An Overview of the Economy of Bermuda Research Paper

An Overview of the Economy of Bermuda - Research Paper Example The country has enjoyed steady economic superiority since the end of the Second World War, although it has been affected by recession since 2007 following the global recession. The country enjoys the fourth highest per capita income, which is 50 percent higher than that of the US. The industrial sector mainly focuses on construction, and there is little agriculture since only 20 percent of the island is arable. Bermuda has a robust financial regulatory system making it an important regional and global offshore financial center. International business is the major foreign exchange generating industry in the country (Anderson, 2011). Bermuda is a reinsurance center and an insurance region with firms writing significant business from USA and U.K. In 2010, 15,078 international companies were registered in the island, many of which are U.S owned (Reinsurance Association of America, 2011). These companies spent approximately $2 billion in the country in 2009, making them an important sourc e of foreign exchange. This sector provided $1.5 billion in its total output corresponding to 26.1 percent of the total GDP. International business is also the third largest employer in the country. The sector had 4,287 jobs in 2010, a reduction from 4,431 in 2009. This reduction has made tourism the largest employer in Bermuda. ... Other countries involved in the import chain are the UK, Canada, and Caribbean countries. Bermuda’s exports are mainly re-exports of pharmaceuticals. These exports are valued at $783 million and export partners include Spain, Germany, Denmark, and the UK. Duty on imports and exports is a major source of revenue for the government (Fabian, 2011). Duty rates in the country are high and are reflected in the consumer retail prices. High prices are countered by high wages that keep up with the cost of living and poverty is practically nonexistent. The government generates approximately 24 percent of its revenue base equivalent to $225.4 million from import and export duty. The government does not impose income, sales, or profit taxes, but levies real estate tax (Fabian, 2011). Bermuda’s tourism industry is the second largest employer with over 4,349 jobs in hotels and restaurants. The industry has been experiencing declining numbers of visitors, which currently stands at 585 ,266 visitors (Ministry of Finance, 2011). The decline can be attributed to the declining travel industry particularly the airline sector. The tourism industry generated approximately $383.9 million in 2011. The cruise and yacht front have reduced the gap created by the failing airline sector. The number of visitors arriving by air grew to 236,038 in 2011 and cruise visitors were 415,711. Three quarters of visitors to Bermuda are from the US, and the slowdown experienced in the country has significantly affected tourism (Government of Bermuda, 2011). Tourism sponsored events such as the Bermuda International Invitational Race Week increased the number of visitors to the island. Hotel occupancy rates have increased with large hotels enjoying the highest occupancy rates. The 2010 census