The economy of the Cayman Islands, a British

overseas territory located in the western Caribbean Sea, is

mainly fueled by the tourism sector and by the financial services
sector, together representing 50–60 percent of the country's
gross domestic product (GDP). The Cayman Islands Investment
Bureau, a government agency, has been established with the
mandate of promoting investment and economic development
in the territory.

The emergence of what are now considered the Cayman Islands' "twin pillars of
economic development" (tourism and international finance) started in the 1950s with the introduction
of modern transportation and telecommunications.

The territory is often considered a major world offshore financial haven for international
businesses and many wealthy individuals.

From the earliest settlement of the Cayman Islands, economic activity was hindered by
isolation and a limited natural resource base. The harvesting of sea turtles to resupply passing sailing
ships was the first major economic activity on the islands, but local stocks were depleted by the 1790s.
Agriculture, while sufficient to support the small early settler population, has always been limited by
the scarcity of arable land. Fishing, shipbuilding, and cotton production boosted the economy during
the early days of settlement. In addition, settlers scavenged shipwreck remains from the surrounding
coral reefs.

The boom in the Cayman Islands' international finance industry can also be at least partly
attributed to the British overseas territory having no direct taxation. A popular legend attributes the
tax-free status to the heroic acts of the inhabitants during a maritime tragedy in 1794, often referred
to as "Wreck of the Ten Sails". The wreck involved nine British merchant vessels and their naval escort,
the frigate HMS Convert, that ran aground on the reefs off Grand Cayman. Due to the rescue efforts
by the Caymanians using canoes, the loss of life was limited to eight. However, records from the
colonial era indicate that Cayman Islands, then a dependency of Jamaica, was not tax-exempt during
the period that followed. In 1803, the inhabitants signed a petition addressed to the Jamaican governor
asking him to grant them a tax exemption from the "Transient Tax on Wreck Goods".

The Cayman Islands' tax-free status has attracted numerous banks and other companies
to its shores.

More than 40,000 companies were registered in the Cayman Islands as of 2000,
including almost 600 banks and trust companies, with banking assets exceeding $500 billion. Large
corporations based in the Cayman Islands such as Semiconductor Manufacturing International
Corporation (SMIC). The Cayman Islands Stock Exchange was opened in 1997.

Currently, banks in the country are used to manage assets worth $ 1.4 trillion.The
Cayman Islands currently have over 200 banks and over 95,000 registered companies here, being a
world leader in investment funds and the world's second largest country where captive insurance
companies are registered (to secure goods owned by a parent company that has another object of
activity).More than half of Cayman Islands' GDP is provided by the financial sector.

Advantages: Cayman Islands are among the few countries or territories where
legislation allows companies to control assets without paying taxes. This is considered perfectly legal
and is not seen as a tax avoidance strategy.

Disadvantages: Companies doing business in different countries are those who can
benefit from tax benefits because they are registered in the Cayman Islands to avoid headaches that
arise when they have to relate to more tax systems.

The Cayman Islands is seeking to diversify beyond its two traditional industries and
invest in health care and technology. Health City Cayman Islands, opened in 2014, is a medical tourism
hospital in East End, led by surgeon Devi Shetty. Cayman Enterprise City is a special economic zone
that was opened in 2011 for technology, finance, and education investment. Cayman Sea Salt and
Cayman Logwood products are now made in the Cayman Islands.

Because the islands cannot produce enough goods to support the population, about 90%
of their food and consumer goods must be imported. In addition, the islands have few natural fresh
water resources. Desalination of sea water is used to solve this. Despite those challenges, the
Caymanians enjoy one of the highest outputs per capita and one of the highest standards of living in
the world. The Cayman Islands produces gourmet sea salt.

Education is compulsory to the age of 16 and is free to all Caymanian children. Most
schools follow the British educational system. Ten primary, one special education, a high school and a
middle school ('junior high school') are operated by the government, along with three private high
schools. In addition, there are a law school, a university-college and a medical school.

Poverty relief is provided by the Needs Assessment Unit, a government agency

established by the Poor Persons (Relief) Law in January 1964.

