Caribbean Trade Law and Development

Tag: WEF

  • World Economic Forum Releases Global Enabling Trade Index 2016; Caribbean countries continue to lag

    World Economic Forum Releases Global Enabling Trade Index 2016; Caribbean countries continue to lag

    Photo source: Pixabay

    Alicia Nicholls

    The World Economic Forum (WEF) and the Global Alliance for Trade Facilitation released the 2016 edition of the Enabling Trade Report today November 30, 2016. Singapore topped the ranking for the 5th time in a row and was in the top 3 for 5 of the 7 pillars.

    For Latin America and the Caribbean, Chile was the top economy and led in all but 2 pillars. With a rank of 21st out of 136 economies, Chile was also the highest ranked emerging economy on the index. According to the WEF, the two main findings from this edition of the index were (1) a large part of the world is still excluded from globalization, and (2) some of the world’s largest economies offer limited market access. Another major finding is that the ASEAN market has become more accessible than European Union (EU) and the United States markets.

    Caribbean countries’ performance 

    Only three Caribbean economies were included on this year’s index: Dominican Republic (78), Jamaica (89) and Trinidad & Tobago (106).

    Dominican Republic

    The Dominican Republic ranked 78 out of 136 economies in 2016, compared to 77 out of 134 in 2014 and has not as yet ratified the WTO Trade Facilitation Agreement. The Dominican Republic’s best performance was on Pillar 4: Availability and Quality of Transport Infrastructure where it ranked 54th. Its worst was on Pillar 6: Availability and Use of ICTs where it ranked 95th.

    The most problematic factors identified for importing were tariffs/non-tariff barriers, burdensome import procedures, high cost or delays caused by domestic transportation, corruption at the border and high cost or delays caused by international transportation. The most problematic factors identified for exporting were difficulties in meeting quality and quantity requirements of buyers, identifying potential markets and buyers, high cost or delays caused by domestic transport, access to trade finance and inappropriate production technology and skills.

    Jamaica

    Jamaica ranked 89 out of 136 economies in 2016, compared to 88 out of 134 economies in 2014 and has ratified the WTO Trade Facilitation Agreement. Jamaica’s best performance was on Pillar 2: Foreign Market Access where it ranked 34th. Its worst was on Pillar 5: Availability and Quality of Transport Services where it ranked 108th.

    The most problematic factors identified for importing were burdensome import procedures, tariffs/non-tariff barriers, corruption at the border, crime and theft, and domestic technical requirements and standards. The most problematic factors identified for exporting were identifying potential markets and buyers, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices, access to trade finance and inappropriate production technology and skills.

    Trinidad & Tobago

    Trinidad & Tobago ranked 106 out of 136 in 2016, sliding from 93 out of 134 in 2014 and ratified the WTO Trade Facilitation Agreement. Trinidad & Tobago’s best performance was on Pillar 6: Availability and Use of ICTs where it ranked 57th. Its worst performance was on Pillar 7: Operating Environment where it ranked 119th.

    The most problematic factors identified for importing were: burdensome import procedures, tariffs/nontariff barriers, corruption at the border, crime and theft and high cost/delays caused by international transportation. The most problematic factors for exporting were: identifying potential markets and buyers, access to trade finance, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices and technical requirements and standards abroad.

    About the Index

    The Enabling Trade Index ranks economies according to “their capacity to facilitate the flow of goods over borders and their destination”.The index is useful as countries seek to implement the World Trade Organisation’s Trade Facilitation Agreement concluded in 2013 at the Bali Ministerial. It helps countries to see where they are excelling and where there is a room for improvement. It is therefore disappointing that more Caribbean countries are unable to be ranked.

    On this year’s index, one hundred and thirty-six (136) economies, accounting for 98 percent of world GDP and 98.3 percent of world merchandise trade, were ranked on seven pillars: domestic market, foreign market, efficiency, transparency and border, availability and quality of transportation infrastructure, availability and quality of transport services, availability and use of ICTs and operating environment.

    The full report may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

     

  • Ranking Caribbean Countries’ Competitiveness: WEF Global Competitiveness Index 2016-2017

    business-561388_960_720Alicia Nicholls

    A few days ago, the World Economic Forum (WEF) released its Global Competitiveness Report 2016-2017. Two things immediately struck me as I perused the list of 138 economies which made the GCI 2016. The first was that because of data shortages only 4 Caribbean countries (Barbados, Jamaica, Dominican Republic and Trinidad & Tobago in order of rank) were included in this year’s index. The second was that all four of these economies were in the bottom 50 per cent of the survey sample, with the highest ranked (Barbados) at only 72nd place.

    The WEF in its Global Competitiveness Report defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of an economy which in turn sets the level of prosperity that the country can achieve”.The GCI’s 114 indicators are grouped into 12 pillars which are further grouped into 3 sub-indices.  Collectively they measure an economy’s performance on a variety of concepts which impact on productivity and prosperity. Some of these include basic requirements such as institutions, infrastructure and macroeconomic environment to more sophisticated indicators dealing with business sophistication and innovation.

