It is a little ironic that just one week after the Commonwealth Business Forum in Trinidad, at which Caribbean prime ministers, government ministers, the Caricom Secretary General and various captains of industry were attempting to sell the region as a place to do business, the President of the Caribbean Development Bank (CDB), Professor Compton Bourne, was painting a less than rosy picture to the annual dinner of the Georgetown Chamber of Commerce and Industry (GCCI), on December 2.
No one is suggesting that Dr Bourne was being mischievous or contrary in his feature address to the GCCI. It is simply not his style. Rather, the widely respected economist was being characteristically realistic and professional about the climate in the Caribbean for doing business and attracting investment.
In addition to the problems arising from the global economic crisis, Dr Bourne identified a few of the issues he regarded as impediments to a more conducive environment for doing business in most Caribbean countries. These included the length of time and the amount of paperwork necessary to establish a business and the slothfulness of the legal system in resolving business disputes. He also opined that regional governments could do more to address the problems of doing business in a systematic manner, by setting targets and benchmarking progress over the years.
But Dr Bourne had a few salutary words for the private sector too, pointing out that firms had to enhance productivity and become more cost-efficient and competitive, while developing new product lines and penetrating new domestic, regional and international markets.
This is all very reasonable advice. But isn’t this what the Caricom Single Market and Economy (CSME), promulgated in 1992 as the integrationist response to globalisation and the challenges arising from the smallness of Caribbean economies, their vulnerability to external factors and the limited regional resource base, is supposed to facilitate?
According to another distinguished regional economist, Professor Norman Girvan, there has been relatively little growth in intra-regional trade since 1992 and where there has been economic growth, it has tended to be concentrated, as in Trinidad. Indeed, the establishment of the legal and institutional structures of the CSME, such as the Revised Treaty of Chaguaramas and the Common External Tariff (CET), do not seem to have been matched by tangible progress or growth.
Of course, the full implementation of the Single Market alone has been bedevilled by delays, both political and bureaucratic. For instance, the changes in government in Jamaica and Barbados in 2007 and 2008 respectively, appear to have put a brake on the momentum towards the establishment of the CSME. It is also a fact that huge resources – financial, human and technical – are required to set up the CSME framework. Now, the most damaging criticism may well be that there are inherent limitations in the benefits of market integration among small economies.
On the other hand, the growth of exports to international markets, based on the freeing up of the movement of capital, services and skills, could arguably be the main measure of the success of the CSME. The counter-argument, however, is whether there is scope for expanded industrialization or manufacturing with limited domestic or regional markets.
In addition, there remain questions as to whether there is “a genuine collective commitment among Caricom member countries” at the levels of institutions and sectors “to the sharing of a single economic space,” as posed by the President of the Guyana Manufacturing and Services Association, Ramesh Dookhoo, in June this year.
Nevertheless, we do believe that, as Caricom is forced to move away from preference dependence to more globalized competition, with the commensurate need for economic transformation, the CSME, with its core objective of deeper economic integration, offers the region the best opportunity to harmonize policies and regulatory frameworks, rationalize production, enhance productivity and increase competitiveness. Encouragingly, Dr Bourne has stated that the CDB is already working to respond to the current challenges facing the region, including modifying its operations and policies to provide assistance. The CDB has, for example, reduced the counterpart funding required for countries seeking to borrow money, has reduced interest rates and will provide liquidity support to indigenous banks and to some hotels affected by low visitor arrivals.
This is welcome news and it is good to see a regional institution reacting in such a helpful manner, especially with regard to the private sector. Indeed, it is apposite here to advert to the call by Mr Dookhoo, for the Caricom Secretariat to move closer to the regional business community to promote private sector projects and initiatives across the region in the context of the global economic crisis, the CSME and the need to accelerate fair and equitable access to regional markets by member countries of the community.
Caricom is still in a period of transition. More needs to be done by regional governments and regional institutions, in partnership with the private sector, to hasten progress towards the CSME before it is too late.