Economy of the Cayman Islands
Encyclopedia
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 Island 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.
, economic activity was hindered by isolation and a limited natural resource base. The harvesting of sea turtle
s 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 available 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".
More than 40,000 companies were registered in the Cayman Islands as of 2000, including almost 600 bank
s 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.
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.
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:
agriculture:
1.4%
industry:
3.2%
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)
Labor force:
23,450 (2004)
Labor 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%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
411 million kWh (2003)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
Agriculture - products:
vegetable
s, fruit
; livestock
, turtle
, sea salt
farming
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 - 0.82 ( 29 October 2001), 0.83 ( 3 November 1995), 0.85 ( 22 November 1993)
Fiscal year:
1 April–31 March
Cayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...
, a British overseas territory located in the western Caribbean Sea
Caribbean Sea
The Caribbean Sea is a sea of the Atlantic Ocean located in the tropics of the Western hemisphere. It is bounded by Mexico and Central America to the west and southwest, to the north by the Greater Antilles, and to the east by the Lesser Antilles....
, is mainly fueled by the tourism sector
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
and by the financial services sector
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
, together representing 70-80 percent of the country's gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP). The Cayman Island Investment Bureau, a government agency
Government agency
A government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...
, 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
International finance
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes...
) started in the 1950s with the introduction of modern transportation and telecommunications.
History
From the earliest settlement of the Cayman IslandsCayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...
, economic activity was hindered by isolation and a limited natural resource base. The harvesting of sea turtle
Sea turtle
Sea turtles are marine reptiles that inhabit all of the world's oceans except the Arctic.-Distribution:...
s to resupply passing sailing ships was the first major economic activity on the islands, but local stocks were depleted by the 1790s. Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, while sufficient to support the small early settler population, has always been limited by the scarcity of available land. Fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
, shipbuilding
Shipbuilding
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to before recorded history.Shipbuilding and ship repairs, both...
, and cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
production boosted the economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
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
Frigate
A frigate is any of several types of warship, the term having been used for ships of various sizes and roles over the last few centuries.In the 17th century, the term was used for any warship built for speed and maneuverability, the description often used being "frigate-built"...
HMS Convert, that ran aground on the reefs off Grand Cayman
Grand Cayman
Grand Cayman is the largest of the three Cayman Islands and the location of the nation's capital, George Town. In relation to the other two Cayman Islands, it is approximately 75 miles southwest of Little Cayman and 90 miles southwest of Cayman Brac.-Geography:Grand Cayman encompasses 76% of...
. 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
Dependent territory
A dependent territory, dependent area or dependency is a territory that does not possess full political independence or sovereignty as a State, and remains politically outside of the controlling state's integral area....
of Jamaica
Jamaica
Jamaica is an island nation of the Greater Antilles, in length, up to in width and 10,990 square kilometres in area. It is situated in the Caribbean Sea, about south of Cuba, and west of Hispaniola, the island harbouring the nation-states Haiti and the Dominican Republic...
, was not tax-exempt during the period that followed. In 1803, the inhabitants signed a petition addressed to the Jamaican governor
Governors of Jamaica
This is a list of viceroys in Jamaica from its initial occupation by Spain in 1509, to its independence from the United Kingdom in 1962. For a list of viceroys in Jamaica after independence, see Governor-General of Jamaica....
asking him to grant them a tax exemption from the "Transient Tax on Wreck Goods".
International finance and tourism
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 bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s and trust companies
Trust company
A trust company is a corporation, especially a commercial bank, organized to perform the fiduciary of trusts and agencies. It is normally owned by one of three types of structures: an independent partnership, a bank, or a law firm, each of which specializes in being a trustee of various kinds of...
, with banking assets exceeding $500 billion. Large corporations based in the Cayman Islands such as Semiconductor Manufacturing International Corporation
Semiconductor Manufacturing International Corporation
Semiconductor Manufacturing International Corporation, is a semiconductor foundry in mainland China, providing integrated circuit manufacturing services at 350 nm to 45nm technologies...
(SMIC). The Cayman Islands Stock Exchange
Cayman Islands Stock Exchange
The Cayman Islands Stock Exchange is a stock exchange based in Grand Cayman, Cayman Islands. It started operations in July 1997 and is fully owned by the Cayman Islands government. The CSX was recognized by the London Stock Exchange as an approved organization in July 1999.Over 1,000 stocks,...
was opened in 1997.
Tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
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
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
. Unspoiled beaches, duty-free shopping, scuba diving
Scuba diving
Scuba diving is a form of underwater diving in which a diver uses a scuba set to breathe underwater....
, 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.
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. DesalinationDesalination
Desalination, desalinization, or desalinisation refers to any of several processes that remove some amount of salt and other minerals from saline water...
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.
Statistics
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:
agriculture:
1.4%
industry:
3.2%
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)
Labor force:
23,450 (2004)
Labor 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
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
Industrial production growth rate:
NA%
Electricity - production:
441.9 million kWh (2003)
Electricity - production by source:
fossil fuel:
100%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
411 million kWh (2003)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
Agriculture - products:
vegetable
Vegetable
The noun vegetable usually means an edible plant or part of a plant other than a sweet fruit or seed. This typically means the leaf, stem, or root of a plant....
s, fruit
Fruit
In broad terms, a fruit is a structure of a plant that contains its seeds.The term has different meanings dependent on context. In non-technical usage, such as food preparation, fruit normally means the fleshy seed-associated structures of certain plants that are sweet and edible in the raw state,...
; livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
, turtle
Turtle
Turtles are reptiles of the order Testudines , characterised by a special bony or cartilaginous shell developed from their ribs that acts as a shield...
, sea salt
Sea salt
Sea salt, salt obtained by the evaporation of seawater, is used in cooking and cosmetics. It is historically called bay salt or solar salt...
farming
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
Cayman Islands dollar
The Cayman Islands Dollar is the currency of the Cayman Islands. It is abbreviated with the dollar sign $, or alternatively CI$ to distinguish it from other dollar-denominated currencies. It is subdivided into 100 cents...
(CI$) = 100 cents
Exchange rates:
Caymanian dollars per US dollar - 0.82 ( 29 October 2001), 0.83 ( 3 November 1995), 0.85 ( 22 November 1993)
Fiscal year:
1 April–31 March