GENEVA, (Reuters) – Caribbean countries should deepen regional cooperation and develop service industries to tackle poverty in current tough economic conditions, the World Bank said yesterday.
“Diversifying trade, becoming more competitive, is crucial for the Caribbean,” the bank’s Caribbean director, Yvonne Tsikata, told reporters before the launch of a bank study on regional development at the World Trade Organisation (WTO).
For 300 years the Caribbean had relied on commodities such as sugar and bananas, but with the loss of preferential trade agreements the island economies must adapt, she said.
New trading arrangements with rich countries, such as the Economic Partnership Agreement, or EPA, signed last October with the European Union, provide opportunities to adjust, she said.
“The challenge for the Caribbean is to take advantage of the transition period and to take advantage of the compensation that is associated with the EPA to build those skills that are needed, to innovate, to move away from those sectors that are not competitive,” she said.
The islands, with a combined population of 25 million and economy of $70 billion in 2005, should draw on their relatively highly trained workforce, proximity to North America, and English-language skills to develop services, she said.
This could involve building up financial services — areas where Barbados and the Bahamas are already active, expanding medical services and offering university education to foreigners.
The region’s traditional reliance on tourism could also be enhanced, by moving more upmarket or developing eco-tourism.
Tsikata said the current crackdown on tax havens, reinforced at Thursday’s G20 summit, did not pose a threat to the region’s financial services sector, as countries such as Barbados were aware of rich country concerns and working on them.
No Caribbean countries appeared on a blacklist of non-cooperative tax havens issued on Thursday by the Organisation for Economic Cooperation and Development (OECD).
But Tsikata said the World Bank report showed the Caribbean region was lagging behind other countries in infrastructure, which pushed up the cost of exports.
The small size of individual economies and the lack of transport links also pushes up costs and inefficiency.
The report has five main recommendations:
* Reduce economic and fiscal imbalances while investing in trade infrastructure and social programmes to facilitate the region’s integration in the global economy and protect recent gains in human development.
* Accelerate implementation of national trade policy reforms and improve investment incentives.
* Adjust to the erosion of trade preferences and use the EPA to enhance competitiveness.
* Develop a long-term trade strategy with a focus on increased competitiveness and new opportunities.
* Strengthen regional cooperation through institutions such as the Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM).
