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Welcome to the Caribbean Trade and Development News Digest for the week of April 18-25, 2021! We are pleased to bring you the major trade and development news headlines and analysis from across the Caribbean Region and the world from the past week.

THIS WEEK’S HIGHLIGHTS

CARICOM foreign ministers met with US Secretary of State Antony Blinken in a virtual forum. Read more here.

A new UNCTAD feasibility study looks at how voluntary sustainability standards (VSS) could help CARICOM members boost export potential to the European Union. Access the study here.

We wish to congratulate Ambassador Dr. Richard Bernal on his appointment to the Leadership Council of the UN Sustainable Development Solutions Network. Read more here.

Finally, we wish to share our solidarity with the people of India who are enduring a deep and deadly second wave of the COVID-19 pandemic. India donated the first set of vaccines to Barbados which was critical in the start of our vaccination programme. We keep our Indian brothers and sisters in our prayers.

Afronomicslaw Symposium: Prospects for Deepening Africa-Caribbean Economic Relations – Call for Blogs (Deadline: May 14)

Given the limited but promising trade and investment relationship between both regions, there is a dearth of scholarly analysis on the Africa-Caribbean economic relationship. This Symposium aims to address this gap in international economic relations scholarship through considered analytical pieces exploring aspects of this understudied relationship. We invite authors to submit contributions which critically analyze and examine this relationship from a variety of perspectives. Read the full Call for Blogs here.

REGIONAL NEWS

Secretary Blinken holds roundtable with CARICOM foreign ministers

The Daily Herald: Secretary of State Antony J. Blinken met virtually with foreign ministers from the Caribbean Community CARICOM member states on Wednesday to demonstrate the United States’ commitment to working with all countries in the region to advance bilateral and regional interests. Read more

Prince Charles holds dialogue with CARICOM heads on disaster response of small states

Dominica News Online: Just days after the Duke of Edinburg’s funeral and burial, the Prince of Wales, His Royal Highness Prince Charles, on Friday, April 23, chaired a virtual round table meeting focusing on: ‘Accelerating Economic Recovery and
Sustainable Markets,’ among Small Islands States (SIDs), in response to disasters and global crisis. Read more

George Talbot is new Guyana Ambassador to CARICOM

News Source Guyana: Career Diplomat, Ambassador George Talbot has been appointed as Guyana’s new Ambassador to CARICOM. He presented his credentials to CARICOM Secretary-General Ambassador Irwin LaRocque on Wednesday. Read more

Bahamas was near top of tax-to-GDP ratio increase in LAC region pre-COVID, IDB study finds

Eye Witness News: The Bahamas saw the second largest increase in tax-to-GDP ratios between the two years preceding the onset of the COVID-19 pandemic, according to a recently released Inter-American Development Bank (IDB) analysis. Read more

Barbados exploring ocean energy technology

Jamaica Gleaner: The Barbados government says it is considering having ocean energy technology operational on the island as part of the National Energy Policy target of 100 per cent renewable energy by 2030. Read more

Hanna wants Jamaica to promote international trade policy

Jamaica Observer: Opposition spokesperson on foreign affairs and foreign trade Lisa Hanna is urging the Government to join hands with the Opposition and the private sector to seek growth solutions by pushing a foreign policy which focuses on economic development. Read more

India in talks with Guyana for long-term crude supply

Hellenic Shipping News: India, the world’s third-largest crude consumer and importer, has approached Guyana’s government about a possible long-term deal to buy the South American country’s oil, a Guyanese official said. Read more

Suriname Hopes To Become South-America’s Newest Oil Exporter

Yahoo Finance: As Guyana prepares to become a major oil production nation the spotlight is firmly on the Guyana-Suriname Basin and the former British colony’s neighbor Suriname. After decades of poor drilling results, ExxonMobil’s slew of large high quality oil discoveries in Guyana’s offshore Stabroek Block has reignited interest in the Guyana-Suriname Basin’s oil potential. Read more

Ministries of Trade and Agriculture meet with livestock producers as Belize looks to renegotiate partial-scope agreement with Guatemala

Breaking Belize News: Belize is trying aggressively to gain more foreign exchange earnings by aggressively pursuing market opportunities in neighbouring countries. Read more

