When in the 1980s it became apparent that Europe’s preferential regimes for bananas and sugar were coming to an end, an impassioned debate began about a transition to other forms of economic activity. For the most part the language was about alternative crops, import substitution, manufacturing, exports and financial services. Oddly, little was said about tourism which was widely regarded as a fickle industry.
There were of course huge legal and technical arguments, extensive conversations about how any accompanying financial measures might work and who should receive such assistance. In the end, the money largely went to governments in the form of budgetary support rather than to the industry concerned or to the private sector.
Europe was concerned that any other course of action might result in one or another company benefiting unfairly in relation to its competitors, and despite a commitment to private sector-led growth, the EU was unable to work out how to introduce the efficiencies and dynamism that profit might introduce into development.
Since then the world has moved on. Tourism has now come to dominate most Caribbean economies and is the Caribbean investment opportunity of choice, irrespective of it being ignored by most agencies until recently. Agricultural diversification has largely not taken place and the Caribbean’s food import bill has remained unsustainably high; an offshore financial services sector was successfully encouraged, but has since come under threat from the same developed countries that had suggested a central role for the industry in the region; and diversification, investment attraction and promotion remained on everyone’s agenda, to the extent that it has spawned a Caribbean mini-industry in its own right.
As a result most Caribbean nations continue to undertake investment promotion activities often with external support. For the most part they involve the organisation of set piece occasions with prime ministers and ministers, and multi-sectoral or sector-specific presentations.
Such events have their place. They provide a spotlight and opportunity for country branding. They enable government to make policy statements on investment opportunities and incentives and to meet privately with potential investors or undertake more targeted initiatives of the kind undertaken by Caribbean Export.
Over the years, thinking about how best investment is attracted has varied greatly in style. In 1981 there was, for example, the Business Committee on Jamaica chaired by David Rockefeller that utilised the support of US CEOs. In the 1990s Trinidad and other governments commissioned large European and US investment banks to produce information memoranda and set up through them one-on-one meetings with business leaders from across the world. Then there were and are seminars and programmed dialogues of the kind organised by Caribbean Central American Action (CCAA) at its Miami Conference on the Caribbean (now held in New Orleans) and sector specific events such as the Caribbean Hotels and Tourism Association’s annual investment conference involving networking and computerised appointment matching. And throughout there has continued to be a perpetual round of promotions, square tables, round tables, huddles and more.
What is far from clear in all of this activity is the extent to which anyone undertakes a cost benefit analysis one to five years out, or tries to determine the extent to which investments that do materialise have at some point been touched by such activities.
Having worked in and around such issues with governments, industries and the private sector what, however, is striking is just how many significant investments into the region or from Caribbean companies overseas – something often overlooked – have occurred without any such fostering. Rather they have been the result of low key research undertaken by the company involved; advice sought personally; confidential initiatives; or the creation of informal high level business contacts. Importantly they tend to relate to a much earlier strategic decision by the company concerned to identify how to maximise profit in a sector or location which they know well.
What is also striking is that many of the investment and business relationships that have developed have not been based on any magic formula but on chance meetings at events or dinners and a discovery that economic synergies are possible when there is a meeting of interested minds or the chance of a complementary economic activity. Above all, what has driven such decisions is the issue that is most difficult for development agencies and governments to address: profit. As odd as it may be, few of the promotional events that take place focus on this or recognise that any decision to invest, create jobs, be socially responsible or choose a particular location, begin and end with whether the company concerned can make a return on a lasting basis.
Promotional events also seem not to recognise that the world has moved on and there are so many asset classes now available to investors, that whole countries are now competing against the greater returns offered by investing in say old master paintings or commodity trading, no matter how little social utility such actions may have.
So what in the longer term might the region be thinking about in terms of new and sustainable forms of investment-related economic activity, given that the Caribbean consists, for the most part, of small markets isolated from one another, offering little in the way of economies of scale or natural resources, other than an attractive natural environment? Space does not permit detail. However , alternative approaches are possible that might build in future on the economic underpinning of well integrated tourism, possible new oil and gas finds, value added agriculture or mineral deposits, and knowledge based communities with good communications.
Opportunities exist, irrespective of the size of a nation, for instance in the creation of information hubs that group together specialists able to provide detailed analysis and information; there are real opportunities to build research centres, science parks and intellectual hubs around universities; quality education at regional universities is saleable internationally; creative industries, meaning the capture of finance, management and marketing in complexes of professionals; and in coming to see Caribbean nations as a physical base for management of productive investment overseas.
Some countries such as Cayman, the BVI, Cuba, the Dominican Republic and Trinidad have, in different ways, already recognised this. Others, however, need to think outside the box and in the process work out how best to re-launch their promotional activities in ways that are unique, realistic, better targeted and measured, and above all related to the thinking of those who may eventually become involved as investors.
Previous columns can be found at www.caribbean-council.org