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TITLE:  BARBADOS ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                             BARBADOS

                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)


                                  1990      1991      1992

Income, Production,
 and Employment

Real GDP (1974 prices)              439.6     421.9     400.1
Real GDP Growth (pct. change)      -3.3      -4.0      -5.3
GDP (at current prices)           1,720.1   1,696.3   1,583.0
By Sector:
  Agriculture                        79.8      80.5      81.9
  Electricity, Gas, and Water        45.9      49.9      50.3
  Mining and Manufacturing          128.6     124.7     110.1
  Construction                       97.0      81.0      50.7
  Financial & Business Services     216.5     217.8     226.6
  Other Services                    640.7     627.5     586.3
  Government Services               274.4     265.1     240.2
Per Capita GDP (current US$)      5,750     5,600     5,200
Labor Force (000's, year-end)       124.8     119.8     129.3
Unemployment Rate
 (pct, year-end)                   14.7      20.0      23.0


Money & Prices
(annual percentage change)

Money Supply (M2)                  16.2      -4.3       8.2
Consumer Price Index                3.0       6.3       6.1
Exchange Rate (Bdos. dollar/US$)    2.0       2.0       2.0


Trade and Balance of Payments
(in millions of U.S. dollars)

Total Merchandise Exports           210.5     205.8     191.9
  of which, to the U.S.              27.9      27.8     n/a
Total merchandise imports (CIF)     705.0     697.0     523.9
  of which, from the U.S.           237.4     252.7     n/a
Balance on Current Account          -34.5     -59.8     275.7
Aid from U.S.                         0.5       0.7       1.1
Aid from Other Countries            n/a       n/a       n/a
Total External Public Debt          458.4     436.3     438.9
Debt Service Payments               143.7     192.2     180.7



1.  General Policy Framework

    Barbados is a British-style parliamentary democracy.  There
are three major political parties in Barbados: the Democratic
Labour Party (the government), the Barbados Labour Party (the
opposition), and the National Democratic Party (not represented
in parliament).  Parliamentary elections will be held by 1995.

    The economy of Barbados is generally market-oriented,
although a fairly large public sector exists.  Tourism,
financial and business services, and agriculture are the main
foreign exchange earners, but transportation and communications
services are increasingly important sectors.  Although mining
and quarrying are only a small part of national output,
Barbados produces enough petroleum and natural gas to satisfy
almost half of its domestic needs.

    Barbados' trade policy seeks to stimulate exports, protect
domestic light industry, maintain the government's revenue base
through customs and tariffs, and to limit foreign exchange
outflows by the use of exchange controls.  As of the end of
1991 (the most recent period for which information is
available), the United States was the leading source of imports
into Barbados, followed by the Caribbean Common Market
(Caricom), the United Kingdom, and Canada.  Barbados is in the
process of removing certain import-substitution protections for
local manufacturers to encourage exports.

    The Barbadian government generally views foreign investment
favorably, especially in areas in which there is no domestic
competition.  Special licenses and a wide variety of incentives
are available for direct foreign investment, especially in
tourism, data entry/keyboarding, and the offshore business and
financial services sectors.  High local factor costs (wages,
utilities, taxes) may challenge the viability of many local
firms, but the well-educated Barbadian work force is a
competitive asset.  The government plans to privatize many of
its holdings, which may open more opportunities to foreign
investors.

    Central government deficits have declined sharply in recent
years, to about 2.5 percent of GDP in 1992.  Deficits are due
mainly to spending on education, health and welfare, and other
general public service.  Wages and salaries and other
personnel-related costs comprise the largest budget elements. 
Deficits are financed primarily by governmental sources
including the Central Bank and the National Insurance Service.