Caribbean food security during COVID-19 can only be ensured through debt relief

The Conversation: The pandemic and global trade disruptions have highlighted the growing vulnerability of Caribbean states when it comes to importing food items. Annually, Caribbean states import food items valued at nearly US$5 billion for food security. Read more

INTERNATIONAL NEWS

European Parliament to vote on EU-UK trade deal

Foreign Brief: The EU parliament will vote today on the EU-UK Trade and Cooperation agreement, which governs post-Brexit relations. Read more

Brexit: UK and Australia agree ‘vast majority’ of trade deal

BBC: The UK and Australia say they have agreed “the vast majority” of a free trade deal. Read more

The future of global trade – in 7 charts

WEF: Global trade is ready for a strong but uneven recovery after the shock of the pandemic, according to the World Trade Organization (WTO). Read more

WTO chief targets EU’s farm policy as part of global discussion on subsidies

Euractiv: The managing director of the World Trade Organisation, Ngozi Okonjo-Iweala, said she wants to discuss China’s industrial subsidies but also state aid given to farmers, such as Europe’s Common Agricultural Policy, as part of efforts to improve the multilateral trading system. Read more

EU sues AstraZeneca over breach of COVID-19 vaccine supply contract

Reuters: The European Commission said on Monday it had launched legal action against AstraZeneca (AZN.L) for not respecting its contract for the supply of COVID-19 vaccines and for not having a “reliable” plan to ensure timely deliveries. Read more

U.S. Chamber sees risk of faltering Indian economy due to COVID-19 spike

Reuters: The U.S. Chamber of Commerce on Monday warned that the Indian economy – the world’s sixth largest – could falter as a result of a record spike in coronavirus cases, creating a drag for the global economy. Read more

New Zealand to open trade commission in Fiji aimed at boosting post-Covid Pacific trade

The Government plans to open a new trade commission in Fiji, with the hope of boosting post-Covid trade between New Zealand and the Pacific. The new trade diplomat will be tasked with helping New Zealand businesses and bolstering trade in Fiji and across the region, Trade Minister Damien O’Connor said on Wednesday. Read more

Top U.S. trade negotiator meets Pfizer, AstraZeneca execs on COVID-19 IP waiver

Reuters: U.S. Trade Representative Katherine Tai on Monday met virtually with top executives of drugmakers Pfizer (PFE.N) and AstraZeneca PLC (AZN.L) to discuss a proposed waiver of certain intellectual property rights in response to the COVID-19 pandemic. Read more

African trade finance sees $5 bn in portfolio outflows in Q1 2020 due to Covid-19, but opportunities exist – report

Africanews: Constrained global financial conditions caused by Covid-19 have led to massive portfolio outflows from Africa, exceeding $5 billion in the first quarter of 2020, a new continent-wide survey on trade finance has shown. About $3.1 billion left the South African market alone, the report found. Read more

Pandemic Spurs Demand For Trade Finance Capacity In Africa

Global Finance: The continent’s trade finance needs are expected to increase as the implementation of the African Continental Free Trade Area agreement begins. Read more

Supporting small businesses is critical for COVID-19 recovery

UNCTAD: Micro, small and medium enterprises (MSMEs) can power a stronger recovery from the COVID-19 pandemic, due to their innovative and opportunity-seeking nature, but they need more support. Read more

STRAIGHT FROM THE WTO

• Madagascar launches safeguard investigation on dry pastries and breakfast cereals
• Madagascar launches safeguard investigation on plastic pipes and tubes and accessories
• Türkiye launches safeguard investigation on polyethylene terephthalate resin
• Türkiye launches safeguard investigation on terephthalic acid
• Türkiye launches safeguard investigation on "other paper and paperboard"

NEW ON THE CTLD BLOG

• CARICOM Releases Statement on Military Build-Up in Caribbean Sea
• Is CARICOM Complicit in the United States and Trinidad’s Unlawful Partnership?
• Trinidad’s Troubling Invitation of War to Caribbean Shores
• From Extractivism to Impact: What I learnt in Zambia
• Boosting island economies’ trade through education

The Caribbean Trade & Development Digest is a weekly trade news digest produced and published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please subscribe to our Blog below:

