Offshore finance and informatics are important foreign exchange earners, and there is also a light manufacturing sector. The government continues its efforts to reduce the unacceptably high unemployment rate which it met in the 1990s, encourage direct foreign investment, and privatize remaining state-owned enterprises.
The main factors responsible for the improvement in economic activity include an expansion in the number of tourist arrivals, an increase in manufacturing, and an increase in sugar production. Recently, offshore banking and financial services also have become an important source of foreign exchange and economic growth.
Economic growth has led to net increases in employment in the tourism sector, as well as in construction and other services sub-sectors of the economy. The public service remains Barbados' largest single employer. Total labor force has increased from 126,000 in 1993 to 140,000 persons in 2000, and unemployment has dropped significantly from over 20% in the early 1990s to 9.3% at the end of 2000.
The Barbados government encourages the development in: financial services, informatics, e-commerce, tourism, educational and health services, and cultural services for the future. In 2000 based on Barbados' level of growth - (at the time) Barbados was supposed to become the world's smallest developed country by 2008. The Government has since stated that the country is still on course for this to happen instead by around 2025.
Barbados has several bilateral tax treaties, mostly aimed at removing double taxation on companies that operate in the Barbados economy. Since Barbados is at times considered an expensive place to conduct business, the treaties are mainly a measure to provide some savings to international businesses operating in Barbados.
The bilateral tax treaty negotiated with Canada in particular has been a political-football for the government of that country. The treaty was made to allow the profits for IBCs and offshore banking companies to be repatriated to Canada tax-free after paying taxes in Barbados. The aim was mainly for companies like the Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC), and Scotiabank, which (along with Barclays of the United Kingdom), when-combined control a healthy majority of Barbados' local Commercial Banking sector. In essence the treaty makes the economy of Barbados almost an unofficial part of the Canadian economy and it was aimed at allowing Canadian companies to extract profits back to Canada more easily. During the Canadian national elections of 2003 and 2006, it was cited that the former Minister of Finance and later Prime Minister Paul Martin had international shipping companies that operated in Barbados' offshore sector under the bilateral treaty possibly saving his company from higher taxes in Canada.
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Economy Of Barbados