driving diversification through competitiveness and … ram - amcham final 30... · asia 2100 4.8...

Dr. Justin Ram

Director of Economics

Caribbean Development Bank

DRIVING DIVERSIFICATION THROUGH

COMPETITIVENESS AND EQUAL OPPORTUNITY

Why does this matter for inclusive development?

ECONOMIC OUTLOOK FORUM

HYATT REGENCY| 30 JANUARY 2020

SELECTED REGIONAL

INDICATORS

A REMINDER: THE CARIBBEAN’S

DEVELOPMENT CHALLENGES

OUTLINE

03

0102 COMPETITIVENESS AND EQUAL OPPORTUNITY

NEXUS

THE COMPETITIVENESS CHALLENGE and

OPPORTUNITIES04A GLANCE AT THE REGION

THE CASE OF TRINIDAD AND TOBAGO

Note: Based on available data from the World Bank. The Lowest Income Earner is always Haiti. The Highest Income Earner is The Bahamas until 2008, then Trinidad and Tobago thereafter

*PPP, current international 4

GDP Per Capita*, 1996 – 2018 Highest Regional Earner$32,228

Lowest Regional Earner$1,819

Caribbean small states$16,270

World$17,914

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000P

PP,

Cu

rre

nt

Int’

l $

Ground Zero01

01Many regional development challenges are persistent

Development Challenges

Implementation Gap

Regional Approach Gap

Cross-cutting

Challenges

COMPETITIVESNESS AND

EQUAL OPPORTUNITY NEXUS02

The Competitiveness and Equal Opportunity Nexus

Turning equal opportunity into tangible rewards and inclusive well-being02

For sustained inclusive development in the Caribbean:

02

1. There needs to be strong state backing for the public goods that

create equal opportunities like education, health and transport

2. We must foster dynamic export driven, competitive and resilient

economies

SELECTED REGIONAL

INDICATORS03

-0.1%

1.1%

1.0%

0.0%

4.5%

3.0%

4.2%

10.9%

BAR

SLU

JAM

TT

GUY

GRN

ANT

ANG

Source: CDB, Central Banks, NSOs

03In 2019, the regional economy expanded by just over 1%.


2018 GDP Growth (%), Selected BMCs

BMC Average = 1.2%

MACROECONOMIC

Source: Central Banks

03In 2018, sovereign debt levels fell in most countries


Government Debt as a share of GDPLatest available statistics for 2018

The median debt level fell slightly

MACROECONOMIC

2019 Estimates coming soon !!

Overall Unemployment Rate (%)2018 estimate unless otherwise noted

1 in every 4young people are unemployed

Source: IMF, Statistical Offices, local reporting, CDB*Barbados: Official statistic as at September 2018, therefore does

not consider significant public sector layoffs in the fourth quarter

03A few countries are struggling with extremely high unemployment rates


HUMAN DEVELOPMENT

Rising crime levels and heighted citizen insecurity

threaten the social fabric of Caribbean society03

HUMAN DEVELOPMENT

Intentional Homicide Rate, per 100k population2017 unless otherwise stated

Source: Official statistics and national reportingSource: IDB 2017Note: Caribbean cities included in the study are New Providence, The Bahamas;

Greater Bridgetown Area, Barbados; Kingston Metro Area, Jamaica; Paramaibo,

Suriname; and Port of Spain Metro, Trinidad and Tobago.

Forecasted Population Change (%)2015 – 2100

Source: UN Department. of Economic and Social Affairs

03Some Caribbean country populations are predicted to decline during this century


HUMAN DEVELOPMENT

32.5 2.4 2.3 2.1

2 2 1.91.8 1.7 1.6

1.4

0

0.5

1

1.5

2

2.5

3

3.5

Total Fertility Rates (%)2010 – 2015

2100: UN Projected World Population > 11.2 billion

Global population

evolution is helping

to change world

trade patterns

1950

>175 million(7%)

2017

361 million(5%)

2017

4.5 billion(60%)

NORTHERN AMERICA

2100

499 million(4%)

1950

>500 million(20%)

2017

742 million(10%)

EUROPE2100

653 million(6%)

ASIA2100

4.8 billion(43%)

2017

1.3 billion(17%)

AFRICA

2100

4.5 billion(40%)

2017: World Population = 7.6 billion1950: World Population = 2.5 billion

Source: Financial Times; UN Dept. of

Economic and Social Affairs

2017

646 million(9%)

2100

712 million(6%)

LAC

2017

41 million(0.5%)

2100

72 million(0.6%)

Oceania

14

03Population trends provide Opportunities

HUMAN DEVELOPMENT

THE COMPETITIVENESS

CHALLENGE and OPPORTUNITIES04A GLANCE AT THE REGION

THE CASE OF TRINIDAD AND TOBAGO

Declining energy sector activity brings fore the

need for diversification.

Source: Review of the Economy 2019 16

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

2014 2015 2016 2017 2018

TT$

Mill

ion

s

Crude oil exploration and extraction Natural gas exploration and extraction

Manufacture of Petrochemicals Petroleum support services

Refining (incl. LNG) Petroleum distribution

Asphalt

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

90,000.00

100,000.00

2012r 2013r 2014r 2015r 2016r 2017r 2018r

93,533.80 94,895.00 96,335.20 98,402.6095,621.90

91,729.30 92,029.90

Non-Energy Energy

PRODUCTIVITY AND COMPETITIVENESS

04

ENERGY SECTOR GDP BY INDUSTRY GDP BY SECTOR

There needs to be more consistent growth in non-energy

industries.