• Convenors:
• Alicia Nicholls
• Ohio Omiunu

Total trade volumes between African and Caribbean countries remain small, but the potential and opportunities for enhancing trade, investment and economic cooperation between these two regions are encouraging based on shared historical and cultural ties. To this end, the Caribbean Community (CARICOM) has announced steps to formalize relations with the African Union (AU).Several CARICOM countries have also sought to deepen bilateral ties with individual African countries. Africa-Caribbean Economic Relations and cooperation are even more critical now as countries on both sides of the Atlantic aim to kickstart economic recovery following the devastation wrought by the COVID-19 shock. Indeed, vaccine cooperation became another form of Africa-Caribbean cooperation when the AU offered CARICOM access to some of the approved vaccines from a shipment it was receiving.

Given the limited but promising trade and investment relationship between both regions, there is a dearth of scholarly analysis on the Africa-Caribbean economic relationship. This Symposium aims to address this gap in international economic relations scholarship through considered analytical pieces exploring aspects of this understudied relationship.

We invite authors to submit contributions which critically analyze and examine this relationship from a variety of perspectives, including but not limited to:

• Geo-political and economic ties (both historical and present) between these two regions; 
• The future of trade and investment relations between both regions in light of WTO-plus mega-regional trade agreements popping up;
• EU-ACP relations e.g. EU-EPAs and issues relating to fragmentation and dilution of negotiating positions by African and Caribbean countries;
• The impact of COVID-19 on the vulnerability of trade and investment regimes in both regions;
• Comparative perspectives from both regions on the role of education in the advancement of critical thought in international economic relations scholarship;
• Comparative perspectives from both regions on the regulation of digital trade/e-commerce;
• Africa-Caribbean collaboration in multilateral fora, e.g., WTO, ACP, Commonwealth, UNCTAD; •
• Comparative perspectives from both regions on approaches to cooperation and regional integration; 
• Comparative perspectives from both regions on Sustainable Development, e.g., approaches to mainstreaming regulation of renewable energy, the green and blue economy into trade and investment regimes;
• Air Connectivity/Tourism/Travel Trade, e.g., prospects for promoting leisure and business travel between CARICOM and African countries;
• Cultural Industries collaboration;
• Role of the private sector in shaping future Africa-Caribbean trade and investment relations;
• Investment relations, e.g., opportunities for Africa-Caribbean FDI, cooperation on investment rule-making reform.

Submission Guidelines:

Essays that are submitted as part of this symposium must be analytical and original. Authors must comply with the Afronomicslaw.org blog submission guidelines accessible here. Blogs are to be submitted to afronomicslaw@gmail.com with the title ‘African-Caribbean Relations Blog Submission’.

Deadline for Submission of Essays:

May 14, 2021.

Inquiries or clarifications relating to this call should be directed to Ohio Omiunu (ohio.omiunu@dmu.ac.uk) and Alicia Nicholls (alicia.nicholls@cavehill.uwi.edu)

Welcome to the Caribbean Trade and Development News Digest for the week of April 11-17, 2021! We are back from our brief hiatus and are pleased to bring you the major trade and development news headlines and analysis from across the Caribbean Region and the world from the past week.

WHAT’S BEEN HAPPENING?

A lot has happened while we were on break. We take this opportunity to express our thoughts and prayers for our brothers and sisters in St. Vincent and the Grenadines who are currently being adversely impacted by the eruption of the La Soufriere volcano on the main island of St. Vincent. We also express our solidarity with brothers and sisters in Barbados, St. Lucia and other islands which have experienced ashfalls of varying intensity due to the eruption. CARICOM Heads of Government held a Special Meeting virtually to discuss the situation. Our islands are still grappling with the COVID-19 pandemic, more Sargassum seaweed and the threat of an impending hurricane season predicted to have “above-normal” activity. Please donate to the LaSoufriere relief efforts if you can! For example, you can donate to the Caribbean Disaster Emergency Management Agency (CDEMA) La Soufriere relief effort here. #oneCaribbean

The IMF/WB held their Spring Meetings 2021 virtually. The US Secretary of the Treasury Janet Yellen has proposed a global minimum corporate income tax, a proposal which Caribbean States should monitor.

