This document analyzes economic growth and sectoral contributions to GDP for several Caribbean nations from 1990-2009. It finds that services now make up the largest portion of GDP across the nations, with tourism playing a key role. However, tourism growth has been volatile and constrained by factors like hurricanes. The document argues regional cooperation could help overcome constraints and promote export diversification through strategies like specializing in similar products and pooling resources to achieve economies of scale. It maps the relatedness of current exports and identifies opportunities for neighboring nations to cooperatively develop new competitive products.

2. 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

3. 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)

4. Growth rate - No. of Tourists (2006-2009)
80%
60%
40%
20%
0%
-20%
-40%

5. 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

6.  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

7. 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

8. 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

9.  (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

10.  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]

11. Hausmann-Klinger MIT Lab

12. Source: Hausmann-Klinger, MIT Lab

13. Hausmann-Klinger MIT Lab

14. Hausmann-Klinger MIT Lab

15. Source: World Bank Tourism Linkages Survey 2008

16.  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

17. 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

21.  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

24.  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
.

26.  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

27. 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