Montserrat is a small island that is part of the British Overseas Territories in the area of the Lesser Antilles. It is situated in between the islands of Guadeloupe and St. Kitts & Nevis, with the islands of Antigua & Barbuda to the east. Montserrat is relatively small, covering an area of just 4 square miles and with a population of around 4,000 inhabitants. The island uses the East Caribbean Dollar which is pegged at a fixed rate against the US Dollar. The Montserrat economy has faced some tough times over the last 15 years, but things are looking positive for the island.
Early History of Montserrat Economy
Montserrat was first settled by "western civilisation" in the 15th century after it was discovered by Christopher Columbus. The British then took over the island in the early part of the 17th century and like many other Caribbean settlements, became a centre of production for sugar cane. By the latter part of the 17th century there were many plantations on Montserrat and also industry relating to cotton, rum and arrowroot grew up around this time too. The Montserrat economy relied heavily on these industries until it began to dwindle (as it did for the rest of the Caribbean islands and territories) during the 19th century.
Effect of Volcanic Eruptions on Montserrat Economy
Today, the industries on Montserrat have been hugely affected by the actions of Mother Nature. The active volcano on the island, Soufriere Hills, erupted in 1995 and completely devastated the capital city of Plymouth. As the volcano is still active on an intermittent basis to this day, an exclusion zone exists on Montserrat, rendering the southern portion of the island uninhabitable. Many of the island's people fled during this time which is why there are so few inhabitants left.
The volcanic eruption had severe repercussions on the Montserrat economy, particularly in the agricultural sector, as many parts of arable land and crops were destroyed by the volcanic ash and lava flow. Today, all agricultural practices are carried out purely on a self-sufficiency basis, if at all, with much of the livestock and foodstuffs being imported.
Despite the massive disaster that happened, the Montserrat economy still survives with a few key industries helping it along. This includes mining, construction and financial services. All three of these sectors are small but steady with the financial services industry providing services to around 11 offshore banks.
Power of Tourism in Montserrat
One industry that is helping enormously with the economy is tourism. Figures for visitors have risen significantly in the last few years, particularly in relation to visitors from the United Kingdom. Montserrat has become a popular place to travel to due to its active volcano and the island's tourist board is "marketing" the experience of visiting the island as a chance to "see a modern day Pompeii".
Being a British Overseas Territory the Montserrat economy benefits from substantial financial backing from the United Kingdom. This said, it appears that if the right measures can be put in place in relation to the activity of the volcano, Montserrat could slowly better its economy in a much more independent manner.