The Role of the Bahamas Development Bank in the Bahamian Economy Coursework

The Role of the Bahamas Development Bank in the Bahamian Economy - Coursework Example State of the Bahamian economy Before exploring the role played by the Bahamas Development Bank in the Bahamian economy, it is imperative to look at the state of the Bahamian economy: its strengths and weak points before addressing how the Bahamas Development Bank plays a role in addressing these weak points. Being among the best offshore global banking centers, Bahamas has come up with a non-simple banking structure that caters for the services of both domestic and foreign investors. Both the central bank of Bahamas and the Bahamian international banks and Trust have a complete list of about 272 financial institutions that are legally mandated to conduct business with the public (US Department of Commerce, 1992, p. 40). The states in the Caribbean went through several challenges in 2004. Examples of these include declining real sector production, a reduction in their export trade, pressure from other parties regarding the exportation of sugar and bananas, increased indebtedness and a season highly characterized by natural perils and catastrophes. Moreover, though categorized as middle – class economies, majority of these nations have a good score of their citizens who are poor. Statistics from the Caribbean Development Bank indicate that the poor form between one and twenty six percent of the population. In a bid to deal with these challenges, Bahamas has had to conserve economic stability, strengthen the tourism and fiscal financial sectors, enhance the security of citizens, and support family islands and growth of small businesses through buttressing social services and improvement of the transport sector (Commonwealth Secretariat, 2006, p. 16). The Bahamas authority plays this role through its financial institutions like the Bahamas Development Bank, among others that get their external sources of finance from other lending agencies such as the Caribbean Development Bank. In the recent years, there has been a reported rapid growth in both the financia l, Nassau and tourism sectors. In the recent years, Bahamas has become popularly known as a center for offshore banks and trusts apart from being a strategic location for carrying out international currency business (Khambata, 1996, p. 95; Bernardi, 2008, p. 107). This has been facilitated by the overall openness of the economy, proximity to the United States and The Bahamas’ tax haven state. Apart from generating income and employment for the country, financial services enhance the nation’s tax haven image. The attainment of the nation’s high-level per capita income can be attributed to the growth in the service sector that has really increased the national income of Bahamas (Karagiannis and Witter, 2004, p. 150). The major cause of the post war growth in the Bahamian economy can be attributed neither to structural reforms neither in the country’s production base nor to any changes in the functioning of its economy. The change can rather be attributed to the enlargement of the tourism and financial sectors. In fact, the pattern