An Assessment of Trade Performance and Competitiveness of ... · Thus far, the OECS sub-region has been able to finance the current account imbalance with substantial inflows of foreign

An Assessment of Trade Performance and Competitiveness of OECS Countries

October 28, 2005

Prepared by Christopher Vignoles

for the Caribbean Regional Negotiating Machinery (CRNM)

TABLE OF CONTENTS

I. Introduction........................................................................................................................... 1

II. The Importance of Trade ..................................................................................................... 2

III. Trade in Services................................................................................................................... 4

A. Importance of Services Trade ............................................................................................. 4

B. Trade Performance.............................................................................................................. 5

C. Travel Services – measuring tourism’s competitiveness .................................................... 7

(i) Tourism arrivals – stopover visitors and cruise ship passengers .................................... 7

(ii) Tourism visitor expenditures .......................................................................................... 8

(iii) Price competitiveness...................................................................................................... 9

(iv) Tourism competitiveness monitor................................................................................. 10

(v) The tourism satellite account ........................................................................................ 11

D. Commercial and Transportation Services......................................................................... 12

E. The Provision of Services via Modes 3 and 4 .................................................................. 14

F. Evaluating Services Trade ................................................................................................ 16

IV. Merchandise Trade............................................................................................................. 18

A. Trade Performance............................................................................................................ 18

(i) Growth and patterns in the direction of trade ............................................................... 18

(ii) Composition of trade by sectors ................................................................................... 20

(iii) Export concentration and principal products ................................................................ 22

B. Competitiveness, Specialization and Complementarity ................................................... 23

(i) Real effective exchange rate ......................................................................................... 24

(ii) Market access and penetration ...................................................................................... 24

(iii) International competitiveness of exports ...................................................................... 26

(iv) Export specialization..................................................................................................... 28

(v) Trade complementarity and intensity............................................................................ 30

C. Evaluating Merchandise Trade ......................................................................................... 31

V. Competitiveness through Cost Structures ........................................................................ 33

A. Inputs and Factors of Production ...................................................................................... 33

(i) Labor ............................................................................................................................. 33

(ii) Capital ........................................................................................................................... 34

(iii) Inputs as goods and services ......................................................................................... 35

B. Infrastructure Costs........................................................................................................... 36

(i) Transport ....................................................................................................................... 36

(ii) Telecommunications ..................................................................................................... 36

(iii) Electricity...................................................................................................................... 37

VI. Trade and Integration: A Strategy for Growth ............................................................... 39

A. Exports and Growth .......................................................................................................... 39

(i) Challenges in scale, cost and preference erosion.......................................................... 39

(ii) Opportunity in diversification....................................................................................... 41

B. A Strategy for Competitiveness ....................................................................................... 41

(i) Unilateral action............................................................................................................ 42

(ii) A multilateral agenda.................................................................................................... 43

(iii) Regional integration....................................................................................................... 44

Statistical Appendix

Bibliography

The views expressed in this document reflect those of the author and not of the Caribbean Regional Negotiating Machinery. The author would like to thank Henry Gill, Ramesh Chaitoo and Dr. Claudius Preville for their valuable comments on a draft of this report.

1

I. INTRODUCTION

The Organization of Eastern Caribbean States (OECS) was formed in 1981 with the signing of the Treaty of Basseterre in St. Kitts & Nevis. The OECS includes seven full member states (Antigua & Barbuda, Commonwealth of Dominica, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines) and two associate members (Anguilla and the British Virgin Islands).1 Its mission is to contribute to the sustainable development of the sub-region through regional integration initiatives.

While the OECS began as a union to promote cooperation and solidarity, it has evolved into a relatively advanced integration process. The organization’s supreme decision-making body is the OECS Authority, made up of prime ministers and chief ministers from all member states, and it is supported by an administrative secretariat located in Castries, St. Lucia. Also, the seven full members and Anguilla have formed a currency union, with the adoption of the Eastern Caribbean dollar, supervised by the Eastern Caribbean Central Bank.

