Report Source: "Living Conditions in Antigua and Barbuda: Poverty in a Services Economy in Transition.

" Prepared by Kairi Consultants Ltd in Association with the National Assessment Team of Antigua and Barbuda. Accessible at http://www.caribank.org

Development

Economic development on Antigua

Do the numbers agree with Kincaid's assessment of Antigua's development?
According to economists Todaro and Smith, in their text Economic Development, there are three core values of economic development: sustenance, self-esteem, and freedom from servitude. In economic terms, part of Jamaica Kincaids argument in A Small Place is that these three values are not all at work in Antiguas development.

both of these complaints seem serious, only a small segment of Kincaids work is dedicated to them. So, it seems safe to assume that Kincaid does not give them much weight.

Sustenance

The first value sustenance covers whether people in a country can meet their basic needs. Basic needs are goods or services necessary for life including food, shelter, healthcare, and safety. In short, economic development requires that the goal of all economic activity be to improve the overall quality of life for the populace. According to Todaro and Smith, such improvement is indicated by rising per capita incomes, elimination of absolute poverty (the state where a populations basic needs are barely being met), job creation, and decreases in income disparity. Kincaid seems to indicate only a minor lack in terms of this first value. According to A Small Place, Antiguans do not or at least did not when the book was written trust the doctors on Antigua. In fact, whenever government ministers fall ill, according to Kincaid, they fly to New York, because they do not trust Antiguan doctors. Furthermore, Kincaid makes a passing reference to Antiguas defense force, which she says is too small to actually defend the country. Although
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Do the economic data agree with Kincaid on this first issue of sustenance? According to a report prepared for the Caribbean Development Bank, healthcare does seem to be widely available to the population. For example, 89.6% of children born in Antigua are delivered in a hospital. However, the number of assisted births is likely much higher, as it is the poorest fifth of the population that has the most hospital births 94.1%. Higher socio-economic segments of the population have the ability to pay for other methods of assisted birthing. Furthermore, the report states that Antigua and Barbuda achieve almost 100% immunization of children by the age of 5 that is, 100% of the World Health Organizations recommended immunizations. According to the report, Antigua has both public and private health services, both of which seem to be widely available. In fact, 33% of the population uses community clinics, and 24.8% of the poorest fifth of the population utilizes private healthcare. As far as Kincaids complaint that the richest in the population use healthcare outside of the country, only 1.7% of the richest fifth of the population (which is 0.5% of the total population) use out-of-state health services. However, it is true that only people from the richest fifth of the population use non-Antiguan healthcare. One negative, however, is that just over half of the population (51.1%) has health insurance, with 35%

Development

of the poorest fifth having insurance and 69.1% of the richest fifth. As far as the other indicators of the populations ability to meet needs, 13.4% of Antiguans are unemployed (cf., 10% in the U.S.). In terms of safety, only 3.1% of islanders report being victims of crime annually (cf., 3.73% in the U.S.). Also according to the report, 5.5% of the population has inadequate access to running water (meaning no piped water) and 20.4% of the population has low-quality housing (defined as a pit latrine or worse). The final measure suggested by Todaro and Smith for the first development core value is lessening income inequalities. Unfortunately, there does not seem to be long-term data on Antiguas economic disparity, so an accurate determination on whether inequalities are lessening is unlikely. However, there are current analyses on economic equality for Antigua.

There are many ways to measure the level of economic inequality in a country. One standard measure is the Gini index. In order to calculate the Gini coefficient, economists use something called a Lorenz Curve. Lorenz Curves plot percentage of income (or consumption) versus the cumulative

Analyzing Inequality

An old construction sign on a road from English Harbour to Shirley Heights serves as a metaphor for Antigua as a developing country.

Health and Poverty Statistics for Antigua

Births in a hospital Children Immunized People with health insurance Poor access to water Children not in school Unemployment rate 10 89.6% ~100% 51.1% 5.5% 4.2% 13.4%
Chart Source: "Living Conditions in Antigua and Barbuda: Poverty in a Services Economy in Transition"
In this chart, Indigent means unable to purchase minimum amounts of food, and vulnerable means living at 125% of the poverty level ANTIGUA January 2010

Sources: U.S. Data - Wolfram Alpha. General development data and Analysis instructions - Todaro, T.P. and S.C. Smith, Economic Development, ninth edition, 2006, Boston: Peason Addison Wesley.

