Mountainous and barren, with few natural resources or advantages, the Netherlands Antilles and Aruba nevertheless enjoy 2 of the more affluent economies in the Caribbean region. This relative prosperity is founded on their one overriding asset: location. In the early 19th century the islands, conveniently poised between the Caribbean islands and the South American mainland, thrived as the clearing house of the Dutch slave trade. When slavery was outlawed in 1863 this industry collapsed. But with the discovery of Venezuela's massive Maracaibo oil reserves in the early 20th century, the islands' advantageous location (just off the Venezuelan coast) again proved to their economic making. In 1918 the world's largest oil refinery was built on Curaçao, and in 1929 another huge refinery was constructed on Aruba. Aruba and the Netherlands Antilles still serve as major refining and transshipping bases for the Venezuelan oil industry, a role that has given the Netherlands Antilles a gross domestic product per capita of US$11,800 (1998 est.).
But in the case of the Netherlands Antilles, this narrow economic focus has also left it vulnerable, and the contraction of the South American oil industry in the 1980s led to increasing economic difficulty. As a service-oriented economy, the Netherlands Antilles relies on its "invisible" earnings from tourism, offshore financial services, and shipping to offset their huge trade deficit , which was US$1,013.7 billion in 1998. The trade deficit has been difficult to manage. In the 1990s, a combination of hurricane damage, weak investment levels, and fluctuating oil prices increased the debt. Plans drawn up in conjunction with the Dutch government and the International Monetary Fund (IMF) aimed at attacking the deficit, raising revenue, and decreasing expenditure. But the price of such plans—reduced government services, privatizations , and redundancies—have made them difficult to implement. Predictions that the country would begin to reemerge in the 2000s from the recession that dogged it in the previous decade have proved to be premature.
Aruba has fared better. Although like the Netherlands Antilles it is heavily dependent on oil refining, transshipment, and service industries such as banking, Aruba has been more successful in developing tourism as an alternative economic base. This combined with more conservative fiscal management—despite some heavy deficits in the late 1990s—has seen the real GDP growth in the 1991 to 1997 period of around 5.6 percent per annum. Its principal sources of income continue to be tourism and oil transshipment, both industries showing solid growth. With Aruba's annual GDP per head at US$22,800—more than 6 times, for example, that of its Caribbean neighbor Jamaica—Arubans are estimated to be among the most affluent people in the Caribbean region.