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Tourism and offshoots drive economy

Tourism and offshoots drive economy

Industry fuels economic diversification, draws investors

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The Bahamas Investor Magazine
January 4, 2007
January 4, 2007
John G F Carey

Investor confidence in The Bahamas is at an all-time high. The renewed effort and energy that has been placed into driving the economy forward is unparalleled in the history of our country. The government of The Bahamas continues to encourage foreign direct investment and domestic investment through spin-off and other related businesses. As always, there is a tremendous amount of interest in the tourism industry as a channel for investment; however, there are also substantial opportunities for investing in manufacturing, fishing, farming and pharmaceuticals. All of these are vital and viable growth areas that hold promise for global investors going forward.

Measuring up
Historically, the full contribution of tourism to the Bahamian economy has been difficult to measure. This is because, until recently, tourism was not considered an industry unto itself but rather a series of activities. All that has changed and, today, tourism is widely recognized as an industry in its own right, with links to many different areas including lodging, recreation, entertainment, retail trade and transportation. Through comprehensive analysis, we have now been able to accurately measure tourism’s share of the Bahamian economy and assess its true contribution to our progress and development. As an extension of this, we can gauge its impact on the many subsidiary industries that are linked to it.

In order to measure tourism’s share of various economic sectors, the World Tourism Organization (WTO), in partnership with the United Nations, Organization for Economic Cooperation and Development and Eurostat developed a standardized methodology for measuring the economic value of the industry, called the Tourism Satellite Account (TSA). The Ministry of Tourism, The Central Bank of The Bahamas, Department of Statistics, Ministry of Finance, Ministry of Financial Services, and a consultant to the WTO have collaborated to establish a TSA for The Bahamas.

The results
Although we have always known anecdotally that tourism is the largest driver of the Bahamian economy, we can now state conclusively that the tourism market accounts for over 50 per cent of The Bahamas’ gross domestic product. This number is impressive in its own right but we begin to get a true picture of tourism’s overall contribution when we consider how many subsidiary industries rely on tourism for their livelihood. For instance, tourism accounts for:
• nearly 100 per cent of hotel business;
• almost 70 per cent of restaurant business;
• about 60 per cent of other service industries and
• about 30 per cent of the domestic transportation business.

Although some of the traditional industries supporting tourism, such as hotels, restaurants and so forth, may not account for as large a share of the economy as in past years, new spin-off businesses in areas such as agriculture, fisheries and souvenir manufacturing have entered the picture. This suggests that the Bahamian economy is becoming more diverse (and therefore more stable) and that tourism continues to contribute to the overall economy above and beyond its 50-plus per cent contribution to the GDP, through its links to other industries.

A new era
For the first time, we have at our fingertips a methodology that enables investors to fully appreciate the contribution and importance of the tourism industry to the Bahamian economy. As a result, individuals interested in business enterprises here can now analyse where the best entrepreneurial opportunities exist within tourism and its related sectors.

Political stability, economic buoyancy and a wealth of spin-off opportunities linked to tourism make the islands of The Bahamas a great place to invest. Over the course of the short, medium and long term, these islands are poised to generate a substantial return for investors who make the commitment now. The government of The Bahamas and the Ministry of Tourism will continue to embrace potential investors wishing to explore the many investment possibilities that can be derived from linking to our number one industry—tourism.

Bio
John G F Carey
John G F Carey, JP, MP, is Parliamentary Secretary to the Ministry of Tourism and Member of Parliament for the Carmichael Constituency. He is author of a book and has written a paper Building a Better Future in Small Island Developing States, published in 2004.

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