Source: Review of the Economy 2019 17

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2013 2014 2015 2016 2017 2018

Pe

rce

nt


04Growth of Selected Non-Energy Sectors

Monochrome growth in labour opportunities: services

18

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

*

20

12

20

13

20

14

20

15

20

16


04Sectoral Distribution of Employment

Lower domestic inflation aided competitiveness in recent years.

19


04Nominal and Real Exchange Rate

5.9

6

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

6.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

Real Effective Exchange Rate (Left Axis) Nominal Exchange Rate (Right Axis)

Ap

pre

ciat

ion

Dep

reciation

High propensity to import increases the consumption of ForEx.

20

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0

2

4

6

8

10

12

14

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

US$

Mill

ion

Mo

nth

sNet Official Reserves (US$Mn) (Right Axis) Import Cover (months) (Left Axis)


04Net Official Reserves and Import Cover

1. Why is this the case?

2. What can be done?


04


04A Regional Glance at Competitiveness

Ease of Doing

Business rankings

have deteriorated

across the Region

2020

2020

7193

111105113119135128

130

134139146

162179

12

Source: World Bank


04WB Doing Business Report 2020

126

106 99 147

139 104 111 113

106 121

Top 30%

Middle 40%

Bottom 30%

Regional Averages

126/190

Source: World Bank

Trinidad and TobagoPRODUCTIVITY AND COMPETITIVENESS

04WB Doing Business

Report 2020

79

126 43 158

67 57 160 134

174 83Top 30%

Middle 40%

Bottom 30%

105/190

Source: World Bank

Let’s take a closer look at Trinidad and Tobago

0

20

40

60

80

100

120

140

160

180

Ease of Doing Business Rank

Starting a Business

Dealing with ConstructionPermits

Getting Electricity

Registering Property

Getting CreditProtecting Investors

Paying Taxes

Trading Across Borders

Enforcing Contracts

Resolving Insolvency

DBR 2012

Source: World Bank


04

2008

67Out of 178 countries

38

pla

ces

105

TT WB Doing Business Reform Agenda

DBR 2008 - DBR 2020 REFORMS


04

Positive Reforms

Negative Reforms

Governmentor agency decides to raise

resources on the market to

build a resilient asset

Financiersmay include households or insurance companies

investing premiums in assets that build resilience

and safeguard their own assets

Assetis an airport or for on-lending

to households e.g., for solar

panels or micro-grids

Coupon is agreed to upfront on

bridge loan, but revised for Pre-

Resilience bond after project is

completed based on resilience

credit rating provided by an

independent agency

Moratorium Clauseon payments is activated if

asset stops functioning after

shock. Payments to financiers

resume after a period of time

Evaluationcompleted by an independent

agency that gives the asset a

resilience rating

Opportunities - Innovative Finance - Pre-Resilience Building

Bond

Private

Sector

State-Owned

Enterprise

04

Lowering costs and

democratizing

finance

04 Challenges to Opportunities

CSN and

Digital Payment

System

Real-time Financial

and Trade data

Tax Data

The Caribbean as a

Digital Test Bed

Is it time for a regional digital settlement network?

How would a digital payments system work?

What are the benefits?

How it would work and its benefits04VAT payment and transaction data

automatically paid to the tax

authority

Merchant immediately receives

payment in their digital account

Data records about the transaction

are automatically submitted to the

merchant’s bank, customers’ banks,

Central Bank, and other regulators

Customers make

payments digitally

Free Movement of

Capital

Reduced Transaction

CostsFaster and Convenient

Transfers

Digital Finance

Network EffectsImproved Financial

Inclusion

Benefits

However, comparable costs are low, what is driving

this? Is there an opportunity to build on this?

30https://izzso.com/what-does-a-kfcs-zinger-cost-you-in-the-caribbean/


04

https://izzso.com/what-does-a-kfcs-zinger-cost-you-in-the-caribbean/

The Competitiveness and Equal Opportunity Nexus

Turning equal opportunity into tangible rewards and inclusive well-being04

Reminder: For sustained inclusive development in the

Caribbean:

04

1. There needs to be strong state backing for the public goods that

create equal opportunities like education, health and transport

2. We must foster dynamic export driven, competitive and resilient

economies

How to avoid Culture eating competitiveness for

breakfast

Source: PEMANDU

8 Steps to Delivery

“We should not let the

urgent stop us from

thinking about the

important. The linked

challenges of climate and

development will shape

humanity’s future”.

Martin Wolf, FT Columnist

Cabinet Prioritization

Planning Labs

Open Day

Roadmap

KPI Targets

Implementation

External Audit

Annual Report

1

2

3

4

5

6

7

8

Collaborating to

determine the

Strategic Direction

for development; being

open to redesigning

institutions and

infrastructure

Gathering

stakeholders in

government, business,

and the community to

develop a detailed

National

Development Plan

Hosting open forums

to share the

Development Plan

with the public and

solicit feedback

Publishing a

Roadmap for

Delivery with specific

objectives and action

plans

Setting KPIs for

monitoring progress

and encouraging

accountability

Meticulous execution

of the Development

Plan ensuring that

targets are met within

stipulated time and at

uncompromising

quality standards

Seeking out external

validation of projects

and achieved targets

Communicate the

achievements and

challenges with

implementing the

rebuilding program to

both HOG and the

public

We can leverage the

Delivery Unit model to

design and

strengthen our

institutions and

regulations to

encourage

competitiveness and

guarantee equal

opportunity for all

04

True Inclusive and Sustained Growth =

f(Equal Opportunity, Competitiveness,

Challenges−1...)

Final Thought

driving diversification through competitiveness and … ram - amcham final 30... · asia 2100 4.8...

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