Lucayan Indians inhabited the islands when Christopher COLUMBUS first set foot in the New World on San Salvador in 1492. British settlement of the islands began in 1647; the islands became a colony in 1783. Piracy thrived in the 17th and 18th centuries because of The Bahamas close proximity to shipping lanes. Since attaining independence from the UK in 1973, The Bahamas has prospered through tourism, international banking, and investment management. Because of its location, the country is a major transshipment point for illegal drugs, particularly shipments to the US and Europe, and its territory is used for smuggling illegal migrants into the US.
The Bahamas has the second highest per capital GDP in the English-speaking Caribbean with an economy heavily dependent on tourism and international banking. Tourism accounts for approximately 75-80% of GDP and directly or indirectly employs half of the archipelago's labor force. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. Manufacturing and agriculture combined contribute less than 7% of GDP and show little growth, despite government incentives aimed at those sectors. On January 1, 2015, the Government introduced a 7.5% Value Added Tax (VAT) on most goods and services, a measure designed to strengthen the fiscal balance sheet. In August 2016, Moody’s downgraded the Bahamas’ bond and issue ratings to Baa3 from Baa2 with a stable outlook, maintaining that rating in its February 2017 review. In December 2016, S&P downgraded the country to BB+ (speculative grade) from BBB- (investment grade) with a stable outlook based on projections of slow economic growth and the pace of debt accumulation. The Bahamas is the only country in the Western Hemisphere that is not a member of the World Trade Organization.