 109
• Many of the factories are in the large cities
and towns Total 424
• Products cater mainly to the local market, with
a small percentage for the international market Food products and the number of firms
producing them
 Chapter 19: Economic Activities in the Caribbean

Factors influencing the location

of the food processing industry
1. Supply of raw
materials
• Two main sources:
local agricultural
output
and imports
• Local sources meet
40%
of the needs of the
food
processing industry
• Imported raw materials
Agricultural imports by country
and semi-processed of origin
materials meet 60% of
the needs
 Chapter 19: Economic Activities in the Caribbean

2. Labour supply
• The industry employs more than 9,000 people
• Locals make up the majority of the labour force
• Workers usually live near the plants

3. Accessibility
• Transport infrastructure is well developed, making most areas
of the country accessible
• Distribution of products from the factories to the retail outlets
is quick and efficient

4. Level of technology
• Ranges from simple to complex
• Canning industry extends the shelf life of foodstuff through
the use of high pressure and temperature, which is relatively
low-level technology compared to freeze-drying and
irradiation
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5. Government
• The government has introduced liberalised import policies to
encourage trade, but protects the domestic food processing
industry by imposing high taxes on selected imports
• CARICOM member countries enjoy duty-free market access
to the domestic market of Trinidad and Tobago
• The government finances the Food Science and Technology
Unit of the University of the West Indies and the Caribbean
Industrial and Research Institute
• The graduates of these institutions are equipped with the
knowledge and expertise to add value to the industry such as
by developing better methods of processing food
 Chapter 19: Economic Activities in the Caribbean

Trends in the food processing industry

• Retail food sector is flourishing due to high per capita
income, large female workforce and rising foreign
investment
• Increased competition has led stores to modernise and
update their look and services to attract customers
• Higher demand for low-fat items and health food as
people know more about healthy lifestyles and nutrition
• Retail outlets are set up in convenient locations, e.g.
supermarkets are located near gyms to cater to health-
conscious consumers who want easy access to fruits
and vegetables after their workout
• Large quantities of food items are imported to meet
consumer demand
 Chapter 19: Economic Activities in the Caribbean

Challenges for the food processing industry

1. Technology
• Unwillingness to upgrade technology
• Lack of capital to invest in new technology
• Lack of skilled manpower to run new technology
• Seafood industry is trying out new technology given the large
market and the perishable nature of the products

2. Standard of processed foods

• Imported products have raised standards
• Local producers must improve their processing methods to
make their products equally attractive
• Investment in research and development is necessary
 Chapter 19: Economic Activities in the Caribbean

3. Globalisation
• With more foreign products becoming available, local
producers are having a tougher time maintaining their share
of the local market
 Chapter 19: Economic Activities in the Caribbean

Case study: Food processing industry in

Singapore
• Singapore is a small, newly industrialised island-state
located in Southeast Asia

0 800km
 Chapter 19: Economic Activities in the Caribbean

• The food processing industry was established in 1950s

• It is growing rapidly to keep up with the global tastes of
the resident population
• Singapore has no natural resources and farming
activities are minimal
• As a result, the food processing industry imports most
of its raw and semi-processed materials
• There are 681 food processing companies
• Factories are located in designated industrial estates
scattered all over the country
 Chapter 19: Economic Activities in the Caribbean

0 20km

Location of industrial estates in Singapore

 Chapter 19: Economic Activities in the Caribbean

Factors influencing the location of the food processing

industry
1. Supply of raw materials
• Almost all the raw materials are imported

2. Labour supply
• Most of the workers are locals
• The industry employs about 19,200 people

3. Accessibility
• Singapore is well connected to the world by air and sea
• Products are easily and quickly exported to other countries
• Internally, a dense and efficient transport network provides
excellent accessibility between the factories, the retail outlets
and the air and sea ports
 Chapter 19: Economic Activities in the Caribbean

4. Level of technology
• The technology used has become more advanced to keep
up with global trends and the local demand for variety and
quality
• Skilled labour is available to operate the higher-technology
equipment

5. Government
• The government has set up designated industrial areas in
different parts of Singapore to cater to different types of
industries
• International Enterprise Singapore, a government agency,
helps local food processing companies to extend their
regional and global reach
• Most imported products are not subjected to import duties
 Chapter 19: Economic Activities in the Caribbean

Features of the food processing industry

• 95% of companies are small and medium-sized
enterprises (SMEs)
• Labour force in an SME may range from a few workers
to about 200
• Highly dependent on imported raw materials and semi-
processed materials
• Products cater to local and international markets
• Some niche markets are being exploited internationally
• Products include dairy products, edible oils, beverages,
bakery products, processed meat and chocolate
 Chapter 19: Economic Activities in the Caribbean

Trends in the food processing industry

• Retail food sales have been rising in recent years
• Lifestyles are changing with increasing affluence
• People are dining out more often
• Preference for food that is ready to eat or requires little
cooking
• Companies are using technology to increase the shelf
life of products and to increase market share
• Some hypermarkets and supermarket chains are
offering online shopping
 Chapter 19: Economic Activities in the Caribbean