    In late 1993, the government attempted to affect the amount
of money in circulation by allowing banks to increase the rate
paid on savings deposits from four to five percent per year. 
Other monetary tools used in late 1993 included a requirement
that purchases of consumer durables could not receive
100-percent financing and would require down payments of up to
20 percent.  The government has also recently sold government
notes to the public at an attractive interest rate (compared to
savings accounts) to reduce money in circulation and finance
the deficit.


2.  Exchange Rate Policies

    Since 1975, the Barbadian dollar (Bdol.) has been pegged to
the U.S. dollar at a fixed rate of Bdols. $2.00 to U.S. $1.00. 
Despite intermittent problems in maintaining adequate levels of
international reserves, the Barbadian government has been
committed to avoiding a devaluation of the currency.  Any
impact of this policy on U.S. exports is probably positive,
because Barbadians can buy more U.S. products than they would
if the currency were devalued.

    The Ministry of Finance sets foreign exchange control
policy, which is then executed by the Central Bank of Barbados
(CBB) through its exchange control division.  Barbadian
citizens travelling abroad may purchase only the equivalent of
U.S. $250.00 in hard currency, and businesses (other than those
in the generally-exempt offshore business sector) must apply to
the Central Bank for permission to purchase larger amounts for
business-related purposes.  There is, however, no parallel
market for U.S. dollars as they are widely accepted as payment,
and the inflow of tourist dollars provides an adequate supply.


3.  Structural Policies

    All foreign investors are treated equally; there is no
discrimination against U.S. investment.  Government policy
favors productive investment (domestic or foreign), with an
emphasis on tourism and manufacturing because of these sectors'
employment and foreign-exchange-generating potential. 
Export-oriented manufacturing firms may receive tax holidays
and exemption from exchange controls, and tourism investors can
take advantage of tax concessions for construction or major
refurbishment of hotels.

    Because Barbados imports much of what it consumes, there is
significant potential for U.S. exports and direct investment of
all types.  However, due to the climate of austerity, near-term
prospects are limited.  On imports, the government maintains a
"negative" list of goods for which import licenses are
necessary.  Some goods cannot be imported for health or safety
reasons, while others cannot because local or Caricom
production exists.

    Quantitative restrictions may also be instituted at any
time if a local manufacturer starts production of an imported
item.  However, pricing decisions are mostly consumer-driven,
even though price controls or subsidies apply to some food
staple items and pharmaceuticals, and energy.  A reportedly
sharp decline in foreign exchange reserves in mid-to-late 1993
led the government to tighten credit restrictions on the
purchases of consumer durables in December 1993.  Most consumer
durables in Barbados are imported and excessive demand for
those goods has been blamed for part of the drop in reserve
levels.  Given the prominence of U.S.-manufactured appliances
in the Barbadian market, this development is likely to affect
U.S. exports to the country.

    The mid-1992 reform of the direct tax system broadened the
tax base while lowering maximum rates.  A promised reform of
the indirect tax system in 1994 may feature a value-added tax
to replace the number of indirect taxes now in effect. 
Barbados' Tax Information Exchange Agreement (TIEA) with the
United States makes below-market-rate financing available for
certain investments available with so-called section 936
(Internal Revenue Code) funds.  The TIEA, together with
provisions of the Caribbean Basin Initiative (CBI) legislation,
allows business meeting expenses to be deducted against U.S.
income taxes.  Negotiations with Barbados on a Bilateral
Investment Treaty are ongoing.  Barbados has concluded seven
double taxation treaties including Switzerland (1963), the
United Kingdom (1970), Canada (1980), the U.S. (1984 and 1991
Protocol), Finland (1989), Norway (1990), and Sweden (1991). 
Other tax treaties are under discussion with Latin American,
European, East Asian and African countries.


4.  Debt Management Policies

    Barbados did not have a formal International Monetary Fund
(IMF) program in place as of mid-November 1993, but it was
independently taking measures that eventually could lead to the
reinstatement of an IMF Standby Program or the establishment of
an "enhanced surveillance" agreement.  Credit controls on sales
of consumer durables were aimed at stanching a reportedly sharp
drop in foreign exchange reserve levels, and a curb was
instituted on the annual salary increases traditionally granted
to civil service employees.  These measures to stabilize the
economy were much in keeping with measures the IMF might
require.

