ALTHOUGH the per capita GDP of Caribbean countries increased significantly in the 1970s, in the last 20 years most of these countries have lost ground compared to the emerging market and developing countries in Asia and Latin America.
All these Caribbean countries have experienced a transition from a labour-intensive agricultural sector to a more capital-intensive sector, such as tourism.
As the Caribbean looks to the future from the throes of the global financial crisis, it must look for ways to promote sustainable economic growth. This will mean parting with some sunset industries that have served the region well during the last century, eg bananas.
Economic growth will have to depend on the expansion of some existing industries and the development of entirely new types of economic activities.
One of the existing industries that can continue to support growth and which can develop new and innovative initiatives is tourism, which has proven itself to be a major contributor to long-term economic growth, employment and taxation. There is significant scope in many countries to enhance the rate and sustainability of growth by enhancing the performance of the tourism sector.
The International Monetary Fund estimates that a 10 per cent increase in tourist arrivals increases economic growth of GDP by about 0.5 percentage points. It has remarkably maintained growth even in the midst of a global economic crisis.
Many criticisms of the tourism industry have proven to be unfounded. Tourism has traditionally been viewed as a volatile industry, not as stable as the production of goods. However, data over the last 20 years have shown that tourism is no more volatile than exports of goods.
It has also been said that the tourism industry is an enclave with little linkage to the local economy because of its high import content. However, tourism has a high density of inter-sectoral linkages to the rest of the economy, including agriculture, manufacturing, transportation, entertainment and art and craft.
Tourism, like every other sector in small, highly open developing countries like those of the Caribbean, has an import content, but it compares favourably with manufacturing and the alumina industry. This suggests that the tourism sector can still be an engine of growth in the future of the region.
There is, however, an urgent need to diversify and improve the quality of the tourism product, either through upgrades in existing products or developing new products such as ecotourism. Tourism is an extremely competitive industry on a global scale, therefore if it is to continue to be the engine of economic growth in the Caribbean we will have to ensure that costs are kept competitive.
The quality of the environment is critical to the continued success of the type of tourism offered by the Caribbean, hence the necessity to protect and preserve the quality of the natural environment. There are untapped opportunities which can attract substantial amounts of foreign investment, but governments must ensure that adequate infrastructure is in place.
Successive governments, our hoteliers and our hotel workers, must be congratulated for doing an excellent job in marketing and managing the tourism industry, especially in these challenging times.