Caribbean businesses should be retooling and training staff as countries look forward to an improvement in the regional economies. Director of Economics at the Caribbean Development Bank (CDB), Dr. Denny Lewis- Bynoe said, “Retooling and retraining of staff in the downtime would better position businesses to compete with the upturn in the economy.” She was outlining the opportunities which the current economic climate offers Caribbean economies.
Dr. Lewis-Bynoe said “the downturn would have also forced companies and Governments to focus on the efficiency of their operations. Enhancing systems and reducing operating costs can be seen as a natural consequence of operating in tight market conditions.”
According to the CDB’s recent press statement, last year’s economic conditions in the Caribbean region remained depressed, even as the world economy rebounded from the 2008/09 recession. The Bank explained that the global recovery was mainly driven by developing and emerging economies but recovery in the more advanced economies – the Region’s main source markets for tourism, investment and remittance flows – was more muted. As a consequence, 12 Caribbean economies- (Barbados, Jamaica, Dominica, Trinidad and Tobago, Grenada, St. Vincent and the Grenadines, Anguilla, Cayman Islands, Montserrat, Antigua and Barbuda, St. Kitts and Nevis and Haiti) – contracted and six (The Bahamas, St. Lucia, Turks and Caicos Islands, Belize, British Virgin Islands and Guyana) recorded growth, the statement added.
However, the CDB forecasted that this year most economies in the region would register modest growth given the lingering weakness in the region’s key North American and European export markets.
According to Dr. Lewis-Bynoe the recession has highlighted some important lessons for the region. One is the potential for financial contagion and the need for adequate regulatory and supervisory frameworks across the financial system. She said, “The importance of supervising and monitoring the activities of non-bank financial institutions has been brought into sharp focus as the global financial crisis and economic recession unraveled the operations of a major financial entity. Cross border supervision and monitoring is now accepted and being undertaken.”
Another lesson is importance of good macroeconomic management including a prudent approach to fiscal policy-making and consistent and supportive monetary policies. Better debt management is also critical to this process. Some of the countries that fared better in the crisis were those that were better positioned to respond, that is, use of counter-cyclical measures.
Finally, lesson number three is economic diversification. She stated that most regional economies are acutely aware of its importance, having experienced shocks before, and most, if not all, are actively seeking to diversify their economies as articulated in their various development strategies/plans.
“The challenge is not in the acceptance of the need for diversification, but in the attainment of diversification given the constraints posed by their small size, limited resources endowment and access to resources. These factors limited their potential to be competitive in a wide cross section of activities. The task is made more difficult in a rapidly changing global economic environment which, while presenting opportunities, also creates uncertainties that small countries seem less equipped to deal with.”
Dr. Lewis-Bynoe said that issues of competitiveness, “predates the crisis and will continue to require the concerted efforts of regional governments at reducing the cost of doing business. The strategies for enhancing competitiveness must include simplifying procedures and reducing bureaucratic red tape associated with key services provided by Governments, as well as providing the right incentives for the private sector to operate.”
“The legislative and regulatory systems need to be updated, and in some cases, made less burdensome. In short, governments must provide an enabling environment that facilitates business activity by streamlining operations at their ports and other points of interface with the private sector. The ease with which businesses can be established should also be an important plank of the strategy for developing new businesses that are better able to compete in a liberalised environment.”
Did she see any rising stars in the region’s economy?
“The advances in technology offer a lot of opportunities for the development of new businesses. A highly educated population should allow the region to capitalise on the provision of services. The international business sector appeared to be a rising star but its growth has been overshadowed by concerns among developed countries (Organisation for Economic Cooperation and Development) about the potential
for money laundering and tax evasion in these jurisdictions. We should create an environment that allows the private sector to pick the winners,” Dr. Lewis-Bynoe stated.