Export of Services – The next frontier for Caribbean Business
By Deodat Maharaj
Caribbean economies have largely been primary producers with a focus on commodities for much of our history.
Diversification has been a constant in our regional and national discourse with limited progress, notwithstanding our best efforts. Globalization has had a massive impact on our small economies, exacerbated by shocks such as the current coronavirus pandemic, not to mention the effects of climate change and financial crises. What each crisis including the current one has taught us is that we must continue to innovate with our existing exports and identify alternative avenues to create jobs and generate foreign exchange.
The commoditizing and export of services represent a viable option. Whilst tourism remains important, the reality is, in terms of services we must think beyond tourists. The evidence says we must. According to the Caribbean Tourism Organization, last year countries took a massive hit. For example, Grenada experienced a decline of tourist arrivals by an estimated 73%. The decline was 69.2%, and 71.4% for St. Lucia and Belize respectively. Due to Covid-19, tourism continues to endure a sustained depression.
While we accept that in the post-Covid world, we will continue to need tourism, the vulnerability of this sector tells us that we must revisit our traditional assumptions of what we can sell globally. This is with reference to services in addition to tourism.
According to the World Trade Organization, trade in services through all modes of supply is worth US $13.3 trillion. In the Caribbean, services account for approximately 65% of our Gross Domestic Product but this is largely driven by tourism. There is room for services to grow and become a greater generator of jobs and foreign exchange in areas such as music, fashion, animation and film, and outsourcing. For this transition to take place, we need to start where we have strength. Let’s look at commoditizing the creativity and talent of our people into viable commercial opportunities.
Taking music as an example, according to Goldman Sachs the global music industry is estimated to reach $131 billion by 2030. For our artistes to gain a piece of this, they not only need the creativity but the underlying business infrastructure to support them. Caribbean Export with support of the European Union has provided a suite of services in this regard. This includes a Business of Music programme and music writing and production bootcamps. Initiatives such as these enhance technical capacity and provides the tools needed, in addition to talent, to capitalise from the digital music space. Coupled with helping link to international music executives through live and virtual showcases, the opportunity for our music creatives has been unprecedented. However, to have sustained impact, efforts at the regional and national levels have to be complementary and we need to do much more.
Another area that offers potential is animation and film. These sectors saw a steady boost in global revenue over the past year, particularly during the COVID-19 lockdowns. The global animation industry in 2020 was worth approximately US $270 billion. Streaming services continue to grow, providing a great opportunity for Caribbean content creators to showcase our unique Caribbean culture in amination, games and films. Caribbean Export is committed to providing the right support, that builds the capacity of our content creators to harness opportunities available to them in the global market.
Another area has to do with training, education and edutourism which can be help earn foreign exchange and create jobs.
There is an opportunity to establish centres of excellence in the Caribbean, to address such as the technical skills required for the creative industries. In terms of languages, almost every Spanish-speaking country in this Latin America and Caribbean region has a mini-industry with Spanish immersion programmes. We need to replicate this model for English-language training in our English speaking countries. We have seen the positive impact of the presence of medical institutions and branches of extra-regional universities in places like Grenada can have in creating jobs.
To diversify our services sector as well as giving a better chance to our businesses to compete, digitalisation is key.
The COVID-19 pandemic underscores the need for a digital pivot. The very nature of providing a service necessitates a robust digital infrastructure, from marketing your service online, delivery of your service and of course receiving payment. To support the diversification of the services sector in the Caribbean and to really unleash their profit potential these fundamentals must be in place.
Looking ahead, Caribbean Export is committed to working with our partners to help realize the full potential of the services sector. It can be a vital pillar for our region’s economic revival and create jobs for our people.
Deodat Maharaj is the Executive Director of the Caribbean Export Development Agency. Deodat can be reached at: [email protected] (Twitter: @deodat_maharaj)