All OECS full member states are partners in the wider regionally integrated Caribbean Community (CARICOM). For more than 30 years, CARICOM members have sought to deepen relations through economic integration, foreign policy coordination and functional cooperation. In 2001, they signed the Revised Treaty of Chaguaramas and committed to, among other things, the creation of a CARICOM Single Market and Economy (CSME).2

While the CSME process is moving forward, many OECS countries have voiced reservations about its potential benefits and costs. This report will not attempt to evaluate the CSME’s impact on OECS member states since it is not yet fully implemented. However, at this time, it is important for OECS countries to evaluate their economic performance, identify development bottlenecks and implement possible solutions, to increase the gains and diminish the losses from a single common market (and eventual single economy) across the Caribbean region.

This report attempts to provide an analysis of the sub-region’s trade performance and competitiveness over the last ten years (for which data is available, 1993-2003). Chapter II of this report briefly looks at the importance of trade for the economies of the OECS sub-region. Chapters III and IV analyze the performance of services and merchandise trade, respectively. They also attempt to provide insights into the competitiveness of sectors and products in both categories of trade. Chapter V identifies the cost structures faced by firms operating across the OECS, and assesses the impact on competitiveness in production and trade. Chapter VI summarizes the conclusions and puts forth a possible strategy for competitiveness to drive sustainable export-led growth in the region. A statistical appendix and a bibliography follow the report.

1 In this report, the OECS refers to full members only. In some data calculations, OECS does not include Antigua & Barbuda and Montserrat due to lack of comparable data. 2 CARICOM includes the seven OECS full member states, plus The Bahamas, Barbados, Belize, Guyana, Haiti, Jamaica, Suriname and Trinidad & Tobago. The Bahamas is not party to the Revised Treaty of Chaguaramas and the CSME.

2

II. THE IMPORTANCE OF TRADE

Trade plays a very significant role in the economies across the OECS sub-region. As small island states, the OECS countries are relatively open economies and therefore, rely on export income to create jobs, buy imports, and maintain an overall healthy balance in external accounts. Furthermore, these countries are fiscally dependent on international trade transactions for revenue to finance government operations and increasing external debt payments.

The constraints of small size render a country to open its economy and integrate into the global trading system. In micro states, the smallness of domestic markets drive firms to seek external markets, while at the same time, limited domestic resources increase the need for consumers and producers to buy goods and services abroad. The openness of OECS countries is evident through the trade openness indicator, measured as exports and imports of goods and services as a percentage of output (trade/GDP). The OECS as a whole displays an openness indicator of 124 percent; this share ranges from 140 percent in Antigua & Barbuda to 113 percent in St. Kitts & Nevis.3 Given this degree of openness, any changes in trade performance have a direct impact on economic output.

Another method to measure the importance of trade is to evaluate the impact of exports and imports on a country’s balance of payments. Over the last decade, the sub-region’s current account balance has deteriorated from approximately 10 percent to 20 percent of GDP.4 This poor performance is the result of a growing merchandise trade deficit (stagnant exports and rising imports) and relatively stagnant services exports (traditionally, a strong surplus account). Thus far, the OECS sub-region has been able to finance the current account imbalance with substantial inflows of foreign direct investment and development aid.

The production and trade structures of OECS countries show that they are predominantly services economies. Services related sectors contribute between 60-75 percent of GDP, while industry (including manufacturing) accounts for roughly 20-28 percent of output.5 In terms of trade structures, OECS member states export mostly services and import mostly goods. Services exports account for almost 80 percent of the region’s total exports, up from a 66 percent share in the early 1990s. For the past decade, goods have accounted for 70 percent of imports into the OECS (see Table 1 in the Statistical Appendix).

