The impact of tourism on Barbados, and the wider Caribbean region, has been a topic of discussion for many years. There can be no doubt of tourism’s moniker as the engine of our service-based economy, and that it is a valuable source of income for thousands of workers and ancillary businesses.But there are thinkers, like Caribbean economist Marla Dukharan, who are questioning whether the industry is truly beneficial or is perhaps a decoy for yet another phenomenon of the reverse flow of wealth from the poorer nations of the South to the rich North.In her latest economic newsletter, Dukharan argues that the tourism industry is a net drain on foreign exchange and may also be a fiscal drain, although there is admittedly a lack of data available to confirm this. In countries like Barbados and the Bahamas, foreign exchange controls incentivize earners of United States dollars to hold onto their revenue overseas, only bringing onshore what is necessary for local bills, she noted. As a result, many countries in the region carry persistent current account deficits, which are typically financed in the capital account via foreign direct investment and government borrowing.