We trade nerds all watched with interest and disquiet as a giant ship MV Ever Given ran aground in the Suez Canal, blocking shipping through that busy shipping lane for several days until being freed eventually. This insightful article from India Today explains the trade costs of this blockage.

This week I was pleased to be a moderator for the panel entitled “New Opportunities to Access Capital and Investment for SMEs” on Day 1 of the inaugural Island Finance Forum 2021 hosted and organised by Island Innovation. I was recently one of the contributors to IFC Review’s ‘Big Debate’ on “COVID-19 One Year On: How has the pandemic changed global finance, and how have IFCs adapted?”. Read the contributions here. I was also interviewed by Nearshore Americas on the possible implications of the EU’s tax blacklist for listed Caribbean IFCs. The article based on this interview may be viewed here.

THIS WEEK’S HIGHLIGHTS

So what have been some of the trade highlights from the past week? We now have the dates for the next World Trade Organization Ministerial Conference (MC 12). It will take place from 30 November to 3 December 2021 in Geneva, Switzerland.

The WTO has released its call for proposals for its next Public Forum to be entitled ““Trade beyond COVID-19: Building Resilience” which will be held in September. Please read more here.

The WTO also held an event entitled “COVID-19 and Vaccine Equity: What Can the WTO Contribute?”. The Chair’s summary may be accessed here.

The European Parliament’s Foreign Affairs and Trade committees approved the EU-U.K. trade deal, but full chamber approval is still required. Read more

There was also an initialling ceremony held for the Post-Cotonou Agreement between the European Union (EU) and the Organization of Africa, Caribbean, Pacific States (OACPS). The Speech by EU Commissioner Urpilainen may be read here.

REGIONAL NEWS

IMF predicting economic growth for Caribbean countries

Jamaica Observer: The International Monetary Fund (IMF) Thursday said that growth in Latin America and the Caribbean (LAC) recovered briskly in the second half of last year, yet still more slowly than the global economy and other emerging markets. Read more

Bousquet’s Bulletin: Next CARICOM Secretary General: A Woman

Caribbean News Global: The Caribbean Community (CARICOM) is known to make and break historical records over its 50 years in the making. One thing the male-dominated regional body has not yet done is break the proverbial glass ceiling at the Guyana-based Secretariat, where every secretary-general since its inception has been a Caribbean man. Read more

SIB Release Latest Stats on Belize’s External Trade

LoveFM: The Statistical Institute of Belize has issued its February report on Belize’s external trade situation. In February 2021, the country’s imports were valued at one hundred thirty-nine point eight million dollars. Read more

Jamaica Government strengthens capacity to tackle illegal gun trade

Jamaica Gleaner: The government is bolstering its capacity to intercept the trafficking of guns and ammunition into the country, as well as implementing a more robust legislative framework to punish those who engage in the illicit trade. Read more

Bahamas rum exports to benefit from over $110M in EU-supported trade development for the Caribbean

Eye Witness News: In an ongoing effort to support the government of The Bahamas’ initiatives for economic diversification, Ambassador Extraordinaire and Plenipotentiary of The Bahamas to the Kingdom of Belgium and Head of Mission to the European Union Maria O’Brien sought assistance under the African, Caribbean, Pacific-European Union (ACP-EU) TradeComm II Programme to develop a trade export strategy for the Commonwealth of The Bahamas. Read more

Guyana taking another tilt at improving trade relations with the region

Stabroek: With successive political administrations in Guyana having made several failed attempts at improving the country’s trading links with the rest of the Caribbean Community (CARICOM), the present government is reportedly having yet another try at improving trading links with the region, according to a March 27 Caribbean Business Report story which hints at the likelihood of yet another attempt to do so. Read more

Guyanese businesses urged to do more than exporting coconuts to DR

Guyana News Room: Guyana’s private sector came together on Wednesday for a virtual educational session on the 1998 CARICOM-Dominican Republic (DR) Free Trade Agreement to which Guyana became a party in 2004. Read more

Scrap metal trade to re-open with strict regulations in place

Guyana News Room: The government has approved the re-opening of the scrap metal trade after a six-month ban on April 08, 2021. Read more