The importance of trade in OECS countries is also evident in their dependence on international trade taxes as a source of fiscal revenues. Revenue from international trade transactions accounts for just over 50 percent of total revenue in Antigua & Barbuda, Grenada and St. Lucia, 45 percent in Dominica and St. Vincent & the Grenadines, and 37 percent in St. Kitts & Nevis.6 This indicates a significant dependence on trade to finance government operations, including the increasing burden of interest payments on debt. OECS member states are among the most

3 In comparison, the trade openness indicator for the Caribbean as a whole is 72 percent, for the MERCOSUR countries it is less than 30 percent. See World Bank – World Development Indicators (WDI) database. 4 IMF – Balance of Payments Statistics database. 5 World Bank – WDI. 6 Total revenue excludes grants. See IMF (2004b, 2004c, 2005c and 2005d) and ECCB (2004).

3

indebted countries in the world. In 2004, six countries in the sub-region were among the fifteen most indebted emerging economies – St. Kitts & Nevis ranked second with a public sector debt to GDP ratio of almost 180 percent.7

Figure 2.1 Export Growth Performance, 1990-2003

In conclusion, OECS economies are small, open and deeply integrated into the global trading system. Export growth, particularly in services sectors, is therefore a key to their development prospects. However, as the balance of payments indicates, export growth has slowed in recent years due to a number of factors, including the erosion of preferences, increased competition from foreign suppliers, and slumping tourism demand (see Figure 2.1 above). OECS countries must find ways to improve their competitiveness and boost exports in this era of growing liberalization, or face the prospect of dwindling economic growth. In the next two chapters, the report takes a closer look at the performance of services and merchandise trade, as well as the competitiveness of specific sectors and products.

7 IMF (2005b).

-7.0

-3.5

0.0

3.5

7.0

10.5

14.0

OECS Antigua &Barbuda

Dominica Grenada St. Kitts &Nevis

St. Lucia St. Vincent& Grens.

Gro

wth

Rat

e (%

)

1990-1995

1995-2000

2000-2003

Notes: Exports of goods and services. Growth is measured as annual average over time period.Source: UN, IMF and WTO data.

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III. TRADE IN SERVICES

This chapter looks at the importance and performance of services sectors in the OECS regional and national economies. It also attempts to evaluate the competitiveness of services sectors, particularly tourism, over the last decade. The analysis is carried out in two ways: (i) by sector, for travel, commercial and transportation services; and (ii) by mode of supply, for trade in services through commercial presence and the temporary movement of labor (Modes 3 and 4, respectively).

It is important to note that the lack of comprehensive and reliable services data, worldwide and especially in the region, limits the scope of analysis.8 Given the importance of services in many OECS economies, the capacity to collect, maintain and disseminate services data should be improved.

A. Importance of Services Trade

Services account for 80 percent of total exports and 30 percent of total imports in the OECS. The sub-region as a whole is a net exporter of services. During the period 2000-2002, it exported twice the value of services as it imported; this ratio has remained relatively consistent over the past decade. Services exports are relatively more important as a source of foreign exchange in Antigua & Barbuda, St. Lucia and St. Vincent & the Grenadines, accounting for more than three-quarters of total exports.

The OECS travel (mainly tourism) industry is the most important sector in the sub-region’s services export structure (see Figure 3.1 below). Between 1993-2003, the travel sector accounted for 73 percent of all services exports (this share has decreased slightly over time). In 2003, OECS travel services receipts reached US$ 914 million, roughly three times the value of total goods exports during the same year. Travel services exports account for over 85 percent of total services exports in St. Lucia; this figure is roughly 70 percent in Antigua & Barbuda, Grenada and St. Kitts & Nevis, 65 percent in St. Vincent & the Grenadines, and 60 percent in Dominica.

Commercial, transportation and government services make up the remaining share of services receipts. The largest sector, commercial services, accounts for 16 percent of OECS total services exports.9 It makes up the largest share of exports in Dominica and St. Vincent & the Grenadines (30 and 26 percent of total services, respectively). The transportation sector is the third largest source of services export earnings, accounting for 10 percent of the total. Government services exports are negligible.

