The economic and social reality of St. Lucia has been shaped in large measure by its relationship with the rest of the world. In the colonial period, like other parts of the Commonwealth Caribbean, it was a tropical appendage of Britain whose entire raison d’etre derived from its capacity to supply primary raw materials to Britain. St. Lucia has remained the archetypical Commonwealth Caribbean country, and continues to be linked to the international economy by its exports of primary products.
The Government has sought, since political independence in 1979, to diversify the inherited economic structure, by developing alternative sources of foreign exchange earnings for its export-propelled platform. In that regard, there was some early success, as light manufacturing and tourism emerged as viable activities outside of export agriculture. By the end of the decade of the 1980s, the country had achieved a rate of growth that would have been considered reasonable by most standards, and, in that regard, it was the lead economy among the Windward Islands. Bananas had continued to contribute to the GDP with good prices and rising output, and the newer sectors had added to employment, income and export earnings.
Economic Situation Analysis
Of crucial importance in the growth of the economy in the latter half of the twentieth century was the success of St. Lucia and others in winning and sustaining trade preferences, especially for its exports, in particular its traditional exports. Within the fora of CARICOM and through regional and international groupings of which it became a member, the country has lent its voice in the shaping of international and regional society. Like the rest of the Commonwealth Caribbean, it has been concerned about small size and viability in the increasingly globalized international economy. Since the 1970s, Commonwealth Caribbean countries had successfully marshaled arguments for their being accorded what has come to be called special and differential status by way of:
- Preferential access for their exports;
- The maintenance of non-reciprocal protection; and
- Longer adjustment periods within which to implement liberalisation.
While there is differential tenacity within the regional movement in the pursuit of this strategy of special pleading, there is no doubt that as a region, countries have been able to win grudging support that has been translated into tangible assistance from time to time.
Tourism, as represented in large measure by Hotels and Restaurants, was the lead export oriented sector and grew by 25 per cent over the period, and has been the prime mover of the entire economy. There has been a rebound in the industry following the impact of September 11, 2001, but the country has to contend with increasing competition within the Caribbean region. The increased reliance on tourism exacerbates volatility in economic activity, as the experience of September 11, 2001 illustrates.
Challenges and Policy Issues
The issue of grave significance in the performance of the economy, having regard to its structure, has been the decline in the Agricultural Sector and of the Banana Industry in particular, since the middle of the last decade. While there were attempts made at diversification of agriculture, the size of exports of non-banana agriculture and the level of growth were miniscule relative to bananas, in the first place: indeed, the non-banana agriculture also declined. This has had the effect of shrouding the agricultural communities in St. Lucia in a pall of doom and gloom. Exports and production of non-banana agriculture came no where near replacing bananas in terms of employment and production.
The most recent review of the economy, the Economic Review 2005, points to the further declines in the agricultural sector in 2005. In respect of bananas, this was attributed to three factors:
- Destruction of banana fields especially in the Roseau Valley on the passing of Hurricane Ivan in September 2004;
- Difficulties in the management of the leaf spot disease partly because of insufficient funds to purchase material used to control the disease;
- Higher input prices and loss in income to farmers because of crop damage during the hurricane, led to general deterioration in field maintenance.