Gov’t holds first bilateral consultation with Canada, closer cooperation expected

Guyana News Room: The Irfaan Ali-led government held its first bilateral consultation with officials of the Canadian government earlier this week on a range of shared priority issues including COVID-19. Read more

Post-Cotonou: EU reaches agreement with African, Caribbean and Pacific States

DW: The EU and the Organisation of African, Caribbean and Pacific States have sealed a new agreement. DW speaks with the chief negotiators about finding common ground on issues including migration and human rights. Read more

Caribbean Netherlands: half of companies use emergency package

CBS: As of March 2020, a package of emergency measures has been in place in the Caribbean Netherlands to tackle the economic consequences of the coronavirus crisis. Nearly half of all local enterprises availed of a financial contribution towards their wage costs and/or fixed overhead last year. This is evident from new figures released by Statistics Netherlands (CBS). Read more

EU-funded programme provides direct support to Bahamian farmers

EyeWitness News: In keeping with the mission of the government of The Bahamas to expand economic diversification and support the development of new sectors, The Bahamas has recently become a beneficiary of the ACP (African, Caribbean and Pacific Countries) Trade Capacity Building TradeComm II Programme under the 11th European Development Fund (EDF). Read more

Saint Kitts And Nevis Participates In Inaugural Saint Kitts And Nevis-Canada Bilateral Consultation

ZIZ Online: The inaugural Saint Kitts and Nevis-Canada Bilateral Consultation Meeting was held on April 14, 2021, between senior officials within The Ministry of Foreign Affairs and Aviation, Saint Kitts and Nevis and from Global Affairs, Canada (GAC). Read more

Deodat Maharaj | The imperative of FDI for Caribbean countries

Jamaica Gleaner: Citizens of the Caribbean are fully aware of the challenges we face. They know that governments across the region are financially stretched, which has been further accentuated by the COVID-19 pandemic. Read more

Taiwan to help Belize fully digitize

Amandala: To strengthen the close and cordial relations between Belize and Taiwan, the ambassadors of both nations met with ministers of each other’s government to discuss bond-strengthening measures and intentions for further cooperation. Read more

Wazim Mowla: Guyana using its foreign policy to strengthen relationship with old allies, build new partnerships with oil producing nations

OilNow: While some states aim to use foreign policy to increase their standing in the world, for advocacy, or as a tool to compete with others, Guyana’s has centered on promoting its economic development at home. Read more

Wazim Mowla: Vaccines Open an Opportunity for U.S. Diplomacy in the Caribbean

Real Clear Politics: Most governments in the Caribbean are racing to secure COVID-19 vaccines for their citizens. This has opened up an opportunity for the United States to use its economic and political clout to help coordinate vaccine distribution to the region. Read more

INTERNATIONAL NEWS

WTO Chief lays out global action to increase vaccine access

Reuters: The head of the World Trade Organization laid out a series of actions on Wednesday for countries and drug makers to increase production of coronavirus vaccines and share them more widely and fairly. Read more

European Parliament gives initial backing to UK trade deal

Reuters: The European Parliament’s committees on relations with Britain on Thursday voted overwhelmingly in favour of the post-Brexit trade and cooperation agreement, clearing the path to its final ratification. Read more

100 days on, what impact has Brexit had on UK-EU trade?

Euronews: Three months after Brexit began for real when the EU’s rulebook stopped applying to the UK, many areas of life have noticed a difference. Read more

EU-UK trade plunges after Brexit: Eurostat

XInhua News: Trade in goods between the European Union (EU) and the United Kingdom (UK) has been deeply affected by Brexit, according to figures published Friday by Eurostat, the EU’s statistical office. Read more

USTR Katherine Tai calls for bold action to put climate at center of trade policy

Reuters: U.S. Trade Representative Katherine Tai on Thursday laid out her vision for using trade policy to protect the planet and combat climate change, and said the United States must be a leader in preventing a catastrophic environmental chain reaction. Read more

Senators urge Biden to back temporary WTO waiver of IP rights to speed vaccine access

Reuters: Bernie Sanders and nine other Democratic senators urged President Joe Biden on Friday to back a temporary patent waiver for COVID-19 vaccines that would allow countries to manufacture treatments locally and accelerate the global vaccination effort. Read more