8 For example, current methods of compiling services data do not allow one to look at trends vis-à-vis different destinations. Furthermore, problems still exist in some countries (OECS member states included) in measuring two of the four modes of supply for services trade (Mode 3 – commercial presence and Mode 4 – movement of labor). 9 Commercial services include, among others, telecommunications, financial, insurance and professional (such as engineering and legal) services.

5

Figure 3.1 OECS Services Exports by Area, 1993-2003

Services industries are also an important source of employment in the OECS sub-region. It is estimated that the tourism sector employs, both directly and indirectly, up to 40 percent of the regional labor force. Another 20 percent, approximately, is estimated to work in the public sector.10 Adding the other services sectors’ share of employment (for which data is largely unavailable) shows the overwhelming importance this area of trade has on employment in the sub-region. For example, in St. Lucia the share of employed persons working in services-related industries (including construction and utilities) was roughly 70 percent in 2003.

B. Trade Performance

OECS services trade has been characterized by slowing growth in exports and imports. The sub-region’s total services exports grew by an average 3.2 percent a year between 1993-2003; a moderate performance, yet relatively weak compared to CARICOM as a whole (4.6 percent) and to all less developed countries (6 percent). Services exports grew fastest in the first versus the second half of the decade, posting growth rates of 5.9 percent and 0.6 percent, respectively. As Figure 3.2 shows, total services exports peaked in 1999 reaching US$ 1.24 billion, however, they contracted over the next three years, and despite growth of 10 percent in 2003 have failed to reach their 1999 level. Total services imports demonstrated a similar pattern of growth – expanding at an average 8.2 percent a year between 1993-1998 and 0.8 percent a year between 1998-2003.

All OECS member states experienced similar trends in growth, with faster growth in the first half of the decade relative to the second half. The poor performance between 1998-2003 can be

10 World Bank (2005).

0%

20%

40%

60%

80%

100%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Shar

e of

tota

l .

Travel Commercial Transportation

Source: See Table 2 in the Statistical Appendix.

6

attributed to three countries: Dominica and Antigua & Barbuda displayed contractions in their total services exports of 1.9 and 0.4 percent a year, respectively; while St. Lucia’s growth was stagnant (0.5 percent). In terms of total services imports, Grenada experienced the fastest growth relative to other OECS member states (7.4 percent a year), while Dominica displayed the slowest growth at an average 2.1 percent a year.

Figure 3.2 OECS: Services Trade, 1993-2003

Similar to total services exports, OECS travel exports displayed moderate 3 percent growth a year between 1993-2003. This growth was comparable to CARICOM as a whole (3.9 percent), but much weaker than some regional tourism competitors such as the Dominican Republic (9.8 percent a year). Travel receipts grew every year since 1995, with the exception of 2001-2002 as a result of weakening tourism demand worldwide. This sector’s exports grew fastest in Dominica and St. Vincent & the Grenadines (over 6 percent a year for both), and remained stagnant in Antigua & Barbuda and St. Kitts & Nevis. St. Lucia’s travel receipts grew at an average 10 percent a year up to 1998, but have since remained stagnant.

The second most important area, commercial services, was the fastest growing sector in the OECS services export portfolio. Between 1993-2003, commercial services receipts grew by 4.5 percent a year. However, this was the result of a strong performance in the first half of the decade (annual 15 percent growth) rather than the second half, where the sector actually contracted by almost 5 percent a year. The poor performance is due to slumping financial and insurance services receipts – as the two sectors, together, have contracted by roughly one-third (in absolute terms). OECS transportation services exports have maintained average growth of 3 percent a year. Grenada’s transportation receipts (both air and maritime) have performed the best relative to other OECS member states, growing at 18 percent a year since 1998.

The performance of OECS services sectors can also be measured through trends in global services market share. The OECS’s share of global services trade has declined in recent years, from 0.09 percent in 1993 to 0.07 percent in 2003. In travel services, the OECS global market share has been volatile and displayed a downward trend – from a high mark of 0.22 percent in 1994 to a minimum of 0.17 percent in 2002. The OECS share in global transportation services imports is slightly down over the last decade, while the sub-region has lost approximately one-third of its share of commercial services over the same period.

