'Make Caricom wider not deeper'
Port of Spain, Trinidad and Tobago — Caricom should generate export-led growth by recruiting new members, rather than by trying to deepen its existing relationships, regional leaders were told this week.
The policy proposed by Professor Victor Bulmer-Thomas would see a return to the successful export strategies of the 1950s, which established the region's tourism industry.
"That strategy did indeed help to raise GDP per head to historically high levels," said Bulmer-Thomas, professor emeritus at London University and honorary professor at the Institute of the Americas.
"But the package is starting to look tired," he told the Jamaica Observer in Port of Spain, Trinidad.
Apart from Trinidad and Tobago, which has oil, and Puerto Rico, with its substantial manufacturing base supplying the US mainland, most countries in the region are suffering from high debt and low growth, he said.
The Caribbean has been trying to deepen relationships for 25 years. "It's time to talk about widening."
A bigger Caricom would have more influence with major trading partners such as Britain over things like its new air passenger duty.
There are other alternatives to promote economies, such as boosting domestic demand or going for balanced growth, but they would involve raising the region's sky-high debt loads or pulling in more imports, and that would be "suicidal", he told finance ministers and central bankers at a closed session of the International Monetary Fund's High Level Caribbean Forum.
"A long-run growth strategy needs to emphasise exports," he said, according to a copy of his key-note speech obtained by the Jamaica Observer.
Expanding Caricom to include the US Virgin Islands, Montserrat or Aruba would create a larger market and encourage intra-regional trade.
The British Territories currently import US$20,000 per person annually while the US and Dutch Territories import US$14,000 per head, compared to an average of US$4,300 in Caricom countries.
However, existing Caricom members might have to allow exceptions to their common external tariff, since those countries which have trade agreements with former colonial powers would not be able to comply. Other free-trade groups, such as the North American Free Trade Agreement, operate without a common external tariff, Bulmer-Thomas said.
Caricom's members currently account for half of the region's countries, but only a quarter of the region's trade, a fifth of its GDP and just 15 per cent of its population, he noted.
The need for a stronger emphasis on exports can be seen in another startling statistic.
The ratio of exports to GDP in Caricom has fallen by more than 20 per cent since 2006, a worse performance than in any of the region's groupings except the French Territories.
Tourist arrivals have also been in long-term decline as a share of the global industry, falling from 2.45 per cent in 1995 to 2.26 in 2010.
Bulmer-Thomas also suggested the region should look to new core trading partners, notably China, Mexico, Brazil and Russia since the economies of its traditional partners, the US and Europe, are in the doldrums.
He also advocated expanding the range of services offered by Caricom to include education, medicine, music and film festivals, sports training, financial services, telecoms, and conferences.