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.

Economy of Aruba
ARUBA-oranjestad-hafen-1
Centre of Oranjestad in 2011.
CurrencyAruban florin (AWG)
1 US$ = 1.79 AWG (2014)
Calendar year
Statistics
GDP2.516 billion (2009 est.)
GDP growth
2.4% (2005 est.)
GDP per capita
$25,300 (2011 est.) (PPP)
GDP by sector
agriculture: 0.4%, industry: 33.3%, services: 66.3% (2002 est.)
0.5% (2014 est.)
Population below poverty line
N/A%
Labour force
51,610 (2007 est.)
Labour force by occupation
agriculture: NA%, industry: NA%, services: NA%
Unemployment6.9% (2005 est.)
Main industries
tourism, petroleum transshipment facilities, and banking
External
Exports$312.7 million (2014 est.) [1]
Export goods
live animals and animal products, art and collectibles, machinery and electrical equipment, and transport equipment
Main export partners
 Colombia 36.9%
 Caribbean Netherlands 18.5%
 United States 12.7%
 Venezuela 12.4%
 Netherlands 5.1%
 Canada 4.6% (2013 est.) [2]
Imports$1.528 billion (2014 est.)
Import goods
machinery and electrical equipment, refined oil for bunkering and re-export, chemicals; and foodstuffs
Main import partners
 United States 50.8%
 Netherlands 12.1%
 United Kingdom 7.3%
 France 6.2% (2013 est.) [3]
Public finances
$533.4 million (2005 est.)

All values, unless otherwise stated, are in US dollars.

History

Unlike many Caribbean islands, a plantation economy never developed on Aruba due to its arid climate. Early Spanish explorers considered the island of little value, partly because the poor soil made growing crops difficult and partly because their attempts to find gold turned up empty-handed. However, long after the Dutch obtained control of Aruba, they found the gold the Spanish had been seeking.

Gold

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 by Royal 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 Lago 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

Mecury in Aruba
The Celebrity Mercury cruise ship docked in Oranjestad.

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 in Oranjestad, 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.

Following the September 11 attacks, tourism temporarily declined because of grounded flights and travel fears. Aruba stepped up its visible security force in tourist areas to heighten safety and reassure visitors. After a short time, tourism rebounded strongly.

Another potential threat to the industry occurred in 2005, when the May 30 disappearance of vacationing Alabama teen Natalee Holloway made international news. Claiming that Aruban authorities weren't taking the case seriously enough, her mother and the Governor of Alabama called for a nationwide boycott of Aruba. However, the U.S. federal government didn't back the proposed boycott. Aruba's reputation as one of the safest islands in the Caribbean may have helped it overcome any negative stigma caused by the case. The amount of tourism in June, 2005, actually rose by 9% from the previous year.

References

  1. ^ "CIA – The World Factbook". Cia.gov. Retrieved 2015-06-26.
  2. ^ "Export Partners of Aruba". CIA World Factbook. 2013. Retrieved 2015-06-28.
  3. ^ "Import Partners of Aruba". CIA World Factbook. 2013. Retrieved 2015-06-28.

See also

Aruban florin

The florin (sign: Afl.; code: AWG) is the currency of Aruba. It is subdivided into 100 cents. The florin was introduced in 1986, replacing the Netherlands Antillean guilder at par. The Aruban florin is pegged to the United States dollar at the rate of 1.79 florin per USD. US dollars are frequently accepted as payment at the rate of 1.75 florin per USD.

Caribbean guilder

The Caribbean guilder (Dutch: Caribische gulden) is the proposed currency of the Caribbean islands, and constituent countries of the Kingdom of the Netherlands, Curaçao and Sint Maarten, which formed after the dissolution of the Netherlands Antilles on October 10, 2010. As of January 2018, the Caribbean guilder has not been introduced.Since 2018 banknotes and coins, which are not in production pending decision on the currency, now require replacement and there were only two years of Antilles guilder remaining and there was still a possibility that the islands could opt for the dollar or euro instead.

Central Bank of Aruba

The Central Bank of Aruba (Dutch: Centrale Bank van Aruba) is the central bank in Aruba responsible for implementation of monetary policy of the Aruban florin.

Index of Aruba-related articles

The following is an alphabetical list of topics related to the nation of Aruba.

List of Caribbean-related topics

This is a list of topics related to the Caribbean region

Outline of Aruba

The following outline is provided as an overview of and introduction to Aruba:

Aruba – Caribbean island nation that is a constituent country of the Kingdom of the Netherlands. Aruba comprises the Island of Aruba, an island of the Lesser Antilles archipelago, 33 kilometres (21 mi) in length in the southern Caribbean Sea, 27 kilometres (17 mi) north of the Paraguaná Peninsula, Falcón State, Venezuela. A country within the Kingdom of the Netherlands, Aruba has no administrative subdivisions. Unlike much of the Caribbean region, Aruba has a dry climate and an arid, cactus-strewn landscape. This climate has helped tourism as visitors to the island can reliably expect warm sunny weather. It has a land area of 193 km2 (75 sq mi) and lies outside the hurricane belt.

Geography
Politics
Economy
Culture
See also
Members
Associate members
Observers
Institutions
Related organizations
Greater Antilles
Leeward Antilles
Leeward Islands
Windward Islands
Other islands
Continental coasts
Economies of the dependencies of European Union states European Union
Denmark
France
Netherlands
United Kingdom
Economy of the Americas
Sovereign states

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