    In the spring of 1993, Barbados allowed an IMF Standby
Program to expire when it did not meet the IMF's qualitative
targets for economic performance.  In the autumn of 1991,
Barbados received IMF funds to handle a shortfall in
international reserves.  In connection with this funding,
Barbados was required to institute economic austerity measures
to reduce government spending including halting major capital
and public works construction projects, limiting official
borrowing, and reducing the level of public sector employment. 
Much of the deficit was due to spending on wages and salaries
for the civil service, and government again took unpopular
actions in late 1993 to try to control those costs.  The
central government deficit was about 2.5 percent of GDP in
1992, well down from the 8.2 percent level in 1990.  However,
during the first quarter of 1993, expenditures increased 14
percent, while revenues rose only 7.2 percent (compared to the
same period in 1992), a situation that may portend an increase
in the deficit as a proportion of GDP in 1993.

    As in previous periods, the government financed the
first-quarter 1993 deficit by borrowing primarily from domestic
governmental sources -- from the Central Bank and from the
National Insurance Board.  Barbados' total external debt at the
end of 1992 was equivalent to U.S. $529.4 million, most of
which is denominated in U.S. dollars.  Maintaining the Barbados
dollar's value vis-a-vis the U.S. dollar means that the
Barbadian government can accurately predict its outflows for
repayment.  Any devaluation would mean that the government
would have to spend more local currency to repay that debt.  
Repayments of external debt peaked in 1991 and are expected to
decline through 1995.


5.  Significant Barriers to U.S. Exports

    The recent introduction of the Caricom common external
tariff will disadvantage non-Caricom exports, including those
from the United States, as Caricom goods imported to Barbados
will receive preferential tariff treatment.  In addition, the
Barbadian government maintains a "negative list" of goods for
which import licenses are necessary.  Some goods cannot be
imported for health or safety reasons, and others are
prohibited because domestic (or Caricom) production exists. 
Quantitative restrictions may also be instituted at any time if
a local manufacturer starts production of an imported item.

    Barbados permits full ownership by foreigners of
investments and property.  There are no maximum equity position
restrictions on foreign ownership of a local enterprise or
participation in a joint venture.  Non-residents need
permission from the Central Bank of Barbados to purchase real
property, and permission is usually granted.  A property
transfer tax is levied on real property transactions conducted
by foreigners.

    The Barbadian government must approve a license in order
for foreigners to invest in utilities, broadcasting, banking
and insurance enterprises.  To date, however, the Barbadian
government has denied requests by investors, domestic or
foreign, to open a television station to compete with the
government monopoly.  In addition, the government has licensed
only one firm to provide basic (local) telephone service. 
Banking and insurance services are open to foreign direct
investment provided the required level of capital, which may be
substantial, is invested, and prior government approval is
obtained.  Stock exchange membership (for traders) is closed to
foreigners, and only firms long-established in Barbados may be
traded on the Barbados stock exchange.

    Travel services are generally open to foreign investment,
although the Ministries of Trade and Labour are responsible for
determining if the additional competition of another service
provider would be detrimental to the financial health of
currently-established Barbadian businesses.

    The government requires a Barbadian citizen to apply for
many of the requisite licenses that allow enterprises to
operate, however, which may mean that a foreign firm would be
obliged to hire a Barbadian citizen.  Work permits for
expatriates are granted only if no qualified, locally-based
Barbadian is available.  Customs clearance proceedings are
sometimes burdensome.  No special documents are required, but
occasionally capricious or dilatory judgments by licensing and
customs officials can slow the import of essential inputs.