Statistics:

 GDP: purchasing power parity - $1.939 billion

 GDP - real growth rate: 1.7%
 GDP - per capita: purchasing power parity - $43,800
 GDP - composition by sector:
 agriculture: 1.4%
 industry: 3.2%
 services: 95.4%
 Population below poverty line: NA%
 Household income or consumption by percentage share:
 lowest 10%: NA%
 highest 10%: NA%
 Inflation rate (consumer prices): 4.4%
 Labour force: 23,450
  Labour force - by occupation: agriculture 1.4%, industry 12.6%, services 86%
 Unemployment rate: 1.7%
 Budget:
 revenues: $423.8 million
 expenditures: $392.6 million, including capital expenditures of $NA
 Industries: tourism, banking, insurance and finance, construction, construction materials,
furniture
 Industrial production growth rate: NA%
 Electricity - production: 441.9 million kWh
 Electricity - production by source:
 fossil fuel: 100%
 hydro: 0%
 nuclear: 0%
 other: 0% (1998)
 Electricity - consumption: 411 million kWh
 Electricity - exports: 0 kWh
 Electricity - imports: 0 kWh
 Agriculture - products: vegetables, fruit; livestock, turtle, sea salt farming
 Exports: $2.52 million
 Exports - commodities: turtle products, sea salt,manufactured consumer goods
 Exports - partners: mostly US
 Imports: $866.9 million
 Imports - commodities: foodstuffs, manufactured goods
 Imports - partners: UK, US, Netherlands Antilles, Japan
 Debt - external: $70 million
 Economic aid - recipient: $NA
 Currency: 1 Cayman Islands dollar (CI$) = 100 cents
 Exchange rates: Caymanian dollars per US dollar - 0.80
 Fiscal year: 1 April–31 March

