Manufacturing

© Oxford University Press 2016

Development and manufacturing in the
Caribbean
•Manufacturing promotes development because it:
– creates employment
– provides a market for primary products such as sugar cane
– reduces the need for imports, and earns money from exports.
From the 1950s, governments encouraged manufacturing by:
– building industrial estates with ready-to-use factories
– training technicians and other staff
– charging duty on (and sometimes banning) competing imports
– giving incentives such as tax holidays.
Most Caribbean exports had duty-free access to Europe, Canada
and the USA under special trade agreements.

© Oxford University Press 2016

Three types of manufacturing were developed
– Processing local raw
materials: alumina
plants, oil refineries,
sugar factories.
– Import substitution
industries such as
cement or processed
foods.
– Enclave industries:
local labour uses
imported materials to
make garments or
electronic components
for export.
© Oxford University Press 2016
Local manufacturers face increased
competition
– The World Trade Organisation promotes free trade.
– Bans and restrictions on imports have been lifted.
– Caricom has reduced its external tariff on imported goods.
– Europe and North America have reduced duties for many other
countries. The Caribbean’s special status is now less valuable.
– Low-cost imports are imported and advertised widely.
– Caribbean labour costs are higher than China or Bangladesh.
– Energy costs are high, except in Trinidad and Tobago.
– Small-scale local factories cannot buy large-scale equipment.
– It is expensive for Caribbean companies to advertise overseas,
pay shelving fees to supermarkets, or obtain the best prices.

© Oxford University Press 2016

Food processing: a flour mill in St Vincent
– The flour mill is located
on an industrial estate,
on flat land close to
Kingstown.
– There is a wharf to
import wheat and rice,
and to export finished
products.
– Flour, rice and animal
feed are exported
within Caricom.
– There are more than
100 staff, from all parts
of St Vincent.
© Oxford University Press 2016
Food processing: local foods in St Vincent
– Erica’s Country Style
buys produce from local
farms to make sauces,
snacks and processed
foods.
– Containers and labels
are imported.
– Foods are sold locally,
and exported to ‘ethnic’
and ‘crossover’ markets.
– This small business has
five staff and can
operate from a rural
location, 6 km from
Kingstown.
© Oxford University Press 2016
Singapore is a natural focus for shipping routes
– The British began to
develop Singapore as a
port in 1819.
– At that time, its
population was around
1,000.
– Singapore has been
independent since 1965.
– Singapore now has more
than 5.5 million people.
– Most are of Chinese
origin. Many are ethnically
Malaysian or Indian.

© Oxford University Press 2016

Singapore is one of the most prosperous economies
– Health and education
are well-developed.
– Singapore has the
world’s second-largest
container port and sixth
airport.
– Singapore is a centre
for banking and finance.
– Singapore is a leading
producer of oil rigs,
computers, integrated
circuits and electronics.

© Oxford University Press 2016

Food processing plays a minor role
– Food processing makes
up 3% of
manufacturing output.
– Wages are below the
national average.
– Many businesses are
small and family-run.
– There are some large
companies which export
convenience foods
worldwide.
– Many are located on
Senoko industrial
estate.

© Oxford University Press 2016

Migrant workers lead a precarious existence
– There are many migrant
workers from other
Asian countries.
– Many borrow heavily to
reach Singapore, and
remain in debt during
their stay.
– Many have short-term
work permits.
– Some work long hours
for less than minimum
wages.
– Some live in huge
dormitories.

© Oxford University Press 2016

Jamaica has many natural resources
– Climate: warm, enough
rain for agriculture.
– Soils: some are deep and
fertile.
– Minerals: such as bauxite,
gypsum and limestone.
– Scenic resources: to
attract tourists.
– Forests: preserve wildlife
and water resources.
– Exploration is in progress
for offshore oil and gas.

© Oxford University Press 2016

These are the main sectors of Jamaica’s economy
– Agriculture: still a big
employer, but no longer
the mainstay.
– Bauxite: few jobs, but
important export earnings.
– Manufacturing: strong,
but garment making has
declined since the 1990s.
– Tourism: earns foreign
exchange, provides jobs,
buys local goods, services.
– Other services: such as
banking, health,
insurance.