    Government procurement is not handled in a transparent
manner; both sole-source and competitive contracts are
tendered, and the government is not obliged to accept the
lowest bid for public works projects or for critical
procurements.  The government is obliged to "buy Barbados" when
it can, but we have received no complaints by U.S. business of
discrimination against U.S. goods in favor of Barbadian goods. 
Neither offsets nor countertrade are used in making
procurements.

    Barbados is a member of the GATT Agreement on Standards
(standards code), and no standards problems have been reported.


6.  Export Subsidies Policies

    Barbados gives priority to investments which intend to
manufacture for export.  Apparel, gloves, hand tools, bicycles
and parts, costume jewelry, hardware, electrical
appliances/devices, electronic assembly, footwear, furniture,
and auto parts are examples of goods that qualify for
preference.  The government provides special incentives to
export industries: a ten-year tax holiday followed by a
seven-percent tax rate thereafter; exemption from import
duties; full repatriation of capital, profits and dividends;
pre-built factory space in ten fully-serviced industrial parks
with subsidized rents; cash grants for worker training; and
free advisory and support services from the Barbados Investment
and Development Corporation (BIDC).  International businesses
also receive incentives to establish a variety of
non-manufacturing offshore operations including tax rates of
only 2.5 percent on profits of data-processing companies; full
tax exemption for U.S. foreign sales corporations; and a tax
rate not exceeding 2.5 percent for international companies and
offshore companies in banking and insurance.  Bulk users of
utilities (gas, water and electricity) are eligible for
resource discounts.  Other types of export guarantee schemes
provide letters of credit and credit insurance for exporters.


7.  Protection of U.S. Intellectual Property

    The Barbados government has made efforts in recent years to
improve the legal regime to protect, acquire and dispose of all
property rights, including intellectual property.  Barbados is
a signatory of the Paris Convention of Intellectual Property
Rights (IPR) and the Madrid Accords, and a member of the World
Industrial Property Organization (WIPO).  The law of Barbados
does not promote domestic industries at the expense of foreign
industrial and intellectual-property-rights-holders.  However,
Barbados has only limited experience with IPR matters and very
few industrial designs or patents have been registered here. 
There have been no recent court challenges or settlements for
patent, trademark or copyright infringements although
infringement is commonplace in certain sub-sectors of the
economy: for example, video cassette rentals/sales; tee-shirt
production of unlicensed copyrighted images; software piracy;
and satellite signal piracy.  Enforcement has not been an
active priority of the government.

    Separate statutes govern and regulate IPR protection.  The
Industrial Designs Act (chapter 309a; Statutory Instrument
Supplement Number 34) provides for registration of industrial
designs for exclusive use by the registrant for five years
which may be renewed for two additional consecutive five-year
periods.  The Patents Act of 1981 (Act 1981-55, Statutory
Instrument 1984 Number 84) allows for patents protection for 14
years.  The Trademarks Act of 1981 (Act 1981-56, statutory
instrument 1984 number 85) protects trademarks initially for
ten years with renewal possible for ten-year periods.  The
Copyright Act (1981) protects copyrights during the life of the
author and for seven years thereafter.  There is no specific
statutory reference to trade secrets or semiconductor chip
layout designs.  The WIPO sent a consultant to Barbados in 1990
to review current IPR statutes and administrative and
enforcement procedures, and WIPO has recommended improvements
that are under review.  Our embassy has no estimate of lost
U.S. import opportunities related to local IPR protection
standards.


8.  Worker Rights

    a.   Right of Association

    Barbados has a mature and democratic trade union
establishment.  Workers in Barbados have the right to form and
belong to trade unions, engage in collective bargaining and
strikes, and they freely exercise these rights.  Strikes are
prohibited only in the water and electric utilities and among
the security forces.  All other private and public sector
employees are permitted to strike.  There were fewer industrial
actions in 1993 than in 1992 as the crisis in the economy and
the maturity of local unions combined to reduce the prospects
of wage or benefit increases.  There are two major unions in
Barbados -- the National Union of Public Workers (NUPW) and the
Barbados Workers' Union (BWU) -- and several smaller ones,
representing various labor sectors.  The Coalition of Trade
Unions and Staff Associations, established in 1992, continues
to function.

