Economy of Seychelles

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Traditionally the economy of Seychelles was based on plantations with cinnamon, vanilla, and copra as the chief exports. In the 1960s, about 33% of the working population worked at plantations, and 20% worked in the public or government sector. In 1971, with the opening of the international airport, tourism became the dominant industry. The tourism sector paid better, and the plantation economy could only expand so far. The plantation sector of the economy declined in prominence, and tourism and fishing became the primary industries of Seychelles.

Since Seychelles' independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the old near-subsistence level. Growth has been led by the tourist sector, which employs about 30% of the labor force and provides more than 70% of hard currency earnings, followed by tuna fishing. In recent years the government has encouraged foreign investment in order to upgrade hotels and other services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, small-scale manufacturing and most recently the offshore sector. The vulnerability of the tourist sector was illustrated by the sharp drop in 1991-92 due largely to the Gulf War. Although the industry has rebounded, the government recognizes the continuing need for upgrading the sector in the face of stiff international competition. Other issues facing the government are the curbing of the budget deficit and further privatization of public enterprises.

Contents

The Traditional Plantation Economy

The French originally settled the Seychelles in 1770, setting up plantations which relied heavily on slave labour to produce cotton, sugar, rice, and maize. The British took control during the Napoleonic Wars, but without removing the French upper class. After the British prohibited slavery in 1835, the influx of African workers did not end because British warships captured Arab slavers and forced the liberated slaves to work on plantations as "apprentices" without pay. However planters soon realised they could grow coconuts with less labour and more profit than the traditional crops.

Plantations were the main industry of the Seychelles until 1971, when the international airport opened. Overnight tourism became a serious industry, basically dividing the economy into plantations and tourism. In the 1960s, about 33% of the working population worked at plantations but by 2006 it was less than 3%.

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