The Rise of Services Exports
Most Caribbean economies have a well documented history of merchandise or goods exports from the agricultural and manufacturing sectors such as coffee, cocoa, sugar, and bananas or from the energy and mining sectors such as bauxite, petroleum, or liquefied natural gas (LNG). Services exports however, have been steadily on the rise even though they are less understood and not as well documented due to their intangible nature and complex linkages to goods.
Here are the region’s fastest growing services exports and the key developments that have fueled this rise in the Caribbean region.
The Emergence of a More Diversified Tourism Product
The Caribbean by its very nature encourages services exporters to specialize in tourism-related activities, scale up, and achieve explosive growth. So much so that tourism has evolved from the traditional all-inclusive hotels and tours and cruises to today’s modern and diversified services such as health and wellness, ecotourism, and more recently sport tourism. A great example of the latter is the staging of various Caribbean Premier League cricket matches in different islands. Caribbean tourism services exports are an economic driving force accounting for as much as USD51.9bn (14.6% of Caribbean GDP) in 2014, and is forecast to rise by 3.3% pa to USD73.6bn in 2025. Visitor exports alone generated USD27.7bn (18.1% of total exports) in 2014.
The Growth of ICT
ICT and cloud-based technology platforms have accelerated the growth of services exports because of their low cost, global reach, ease of use, and on-demand capabilities. Services that are not location-bound — and therefore do not require a physical presence or face-to-face contact — are now commonly transported digitally using technology-based applications such as online learning, webinars, desktop publishing, graphic design and animation, videography, copywriting, downloadable reports, and music files.
The proliferation of online learning sites such as Coursera, EdX, Udacity, and Lynda along with freelance sites such as Freelancer, Upwork, and Guru are also proof of the dramatic global growth of services exports. Right here in the Caribbean we also have our own examples such as Business Process Outsourcing (BPO), which has caught on in markets such as Jamaica and Trinidad, where services in the form of medical record transcription, management, and maintenance of IT networks and support desks and call center services are exported.
The Explosion in Caribbean Culture and Creative Talent
Music genres such as reggae, calypso, merengue, and bachata are some of the most renowned services exports from the Caribbean region, achieving widespread, global recognition. The legendary Bob Marley blazed that trail and today Jamaican reggae icons such as Shaggy and Sean Paul have a higher annual worth than Jamaica’s banana industry, illustrating the increasing contribution and impact of services exports on Caribbean economies.
Additional creative and cultural sectors such as fashion and film also contribute to the rise of services exports from the region. Anya Ayoung Chee for example, a young and aspiring Trinidadian fashion designer was the Winner of Lifetime TV’s Project Runway in 2011 and now has her own clothing line.
The Informal Economy
The economic realities of poverty, limited employment opportunities, and gender-based inequalities in accessing and generating income all provide impetus for the rapid growth of services exports in the Caribbean because the provision of services is seen as a means to reduce poverty, create jobs, and self-employment.
Against this backdrop there is also a growing realization that many Caribbean small and medium enterprises (SMEs) are in fact unregistered businesses owners and operated by a single person providing an informal service for which the revenue or income generated is not declared or reported. This scenario is what forms part of the informal economy.
This informal services sector presents an ideal road map for economic freedom or entrepreneurship for Caribbean women who predominantly provide services that include childcare, elder care, and tutoring, because of the low start-up cost and ease of operating without any formal training, registration, or reporting. The high demand for such services in developed economies such as North America and Europe and among the expat communities has led to the thriving export of these informal services.
The export of professional services from one region to another has been on the rise and is facilitated by the establishment of the CARICOM Skills Certificate, which allows freedom of movement of certain persons throughout the region. This has allowed architects, engineers, medical practitioners, legal professionals, and other graduates from Caribbean universities to more readily export their services across regional boarders. Cuba’s export of its doctors to countries in need of humanitarian aide such as Ebola-stricken Africa is a perfect example of professional services exports.
While there are many other developments that are also contributing to the rise of services exports in the Caribbean, I hope this overview gives you a new or different perspective on how our economies can more rapidly grow through services exports by leveraging the very unique nature of the Caribbean.