There is no economy in the world that can claim to be immune from the occurrences of the natural elements. Droughts, floods, storms any many other natural disasters constitute as only one factor that incur profound impacts on the economies. The shock may be confined to a certain region or locality, but it may also send tremors worldwide. It is this exact dilemma that plagues the developing and often fragile economies of the Caribbean. Since the islands rely so heavily upon the flow of capital from the tourist sector, they can easily be devastated financially if even the slightest natural phenomena occur. Volcanoes and hurricanes – two common and well known natural disasters – are quite frequent in the Caribbean, owing to the physical geography of the regions. Such events can easily deter potential tourists and sent the economy into a downward spiraling recession, amplifying the challenge of recovery.
The increased demand for goods that ensues subsequent to the establishment of tourism as the primary contributor to national income leads to an unprecedented demand for products and services. And as according to the dictates of the laws of supply and demand, as inflation beings to skyrocket, the purchasing power parity of individuals plummets. This imbalance between an extremely high aggregate demand and a relatively inelastic aggregate supply (in part due to the short time frame) places locals in a difficult position. High costs of living necessitate drastic changes in traditional lifestyles and often lead to poverty; these events in turn result in even greater social and economic chaos.
Unlike the development of high-tech industries by public and private sector contributions, heavy investment in tourism yields few other advantages, especially in digital communications networks. To illustrate this example, Singapore provides one of the best examples in the world. Once the government began to stimulate growth in fields such as precision machinery, digital technology, advanced materials and other such technologically innovative fields, the demand for a high-tech network led to the development of the world’s most advanced communications infrastructure. Today, Singaporeans enjoy a level of technology that rivals the best in the world. Other examples of this can be seen in Hong Kong, Japan, India (namely the Bangalore Diamond District Tech Park), and Kuala Lumpur, Malaysia. By investing heavily in tourism such a level of sophistication is beyond the reaches of reality. In a few rare and exceptionally successful instances, tourism has led to the development of sewage, utility, and transportation infrastructures of a basic nature. Although these constitute as achievements nonetheless, they pale in comparison to the advantages of pursuing high-end technology.
Most likely the most severe problem that the Caribbean faces is their inability to adhere to the Keynesian economic concepts and administrative policies. During recessions and other declines in economic activity, governments, being the most influential force in determining aggregate demand, should work towards stimulating economic growth. But they can only do so with a co-ordinated and co-operative effort with the private sector. Economic health depends heavily – almost solely – between an interaction between the government and businesses. Foreign ownership of hotel and recreational corporations is prevalent in the Caribbean. In essence: foreign ownership of the economic lifeline. Thus, the generated revenues are not re-invested into the domestic economy. Even if more locals are employed into the hotels, they will remain in the position of consumers. And although consumers wield heavy influence over the GDP during economic boom with their immense purchasing power, in the face of recessions they are victims of the spiraling business cycle as they lack unitary effort. It is only with the ownership of the corporations does there lie a remedy for this malady.
Therefore, it can be concluded that extensive exploitation of the tourist sector by Caribbean nations has already led them to an undesirable situation, and if the trend is not reversed their plight will only worsen. The country of Malaysia had a GDP per Capita less then that of Haiti not too long ago. Today, after extensive development of their technology and finances sector they have become one of the most well developed countries in Asia, enjoys tremendous newly attained prosperity, and possesses a capitol that is regarded as an urban financial hub of the highest caliber. The tourist sector has developed as a result, especially business tourism. But these tourists do not come to take advantage of the weather and natural sites; rather they come to admire the accomplishments of the Malay. This tourism acts as a simple boost to the economy, not a lifeline. Changes in the volatile market of tourism will not adversely impact the country. The Caribbean nations should take example of the success of the Asians in transforming their countries into booming developing countries from their poverty stricken and technologically impaired plight only decades ago. Domestically owned corporations and far greater emphasis on technological and other industrial fields is vital to their successful future.
