It is my profound pleasure, ladies and gentlemen, to warmly welcome you to the island of Saint Lucia and to the third Regional Workshop of the Caribbean Growth Forum.
I wish, in particular, to extend a warm welcome to:
- The Honourable Timothy Harris, Prime Minister of Saint Kitts and Nevis;
- Senator the Honourable Lennox Weston, Minister of State within the Ministry of Finance & Corporate Governance, Antigua and Barbuda;
- The Honourable Khaalis Rolle, Minister of State for Investments in the Office of the Prime Minister, Bahamas;
- Senator the Honourable Darcy Boyce, Minister of State in the Office of the Prime Minister, for Energy, Immigration, Telecommunications and Investment, Barbados;
- The Honourable Claude Hogan, Acting Premier of Montserrat;
- The Honourable Lindsay Fitz–Patrick Grant, Minister of Tourism, International Trade, Industry and Commerce, Saint Kitts and Nevis.
And from Saint Lucia, I welcome too:
- The Honourable Harold Dalsan, Minister of Social Transformation, Constituency Empowerment & Local Government;
- The Honourable Dr. Robert Lewis Minister of Education, Human Resource Development & Labour;
- The Honourable Emma Hippolyte, Minister of Commerce, Business Development, Investment & Consumer Affairs;
- Senator the Honourable Stanley Felix Minister of Physical Development, Housing & Urban Renewal; and
- The Honourable Moses Jn. Baptiste, Minister of Agriculture, Fisheries, Food Production & Cooperatives.
A special welcome is also extended to the region’s development partners, in particular the World Bank. The Bank has played a pivotal role in providing technical support to the implementation of the Caribbean Growth Forum and is today represented by an impressive team which includes Mr. Jorge Familiar, Vice President, Latin America and the Caribbean; Mr. Marcelo Giugale, Senior Director for Macroeconomics & Fiscal Management, Ms. Sophie Sirtaine, Country Director, Latin America and the Caribbean and a number of their colleagues.
I acknowledge other development partners involved with this initiative including, the Inter-American Development Bank, the Caribbean Development Bank, the United Kingdom Agency for International Development, the Canada Department for Foreign Aid, Trade and Development and the Italian Ministry of Foreign Affairs and International Cooperation.
I note too, the presence of the Governor of the Eastern Caribbean Central Bank, Sir Dwight Venner and the Director General of the Organisation of the Eastern Caribbean States, Dr. Didacus Jules.
Other dignitaries, representatives from Compete Caribbean and technical advisors to the CGF process, Senior Government officials, private sector representatives, representatives of Non-Government Organisations (NGO’s), Civil Society Organisations, ladies and gentlemen, welcome and good morning!
By all accounts this is an impressive list of sponsors, donors and partners!
CARIBBEAN GROWTH FORUM
We gather, once more, against the backdrop of weak growth outcomes evidenced by low average growth of 1.1 percent for the Caribbean Region over the period 2008 to 2013. Given this anemic performance, the Governments of the region agreed to work with major donor partners to establish an initiative aimed at identifying short term policy actions to facilitate enhanced competiveness.
Thus, the Caribbean Growth Forum was implemented with the support of the Compete Caribbean Programme, the Inter-American Development Bank, the World Bank, and the Caribbean Development Bank.
It is also supported by the Canadian International Development Agency, the Department for International Development (DFID), CARICOM Secretariat, and the University of the West Indies.
ACCENTUATED STRUCTURAL WEAKNESSES
It is no secret that the Global Financial Crisis which started in 2008 has adversely impacted the economies of non-commodity exporting Caribbean states. The crisis accentuated structural weaknesses within those economies as foreign exchange inflows decreased due to lower tourism arrivals. Added to this were high levels of unemployment, triggered in most instances by job losses and limited capacity of domestic firms to absorb new entrants in the Labour Market.
While commodity exporters have fared somewhat better, these countries remain highly vulnerable to international price changes.
POST FINANCIAL CRISIS PERIOD
In the post financial crisis period, even as the economies of our major trading partners have begun to recover, all Caribbean countries have experienced decelerated foreign direct investment (FDI).
A 2015 report by ECLAC on Foreign Direct Investment in Latin America and the Caribbean indicated that FDI inflows into the Caribbean sub-region declined by 4.7 percent in 2014 after falling by over one third since 2008.
This holds true even for the region’s largest economy and top recipient of FDI inflows; the Dominican Republic. FDI into this nation, while increasing by 11 percent in 2014, was less than the amount received in 2012.
Of concern, is the concentration of the FDI flows into tourism and natural resources that have not assisted our countries in diversifying their economies. This, coupled with decreasing workers’ remittances, have exacerbated the negative impact that the financial crisis has had on economies and on livelihoods.
In the midst of the global crisis, this region has been exposed to other debilitating shocks. It has had to contend with the collapse of some financial institutions and in others, fragility emanating from the collapse of significant investments in the tourism plant in some states.
Cognizant of our fiscal challenges and limited policy options, Governments of the Caribbean have had to implement measures to alleviate this crisis. Such efforts would have been futile had it not been for the technical and financial support provided by the multilateral community to our region.
