Economy of Aruba
The economy of Aruba is an open system, with tourism currently providing the largest percentage of the country's income. Because of tourism's rapid growth in the last 80 years, related industries like construction have also flourished. Other primary industries include oil refining and storage, as well as offshore banking. Although the island's poor soil and low rainfall limit its agricultural prospects, aloe cultivation, livestock, and fishing contribute to Aruba's economy. In addition, the country also exports art and collectibles, machinery, electrical equipment, and transport equipment. Aruba's small labor force and low unemployment rate have led to a large number of unfilled job vacancies, despite sharp rises in wage rates in recent years.
With such a large part of its economy dependent on tourism, the Aruban government is striving to increase business in other sectors to protect against possible industry slumps. Their current focus is on expanding technology, finance, and communications.SectorGold
With the discovery of gold on Aruba in 1800, mining became the island's foremost industry. Aruba's economy boomed. However, by 1916 the gold supply had mostly been tapped out, making it impossible for companies to turn a profit. As the gold mining industry waned, so did the economy. Aloe
First planted on Aruba in 1850, aloes throve in its desert conditions. With a healthy demand for aloe products, it became an important part of Aruba's economy. In fact, for many years, the country was aloe's top exporter. But over the years, many aloe fields were replaced by buildings, diminishing its production and exports declined.
The oldest company on the island, Aruba Aloe, has recently instituted changes in the hopes of becoming Aruba's leading product manufacturer. It built a new, modern facility, an aloe museum, and designed new packaging. Although most of their product line sells in the national market, a 2005 exporting deal with a U.S. company and sales through their website have increased their international market. Oil
Despite setbacks caused by the troubled gold and aloe industries, Aruba's economy didn't suffer long. Because of its location near Venezuela, the island became an attractive spot for oil refineries. The Lago Oil and Transport Company, owned by Standard Oil of New Jersey (now Exxon), opened in 1929 near the transshipping port of San Nicolaas. Following in their footsteps, the Eagle Oil Refinery opened soon after. Over the next few decades, the oil industry took over as Aruba's primary economic force.
With the United States entry into World War II in 1942 the demand for Aviation gasoline further increased and considerable expansion was done at the Lago Refinery soon after the United States entered the war. With this expansion, Lago became one of the largest refineries in the world, only bested byRoyal Dutch Shell Isla refinery on Curaçao, and a major producer of petroleum products for the Allied war efforts. The importance of the Lago refinery was well known to the German High Command and on February 16, 1942 the Lago refinery was attacked by the German submarine U-156. Due to mistakes by the German deck gunner the refinery was not damaged but three of the lake tankers were torpedoed in San Nicolaas harbour.
The Eagle Oil Refinery shut down and was dismantled in the late 1950s. But the Lago refinery kept going until 1985, when the demand for oil fell and Exxon closed it. In 1991, the Coastal Corporation bought it, scaled down operations, and reopened it. Coastal later sold the refinery to Valero Energy Corporation in 2004. Its reopening didn't raise Aruba's oil industry to its previous heights although it did revive that sector and continued to be a key contributor to the country's economy until 2009 when it was closed. In December 2010, Valero Energy announced plans to reopen the refinery. Tourism
In 1947, Aruba's government founded a tourist board to explore the possibility of developing a tourism industry. Several years later, cruise ships began to dock inOranjestad, Aruba's capital city. The island's first luxury hotel was built in 1959, giving the fledgling industry a good start. Over the years, tourism grew and helped create a prosperous economy.
As the oil industry waned, tourism increased in importance. The government offered fiscal incentives to spur growth of hotels and other tourist-oriented businesses. Their efforts resulted in a steady and rapid rise in tourism. When a surplus of these jobs couldn't be filled, they placed a one-year moratorium on new hotel construction and new tourist corporations.
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