Statement of the Problem
The economy of the Turks and Caicos Islands is mostly driven by tourism. In recent years, the islands are facing a devastating time due to the onset of the coronavirus. The islands are looking to enter into a recession as stated by the Minister of Finance Hon. Sharlene Cartwright-Robinson (Rose, 2020). The islands have had two consecutive quarters that showed negative growth. The coronavirus has impacted many nations across the world, and many economies are at a standstill. According to the finance minister, the country had positive economic growth in the first quarter but has had negative growth in the last two quarters. The islands are dependent on tourism, which has come to a standstill due to many countries, including the islands restricting such activities.
The island shut down the economy in March 2020 because of the virus. The government advocated for the shutdown of the economy as a countermeasure to the coronavirus’s increasing cases in the islands. The first case of the virus was confirmed in March, and the Royal Turks and Caicos Islands Police Force issued an order for everyone to stay at home and also set a curfew. The islands had the first death from the virus in April (Rose, 2020). The country put preventive measures such as the lockdown of schools. Cruise ships that mostly carry tourists were banned, and the port was closed down until the 30th of June. Airports, seaports, beaches, and other businesses were also locked down. In the last weeks of March, the Turks and Caicos Island (TCI) were under full lockdown. The lockdown had negative consequences on the economy of TCI. It saw businesses lose their incomes, communities become displaced, and businesses lose markets (Center for Disease Control and Prevention, 2020).
The impact trickled down to the small businesses in the TCIs leading to the closure of such businesses and financial distress on most small business owners. The government, also before the coronavirus, engaged in a stimulus package that was attached to the hospitality industry in the country. The stimulus package affected the amount of money that the government was paying out to a foreign workforce instead of keeping it within the country. On top of that, the lockdowns that were imposed by the government lead to the loss of confidence in the markets and the loss of business (Charles, 2020). This paper will focus on the impact that the corona virus-induced recession has on small businesses on the TCIs.
The problem is significant in that it affects the most vulnerable parts of the TCIs economy. Recessions lead to the economic decline within a nation and affect all businesses, small and big alike. They lead to slow market demands, tightened marketing conditions, and general uncertainty. It is a significant issue to study as it affects the islands’ economic performance and affects factors such as unemployment and GDP. A proposal on this topic will enable me to understand the impact that recession, due to the coronavirus, has on the TCIs. It will help understand the impact that the recession has on the economy and governance of the country.
- What is the impact of the coronavirus pandemic on the economy of the Grand Turks Island?
- How does the pandemic induce a recession in the country?
- What is the impact of the recession on the businesses on the island?
- How does the recession affect small businesses within the island?
- How will the island come out of recession? What are the possible solutions to fix the recession?
The corona virus-induced recession leads to slow growth and collapse of small businesses on the Grand Turks Island.
The research by González-Pernía et al. (2018) expounds on the impact that recession in nations has on entrepreneurial behaviors. The researchers carried out the study to better understand the relationship between economic conditions and entrepreneurship. The study was focused on Spain and was based on the recession period experienced between 2007 and 2010. The researchers address the likelihood of people investing or creating new firms during the period of a recession. The results of the study showed that the level of entrepreneurship shrank during the recession periods. Individuals did not have faith in the economy and therefore avoided investing their money in the economy during the recession period.
The research relates to the topic of study in that it shows the perception that individuals have about business during a recession. Entrepreneurs mostly form small businesses within an economy, and therefore their perception of the bad conditions of the economy influences the development and growth of such small businesses. The study helps in understanding the relationship between the economic conditions of a country and the level of business activities within the country. The recession in the Grand Turks islands will have a similar impact on small businesses and entrepreneurship. Small businesses are likely to close their doors due to the lack of finances or the lack of disposable income by consumers within the community. The small businesses also operate on a hand-to-mouth basis, and therefore, anti corona measures such as lockdowns adversely affect the businesses.
Campanella & Dookeran (2020) talk about symmetric shock and the coronavirus’s consequences on different territories in the Caribbean. The authors show that the coronavirus outbreak has led to a lot of uncertainty in world economies. They predict an upcoming massive recession characterized by a rise in unemployment, poor investments in fixed assets, and critical economic and financial variables. The researchers also conclude that the Covid-19 related shock mostly affects the developing nations, and there is a likelihood of an L-shaped recession. The recession leads to a fall in the gross domestic product. The authors go further to try understanding what Caribbean countries could do to mitigate the impact of such a recession. The lack of any action from the Caribbean government could lead to a long stagnation in economic growth.
