Bahamas Economy - The Industrial Sector
Sources: The Library of Congress Country Studies
In the late 1980s, the Bahamian industrial sector consisted of several large-scale activities (chemicals, pharmaceuticals, and oil) and a variety of small-scale industries (food processing, paints, purified water, rum and other alcoholic beverages, salt, and soft drinks). The large-scale activities were located on Grand Bahama, whereas small-scale industries were concentrated in both Grand Bahama and New Providence. The industrial sector experienced setbacks in the early 1980s, when declining demand caused steel and cement plants to close. In mid-1985 the Bahamas Oil Refining Company (BORCO), the fourth largest refinery in the world, shut down its refining operations in response to the oil glut on the world market. BORCO continued its oil transshipment operations, however, importing large quantities of oil from the Middle East and Africa for transshipment and for domestic use. In the Bahamas, oil exploration by several international companies began in the early 1980s; marine geologists believed vast deposits of oil and natural gas might be found.
Chemical and pharmaceutical plants fared well in the early 1980s. Exports of chemical products increased by over 100 percent in the 1980-84 period. Several large chemical and pharmaceutical industries were located in Grand Bahama. Light industrial activities experienced slight growth in the early 1980s. Salt was mined on Great Inagua, and small amounts of aragonite sand were mined near the Bimini Islands for export. The rum industry grew. Bacardi operated a major distillery in New Providence. In 1986 construction began on a brewery sponsored by a consortium made up of Bacardi, Guinness, and Heineken to produce a new beer with a Bahamian name.
Since the 1950s, the government had consistently encouraged efforts to diversify the economy. Industrial incentive legislation, however, dated back to the 1950s, when the Hawksbill Creek Agreement allowed the Grand Bahama Port Authority to develop industry on that island. In 1970 the Industries Encouragement Act provided incentives for manufacturers of approved products. Incentives included the duty-free importation of machinery and raw materials and tax exemptions. In 1971 the Agriculture Manufacturers Act provided similar incentives for that industry. In 1981 the Bahamas Agricultural and Industrial Corporation was established as a central agency for potential investors seeking advice and assistance. Finally, in 1984 legislation created a free-trade zone in New Providence similar to the one in Grand Bahama established by the Hawksbill Creek Agreement.
Aside from a weak external market for oil products, the industrial sector faced several other difficulties. The Bahamas had a very limited market size. Wage rates tended to be high, and skilled workers were lacking. Capital-intensive industries developed despite the government's desire to locate labor-intensive industries there, especially in New Providence. This development underscored the growing problem of structural unemployment. A 1986 report by the Inter-American Development Bank (IDB) indicated that a major task for the government would be to provide 3,000 to 3,500 jobs annually in the late 1980s and early 1990s for graduating youths.
Data as of November 1987
NOTE: The information regarding Saint Kitts and Nevis on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Bahamas Industrial Sector information contained here. All suggestions for corrections of any errors about Bahamas Industrial Sector should be addressed to the Library of Congress and the CIA.