Vocabulary
 agency
the state of being in action or exerting power
 agent
a representative who acts on behalf of others
 amortisation
the reduction of the value of an asset by prorating its cost over a period of years
 appreciation
understanding of the nature or meaning of something
 buyer's market
a market in which more people want to sell than want to buy
 capacity
capability to perform or produce
States
 capital gain
the amount by which the selling price of an asset exceeds the purchase price; the gain is
realized when the asset is sold
 capitalism
an economic system based on private ownership of assets
 central bank
a government monetary authority that issues currency and regulates the supply of credit and
holds the reserves of other banks and sells new issues of securities for the government
 commodity
articles of commerce
 competition
the act of contending with others for rewards or resources
 compound interest
interest calculated on both the principal and the accrued interest
 consumption
the act of using something up
 cost of capital
the opportunity cost of the funds employed as the result of an investment decision; the rate of
return that a business could earn if it chose another investment with equivalent risk
 credit
an estimate of ability to fulfill financial commitments
 debt
the state of owing something, especially money
 deficit
the property of being less than expected or required
 deflation
the act of letting the air out of something
 demand
request urgently and forcefully
 depreciation
a decrease in price or value
 Depression
a period during the 1930s when there was a worldwide economic depression and mass
unemployment
 deregulation
the act of freeing from rules
 derivative
a compound obtained from another compound
 devaluation
the reduction of something's value or worth
 discount rate
interest on an annual basis deducted in advance on a loan
 disinflation
a reduction of prices intended to improve the balance of payments
 diversification
the condition of being varied
 dividend
a number to be divided by another number
 econometrics
the application of mathematics and statistics to the study of economic and financial data
 econometrics
the application of mathematics and statistics to the study of economic and financial data
 efficiency
skillfulness in avoiding wasted time and effort
 elasticity
the tendency of a body to return to its original shape
 equity
conformity with rules or standards
 fiscal policy
a government policy for dealing with the budget
 free lunch
something acquired without effort or payment or obligation
 free trade
international trade free of government interference
 full employment
the economic condition when everyone who wishes to work at the going wage rate for their
type of labor is employed
 game theory
(economics) a theory of competition stated in terms of gains and losses among opposing
players
 GDP
the measure of an economy adopted by the United States in 1991; the total market values of
goods and services produced by workers and capital within a nation's borders during a given
period (usually 1 year)
 globalisation
growth to a global or worldwide scale
 gold standard
system that defines money's value in terms of precious metal
 hedge
a fence formed by a row of closely planted shrubs or bushes
 incentive
a positive motivational influence
 income
the financial gain accruing over a given period of time
 inelastic
not able to resume shape after stretching or compression
 inflation
the act of filling something with air
 inflation
the act of filling something with air
 interest
a sense of concern with and curiosity about something
 interest rate
the percentage of a sum of money charged for its use
 Karl Marx
founder of modern communism
 leverage
the mechanical advantage gained by a machine on a fulcrum
 liquidity
the state in which a substance exhibits a readiness to flow
 long run
a period of time sufficient for factors to work themselves out
 long run
a period of time sufficient for factors to work themselves out
 macroeconomics
the branch of economics that studies the overall working of a national economy
 marginal
at or constituting a border or edge
 market capitalisation
an estimation of the value of a business that is obtained by multiplying the number of shares
outstanding by the current price of a share
 market forces
the interaction of supply and demand that shapes a market economy
 market forces
the interaction of supply and demand that shapes a market economy
 mercantilism
system increasing a nation's wealth by government regulation
 microeconomics
the branch of economics that studies the economy of consumers or households or individual
firms
 Milton Friedman
United States economist noted as a proponent of monetarism and for his opposition to
government intervention in the economy (born in 1912)
 minimum wage
the lowest wage that an employer is allowed to pay
 modelling
a preliminary sculpture in wax or clay from which a finished work can be copied
 money
the most common medium of exchange
 money market
a market for short-term debt instruments
 money supply
the total stock of money in the economy
 Monopoly
a board game in which players try to gain a monopoly on real estate as pieces advance around
the board according to the throw of a die
 monopoly
a market in which there are many buyers but only one seller
 monopsony
an economic market with several sellers but only one buyer
 moral hazard
(economics) the lack of any incentive to guard against a risk when you are protected against it
(as by insurance)
 motivator
a positive motivational influence
 national debt
the debt of the national government
 nominal value
the value of a security that is set by the company issuing it; unrelated to market value
 nudge
to push against gently
 oligopoly
a market in which a few producers control a commodity
 opportunity cost
cost in terms of foregoing alternatives
 poverty
the state of having little or no money and possessions
 poverty trap
a situation in which an increase in income results in a loss of benefits so that you are no better
off
 price
the amount of money needed to purchase something
 principal
most important element
 profit margin
the ratio gross profits divided by net sales
 public utility
a company that performs a public service
 quota
a prescribed number
 recession
the act of returning control
 regression analysis
the use of regression to make quantitative predictions of one variable from the values of
another
 regulation
the act of bringing to uniformity
 replacement cost
current cost of replacing a fixed asset with a new one of equal effectiveness
 risk
a source of danger
 scalability
the quality of being scalable
 scarcity
a small and inadequate amount
 seller's market
a market in which more people want to buy than want to sell
 short-run
relating to or extending over a limited period
 simple interest
interest paid on the principal alone
 socialism
a political theory advocating state ownership of industry
 spread
distribute or disperse widely
 stagflation
a period of slow economic growth and high unemployment (stagnation) while prices rise
(inflation)
 stagnation
a state of inactivity
 stakeholder
someone entrusted to hold the stakes for betting
 standard deviation
the square root of the variance
 subsidy
a grant paid by a government to an enterprise
 supply
circulate or distribute or equip with
 tariff
a government tax on imports or exports
 tax base
collective value of taxable assets
 time value
(music) the relative duration of a musical note
 trade
the commercial exchange of goods and services
 transparency
the quality of being clear
 Treasury bill
a short-term obligation that is not interest-bearing
 unemployment
the state of not having a job
 unemployment
the state of not having a job
 use
put into service
 utility
the quality of being of practical use
 value-added
 vertical integration
absorption into a single firm of several firms involved in all aspects of a product's
manufacture from raw materials to distribution