© Oxford University Press 2016

Which economic sectors are most significant?

Which create most jobs? Which create most economic output?

© Oxford University Press 2016

Which are the export sectors? Why do they matter?
•Exports are needed to pay
for oil, food and other
imports.
•What are the three main
sources of export earnings
for Jamaica?

© Oxford University Press 2016

 Air pollution
– Dust: Dust from quarries and construction sites can
cause breathing problems. It is localised, and can often
be controlled.
– The ozone layer: Ozone in the upper atmosphere
protects us from ultraviolet rays. This ozone is destroyed
by chlorofluoro-carbons which were used in refrigerators
and sprays until the 1990s. New emissions are
controlled; but the chemicals are persistent and have
also caused a hole in the Arctic ozone layer.
– Urban smog: Vehicle exhaust and sunshine form
harmful surface ozone, which causes urban ‘smog’ in
tropical cities.

© Oxford University Press 2016

The Gulf of Mexico: the Deepwater Horizon oil spill
– Oil and gas supply 60%
of the world’s energy.
– Marine reserves are
enormous, but drilling
brings dangers.
– In 2010, methane gas
exploded at an oil rig,
65 km from the
Mississippi delta.
– Eleven workers were
killed and crude oil
poured out for 87 days.
© Oxford University Press 2016
Oil affected a huge area in the Gulf of Mexico

Areas covered with oil, closed to fishing, or with coastal pollution.

© Oxford University Press 2016

Some effects of the Deepwater Horizon oil spill
– Fishing was banned in a
sea area larger than
Guyana.
– Tourists stayed away
from the Gulf of Mexico.
– Marine wildlife and eco-
systems were damaged.
– The rig and lost oil were
worth US$800m.
– The oil company BP
agreed to pay US$18.7
billion for enronmental
damage, more than the
GDP of Jamaica.

© Oxford University Press 2016

 Location factors for manufacturing
•Raw materials: alumina plants and
factories are close to bulky or
perishable materials.
•Markets: bakeries and other
industries with perishable or bulky
products are close to their markets.
•Labour: garment manufacturing
requires skilled and low-cost labour.
•Relief: flat land is needed.
•Ports: heavy industries such as
cement or oil refining are usually
close to ports.
•Energy: all industries need a reliable
low-cost energy supply. Low-cost
electricity is essential for aluminium
smelting.
•Government support:
– developing industrial estates
– tax concessions
– protection against imports.
© Oxford University Press 2016
Which factors affect industrial location in Trinidad

The location of heavy energy-based industries in Trinidad

© Oxford University Press 2016

 Location factors for agriculture and
tourism
Tourism Agriculture
– Natural attractions, beaches Natural environment
– Culture, music, food, sports – Climate, hazards, soil, relief,
– Social environment, safety water supply, drainage
– Transport facilities, airports Human environment
– Infrastructures, electricity – Land ownership, farm size,
– Labour force, skills and costs labour supply, technology
– Markets, USA, Europe, other Economic environment
– – Markets, prices, investment
Government assistance, tax
concessions, staff training Government assistance

© Oxford University Press 2016

 Benefits and drawbacks of
globalisation
Advantages
•High quality imports available
•Export opportunities
•More international tourism
•Foreign investment
•International rules on tax,
environment, copyright etc.
•Worldwide disaster assistance
Disadvantages
•Competition for local business
•World market is competitive.
•Other regions develop tourism.
•Investors compete with locals.
•Caribbean countries must
change their rules to meet
international standards.
© Oxford University Press 2016
 Trading blocs and international
organisations
•Caricom: promotes trade, economic development and functional co-
operation for 15 Caribbean countries.
•Caricom Single Market and Economy: No trade barriers, free
movement of capital, some types of labour can migrate freely.
•Organisation of Eastern Caribbean States: Economic integration,
co-operation, shared court system and Central Bank.
•European Union: Free access for exports, financial assistance.
Formerly privileged access for Caribbean sugar, bananas and rice.
•IMF, World Bank: Economic co-operation, development support.
•World Trade Organisation: Sets international trading rules.

© Oxford University Press 2016