The article relates to the topic in that it covers the coronavirus and how it has affected countries’ economies. The economies of nations, especially in Caribbean countries, are on the decline, with many individuals being rendered jobless and investments decreasing over time. Such joblessness leads to low incomes and a lack of disposable income within the communities. Small businesses rely on the disposable incomes of the individuals they serve. Without such income, there are fewer consumers of their products and, therefore, less money to run or sustain the business. The stagnation in economic growth could also lead to the stagnation of small business development.
Folinas & Metaxas (2020) discuss the impact pandemics, such as the Coronavirus, have on the tourism industry. According to their article, the coronavirus has negatively impacted the tourism industry, especially in tourist destinations that attract huge numbers of people. The pandemic began in China but affected tourist destinations such as Italy due to the high number of cases and the daily increase in the virus cases. The virus is deadly and yet to be understood by scientists. According to the authors, many tourists canceled their plans to visit destinations due to the fear of contracting the virus with no vaccine and no cure. Tourist destinations suffer as well as the businesses that are reliant on the industry. The authors cite evidence from the World Tourism Organization revised in 2020. They show that international tourism is likely to go down by 20% to 30% in 2020, a rate higher than in 2019.
The article relates to the topic in that the tourism industry is one of the major sectors in the Caribbean islands that lead to small businesses’ growth and operation. Most small businesses on the Grand Turks islands, for instance, are reliant on revenues from tourists that visit the island as a holiday destination. Tourism is the backbone of the region’s economy. The slowdown of tourist activities in the territories will impact small businesses. They will have fewer customers to serve their products. Others, such as the hotel and food businesses, will have to shut down due to the TCI’s government’s lockdown measures. Therefore, the article is valuable to the study as it will help understand how an important sector in the economy, such as tourism, will affect small businesses in the region.
Fairlie’s (2020) research focuses on the impact that the coronavirus had on business in the first two months of the pandemic’s surge. No other research had been carried out about how the corona pandemic affects small businesses in the country. The focus of the research is the United States. The author provides a firsthand analysis of the pandemic’s impact on small businesses in the country. The USA’s number of active business owners fell by 22 percent (3.3 million small business owners). This was according to the data recorded between February and April 2020. The data showed that most business owners were unable to sustain their small businesses during the pandemic and due to the strict anti-pandemic measures put across by the government. The study’s finding shows the adverse impact coronavirus has on small businesses and the implication that has on policies, job losses, and economic inequalities.
The research relates to this study in that the study focuses on understanding the impact of the pandemic led recession in the Caribbean. Like any other country, the pandemic will have a similar impact as witnessed in small businesses in the United States. Businesses are likely to collapse, with many more suffering losses as they try to weather the Covid-19 recession. The virus has led to a strict restriction in TCIs, and therefore losses similar to those in the USA in relation to small businesses are expected.
Chen et al. (2017) discuss the impact that recessions have on the power and lenders’ ability to lend money to small businesses. The authors identify the decline in Big-Bank lending to small businesses and a factor that affects such businesses during times of economic crisis. The article focuses on the recession that happened in the 2007-2010 economic crisis that affected most nations globally. The researchers identified that lending to small businesses during the period remained low until 2014. The flow of credit to small businesses fell as the average rate on the loan interests rose. The period was characterized by high rates of unemployment and fewer business expansions than in previous periods.
The research is a clear indication of the negative impact that an economic recession will have on small businesses. It is related to this study in that the TCIs are likely getting into a Covid-19 driven recession. Most lenders within the territory are uncertain about the future of the region’s economy and small businesses’ ability to recoup losses and make profits to pay back loans. Therefore, it is hard for businesses on the islands to access loans from financial institutions to hold the business together during the pandemic. The lack of loans leaves small businesses in a volatile market with little to no hopes of surviving economic recession conditions.
The article by Sahin et al. (2011) explains why recessions often hit small businesses. The article is based on the recession that occurred after the financial crisis of 2007-2008. The researchers identified in their study that recession leads to a decline in economic activities such as sales and economic uncertainty that affects consumer spending. They also identified that large businesses are also affected by the recession by a lesser degree than small businesses. The researchers also identified in their study the problem of credit supply constraint that mostly affects small businesses. The researchers identify the weakening of consumer demand for such businesses’ products during a recession to be a key factor that leads to failure or decline of performance of small businesses.