percentage of income recipients (see Lorenz and Gini box). As a type of yardstick, Lorenz Curves have a line that runs along the diagonal of the graph (45). If the population measured by the curve had perfect equality, the actual curve would match this benchmark exactly. Actual Lorenz Curves bow away from the 45 line the line of equality. The larger the bow, the more inequality there is in the population. For example, a perfectly unequal population where one person or household made all the income would run along the bottom horizontal axis and up the right vertical. Such a line would be as far away from the line of equality as possible Someone who looks at a Lorenz Curve can get an idea of approximately how much inequality there is in a population by seeing how far the curve is from the diagonal line. A Gini coefficient quantifies this difference by dividing the area between the two curves by the total area under the line of equality. Therefore, a Gini coefficient of 0 would report perfect equality, and a Gini coefficient of 1 means perfect inequality. According to Todaro and Smith, 0.50 to 0.70 is considered a highly unequal distribution. Populations in the 0.20 to 0.35 range are typically considered to have a relatively equal income distribution. For comparison, the United States of America has a Gini coefficient of about 0.45. The Caribbean Development Bank gives a Gini coefficient of 0.48. This value, according to the report, is high, even by Caribbean standards. By general standards, this number is just below the lower limit of the highly unequal range. However, by comparison the U.S. really isnt doing that much better. The report suggests that the Antiguan governments preference for indirect methods of taxation and the large number of possible tax exemptions play a role in inequality.

Lorenz curve and Gini index for Antigua and Barbuda

Chart Source: "Living Conditions in Antigua and Barbuda: Poverty in a Services Economy in Transition" Annotation

When contrasted with local shops and middle-to-low income housing, high-end tourist spots like yacht clubs and resorts create the appearance of economic disparity. ANTIGUA January 2010

The Lorenz Curve (curved line) plots cumulative percent of income (or in the case of the graph above, consumption) versus cumulative percent of the population. For example, if you were to go over to 30 on the horizontal axis, the value on the vertical axis matching that point shows the percent of consumption for the bottom (or poorest) 30% of the population. At 50 on the horizontal, the vertical value is the percent consumption for the lower 50% of the population. Finally, 100 on the horizontal axis shows the consumption percent for the entire population, which must be 100%. In a situation of complete equality - where everyone (or at least every household) had the same income - the Lorenz Curve would match the line of equality (straight, diagonal line). Such a situation does not exist for any significant population in the world, so actual curves fall under the line of equality. A Gini coefficient is what's known as an aggregate measure of inequality, meaning that the coefficient attempts to condense inequality data into a single number (see below). This number shows quantitatively how much difference there is between the actual economic distribution and perfect equality (0 is perfectly equal and 1 is perfectly unequal).

and shading, mine.

Gini coefficient =

Area A Area (A+B)

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In the 1990s, the United Nations decided to make a comparative analysis of developing and developed nations. In order to facilitate quantitative comparison, the UN developed The Human Development Index (HDI). The index attempts to combine multiple aspects of developed society into a single measure, which ranges from 0 to 1. The lowest rank, 0, represents the lowest measurable development, and 1 represents the highest measurable development. This value is calculated using weighted averages (meaning some variables count more than others) of life-expectancy, education, and standard of living. In order to calculate the HDI, four pieces of information are needed. They are GDP per capita, life expectancy, adult literacy rate, and school enrollment.

Warning: Math Ahead (but with careful explanation)

Income Index =

Human Development Index

For Antigua, the results is Income Index = 0.873

Sources: Calculation instructions from Todaro and Smith, 2006. Antigua and U.S. Data from 2009 UN Human Development report, undp.org.

[ log (GDP/capita) - log (100) ] [ log (40,000) - log (100) ]

The UN estimates that the current maximum reasonable life expectancy for a country is 85, and the lower limit is 25. The life expectancy index is calculated by subtracting 25 (the lower limit) from a country's life expectancy and dividing that figure by the the upper limit (85) minus the lower limit (25). Life expectancy Index =

Life Expectancy Index

(Life expectancy) - 25 (85 - 25)

GDP per capita ($ PPP) Life expectancy (yrs.) Adult literacy (%) Gross enrollment (%)

Antigua HDI raw data

Antigua Life expectancy index = 0.786

18,691

72.2 (est.) 99.0 85.6 (est)

The income index requires Gross Domestic Product (GDP) per capita in US dollars Purchasing Power Parity (PPP). PPP compares the purchasing power of a country's currency to that of the US dollar by comparing how much certain goods cost in one country to how much they cost in the United States. The maximum a country can achieve in GDP per capita is $40,000 PPP, a benchmark set by Luxembourg. The HDI algorithm uses a natural logarithmic function in order to convert the GDP per capita to a decimal.