Notwithstanding this, if today’s discourse is to yield true fruit, we must acknowledge that declining growth in the Caribbean featured from the mid-1990s. This is not just a phenomenon of the post 2008 period. Such declining growth is particularly perceptible for the member countries of the Eastern Caribbean Currency Union. Moreover, the analytical work suggests that the countries which were most negatively impacted by the global financial crisis were countries where:
1. Sudden stops in foreign direct investment resulted in disruptions to financial sector institutions;
2. High deficits on the current account of the Balance of Payments existed prior to the crisis; and
3. The pre-crisis boom was related to significant inflows of foreign investment.
We all know that many member countries of the ECCU fall within the group of countries which I have just described.
Sometimes too, we forget that we have been lurching from one crisis to the next, in quick succession. In the early years of this new millennium, we were all faced with managing economies that witnessed the almost sudden collapse of export agriculture, be it sugar or bananas. If all of this is viewed from a political economy perspective, we really have had little time to adjust, restructure and reform our economies.
Recent discourse in and about the Region has focused on the underlying reasons for their weak growth performance. Some camps suggest that our small size and in some cases multi-island status mean that the costs associated with the provision of security, infrastructure, regulatory oversight, foreign services, education and social services are comparatively higher and therefore adversely impact fiscal outlays. These groups postulate that greater focus on regional integration is the answer.
Others point to our indisputable susceptibility to natural disasters. This camp cites reports such as a 2014 Inter-American Development Bank report on economic growth in the Caribbean. This report suggested that “the direct economic cost of natural disasters is also higher for smaller economies.” In terms of GDP in large economies, the direct loss due to natural disasters was estimated at US$59.5 per square kilometer. In comparison, similar losses for the Caribbean was estimated at five times that of the large states.
This so called “bad neighborhood” effect, coupled with the natural frangibility of our recourses and ecosystems, placed within the context of a changing climate, constrains prospects for growth and development in the view of some.
HIGHER PRODUCTION COSTS
More recent analysis has focused on issues of productivity and competitiveness that manifest in higher production costs. These costs are associated with labour costs, and high import content, particularly of strategic goods such as food and fuel, whose prices have exhibited high volatility.
Moreover, the example of historical production patterns from sugar, bauxite, bananas, tourism and oil suggests that the region has maintained strong dependence on a narrow range of exports, thereby constraining foreign exchange earnings and growth outcomes.
BUSINESS & STRUCTURAL REFORMS
Debate on competitiveness in the region has suggested that these issues, whatever the causes, can be partly remedied through the implementation of core business and structural reforms aimed at enhancing the investment environment, improvement to labour productivity, and creating a more vibrant export sector.
Reforms would include strengthening the legislative, regulatory and incentive frameworks to provide for predictability and transparency in the course of doing business. It has also been suggested that Labour Market reforms aimed at improving productivity and enhancing the skills and employability of those persons who are part of the Labour Force are vital and urgent. And may I add, only in passing, that our workers, by and large, do not believe there is an issue of productivity in our islands?
Further work still needs to be done in raising the profile of the region’s private sector. It is dominated by smaller businesses; which sometimes have difficulty accessing finance and are less engaged in international trade. Additionally, the private sector has argued that the paucity of a reliably skilled Labour Force has limited the prospects for firm growth and product innovation.
SOLUTIONS AND CONSENSUS
Some of this I readily concede is tiresome. It is easy to dismiss it all by the usual quip: “we have heard it all before.” My simple point is that there has been no shortage of analysis on these issues. What eludes us is agreement on the solutions and consensus on the way forward.
Frankly, we have little time. Our people are becoming impatient even as they lack the will to subscribe to the very reforms that are so necessary to a different future.
Therefore, our gathering in Saint Lucia for this Third Region Workshop is a further step in both identifying solutions to effect change and building national and regional consensus on these proposed solutions.
The launching of the Forum three years ago initiated dialogue between representatives from business associations, civil society organizations, Government, private sector, and international development agencies on growth and development in the Region.
Twelve countries have launched their national chapters, including; Antigua and Barbuda, The Bahamas, Belize, Grenada, Dominica, Dominican Republic, Jamaica, Saint Kitts and Nevis Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, and Saint Lucia.
These countries committed to work prioritized reforms in areas of Logistics and Connectivity; Investment Climate; and, Skills and Productivity.
In Saint Lucia, this has been evidenced by reforms such as; the expansion of wireless internet access, reforms to improve access to government services, developing strategic interventions to enhance the competitiveness of the tourism sector and the development of interventions designed to measure and improve productivity levels.
A TIME TO DISCUSS, A TIME TO DECIDE
Beyond the Caribbean Growth Forum, the reform process continues in Saint Lucia with ongoing work in a number of areas including reforms aimed at improving access to finance, strengthening the regulatory environment and improving logistics and connectivity.
I encourage you to dialogue with regional colleagues and share experiences to shape the next phase of the CGF.
I also encourage you to reflect on the causes of the current development doldrums. Engage in discussion and debate on various perspectives; including the merits of regional integration, addressing our vulnerabilities, fiscal, social or otherwise and improving competitiveness of our islands.
We need to dispel the widespread view that we are all managing failed economies. I do not subscribe to that perspective. These economies may be broken but I believe we can pick up the pieces. I believe that our historical task is to conceptualize, shape and define an economic model that answers to the times and to our needs.
So, challenge yourselves, our development partners and the esteemed panelists to develop a new phase which builds upon the successes of the last CGF, and learns from its shortfalls. Now is the time to discuss. Now is the time to decide. Now is the time to act.
Ladies and gentlemen, I thank you.