Barbados embodies an open, small, free enterprise economy. A Value Added Tax on consumption, implemented in 1997, has enabled the country to reduce its dependence on import tariffs and duties as a source of revenue, and also to improve compliance with WTO rules.
In 2007, the country's Gross Domestic Product (excluding net indirect taxes) was approximately US$3 billion. That same year, exports amounted to US$470 million, while imports totalled US$1.72 billion. Domestic exports consist mainly of sugar and its by-products: rum and molasses, chemicals, clothing, furniture, electrical components and cement. Consumer goods, mostly food and beverages, account for the majority of the island's imports.
Based primarily on sugar until the 1970s, the island's economy now has four key productive industries: tourism, agriculture, manufacturing and international business.
Tourism continues to play a key role in the economy and has a positive "spin-off" impact on virtually all other business sectors. Currently, this industry accounts for about 13% of the employed labour force and is the country's principal foreign exchange earner. In 2007, the gross annual earnings from tourism were approximately US$1.2 billion. The island attracts approximately one million visitors each year, with an almost equal split between long stay visitors and cruise ship passengers.
The manufacturing sector in Barbados accounts for approximately 7% of the island's employed labour force and includes food and beverages (especially sugar and rum), electronics, hardwood furniture, garments and chemicals.
The country continues to welcome investment in the manufacturing sector, especialy for the production of higher value-added, skills-intensive products that use modern technology. Electronics, medical equipment and information processing are areas of particular interest. In recent years, the island has been attracting a growing number of call centres.
While the production of sugar is still important to the island's ability to earn foreign exchange, the Government's policy in agriculture has been to reduce dependence on this commodity and to encourage diversification, especially in vegetables, poultry, livestock and fishing.
This sector, which has steadily developed since 1977, now contributes significantly to the island's foreign exchange earnings and provides employment for approximately 3,000 Barbadians. Some unofficial estimates put the sector's contribution to the island's GDP at about 7.5%.