    Barbadian trade unions are free to form federations and are
affiliated with regional and international labor
organizations.  The Caribbean Congress of Labor has its
headquarters in Bridgetown and conducts many of its programs in
Barbados.  Barbados is an active member of the International
Labor Organization (ILO) and sends a worker delegate to the ILO
governing body.  The head of the BWU, Leroy Trotman, is the
current president of the Caribbean Congress of Labor (CCL) and
the International Confederation of Free Trade Unions (ICFTU).

    b.   Right to Organize and Bargain Collectively

    The right to organize and bargain collectively is provided
by law and respected in practice.  In 1992, over 25 percent of
the working population was organized but job losses in the
economy have resulted in a decline in union membership. 
Normally, wages and working conditions are negotiated through
the collective bargaining process.  Employers have no legal
obligation to recognize unions under the Trade Union Act of
1964, but most do when a majority of their employees signify a
desire to be represented by a registered union.  While there is
no specific law prohibiting anti-union discrimination, the
courts provide a method of redress for employees alleging
unfair dismissal.  The courts commonly award monetary
compensation but rarely order reemployment.  There are no
manufacturing or special areas in which collective bargaining
rights are legally or administratively impaired.  Barbados has
no specially designated export processing zones.

    c.   Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is prohibited by the Barbadian
constitution and does not exist.

    d.   Minimum Age for Employment of Children

    The legal minimum working age of 16 is generally observed
in Barbados and is reinforced by compulsory education policies
requiring school attendance until age 16.  Occasionally,
especially among migrant worker families, children assist in
agricultural production during peak season.  There is a small
cadre of labor inspectors who conduct spot investigations of
enterprises and check records to verify compliance with the
law.  These inspectors are authorized to take legal action
against an employer who is found to have underage workers.

    e.   Acceptable Conditions of Work

    Wages in Barbados are among the highest in the Caribbean. 
Barbados' per capita GDP exceeds US$ 5,000 per year.  Minimum
wages are administratively established and enforced by law only
for specified categories of workers.  The minimum wage for shop
assistants (entry-level commercial workers) is marginally
sufficient to meet minimum living standards; most employees
earn more.  The standard legal work week is 40 hours in five
days, and the law requires overtime payment for hours worked in
excess of that.  Workers are guaranteed a minimum of three
weeks of annual leave.  All workers are covered by unemployment
benefits legislation, and by National Insurance (social
security).  A comprehensive government-sponsored health program
offers subsidized treatment and medication.  The Factories Act
of 1983 sets occupational safety and health standards. 
Recently, there have been calls from trade unions for the
government to increase the number of factory inspectors to
better enforce existing and proposed safety and health
legislation including follow-up to ensure that problems cited
are corrected by management.

    f.   Rights in Sectors with U.S. Investment

    The Barbados economy is small and of limited diversity, but
local experience and practice in industrial relations protects
worker rights across the economic spectrum.  The U.S. is a
major supplier of essential commodities and manufactured
products.  Investors from the U.S. are active in petroleum,
electricity generation, food and related products, electrical
equipment, other manufacturing, finance and insurance, and
wholesale trade.  Workers' rights do not differ among the
various sectors in the economy.  There is no locally-available
data source on the actual amount of U.S. direct investment in
these sectors.



         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                89
Total Manufacturing                                       7
    Food & Kindred Products                     3
    Chemicals and Allied Products               0
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             3
    Transportation Equipment                    0
    Other Manufacturing                         1
Wholesale Trade                                         277
Banking                                                   D
Finance and Insurance                                    62
Services                                                  D
Other Industries                                          0

TOTAL ALL INDUSTRIES                                    507

(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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