Challenges for the food processing industry

• Small domestic market
• Need to sell to markets abroad to stay viable
• 40% of the products are exported overseas
• Competition from countries that are able to produce the
same items at lower cost due to cheaper labour
• Need to come up with products that are uniquely
Singaporean using new technology, e.g. instant roti
prata
 Chapter 19: Economic Activities in the Caribbean

Tertiary industry: Tourism

• Provision of services to people who travel to and stay in
places away from their place of residence for leisure
purposes or otherwise
• Generates income for a
country through the sale
of domestic goods and
services to tourists and
the employment of its
people in tourism-related
businesses
 Chapter 19: Economic Activities in the Caribbean

Tourism in the Caribbean

• Major contributor to GDP
• Accounts for more than 60% of the GDP in countries such as the Bahamas,
Jamaica, Antigua and Barbuda, and the Netherlands Antilles
• Earns 90% of the foreign exchange for some countries

Types of tourism in the Caribbean

 Chapter 19: Economic Activities in the Caribbean

Major tourist destinations in the Caribbean (2005)

Destination Total tourist Destination Total tourist
arrivals arrivals
Anguilla 62,084 Grenada 98,244
Antigua & Barbuda 245,384 Guyana 116,596
Aruba 732,514 Jamaica 1,478,663
Bahamas 1,514,532 Martinique 474,126
Barbados 547,534 Montserrat 9,690
Bermuda 269,576 Puerto Rico 1,449,785
British Virgin Islands 337,135 St. Lucia 317,939
Cayman Islands 167,801 St. Vincent & Grenadines 95,505
Cuba 2,319,334 Suriname 144,899
Curacao 222,070 Trinidad & Tobago 460,195
Dominican Republic 3,690,692 US Virgin Islands 697,033
 Chapter 19: Economic Activities in the Caribbean

Sources of tourist arrivals in the Caribbean

 Chapter 19: Economic Activities in the Caribbean

Case study: Tourism industry in Jamaica

• Jamaica has a strong global presence
• The country is noted for its excellent beaches such as
Negril and Doctor’s Cave in Montego Bay.
• It is also known for the Dunn’s River Falls, YS Falls,
river rafting on the Rio Grande, cliff jumping at Rick’s
Café and many other attractions.
• Tourism earns the country up to US$970 million a year
in foreign exchange
• The industry is well developed compared to other
Caribbean countries. Activities occur both day and night
throughout the year with something to interest
everyone.
 Chapter 19: Economic Activities in the Caribbean

Physical factors influencing the tourism industry in Jamaica

1. Climate
• Warm and sunny throughout the year
• Attracts people from cool temperate regions such as the northern parts of
the US
• Tourists can enjoy the beaches all year round

2. Natural resources
• White sandy beaches
• Clear seas rich with marine life
• Beautiful scenery (e.g. Blue Mountains)
• Lush vegetation
• Wide variety of flora and fauna

View of the Blue Mountains

 Chapter 19: Economic Activities in the Caribbean

3. Proximity to markets
• Near to Canada, the US and Europe, which are where the
bulk of the tourists come from
• Travel to Jamaica is relatively cost-effective and time-
efficient for these tourists
 Chapter 19: Economic Activities in the Caribbean

Human factors influencing the tourism industry in

Jamaica
 Chapter 19: Economic Activities in the Caribbean

Economic factors influencing the tourism industry in

Jamaica
1. Contribution to economy
• The industry is a major contributor to GDP
• In 2004, it accounted for 12% of the GDP
• It is estimated that a quarter of the country’s workforce is
employed in the industry
• Tourism provides direct and indirect employment

2. Labour supply
• Tourism is a labour-intensive industry
• Workers are mainly locals
• Labour force is well-educated and skilled, and provides a
high standard of service
 Chapter 19: Economic Activities in the Caribbean

3. Availability of capital
• Capital is provided by foreign investors, especially in the
development of hotels
• The government plays an important role in attracting foreign
investments

4. Caribbean Single Market and Economy (CSME)

• Being a member of CSME has improved Jamaica’s credibility
and encouraged other CSME members to invest in the
country
• CSME allows free movement of skilled labour among
member countries
 Chapter 19: Economic Activities in the Caribbean

Summary of economic factors influencing the

tourism industry
 Chapter 19: Economic Activities in the Caribbean

Trends in the tourism industry

• Increased affluence has given people in many countries
greater incentive to travel overseas
• Proximity to North America and Europe makes travel to
Jamaica relatively fast and cheap for tourists from these
markets
• Close cultural and political ties with the US and
European countries ensure a comfortable and familiar
environment for the tourists
• Improved access to information through the Internet
has generated greater interest in travel
 Chapter 19: Economic Activities in the Caribbean

Challenges for the tourism industry

• Need to develop sustainable tourism to ensure that
future generations will be able to benefit from the
tourism resources
• Rising number of tourists visiting the natural attractions
has caused increased damage to the environment
• Caribbean Conference on Sustainable Tourism (STC)
was inaugurated in 1997 to promote sustainable
tourism