An Opportunity to Reduce the Subregion’s Dependence on Tourism
By
Betty Combie
Quality Management Consultant
Managing Director, Moz Inc
Saint Lucia
November 28, 2020
COVID-19 and its impact on our tourism dependent economies means the time is now for regional governments to implement disruptive and forward-thinking programme concepts and policies that fast-track the development of a Caribbean technology economy.
Honourable Mia Amor Mortley, Prime Minister of Barbados
Time to for the Region to Pivot, Barbados Advocate, October 16, 2020
https://www.barbadosadvocate.com/news/time-region-pivot
Our Export Reality
When it comes to the export of our services, tourism has been a key economic driver for most of the islands of the sub-region. Its contribution to our gross domestic product, employment and our exports in 2019 is captured in the table below extracted from: Caribbean Region Quarterly Bulletin: Pandemic Saga Continues (https://flagships.iadb.org/es/node/38309)
|
Tourism Dependence in the OECS |
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|
Country |
Contribution to GDP (2019), % |
Share of Employment (2019), % |
Tourism Receipts, % |
||
|
|
Direct |
Total |
Direct |
Total |
Share of Exports |
|
Antigua and Barbuda |
12.3 |
44.7 |
12.3 |
44.7 |
37.8 |
|
Dominica |
12.5 |
38.0 |
11.3 |
34.7 |
46.0 |
|
Grenada |
19.0 |
55.8 |
17.8 |
51.6 |
26.9 |
|
Saint Lucia |
16.0 |
43.0 |
16.0 |
43.0 |
46.9 |
|
St. Vincent and the Grenadines |
13.8 |
46.2 |
12.9 |
42.7 |
39.9 |
|
Source: World Travel & Tourism Council |
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This current environment brought on by COVID-19 inclusive of depressed economies and travel restrictions has severely disrupted the industry.
Over the years, our efforts to diversify by way of exporting of goods has been and continues to be plagued with issues related to high production cost, capacity constraints, inconsistency in quality, strict market entry requirements, lack of economies of scale (our volume of production is not large enough to result in reduced unit cost), natural disasters, etc.
The time is now to focus on services, other than tourism, which are not impacted by travel restrictions and which continue to be in demand in export markets.
Trade in Services
The World Trade Organisation (WTO) General Agreement on Trade in Services (GATS) identifies four modes of supply for delivery of services.
Mode 1 - Cross-border supply - Service delivered within the territory of another member. In Mode 1, both the supplier and consumer are immobile. For example, services offered and consumed via the internet. Neither the supplier nor the consumer leaves their country.
Mode 2 - Consumption abroad – Service delivered outside the territory of the member, In the territory of another member, to a service consumer of the member. In mode 2, the supplier is immobile, but the consumer is mobile. For example, tourism. Tourists leave their country to travel to another country for the service.
Mode 3 – Commercial presence - Service delivered within the territory of the member through commercial presence of the supplier. In mode 3, the service supplier has a presence in the country of the consumer. For example, the establishment of an office or entity abroad.
Mode 4 – Movement of natural persons - Service delivered within the territory of the member, with the supplier present as a natural person. In Mode 4, the service supplier is present within the territory of the member. For example, farm workers in Canada; or the presence of a tradesperson, artist, professional, etc.
Opportunity to Invest in Mode 1
Tourism is an example of Mode 2. I am suggesting that there is an opportunity in this current environment and beyond to focus on Mode 1. Mode 1 allows for online delivery of our services.
Digitalisation is the biggest enabler for trade facilitation reform.
A statement presented by Mohammad Saeed of the International Trade Centre (ITC) during a
Webinar entitled: Regional Private Sector Dialogue on Trade Facilitation and the COVID-19 Pandemic
October 28, 2020
Globally, consumers (including the diaspora) are shopping online for services which were usually accessed face-to-face. Even more opportune is the recently made available World Bank funds to four islands of the OECS through the project “Caribbean Digital Transformation Project”.
The World Bank Board of Executive Directors approved today the regional Caribbean Digital Transformation Project for a total of US$94 million for four Eastern Caribbean countries: Dominica (US$28 million), Grenada (US$8 million), Saint Lucia (US$20 million), Saint Vincent and the Grenadines (US$30 million), and the Organisation of Eastern Caribbean States (OECS) Commission (US$8 million) to build an inclusive digital economy. This is the first World Bank-financed project to support the development of digital economy in the Caribbean. It aims to increase access to digital services, technologies, and skills by governments, businesses, and individuals.
First-Time Financing by World Bank for Digital Economy in the Eastern Caribbean Approved for US$94
Press Release June 22, 2020
What is needed?
Investing in Mode 1 requires the following:
1) The acceptance by the powers-that-be that currently we have services (film, music, publications, consulting, education) which:
- have a global appeal and offer a unique value proposition
- can be delivered virtually
- have continued to trade in this pandemic environment
2) Identification of the significant few services which have the potential to significantly impact our GDP and employment
3) A policy decision to use the World Bank funding to provide holistic and longer-term support (not piecemeal support as have been done in the past) to these services
4) A comprehensive plan inclusive of:
- A database on services which we are currently being exported and/or which has the potential for export
- Map the value chain for these services to recognise the linkages for further economic activity. For example, supporting film producers can result in economic activity for script writers, videographers, actors, sound technicians, musicians, stage designers, etc.
- Prioritisation of the significant few which are in demand globally, can penetrate markets and which increases economic activity.
- Baseline data on the contribution of these services to the Gross Domestic Product (GDP)
- Determination and provision of support needed for these services to deliver consistently for example:
- Information and communication technology (ICT)
- Bandwidth/broadband
- E-commerce capability
- Professional marketing of these services
5) Implementation, monitoring and evaluation of this plan
6) The regular reporting of Mode 1’s contribution to GDP and to employment
Towards the “New Normal”
The “new normal” must be influenced by lessons learnt from this crisis. A journey of sustainability requires that we not return to business as usual after COVID-19. The evidence of the fickleness of the tourism industry is in front of us. We need to re-strategise and pursue the export of services which are more resilient to disasters. Now is the time to reduce our subregion’s dependence on tourism.