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Caribbean Islands-Role of Government

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Although most economic activity was privately controlled and operated, state enterprises represented an important element in the economy in the late 1980s. Beginning with the electric power industry, the public sector expanded into agriculture, manufacturing, and tourism, as well as infrastructural services such as seaports, airports, roads, water supply, energy, and telecommunications. Productive enterprises included a cotton ginnery, an edible-oil plant, two large hotels, a commercial bank, an insurance company, the Antigua and Barbuda Development Bank, and most of the prime agricultural land.

The government's rationale for involvement in infrastructure and public utilities was that it contributed to firmer bases for further development. The purchase of failing enterprises, such as the sugar factory and the oil refinery, limited the anticipated increase in unemployment should the enterprises actually close. The government entered the tourist sector primarily to influence the employment practices of private investors. By keeping the stateowned resort open year round, the government was able to persuade the privately owned resorts to stay open as well, which alleviated unemployment in what had been the slow season. In addition, operation of the resort allowed the country to keep some of the tourist industry profits. In the manufacturing sector, the government constructed factory shells to be rented at low cost in order to attract foreign investment.

Despite achievements in some areas, such as tourism, the government's entrepreneurial efforts were relatively ineffective. Lacking an adequately trained managerial work force, the government often contracted with foreign nationals to run the state enterprises. In many cases, mismanagement grew out of the political patronage system used to fill senior public sector positions. Because the government also tended to act as the employer of last resort, it effectively gave a higher priority to reducing unemployment than to economically efficient use of labor. Despite its employment priority, the government was forced to shut down some operations, including the sugar factory and the oil refinery just mentioned, because they were serious financial liabilities.

Data as of November 1987

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