On the 15th of June 2021, the prestigious Sir Arthur Lewis Community College of St Lucia convened participants from all over the world to unthink Caribbean globalization. Dr. Keith Nurse, Principal and President, scholar, and consummate networker, challenged us all to share our most provocative views about a region exposed like never before.
We all know that the Caribbean is vulnerable. Few, however, anticipated a shock so devastating for our economies such as the COVID-19 pandemic. Will this be the turning point for the Caribbean’s quest for resilience?
I was asked to evaluate the situation from the point of view of my present role as Dominican Ambassador to the Republic of Korea and as a former Member of the CARIFORUM College of Negotiators.
The Republic of Korea was forged in the anvil of a centuries-long regional rivalry between difficult neighbors that resulted in its present division from the Democratic People’s Republic of Korea along the 37th parallel.
Having to face such regional risks produced a national ethos of hard work, commitment to excellence and an undying will to advance on all fronts, all of the time, in order to survive and prosper.
More geographically similar to the reality of many a Caribbean island is Singapore. With a landmass of 650 Sq Km and populated mostly by immigrant descendants – in their case, of Chinese origin – Singapore was expelled from the Malay federation in 1965 just for reclaiming equal treatment for all.
Both countries advanced continuously since the 1960s, reaching leadership positions in all key indicators of economic, political, and social development, preparing them to face and to overcome all crises suffered since then.
Both illustrate, with their performance, what Caribbean countries need most urgently: resiliency. Their very high levels of international reserves ensure exchange rate stability. Their economic diversification guarantees continued flows of investment and trade in good and bad times. Their network of trade agreements provides for essential goods and services for their industries and consumers.
Equality of opportunity allows for the enjoyment of world class public services, with outstanding educational and health systems. Both were able to contain the contagion of COVID-19 and to minimize deaths.
To imitate these examples is not impossible. After all, it was precisely a Caribbean Nobel prize winner, a certain Sir Arthur Lewis, who proposed the strategy for economic development these countries followed so successfully.
How then to unthink Caribbean globalization in light of these examples and within the context of the sovereignty that must frame all choices of strategic relevance? Clearly, it is urgent to diversify Caribbean economies. Trade patterns are neither resilient nor sustainable, dependent as they are from bananas, tourism and off-shore banking. All are facing exogenous threats beyond our control.
Exports of bananas depend on our rapidly eroding margin of preferences with respect to competitive Latin American banana exporters. This margin will disappear after a transition period and so will the competitiveness of Caribbean conventional bananas. Is it worthwhile to contemplate adding value to this crop? What are the options for our farmers?
Tourism has been hit very hard by the crisis. The one service export in which developing countries had a trade surplus is the one that suffered the most worldwide. All countries are rapidly transforming their tourism, moving upmarket to maximize revenue with lower densities – that is, by servicing less tourists occupying more space and paying dearly for the privilege.
Many operations in the Caribbean were pioneers in targeting this exclusive market segment which continued to grow even during the darkest days of the pandemic.
And off-shore banking has been on the defensive ever since the 2008 financial crisis kickstarted the fight against tax-havens by leading developed countries – some of which happen to host off-shore operations themselves.
Our success in resisting the encroachment of intrusive regulations through the back door of our EPA services negotiations with the EU during 2005-2007 was an ephemeral victory.
This time it’s different: there is already a G-7 consensus on the way forward and it is only a matter of time for this consensus to receive approval by the wider group of participants in the OECD negotiations seeking to close the loop that allows 4 territories in the Caribbean to be the main sources of FDI into the EU, exceeding in total all of the FDI of Canadian, Chinese and Japanese origin put together.
The Caribbean needs to confront its vulnerability decisively. Our region needs to become resilient as a matter of urgency. Because of its exposure to natural disasters, because of the need to reconsider political decisions taken previously and because economic diversification needs to rely on the entrepreneurship of Micro, Small and Medium Enterprises (MSMES), our most important employer.
But, most of all, because of the many delays in strengthening the bonds that should allow us to depend more from within than from without. Sustaining MSMES and developing intraregional supply chains can be achieved only through deeper regional integration, the key ingredient for the resiliency required by the Caribbean in face of the hostility of globalization against its interests.
Facing hostile neighbors forged the will of Korean and Singaporeans. May the pandemic leave a comparable legacy in the Caribbean. All the irreparable loss will not have been in vain. In the meantime, our appreciation to the Sir Arthur Lewis Community College for organizing an event of global reach and far-sighted aims and our recognition to Dr. Keith Nurse for his leadership.