Economic Activity and Development
Sectors
Economic activity is grouped into primary (fishing, farming, mining, salt, aragonite), secondary (processing, manufacturing, construction, brewing) and tertiary (tourism, financial services, retail, transport). In The Bahamas the tertiary sector dominates, with tourism typically contributing close to half of GDP and employing a large share of the workforce, and offshore financial services the second pillar.
Measuring performance
Gross domestic product is the value of output produced inside the country; gross national product counts income earned by residents at home and abroad. Per capita income divides output by population and hides inequality. The balance of payments records trade with the world: visible trade in goods and invisible trade in services. A visible trade deficit is normal because the country imports most food, fuel and manufactured goods, and it is offset by earnings from tourism and financial services.
Development issues
Growth is not development; development also means better health, education and living standards, measured by indicators such as literacy, life expectancy and the Human Development Index. The economy is narrow and vulnerable to hurricanes, recessions and pandemics, so diversification, import substitution, foreign direct investment and small-business growth are recurring policy themes. Leakage - money leaving the country through foreign-owned hotels and imported supplies - reduces the tourism multiplier.
Worked example
Exports $1 billion, imports $3 billion, so the visible deficit is $2 billion. Tourism and financial services earn $2.5 billion, giving a services surplus of $2.5 billion. The current account is roughly in surplus by $0.5 billion.
Traps
Do not confuse GDP with GNP, or growth with development. Cruise passengers spend less per head than stopover visitors.