Many of the smaller island nations – Turks and Caicos, Cayman Islands, Barbados and the British Virgin Islands – have high standards of living with large amounts of wealth concentrated in small areas. The gross domestic product per capita of these nations is higher because of traditional offshore financial industries. Other countries, such as Trinidad and Tobago, St. Maarten, Antigua and Martinique, which are protectorates of foreign countries, boast stronger economies than many of their larger, governmentally independent Caribbean neighbors.
Puerto Rico, a U.S. territory, is largely dependent on the mainland. Because the economy runs on the U.S. dollar, explains Touchton, it has hurt Puerto Rico’s ability to emerge from its current economic debt crisis. If Puerto Rico were to become independent and devalue its currency, it would allow investment to pour into the island: Land, labor and services would all become cheaper. But that's not an option so long as Puerto Rico remains a U.S. territory. The result is a territory in economic limbo.
The sense of dependency throughout the region seems to work, though.
“It benefits Caribbean economies to have a weaker economy, because it makes it easier for them to sell their exports in the world market,” Touchton says. This allows Caribbean nations to produce their goods using local labor and local pricing, but then sell at a higher market price.
The World Bank reports that Haiti – the second-largest nation in the Caribbean by population – is also the poorest country in the Western Hemisphere. Touchton attributes this to the major challenges faced by the island.
“Haiti has experienced challenges in something as simple as electing political leaders,” Touchton says. “Their devastating natural disasters undermine any recovery or rebuilding, and they have had difficulties recovering from health crises. Rebuilding does stimulate an economy, but resources are scarce and corruption is rampant throughout the country.”
In Cuba, the country’s unique economic dual-currency system is practically unsustainable. Cubans are paid CUPs, or Cuban national pesos, but most consumer goods are priced in CUCs, or Cuban convertible pesos. CUCs, which were originally created in the 1990s for foreigners traveling to the island, are pegged to the U.S. dollar and are worth about 24 times more than the CUP. Cuban citizens do not work at a market rate that translates to any sort of livable salary. The average Cuban brings home about 20 CUCs per month (about US $18), and many Cubans opt to find a second job in the private sector to make ends meet. Taxi driver wages in the private sector are far greater than the wages brought home by a doctor in the public sector.
“Now, there are different systems for different people, which is creating a class system that the Communists never wanted,” Touchton says, having experienced the economic system firsthand when he presented on research at the University of Havana’s medical school recently. “Cubans are beginning to resent it.”
- MEGAN ONDRIZEK / UM News