Biden Trade Chief Meets Drugmakers, WTO Vaccine-Waiver Advocates

Bloomberg: President Joe Biden’s trade chief met with drugmakers and with groups seeking a waiver for sections of the World Trade Organization’s intellectual-property rules to improve vaccine access for poorer nations. Read more

Multiple U.S. trade partners risk ‘manipulator’ label in Yellen’s first currency report

Reuters: Taiwan and Thailand risk joining Vietnam and Switzerland in running afoul of U.S. currency manipulation triggers in Treasury Secretary Janet Yellen’s first foreign exchange report, expected this week, but whether she applies that label is unclear. Read more

China’s imports from US set record in first quarter, but their trade imbalance grows on strong Chinese exports

SCMP: Analysts tie China’s broader import rise to higher global commodity prices and stronger domestic demand, particularly in construction sector. Read more

Good reviews buoy odds Biden keeps US steel, aluminum tariffs set by Trump

S&P: The Biden administration has not disclosed where it will go with steel and aluminum tariffs set under former President Donald Trump, but recent favorable reviews could buoy the trade measures through the immediate future. Read more

Singapore ratifies mega free trade agreement RCEP

Hellenic Shipping News: Comprising about 30 per cent of global gross domestic product and close to a third of the world’s population, the deal will complement Singapore’s existing network of FTAs and boost trade and investment flows, the ministry said. Read more

Iran to ink free trade agreement with Pakistan: envoy

Dawn News: Iranian Consul General in Peshawar Hamid Reza Ghomi said on Wednesday that efforts were initiated to sign a free trade agreement between Iran and Pakistan. Read more

Patrick Anam Commentary on the Africa Regional Integration Index Report 2019

Patrick Anam blog: The African Union (AU) recently launched the Africa Regional Integration Index Report 2019 indication the level of integration on the African continent. As African countries ready themselves to trade under the African Continental Free Trade Area (AfCFTA), it perhaps important that occasionally we look at the status of the Regional Economic Communities (RECs) more so as they are viewed as building blocs in Africa’s integration. Read more

Urgent need for African free-trade infrastructure

Business Live: The AfCFTA agreement will only produce results if roads, pipelines and communication channels are put in place. Read more

Mauritius: Minister Bholah Chairs High-Level Committee With Private Sector On Free Trade Agreements

AllAfrica: A high-level committee pertaining to the application of Free Trade Agreements signed with countries such as India, China and Africa, was held this morning, at Newton Tower in Port Louis. The meeting was chaired by the Minister of Industrial Development, SMEs and Cooperatives, Mr Soomilduth Bholah, and brought together several stakeholders of the Private Sector. Read more

India, Mauritius FTA to come into effect from Apr 1

Business Standard: Several Indian products will enjoy the benefit of greater market access at concessional duties in Mauritius as the FTA signed between the two countries will come into effect from April 1. Read more

We are open to FTAs as long as it is a fair deal to us, Malaysia PM tells industry players

The Star: Malaysia is open to all free trade agreements (FTAs) as long as it is fair and benefits the nation, Prime Minister Tan Sri Muhyiddin Yassin told industry players. Read more

April 29 meeting shores up hopes on India-EU trade, investment talks next month

Hindustani Times: Union commerce minister Piyush Goyal and European Commission’s Valdis Dombrovskis will meet on April 29 ahead of the India-EU Summit. Read more

STRAIGHT FROM THE WTO

• Madagascar launches safeguard investigation on dry pastries and breakfast cereals
• Madagascar launches safeguard investigation on plastic pipes and tubes and accessories
• Türkiye launches safeguard investigation on polyethylene terephthalate resin
• Türkiye launches safeguard investigation on terephthalic acid
• Türkiye launches safeguard investigation on "other paper and paperboard"

NEW ON THE CTLD BLOG

• CARICOM Releases Statement on Military Build-Up in Caribbean Sea
• Is CARICOM Complicit in the United States and Trinidad’s Unlawful Partnership?
• Trinidad’s Troubling Invitation of War to Caribbean Shores
• From Extractivism to Impact: What I learnt in Zambia
• Boosting island economies’ trade through education

The Caribbean Trade & Development Digest is a weekly trade news digest produced and published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please subscribe to our Blog below:

Alicia Nicholls

The COVID-19 shock inflicted on Caribbean economies and societies is both deep and multi-sectoral. The shockwaves will be palpable for years to come. Stimulating resilience-based economic and social recovery will require large injections of capital which cannot come solely from public coffers. Moreover, heavy borrowing is unsustainable given the already high debt burdens many fiscally-constrained Caribbean economies carry, narrowing revenue bases and the limited access to concessional financing.