Income Index

For Antigua, the result of this simple calculation is Education index = 0.945
For the final calculation of the HDI, each of these three calculated indices are equally weighted into an average, meaning that one-third of all three figures is added together into a final number. For Antigua, this is

The education index is where the weighted averages come into play. This index first converts the percents to decimal form (divide by 100). These numbers are then called the adult literacy index and the gross enrollment index. The education index is calculated by adding twothirds (weighted more heavily) of the literacy index to one-third (weighted less heavily) of the enrollment index.

Education Index

which gives Antigua a rank of 47 among the 187 nations compared by the UN. Compare this to the twelfth-ranked ranked US with an HDI of 0.956.
ANTIGUA January 2010

HDI = 0.868

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Development

Inequality = Bad?

Before moving on to the final two core values for development, theres a question that needs to be answered. Why is reduction of inequality so important to economic development? It seems like there should be an obvious answer, but things get a little more complicated when you realize were not talking about poverty. A nation could eliminate poverty and still have quite a bit of inequality.

instability. When a small segment of the population controls inordinate amounts of capital, that segment is able to lobby political institutions to create policies that result in more control of capital for the upper class, widening the gap. Using capital for lobbying and political purposes removes it from industrial sectors where the money could encourage increased economic growth. Furthermore, Todaro and Smith reference the histories of Iran and El Salvador as examples of inter-country conflict and political upheaval that result from extreme inequality. The final reason for assigning a negative value judgment to inequality is society's view of it. Whether morality should be a factor is a debate for another time. Either way, the fact remains that people make moral judgments and often make decisions based on them, and in terms of morals, inequality is generally considered a bad thing.

Along roadways away from tourist-heavy and yachter areas, the landscape contains old shack houses and private construction projects that stalled when funds ran out.

Perhaps a look back to a basic economic development can help with figuring out why a lot of emphasis is placed on inequality when dealing with development. The economists Todaro and Smith provide three primary answers to the question of whats wrong with inequality. The first reason is that a large income gap leads to an inefficient economy. High levels of inequality usually correlate to small fractions of the population qualifying for credit and low levels of saving. Savings typically come from the middle class, since the highest earners in the upper class tend to spend money on foreign travel and luxury goods. Economists refer to this phenomenon as capital flight. At times, capital flight even results in the lower class saving and investing more in a given nations economy. Finally, economic inefficiency becomes a cyclical effect. Highincome sectors emphasize quality in higher education, often at the expense of primary education, which the poorer sectors need to have improved to get out of poverty. Second, extreme inequality leads to political
ANTIGUA January 2010

Back in St. John's, where tourists arrive frequently via cruise ships, construction projects continue, unplagued by the insufficient fund base that trouble less developed sections of the island.

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Development

Self-Esteem

The last two values of economic development are less quantifiable than the first category (though, that wont stop me from trying). Selfesteem and freedom from servitude are also interrelated especially for a one-industry, service economy like Antigua.

local population constantly sees people from developed nations coming to visit. Jamaica Kincaid was making this very point when she wrote that Antiguans envy tourists because tourists have the resources to escape their own banality and boredom. By seeing people, who

are comparatively rich, all the time, Antiguans who dont have as much are continuously reminded of their own poverty, causing a feeling of low self-worth.

Just a few minutes' walk from where the cruise ships dock in St. John's is a casino, which, according to locals, is a significant attraction for tourists.

Self-esteem is about having a sense of selfworth and not feeling like a pawn for other people. Although what it means to have this strong sense of identity might vary from culture to culture, there are some modern values that seem somewhat widespread. The most prominent of these values, Todaro and Smith point out, are the desires for economic prosperity and technological capabilities. Just offhand, this idea seems like it would be particularly true for a tourist economy where the

It is important to remember that these statements are really just conjecture at this point. In order to know if Antiguans really do have low self-esteem as a result of tourism, someone needs to go ask them about their thoughts on tourists, which is exactly what I did. However, Im saving those conversations for later (later being page 20). In the meantime, though, we can look at Antiguas score on the Human Development Index (see page 12), since Todaro and Smith suggest that economic prosperity is linked to self-esteem. Antigua scores a 0.868 on the HDI, ranking them 47 of 187, which is in the top third of countries analyzed. By comparison, the United States scores 0.956, making us number 12 of 187. Antigua is not at the top of the list, but they are definitely not at the bottom, either. In fact, as of 2008, the Organization for Economic Cooperation and Development (OECD) labeled Antigua a high-income country, putting them in highest category of countries when ranked by income per capita for the economists in the audience, GNI per capita. It might be interesting to note that this ranking is an improvement from 2003 when Antigua and Barbuda was ranked as an Upper-middle-income country second highest category.

