A lot of islands are expensive but here it is pronounced. Western "shopping mall" goods are not bought by many people in the core population, so the market consists mainly of low-elasticity demanders, namely tourists and wealthy expats. A small number of buyers have to cover the fixed costs of transportation to the island plus the costs of a not-so-efficient retail sector. Taxi fares are cartelized plus it's only locals on the informal buses, so even intra-city transport costs are high. That means lots of local monopoly and yet higher prices. To go from a typical tourist hotel to some semi-cheap local food isn't easy to do, and so it is possible to spend $30 or more on a mediocre breakfast and yes the portions are small too.
In turn that keeps away tourists and maintains the need to spread fixed costs across a small rather than a large number of buyers. Chicken, egg, etc.
There is good cheap food in the countryside, especially if you catch a jamboree or fish fry.
Addendum: They also use the East Caribbean Dollar, which perhaps for them is not an optimum currency area. Should Grenada be pegging to the U.S. dollar?
The ECD is itself pegged to the dollar.
I am not sure how anything that you pointed out makes Grenada a unique case. Cabs are expensive in many places- particularly in destinations that cater to tourists.
Most of the hotels in Grenada are not located very near places where locals would live/open cheap food joints. That is because some hotels (e.g. La Luna) are located in secluded places while others are clustered in a decidedly tourist area- Grand Anse beach. As a result, cheap food places are in areas where people live, not where tourists stay.
@Danny
Currency stability and credibility. Actual investors with money on the line (not screaming pundits on either side of fence) appear to trust the US dollar, both now and in the recent past, so pegging to the dollar allows a country to piggyback on said trust, and on the discipline of the Fed.
Adopting the dollar would make it impossible for your country to unpeg it once conditions change. This is what Greece is learning now, as it happens. Sometimes a recession occurs and you need to set monetary policy; you would then have to repeg the currency, which you cannot do with actual dollars, as those are always 1:1.
The valuation issue is not problematic if the small country’s bank is willing to absorb currency until the peg matches what the floating nominal rate would be.
Thanks for the help david
The local buses in Grenada seemed fine to me. Food is, for sure, cheaper than in the US – even Western food at the plazas (such as the one between Grande Anse and St. George) that cater to expats and Med students. Drinks and hotels are cheaper than anywhere in the “small islands” of the Caribbean, though certainly aren’t cheap per se. If you want expensive, check out, say, Martinique or French Guiana, both of which are on the Euro and are more expensive than France proper.
As an American, surely you would drive your own car to Grenada, or have it flown in. No American would find any form of public transport acceptable. And personal cars are always cheaper.
Right?
it’s only locals on the informal buses
I believe you can reasonably take the bus with the locals in Grenada. But locals may not point you to it unless you tell them that yes you really do want to take the bus. Once you convince them they’ll help you, though.
There are lots of informal food sales, not just in the countryside. I found the meats very good but the sides mushy. Portions are large. There’s a great open-air cafe for students at the old medical school campus (don’t know about the new one). Off-beach shacks serve good grilled Caribbean food.
The problem is a lot of this is very informal and locals don’t think like us – they’re baffled that you want cheap food etc.
Comments on this entry are closed.