25

GDP Growth (%)

20
15
10
5
0
-5
-10

Mauritius
St. Vincent and the
Grenadines
Antigua and Barbuda
Dominica
Grenada
Jam...
Sectoral Contribution to GDP
100%

80%

60%

40%

20%

0%
1990

2009

Antigua and Barbuda

1990

2009

Dominica

Services ...
Growth rate - No. of Tourists (2006-2009)

80%

60%

40%

20%

0%

-20%

-40%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Haiti
Vanuatu
Aruba
US Virgin Islands
Kiribati
Antigua and Barbuda
Tonga
Bahama...
 Services?

(10 – 13% of GDP)? Limited by growth
in tourism (hotels, golf courses and condos)

 Construction

business s...
Constraints:
 Preferential trade agreements on banana and
sugar ended
 Volatile ecosystems; hurricane belt
 Structural ...
Too many constraints – cannot resolve all at once –
doomed to choose
 Smart industrial policy- necessary factors:
• (1) c...
 (1)

Import substitution - to increase
intraregional trade
 (2) Export cooperation - to access world
markets
Both chann...
 Specialization

through input pooling. Example:
pool fresh fruit to produce jams and juices for
large scale export

 Sp...
Hausmann-Klinger MIT Lab
Source: Hausmann-Klinger, MIT Lab
Hausmann-Klinger MIT Lab
Hausmann-Klinger MIT Lab
Source: World Bank Tourism Linkages Survey 2008
 Tourism

sector’s food imports are only 20-25% of total
agricultural imports
 80% of total imports are for local consum...
Distance between two products measures:


The similarity in inputs required to produce products
including everything from...
 There

are only 25 products (out of 800) in
which at least 3 OECS countries are globally
competitive
 Can become the st...
 Product

Complexity Index - measures the level
of difficulty countries face in exporting a
product in a globally integra...
 Current

productive structure determines the
future productive structure in a country
 Density - a country’s capability...
OECS country-specific Densities for Imports
Total
St.Vince
St. Kitts
imports Antig
Dominica Grenada
St. Lucia
nt &
& Nevis...
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra
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Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra

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Specialization for export diversification – a case for greater intraregional trade in the OECS :: Vandana Chandra

