In the mid-1980s, the Cayman Islands were one of the most prosperous areas in the Caribbean. The gross domestic product (GDP- -see Glossary) in 1985 was approximately US$254.5 million, with a per capita GDP of US$12,789. Approximately 75 percent of all workers were employed in the service sector. Industry accounted for an additional 23 percent of workers; the remaining 2 percent were in agriculture. Forty-two percent of adult women were in the work force in 1979. As with most Caribbean islands, imports to the Cayman Islands greatly exceeded exports. In 1983 imports totaled US$140.4 million, while exports totaled only US$2.4 million. Major trading partners were the United States, Trinidad and Tobago, Britain, and the Netherlands Antilles.

Until 1970, fishing generated most of the Cayman Islands' income. In the 1960s, however, the islands began systematically to nurture two industries--offshore financial services and tourism. The territory passed new banking laws and made extensive investments in infrastructure, including roads, airports, and wells and desalination plants for water supplies. By the late 1980s, the islands had become the Caribbean's leading tax haven. Citizens, permanent foreign residents, and corporations paid no income, property, inheritance, or capital gains taxes. In 1985 approximately 19,000 companies were registered in the islands, including 498 banks and trust companies and 369 insurance companies. Revenues from company registration fees, trust and insurance licenses, and stamp duties brought in almost US$18 million during 1983. About the same amount was collected in import duties, and total revenue exceeded government expenditures by almost US$2 million. Banks on the islands handled an estimated US$1 billion a day in Eurocurrency (see Glossary) deals. External assets of banks licensed in the Cayman Islands totaled US$127 billion at the end of 1982.

The Cayman Islands also has succeeded in building its tourist industry. Infrastructure for tourism has been developed substantially, and new hotels and condominiums have been built on all three islands. Tourist arrivals soared 300 percent between 1973 and 1984, largely because of more cruise ship arrivals. In 1986 more than 382,000 tourists visited the islands, including 216,000 cruise ship passengers. In 1985 tourism contributed US$75 million to the economy and employed one-fourth of the work force.

Despite the relative prosperity of the Cayman Islands, problems remained. The tourism boom had inflated land prices to such an extent that young islanders found it difficult to build homes. Agriculture was almost nonexistent in the Caymans because of low rainfall and poor soils. Over 90 percent of the islands' food was imported, a major part of the Caymans' import bill. However, development efforts had made the islands self-sufficient in eggs and bananas, and beef, oranges, and tomatoes also were produced.

Serious questions also had been raised about the offshore banking industry. In the early 1980s, United States officials became concerned that Cayman banks were becoming havens for illegally obtained drug monies. The United States Department of Justice estimated that between 20 and 40 percent of the US$76 billion generated annually by illegal narcotics trafficking in the United States and the Caribbean was laundered through offshore banks in the Caribbean, where criminals were shielded from investigators by secrecy laws. The United States government therefore put pressure on Britain and the Cayman Islands to modify bank secrecy regulations to allow the United States attorney general access to Cayman bank and business records. On August 27, 1984, the two countries and the Cayman Islands signed a pact requiring the islands' administrators to obtain requested records within fourteen days of receiving a certification that the records were needed for an investigation of a drug-related offense.

The Cayman Islands had a modern communication system in the 1980s. The British firm Cable and Wireless operated an entirely automatic system of over 9,000 telephones. A small ground satellite station and submarine cables provided international links to the United States and Panama. Four radio stations on Grand Cayman served the island, broadcasting on 1205 and 1555 kilohertz and on 101.1 and 105.3 megahertz. The Cayman Compass and the Sun were both published five times a week.

Transportation among the islands was relatively good. In 1984 the territory had 252 vessels over 100 gross tons; the large number reflected the islands' sizable charter boat business. Georgetown was a major port. Populated sites on all three islands were linked by 160 kilometers of all-weather roads. Municipal buses ran between Georgetown and West Bay on Grand Cayman. Owen Roberts International Airport outside Georgetown and an airfield at the western end of Cayman Brac had paved runways to accommodate international flights. There were no railroads or inland waterways.

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 Cayman Islands Economy Overview information contained here. All suggestions for corrections of any errors about Cayman Islands Economy Overview should be addressed to the Library of Congress and the CIA.