CASTRIES, St Lucia (CMC) — Caribbean share of global trade has declined from three per cent in the 1970's to a quarter per cent in 2012, according to a new World Bank report.
But the report also notes that the rapidly changing environment for Caribbean exports presents both new opportunities and challenges for economies highly dependent on external markets.
The report, 'Trade matters: New opportunities for the Caribbean', notes that while trade plays an important role in job creation, exporting also makes employment more vulnerable to external shocks.
"Entrepreneurs are already seeing improvements in the business climate. Continued efforts to improve trade facilitation and step up investments in research and innovation, as well as quality education, will help improve skills and generate well-paid jobs in the Caribbean," said Jorge Familiar, World Bank vice-president for Latin America and the Caribbean.
The report also indicates that the region's trade performance is limited by lack of diversity and limited innovation. The number of patent applications in the Caribbean has been lower than in other regions of the world.
Looking at emerging trade opportunities, the report shows that the Caricom agreements have driven a rapid increase in intra-regional trade, and that a common market would lead to a substantial rise in exports in the region.
But it states, with the exception of the Bahamas, St Kitts and Nevis, Saint Lucia, Belize and Haiti, exports from Caribbean countries to growing emerging markets remain small.
The report suggests three main opportunities to boost trade and generate a positive cycle of shared prosperity in the region.
It is recommending the deepening of trade integration with North America, which it said would boost trade and accelerate growth in the region.
"The gains for the Caribbean of entry to the North American Free Trade Agreement (NAFTA) would be six times the size of the gains for implementing a Caribbean common market. The negotiations toward a Canada-Caricom free trade agreement launched in 2007 should also be pursued," the report notes.
It said improving the trade facilitation environment, through modernised custom systems and better connectivity, would also have a major impact on trade.
"Efforts across the region to modernise customs administrations and border management should be accelerated. With the expansion of the Panama Canal and the expected increase in transshipment, recent initiatives to modernise ports infrastructures and regulation are being carried out in Jamaica, the Dominican Republic, Bahamas and Haiti."
The report, released at the Third Regional Caribbean Growth Forum (RGF), states improving the business environment and investment climate would be essential to enhance productivity and competitiveness. "While Caribbean economies recently adopted a record number of reforms improving local business regulatory climate, exporting firms remain affected by the limited access to electricity, telecommunication and transport services, and the need for policies to further promote technology capability and innovation. More efforts are needed to improve skills and access to infrastructure and finance."
The 36-page report concludes that there is considerable potential for boosting trade and accelerating growth in the region.