The article relates to the study in that it describes the aftermath of recessions. The 2007-2008 recessions had impacts that would be similar to a recession caused by any other factor such as the coronavirus. A recession is a period of poor economic growth. The Turks and Caicos Islands’ recession will trickle down to islands such as the Grand Turks and will affect small business owners. The recession will reduce consumer spending on small businesses’ products and services, reducing revenues that keep such businesses afloat and dampening the spending on investments.
Cowling et al. (2015) ‘s article is based on evidence from previous recessions in the United Kingdom. The authors aim to understand the impact that global recessions have on small and medium-sized businesses. The article identifies how such small businesses cope during economic recessions, especially due to the decline in the demand for their products and services. Their study showed that more than half of small businesses experience a fall in employment during recessions and a fall in sales during the period. However, they identify that most businesses find it easy to recover after the recession, especially those with high human capital. The study relates to the topic of study in that it explains the impact of recessions on small businesses and also identifies how such businesses could focus their efforts on dealing with such recessions. This study will be based on a recession caused by the coronavirus in the Grand Turks islands. Therefore, this study might have similar effects as those experienced by small businesses during the recessions in the 2007-2008 crisis.
Many researchers have studied over the past how the recession has affected small business owners. Such literature could be used to understand how the corona virus-induced recession in the TCIs could impact small businesses and create a basis for research. The studies also help to identify limitations that could be avoided in the current study to yield better and more accurate results. The following are some of the previous studies that relate to the topic under study.
Participants and subjects
The participants of the study will be small business owners in Grand Turks Island. The participants will be aged between 25- 45 years old. The businesses must have been in operation before the coronavirus and must have been affected by the virus’s onset and the lockdown restrictions set by the government. The study has a participant target of 500 business owners who will provide information that will be used to generalize the impact that the recession has on the small businesses. The participants will qualify for the study if their businesses serve less than 1,000 participants in a month. The reason for choosing this group of participants is that they are affected greatly by the recession. Businesses are dependent on the island’s economic conditions, and when it is down, businesses are also impacted. The business owners will have a testimony of how their businesses have been affected and thus conclude how the recession has affected small businesses.
The research will be carried out through two methods: surveys and independent interviews with different participants (Tracy, 2019). The participants will be divided into 20 groups, with 25 participants each. The groups will be handed out surveys that have open-ended and closed questions relating to their business conditions before and after the coronavirus. The interviews will be carried out in the groups with an independent researcher manning each group. Participants will be asked questions relating to the businesses and recession brought about by the coronavirus. They will include the following:
- What is the financial state of your businesses before the coronavirus?
- What is the performance of the business after the lockdown induced by the government?
- What is your take on the quality of business currently?
- Does the declining economy affect your business in any positive way?
- What have you done to safeguard your business from the impact of the coronavirus?
The research will also involve reviewing financial documents available on the Finance Ministry’s website. The researchers will review the Grand Turks Islands’ financial statements and relate them to the country’s economic conditions (Gov.tc, 2020). The data will be analyzed and compared to a year before the coronavirus pandemic hit the continent.
The study is qualitative and will involve the organization of all the data collected from the participants and financial information collected from the government’s website. The analysis of the data will occur in several phases. The first will be the review of the interview transcripts to identify any recurring regularities. It will involve highlighting phrases and keywords that are important and related to the study topic. The interview transcripts will be arranged into categories such as the businesses that were highly affected by the recession due to the coronavirus, those moderately affected, and those that faced little impact from the islands’ current economic conditions. The researchers in the study will also bring together coded interviews to determine the relationship between the 20 groups selected for the study. The final part of the data analysis will be to integrate and refine the crucial data related to the study topic and solidify themes evident in all the data (Mihas, 2019).
One limitation that the research proposal might have is the use of a huge number of participants. The research aims at collecting data from over 500 business owners to ensure the credibility and validity of data and conclusions made from such data. However, it is hectic to get 500 participants who will be willing to participate in the study and that own business on the TCIs. The huge number of participants requires additional research resources that might not be readily available at the time of the research. Another limitation of the study would be the Turks and Caicos Islands’ social barriers that might affect how data is collected (Queirós et al., 2017).
The social barriers might lead to the participants not giving enough information for the study. Some might register as participants but not be willing to disclose honest information about their businesses. The study is also time-consuming and labor-intensive. The data collected from the 20 group interviews and over 500 questionnaire surveys require a lot of time to analyze and organize meaningful data. It is also hard to statistically verify the study results as qualitative research cannot be represented statistically.