Cayman Islanders - Economy



Driving past the luxury condominiums, hotels, restaurants, and shops on West Bay Road or the duty-free shops and office towers of George Town, it is difficult to imagine the seafaring and agricultural communities of the Grand Cayman of the 1950s and 1960s. Today one is far more likely to encounter turtles or crops in the managed breeding pools of the Turtle Farm in West Bay or the Smith Road demonstration farm than in the districts or shores of Cayman. The Cayman Islands currently meets virtually all the consumption needs of residents and visitors through imports, and its economy is almost entirely based on tourism and finance. In 1990 there was a total of 614,870 visitors, and the number continues to increase: in 1994, Cayman received 503,000 visitors in the first six months alone. Encouraged by the absence of any direct taxation of companies and individuals or of inheritance taxes and estate duties, an extensive professional and financial infrastructure has evolved. The climate of confidentiality, backed by legislation and sophisticated communications, has induced some 546 banks and trust companies from over sixty countries, 24,000 companies, and approximately 500 mutual funds to locate or register in the Cayman Islands. In addition, Cayman has become one of the world's most popular centers for offshore captive insurance, (insurance companies owned by other companies that thereby acquire business insurance at rates lower than they could get from independent insurers), with 367 such companies operating in 1992.

Several developments appear to have facilitated this dramatic transformation. The construction of the George Town airport in 1953 and an airstrip in Cayman Brac in 1954 made the islands more easily accessible to visitors. During the early 1960s, the mosquitoes that infested the Caymans and made life very uncomfortable were finally brought under control. This made the islands much more appealing to tourists. The most important development, however, was probably the 1962 decision of Caymanians not to follow Jamaica into independence from Britain.

The status of the Cayman Islands had, for most of its history, been linked with Jamaica. From 1863 until 1959, the Cayman Islands were formally a dependency of Jamaica. From 1957 until 1962, both the Cayman Islands and Jamaica were members of the Federation of the West Indies. Nonetheless, in 1962, when the majority of Jamaicans voted to leave the federation and to seek independence from the United Kingdom, the Cayman Islands did not follow suit, opting instead to remain a British colony. The continuity of colony status has been perceived by investors and visitors as a potent symbol of the Cayman Islands' political stability in the face of the more turbulent political upheavals that have marked recent years in Jamaica and other parts of the Caribbean.

The reputation of the Cayman Islands as a stable, peaceful spot in which outsiders can safely vacation and invest has been both its greatest asset and its Achilles' heel. It has helped to make Caymanians very prosperous. The Cayman Islands' per capita income is very high, comparing most favorably with that of Western industrialized societies. There is little unemployment or poverty, and, during the 1980s and early 1990s, the gross national product enjoyed impressive rates of annual growth. That prosperity has, however, involved a very high and rather precarious dependence on outsiders with little vested interest in the Cayman people themselves. That dependence extends to labor as well as capital.

The rapid and dramatic expansion of the Caymanian economy has created a shortage of labor at all levels of the economy. The Cayman Islands responded by importing labor from all over the world but in particular from other parts of the Caribbean, North America, Britain, and Ireland. Expatriate workers are employed in the civil service, financial industries, cultural organizations, hotels, restaurants, shops, water-sports outlets, and construction and as doctors, accountants, lawyers, and architects. In short, foreign workers have become a critical mainstay for the Caymanian economy, and their presence has been an important contributor to Cayman's recent population expansion. In 1989 these workers and their families accounted for 32 percent of the total population. Most come to Cayman on temporary work permits (Gainful Occupation Licenses) granted to their prospective employers and subsequently renewed only on the condition that there are no suitable local workers who can fill the position. This transitory status does not do much to encourage foreign workers to make long-term investments in the Cayman Islands, a situation that can evoke resentments among both locals and expatriates.

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