Caribbean countries must step up current investment facilitation and promotion efforts to increase private investment by local, foreign and diaspora investors to assist their recovery efforts. In this blog piece, I rely conceptually on Sir W. Arthur Lewis’ Industrialisation by Invitation model and apply it to the present-day COVID-19 conundrum. I ultimately posit that efforts at facilitating and promoting greater private domestic and foreign investment flows must be informed by a sound development strategy, with clear measurable targets and built-in monitoring mechanisms if they are to achieve the desired development outcomes.

The Lewisian Model of Industrialisation by Invitation

Caribbean countries generally have very liberal and open investment regimes offering investors a wide suite of fiscal and other incentives as inducements to invest. In large part, our countries followed the ‘Industrialisation by Invitation’ model proposed by St. Lucian-born Nobel Prize Laureate in economics, the venerable Sir W. Arthur Lewis.

Lewis’ model, outlined in his magnum opus ‘Industrialisation of the British West Indies’ of 1950, was informed by the development model he observed in the United States (US) Commonwealth of Puerto Rico. The Puerto Rico government lured foreign investors to the island’s shores by means of various fiscal incentives to assist in the development of industry in that territory.

Lewis based his case for industrialization of the BWI on the overpopulation then experienced in the agrarian-based economies of the BWI. Technology, he argued, was causing a reduction in the amount of labour agriculture could absorb and this was exacerbated by population increases. Industrialisation would provide jobs for this surplus labour.

His case for attracting foreign capital for industrialization was based on two major premises. First, financing industrialization was an expensive task for governments. Second, the local private sector at the time lacked expertise in manufacturing. He further noted that the involvement of foreign capital was less risky in manufacturing than in agriculture or mining. Moreover, while he recommended ‘inducements to foreign capital’, that is, incentives, he cautioned that “a sense of proportion” is required.

Lewis recommended the creation of an industrial development corporation which would have three main roles, including to prospect the market and decide what types of industry to encourage, to advise the government on the types of assistance to offer and to interest manufacturers in coming into the area. He based this on several development agency examples he observed across the world, and these functions are fulfilled, in varying degrees, these form the blueprint of our contemporary investment promotion agencies. Today, all Caribbean countries have at least one agency charged with the promotion of investment.

Why is investment facilitation even more critical now?

Since the start of the COVID-19 pandemic, various multilateral institutions have provided sobering reports of the damage inflicted by the pandemic on Caribbean economies and societies. Pienknagura, Roldos & Werner (2020) in an International Monetary Fund (IMF) blog post of October 2020 noted that although the region had been relatively successful at managing the virus spread, our countries were the hardest hit economically because of their heavy dependence on tourism for economic activity and employment. The authors likened the sudden stop in tourist arrivals and local lockdowns to ‘a cardiac arrest to their economies’. The IDB has also noted the high social costs of the pandemic, which has led to job losses and increases in inequality. In short, the pandemic has reversed many of the development gains the region has realized.

In order to rebuild for resilience post-COVID-19, domestic and foreign private foreign capital inflows must supplement increasingly constrained public revenue sources. Rising unemployment and a growing informal sector have caused a declining tax base. In Barbados, whose GDP contracted nearly 18% in 2020, personal and corporate tax receipts declined over the review period, according to the latest Central Bank of Barbados Report. This means that Governments are further unlikely to be able to finance capital works projects and spending on social and economic recovery programmes through taxes alone. Barbados is currently in an IMF-sponsored homegrown Barbados Economic Recovery and Transformation (BERT) programme which has unlocked some multilateral financing it otherwise would not have been able to access. However, what about those countries which lack this option?

