St. Lucia - Overview of economy
St. Lucia has traditionally had an agricultural economy, one geared towards exporting tropical commodities and importing manufactured goods. Sugar was the main crop from the 17th century until the 1920s. The end of slavery in 1838 allowed those who had worked on the large plantations to start their own, privately-owned farms producing fruits and vegetables. Bananas were introduced in the 1950s and rapidly became the island's main export, benefiting from preferential access to the British market and, after independence from Britain in 1979, to the entire European market. The heyday of the banana industry was during the 1980s, when exports were consistently above 100,000 tons annually, representing as much as 70 percent of export income.
St. Lucia's banana industry was troubled by uncertainty and crisis during the 1990s. The World Trade Organization (WTO) ruled in 1995 that the European Union (EU) went against free trade legislation by giving preference to Caribbean banana exports. This caused concern that the St. Lucian banana industry had lost its most profitable fruit market. As a result, many farmers abandoned banana cultivation and planted other crops. Making matters worse for the banana industry, the government-supported St. Lucia Banana Growers' Association (SLBGA) was bankrupted in 1994 under rumors of corruption. The SLBGA helped banana growers, but the organization was also illegally used by the government to
St. Lucia has quite a large manufacturing sector, mainly geared towards supplying the U.S. market with clothes and sporting goods, and there is a factory that produces cardboard packaging for bananas and other agricultural crops. Several plants closed and many jobs were lost in 1996 due to the difficult economic situation. The new administration attempted to impose taxes on foreign operations in St. Lucia, and failed. These manufacturing operations quickly closed and left the island, rather than pay corporate taxes.
The main areas of growth have been related to the tourism industry, in services and construction. On average, over 250,000 tourists visited the island each year during the 1990s. Government-sponsored infrastructure projects such as construction of new roads, ports, and several hotels have contributed to the economy's growth since the late 1990s. St. Lucia is also trying to establish itself as a center for offshore banking , where foreign investors and companies can avoid paying taxes in their own countries, and where the tax rates are comparatively low.