    In the preface to this year’s report, the World Economic Forum team highlighted that “many of the competitiveness challenges we see today stem from the aftermath of the financial crisis”.  Productivity and GDP growth in advanced economies and increasingly emerging economies remain subdued. This equally applies to Caribbean countries whose small open economies enhanced their vulnerability to the effects of global financial and economic crisis of 2008, and face many competitiveness disadvantages inherent in their smallness. However, not all of the region’s competitiveness challenges are structural and many are within our power to address.

    Caribbean Countries’ WEF GCI Performance 2016-2017

    So how did the region fare on the GCI this time around?  Barbados, whose economic recovery remains fragile, topped the CARIFORUM rankings with a rank of 72. Due to data shortages, the island had not been included in the 2015-2016 index but has dropped several places since its rank of 55 out of 144 economies on the 2014-2015 index.

    Barbados commendably tops the Latin America and Caribbean region in infrastructure, labour market efficiency and technology. However, the island’s most problematic factors for doing business are as follows: poor work ethic in national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

    Trinidad & Tobago, which is currently in recession, has also lost ground, ranking 94 out of 138 economies in 2016-2017, compared to 89 out 140 in 2015-2016. The top 5 problem areas for Trinidad & Tobago for doing business were poor work ethic in national labour force, corruption, inefficient government bureaucracy, crime and theft and foreign currency regulations. But there is a silver lining. The WEF GCI identifies three stages of development: Stage 1 (Factor-driven), Stage 2 (Efficiency-driven) and Stage 3 (Innovation-driven). Trinidad was the only Caribbean country listed as a stage 3 economy (innovation-driven). Barbados was ranked as transitioning between stages 2 and 3. Jamaica and the Dominican Republic were classified as stage 2.

    Some more good news is that Jamaica saw forward movement on the index, moving to 75 out of 138 in 2016-2017 from 86 out of 140 in 2015-2016, as well as the Dominican Republic which ranked 92 out of 138 countries in 2016-2017 compared to 98 out of 140 countries in 2015-2016. The Dominican Republic’s reforms were mentioned in the report.

    Importance of Country Competitiveness Indices

    The WEF GCI is the most comprehensive benchmark of national competitiveness of economies worldwide. This year’s index comprised 98% of the global economy. It is, therefore, quite disappointing that not only does no Caribbean country currently rank among the top 50, but that so few Caribbean countries are included in the 2016-2017 index compared to previous indices as a result of data shortages.

    These rankings are important for several reasons.The GCI is a useful tool for policy makers not only  for benchmarking the economy’s current performance  across over 100 competitiveness indicators against its historical performance, but also against other economies in the same bracket. As such, it provides good empirical evidence for setting policy priorities and interventions as national competitiveness strategies are crafted and refined.

    Secondly, and importantly for small economies which depend significantly on foreign direct investment inflows, the WEF GCI is one of several indices, along with the World Bank’s Doing Business Index, which discerning investors consult when considering potential investment locations. For this reason, it is not uncommon for investment promotion agencies to reference their country’s favourable performance on these indices when marketing to prospective investors.

    The Way Forward

    It is axiomatic for any economy that  competitiveness should not only be long-term but sustainable. What the current WEF GCI makes clear is that economies in the Caribbean region have a lot of room for improvement, particularly in these problem areas: inefficient government bureaucracy, work ethic in the national labor force and corruption. Improving our competitiveness, however, is not a government responsibility alone. It requires continued strategic and enhanced  public-private sector collaboration and partnership.

    Governments, the private sector and other stakeholders including trade unions and other civil society actors, therefore, need to closely examine the causes and solutions for these problematic areas. For example, what are the factors which contribute to the perception of “poor work ethic”? What country-level and firm-level productivity enhancing reforms are working and which need revising or implementing? What can we do improve the vexing issue of “inefficient government bureaucracy”? This year’s Global Competitiveness Report focused heavily on the Fourth Industrial Revolution. What role can ICTs play in improving our weak areas?

    We can also take lessons from those economies which consistently rank as the most competitive economies and those which saw tremendous improvement. The top five economies in this year’s GCI were in order of ranking: Switzerland, Singapore, United States, Netherlands and Germany. What best practices can we learn from these countries? How about those countries like India, which made the biggest leap of any country in this year’s index by climbing 16 places? Or Mauritius, a SIDS, ranks 45th , having climbed two places? Even our own Jamaica and the Dominican Republic which saw improved rankings may hold valuable lessons.

    Businesses also need to play their part. It is unacceptable that the region is so poorly represented on the GCI year after year. A few years ago, I was part of the survey team which administered the WEF  Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, one of the challenges we found was the unwillingness of some business executives either to participate in the survey, or to complete it properly and in a timely manner. This is after repeated attempts to impress upon them the importance of the data collected in the survey for judging Barbados’ competitiveness and to ensuring Barbados was ranked on this important index. If insufficient businesses answer the survey, the country will not be included in the index. To encourage greater private sector participation in the survey in each country, I suggest there be closer collaboration between the country partner institutes and the various private sector bodies in the countries.

    The full WEF GCI 2016-2017 Report may be accessed here.

     Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.