E3 Virgin Islands

Category: Economy

Examining small business, tourism, government revenue, workforce data, and economic diversification in the VI.

  • Small Business in the VI: Strengths, Gaps, and What the Data Shows

    According to the U.S. Small Business Administration, small businesses (firms with fewer than 500 employees) account for the vast majority of private-sector employment in the U.S. Virgin Islands. In an economy this size, even a modest restaurant or retail shop can be a significant employer.

    Structural challenges

    VI small businesses face cost structures that mainland counterparts don’t: higher shipping costs for goods, higher energy costs (WAPA electricity rates are among the highest in the U.S.), limited access to capital, and a smaller local customer base that is heavily dependent on tourism seasonality.

    Post-hurricane recovery

    Irma and Maria disproportionately affected small businesses, which had less access to disaster recovery capital than larger firms. Many did not reopen. The economic footprint of lost small businesses is difficult to measure precisely — but it shows up in reduced employment, reduced tax revenue, and reduced community vitality.

    What effective support looks like

    E3 VI will track small business health indicators over time and highlight both the gaps in current support structures and the models — from other small island economies — that have shown promise.

    This perspective is part of E3 VI’s Economy series.

  • Tourism Dollars and Who They Actually Reach

    Tourism accounts for roughly 60% of the U.S. Virgin Islands’ GDP — a figure that hasn’t changed meaningfully in decades. But aggregate figures hide as much as they reveal.

    The reach problem

    When a cruise ship docks in Charlotte Amalie or Frederiksted, how much of the spending stays in the Virgin Islands? Studies of Caribbean tourism economies consistently find that “leakage” — revenue that flows back out to foreign-owned suppliers, imported goods, and off-island financial services — can exceed 70% of gross tourism revenue in small island economies.

    Local ownership and the multiplier effect

    The key variable in determining how much tourism revenue benefits local residents is local ownership. Tourism dollars spent at locally owned restaurants, shops, and tour operators cycle through the local economy multiple times — creating jobs, supporting local suppliers, and generating tax revenue.

    What the VI data shows

    The USVI Bureau of Economic Research tracks visitor spending, but granular data on local versus foreign ownership of tourism-sector businesses is harder to come by. E3 VI is tracking this gap and will publish findings as data becomes available.

    This perspective is part of E3 VI’s ongoing Economy series. Data sourced from the USVI Bureau of Economic Research and Caribbean Tourism Organization.