Sources: 2008 OECD Data - worldbank.org; 2003 OECD Data - Todaro and Smith, 2006.

Buildings outside of tourist areas have nowhere near the shine as those in St. John's or other spots frequented by tourists.

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ANTIGUA January 2010

Source: Piraszewska, K. "Economic Significance of Tourism in the Lesser Antilles." Miscellanea Geographica. Vol. 1 2, 206. 269-275.

Just outside of the East Bus Station, which is used by tourists and locals to navigate the island, vendors sell Antigua bags, tshirts, and other souvenirs.

Freedom from Servitude

Since the idea of self-esteem includes not feeling like a tool for others to use, it is connected to the idea of freedom. Jamaica Kincaid links Antiguas services economy to the islands history of slavery. In her view, the rich people in the world see Antiguans as objects of interest things to be seen, like tourist attractions. In her mind, this state is reminiscent of a time when the people of Antigua were objects for sale.

Several banks on Antigua serve tourists through currency exchange and 24-hour ATM access.
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Kincaid argues that Antiguans dont have the freedom to choose what they spend their lives doing. Her main example is that children are encourage to aspire to getting into a school that teaches individuals how to work at hotels. Kincaid's point is that Antiguans works in tourism, and thats just the way it is. They dont really have a choice. In describing this last value for development, Todaro and Smith use some language that is coincidentally apropos of Antiguas history: Freedom here is to be understood as the sense of emancipation from alienating material conditions of life and from social servitude to nature, ignorance, other people (emphasis added). How much freedom do the people of the island really have in their careers? As I tried to find out exactly how much of Antiguas economy depends on tourism, I found estimates ranging between 40 and 60%. The problem was that there was no explanation for the method used to arrive at the percentages. What qualifies something as depending on tourism? I eventually found a study with a satisfactorily explained - and pretty insightful - method. The study, Economic Significance of Tourism in the Lesser Antilles, was done by Katarzyna Piraszewska at the Institute of Developing

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Development

Every Sunday and Thursday night at Shirley Heights (the highest point on the island) there is a steel band and reggae singer, along with grilled food and drinks. This twice-weekly party, with a cover charge on par with U.S. clubs, is a major attraction for tourists.

Countries. The method used is called the satellite accounting method. Rather than limiting itself to employment and transaction statistics that are directly related to tourism like hotels, restaurants, resorts, etc. the methods tries to find jobs and transactions that exist because of tourism that is, ones that are indirectly related. For example, the soap being used in hotels where tourists stay would not have been purchased if it werent for tourism. Fortunately, the study parses out the direct and indirect data for comparison. By just looking at the part of the GDP of Antigua and Barbuda made up of the tourism industry that is, directly from tourism the figure is 24.0%. I have to say, after having gone to Antigua, if someone told me that only 24% of the GDP came from tourism, I wouldnt believe it. (By the way, the number that most Antiguans give when asked is 85%). Similarly, by looking at employment directly from the tourism industry, 33.6% of jobs come from tourism. Now, looking at what the study calls Tourism Economy, which is direct and indirect composition of the GDP and job market, the numbers go up substantially. The percent of GDP from the tourism economy is 77.7%, which is, honestly, slightly lower than I would expect. The

big surprise, however, comes with the redone employment figures. According to the study, the percent of jobs on Antigua that depend on tourism is a whopping 94.8%. So, if were asking the question of whether someone can have a job not related to tourism, the answer is not really. But, if not having a job in tourism just means not directly interacting with tourists, then people have a pretty good shot, since only 33.6% of jobs are directly related to tourism. Now, there is one glaring problem with these figures. They are old. The paper giving these numbers was published in 2001. The problem is that most current figures on tourism dont provide much information on what the basis of the numbers is. The U.S. State Department reports a figure of 50% for Antigua and Barbuda (even this figure is a little dated, being from 2005). Assuming that this number represents the tourism industry and not the tourism economy, that represents a 48.8% increase from the earlier figure of 33.6%. If the tourism economy figure similarly increased, then all of Antiguas (actually, a little more than all of it) economy would be dependent on tourism.

Along the city streets in Antigua's capital, tour guides and taxi drivers offer excursions and transportation.

Regardless of the dates and exact numbers, it is quite apparent that Antiguas economy is overwhelmingly dependent on tourism, and almost all of the job market services tourism in some capacity. So, at least by the numbers, Kincaid may have hit that one on the nose. It certainly doesnt look like someone from Antigua can have a job not related to tourism, since in 2001 about 95% of the jobs came from that area.

Source: 2008 Tourism Industry % of GDP - state.gov

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