Caribbean businesses not competitive enough

HALIFAX, Canada, May 29, 2008 – President of the Caribbean Development Bank (CDB), Dr Compton Bourne, has pointed to several weaknesses in businesses across the region, including uncompetitive pricing, which threaten their ability to be competitive on an international scale.

Addressing the opening of the 38th Annual Meeting of the CDB’s Board of Governors on Wednesday, he said there is clearly a need to improve trade competitiveness.

Dr Bourne pointed out that the improvement of trade competitiveness implies firstly, the identification and production of goods that are wanted and the cessation of production of goods that are not wanted; secondly, achievement and maintenance of high quality standards in what is produced; thirdly, the supply price must not be higher than that for comparable products; and fourthly, that supply contracts must be honoured in their quantity and delivery date dimensions. 

“In all four aspects, Caribbean enterprises seem to have significant weaknesses. Sufficient nimbleness in switching product lines and identifying new lines is not displayed, quality deficiencies persist, prices are often uncompetitive, supply irregularity is a problem, especially in the new agricultural industries and the nascent professional services industries,” he contended.

Dr Bourne told the gathering at the opening ceremony that trade capacity and competitiveness were vital since they would be at the heart of the Caribbean’s ability to benefit form the trade provisions of the CARIFORUM – the Caribbean Community (CARICOM) and the Dominican Republic – Economic Partnership Agreement (EPA) with the European Union as well as later agreements with Canada and the United States.

Under the new trade deal, merchandise imports from CARIFORUM countries will be liberalised and CARIFORUM merchandise imports from the EU will also be liberalised after varying but generally lengthy transition periods. It also provides financial support for Caribbean integration, trade adjustment and improvement of trade competitiveness.

“Earlier trade agreements have not fully benefitted the Caribbean partly because of inadequate trade capacity and weak competitiveness manifested in supply irregularity and high prices relative to competitors. In the absence of an ability to compete effectively, negotiated market access provisions become mere formalities, devoid of empirical significance. It is necessary, therefore, that Caribbean countries intensively and urgently focus on strengthening their productive capacity in respect of tradable goods and services and on improving competitiveness,” Dr Bourne said.

“There has to be capital investment in plant, machinery and equipment and in increased land area under cultivation in the case of agricultural commodities. There has to be capital investment to expand the capacity of education, training and research and development institutions and to increase access by students and trainees so that an improved and increased stock of human resources becomes available to producers. There needs to be technology innovation. 

“There has to be improvement in access to finance for working capital and for investment capital, especially by small and medium-sized enterprises. The economic infrastructure which is essential for production would need to be strengthened to deliver telecommunication services, electricity and water on an extended scale and reliable basis and to minimise transportation bottlenecks in the supply of production inputs. There needs to be liberalisation of the movement of capital and labour across the Caribbean,” he added.

Meanwhile, in commenting on the region’s economic situation, Dr Bourne said decisive action is required to resuscitate economic growth and avoid reversals in the progress toward poverty reduction.

He however warned that this would not be an easy task “in the global economic environment of a diminished appetite for financial risk, steeply rising petroleum prices and rising food prices”. 

“Higher food prices and decreased food availability can mean involuntary reductions in food intake by poor families, increases in under-nutrition, reduced discretionary household income for capability-enhancing expenditures on schooling and health care, and in the extreme to social unrest,” the CDB president said.

“The response should be to expedite decisions and actions on the proposals for agricultural development in the Jagdeo Initiative, to engage in emergency food production and food distribution programmes and to find ways of quickly matching regional supply capacity with regional excess demand for food.”