Borrowing is also not a particularly attractive option for many fiscally-constrained Caribbean countries. The macroeconomic fundamentals of many of our countries, including the high debt to GDP ratios, make borrowing at preferential rates unrealistic. Borrowing also adds to a country’s debt burden. Every dollar spent on debt-servicing is a dollar that could be spent on social programmes and capital works programmes that benefit the population. This is further compounded by many Caribbean countries’ ineligibility for most concessional financing and official development assistance (ODA) due to their classification as middle income or in some cases, high income countries on an income per capita basis. More recently, the press release for an upcoming Caribbean Development Bank (CDB) report revealed that all, but one (Guyana), of its Bank Member Countries (BMCs) registered double-digit declines in GDP. Moreover, all, except Guyana, saw an increase in their debt to GDP ratios, with the regional debt-to-GDP average rising from 66.5% to 79.5%.

Increasing FDI inflows is the more attractive option for stimulating greater capital inflows. However, UNCTAD’s data estimates a 40% decline in global FDI flows, which means there will be increased competition by countries for a smaller pool of capital. The most competitive countries will be those most attractive to investors for their ease of doing business. Jamaica, ranked 71, is presently ranked as the easiest Caribbean country in which to do business and ranks 6^th on the ‘Starting a Business’ indicator. While no CARICOM country ranks within the top fifty countries on the World Bank’s Doing Business Index, some small States have done well. Mauritius, for example, ranks 13^th, Taiwan (15^th), Iceland (26^th) and Cyprus (54^th). Clearly, therefore, CARICOM countries can do better.

Applying Lewis’ model to the COVID-19 conundrum

Lewis’ model, though criticized by many, bears much relevance for the current situation facing Caribbean countries today where investment is needed for the stimulation of investment activity, jobs and foreign exchange. However, there are some important differences.

First, given the region’s sizable diaspora, the focus should not just be on attracting and facilitating foreign investors (those without ties to the region) but also diaspora investors. Caribbean IPAs have already made diaspora FDI targeting part of their promotion efforts.

Second, the domestic private sector has become much more sophisticated since the days of Lewis and has a key role to play as investors and source of private capital flows. While some private sector entities have been impacted by the pandemic, the extent of impact differs and some have evinced an appetite to invest despite the current economic climate.

Third, competition for investors cannot be merely on tax rate or incentives alone, but on their value proposition to investors, through things such as market potential, ease of establishment, access to finance, and other factors which investors consider in their decisions.

Fourth, Lewis was focused at the time on inducing investment for building manufacturing capacity. These days, however, the focus should be on attracting and facilitating investment in high-technology and other high value-added sectors of strategic importance to the region, such as FinTech, medicinal cannabis, research & development, the creative industries, as examples. The aim is to attract investment which is development-friendly, sustainable and inclusive. Therefore, screening of proposed investments to prevent environmental degradation, as well as monitoring to ensure compliance with environmental and labour laws will ensure such investments are sustainable.

Fifth, for this reason, investment facilitation reforms must not be ad hoc. They must instead form part of a wider investment strategy, which coheres with the country’s industrial and trade policies, all of which are moored to the country’s development strategy.  

Sixth, monitoring the effectiveness of investment facilitation and promotion policies is needed and requires better data collection. Limited disaggregated data on investment type, source or sector makes it difficult to empirically assess the effectiveness of investment promotion and facilitation strategies. Moreover, investors often rely on such data in making their decisions on whether to invest or reinvest. As such, a concerted approach to improving the quality, timeliness and availability of data should be a key component of the region’s efforts.  

In summary, it has been argued, using Lewis’ Industrialisation by Invitation Model as applied to the COVID-19 conundrum, that facilitating investment by local, foreign and diaspora investors will be critical to assisting Caribbean countries in their economic and social recovery efforts. It can do so by stimulating economic activity, foreign exchange inflows and job creation. However, these benefits are not automatic and must be informed by a sound development strategy and monitored if they are to achieve the desired results.

Alicia Nicholls, B.Sc., M.Sc., LL.B is an international trade and development specialist. Read more of her commentaries here or follow her on Twitter @licylaw. All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may from time to time be affiliated.