  1. 1. 25 GDP Growth (%) 20 15 10 5 0 -5 -10 Mauritius St. Vincent and the Grenadines Antigua and Barbuda Dominica Grenada Jamaica St. Kitts and Nevis St. Lucia -15 Linear (St. Lucia) -20 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
  2. 2. Sectoral Contribution to GDP 100% 80% 60% 40% 20% 0% 1990 2009 Antigua and Barbuda 1990 2009 Dominica Services (% of GDP) 1990 2009 Grenada Manufacturing (% of GDP) 1990 2009 St. Lucia Industry (% of GDP) 1990 2009 St. Vincent and the Grenadines 1990 2009 St. Kitts and Nevis Agriculture (% of GDP)
  3. 3. Growth rate - No. of Tourists (2006-2009) 80% 60% 40% 20% 0% -20% -40%
  4. 4. 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Haiti Vanuatu Aruba US Virgin Islands Kiribati Antigua and Barbuda Tonga Bahamas British Virgin Islands Grenada Mauritious Guadeloupe Cayman Islands Anguilla Barbados Seychelles Martinique Dominican Republic Solomon Islands Jamaica Reunion Maldives St. Lucia Dominica Fiji Comores St. Vincent and the Grenadines St. Kitts and Nevis Growth in Tourism's Contribution to GDP (%) 2006-2010
  5. 5.  Services? (10 – 13% of GDP)? Limited by growth in tourism (hotels, golf courses and condos)  Construction business services – in the short term, constraints are a high rate of emigration, skills and absence of a critical mass (small population)  Other term – scope but no short cut to longer term investments in skills  Longer
  6. 6. Constraints:  Preferential trade agreements on banana and sugar ended  Volatile ecosystems; hurricane belt  Structural barriers in agriculture: • small domestic markets, high production costs, old technologies  High transport costs  Regional competitors - similar products  TOO MANY CONSTRAINTS
  7. 7. Too many constraints – cannot resolve all at once – doomed to choose  Smart industrial policy- necessary factors: • (1) comparative advantage • (2) competition (NO subsidies) • (3) role of government – facilitator or provider of public goods  Regional integration strategy – targeting sectors in which 3 or more regional partners have a stake – no losers, at least 3 winners   Analytical framework based on the global competitiveness of countries – draws on experience of all countries’ trade in all products
  8. 8.  (1) Import substitution - to increase intraregional trade  (2) Export cooperation - to access world markets Both channels need  (a) economies of scale  (b) greater intraregional trade  (c) regional integration
  9. 9.  Specialization through input pooling. Example: pool fresh fruit to produce jams and juices for large scale export  Specialization through final output pooling. Example: pool fresh flower or vegetable products to achieve critical mass needed for import substitution or export to rest of the world [example -China’s trading companies; Uganda’s rose exports to the EU; India’s table grape exports to the EU]
  10. 10. Hausmann-Klinger MIT Lab
  11. 11. Source: Hausmann-Klinger, MIT Lab
  12. 12. Hausmann-Klinger MIT Lab
  13. 13. Hausmann-Klinger MIT Lab
  14. 14. Source: World Bank Tourism Linkages Survey 2008
  15. 15.  Tourism sector’s food imports are only 20-25% of total agricultural imports  80% of total imports are for local consumption; large scope for IS in OECS  OECS agricultural imports  Most agricultural imports are are greater than exports processed and semiprocessed goods while local production is mostly unprocessed  Most manufactured imports are not hi-tech – large window of opportunity
  16. 16. Distance between two products measures:  The similarity in inputs required to produce products including everything from natural factors, skills, institutions, infrastructural requirements, to technological capabilities  Likelihood of exporting a new product competitively if you are already competitive in one (Hausmann –Klinger concept)  Distances between products map into a forest where each product is a tree Forest has a core and periphery - fruitier trees in the core   Producers want to jump to trees in the core but most likely jump is to neighboring trees
  17. 17.  There are only 25 products (out of 800) in which at least 3 OECS countries are globally competitive  Can become the starting point of a regional integration strategy of economic specialization for export diversification  Regional cooperation required to achieve the scale economies necessary for import substitution and export to the rest of the world
  18. 18.  Product Complexity Index - measures the level of difficulty countries face in exporting a product in a globally integrated market (Hausmann and Hidalgo, 2012)  Average product complexity is 0 (oil exports)  Product complexity of many OECS imports is below 0. Example, foods and agricultural goods .
  19. 19.  Current productive structure determines the future productive structure in a country  Density - a country’s capability to produce a new product is related with its capabilities to produce other products. The more products it currently produces, the easier it is to become competitive in the new product.  Higher density is better
  20. 20. OECS country-specific Densities for Imports Total St.Vince St. Kitts imports Antig Dominica Grenada St. Lucia nt & & Nevis Code Product (1000 &Barbu 114 Poultry -dead/edible 120259 da 0.16 0.09 0.05 0.04 0.05 Grenadi 0.05 721 Cocoa beans 119857 5417 Medicaments 85657 1110 Non-Alco.beverages 73150 980 Edible products 67936 5530 Perfume/cosmetics 52298 484 Bakery Products 49502 224 Milk.cream preservatives47477 5542 Org.chemicals 44644 460 Meals and flour 43847 1124 Spirits,liqueurs 41263 0.16 0.18 0.20 0.19 0.18 0.18 0.21 0.18 0.18 0.22 0.16 0.11 0.15 0.15 0.13 0.13 0.12 0.13 0.14 0.17 0.12 0.07 0.10 0.09 0.08 0.09 0.07 0.08 0.11 0.11 0.05 0.05 0.07 0.06 0.06 0.05 0.05 0.06 0.06 0.08 0.10 0.06 0.10 0.09 0.07 0.08 0.07 0.07 0.09 0.10 0.09 0.05 0.10 0.09 0.07 0.08 0.07 0.07 0.11 0.09

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