300

500

700

900

1,100

1,300

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

US$

Mill

ions

Exports

Imports

Source: See Tables 2-4 in the Statistical Appendix.

7

C. Travel Services – measuring tourism’s competitiveness

To measure the competitiveness of the OECS’s tourism product, this report analyzes a variety of traditional and non-traditional indicators. Traditional measures of tourism performance and competitiveness include tourism arrivals (both stopover and cruise passenger visitors), tourism earnings, and the real effective exchange rate. Non-traditional indicators include the World Travel & Tourism Council’s competitiveness monitor and the tourism satellite account. It is important to note that while this section focuses on the tourism sector, there are other sectors within travel services with significant potential for growth such as offshore education and health-related services.11

(i) Tourism arrivals – stopover visitors and cruise ship passengers

OECS total tourism arrivals have grown at 3.5 percent a year between 1993 and 2003. Tourism arrivals grew strongly in the first half of the period (over 7 percent growth). Growth over the next five-year period was relatively stagnant with arrivals contracting, on average, 0.1 percent a year. There are two main categories of tourism arrivals: (i) stopover tourists, whose arrivals have increased by 2 percent a year; and (ii) cruise passengers, whose arrivals have grown by almost 5 percent a year. Given this performance, stopovers now represent a smaller share of total arrivals in the OECS from a decade earlier (from a 43 to a 38 percent share).

The consumer market structure of the OECS tourism industry is relatively diversified. Between 1998-2003, 31 percent of stopover arrivals came from Europe, another 30 percent from the United States, 27 percent from the Caribbean and 13 percent from other countries. Intra-regional stopover arrivals have displayed the strongest growth performance, increasing by an average 5.2 percent a year over the last decade, versus growth of 2 percent and 1 percent a year in European and American stopover visitors, respectively. The increasing importance of the Caribbean as a consumer market for OECS tourism is, in part, the result of increasing popularity of cultural tourism within the region (i.e. music festivals, carnivals, holiday celebrations). There is potential for additional growth of Caribbean tourist visitors if the region can address some existing constraints such as weak intra-regional transport links (see Figure 3.3 below).

To measure the OECS tourism industry’s competitiveness one can also analyze trends in its market share of total Caribbean stopover and cruise passenger arrivals. The OECS share of total stopover arrivals to the Caribbean has remained relatively stable at 5 percent between 1993-2003. While this share has not increased over time, the sub-region did display relatively strong growth of 2 percent a year since 1998 (second fastest growth among Caribbean regional groupings, behind the Hispanic Caribbean destinations).12 As a result, the Hispanic Caribbean has increased its share of total visitor arrivals to the region from 28 percent to 37 percent a decade later.

11 For more detailed information on offshore education and health-related services see World Bank (2005). 12 Regional groupings include: OECS, Other CARCIOM (non-OECS), Other Commonwealth (Anguilla, BVI, Bermuda, Cayman Islands and Turks & Caicos Islands), Hispanic Caribbean (Cancun and Cozumel-Mexico, Cuba and the Dominican Republic), Dutch Caribbean (Aruba, Bonaire, Curacao, Saba, St. Eustatius, St. Maarten), French Caribbean (Guadeloupe and Martinique), and US Territories (Puerto Rico and USVI).

8

Figure 3.3 OECS Stopover Arrivals by Origin, 1993-2003

A closer look at stopover arrivals to the Caribbean by consumer market (or origin) yields similar results. The OECS share of all US stopover arrivals to the Caribbean has decreased slightly from 2.8 percent in 1993-1998 to 2.5 percent in 1998-2003, given that increasing numbers of American tourists are now heading to Hispanic Caribbean destinations. Similarly, the OECS share of European visitors to the region has dropped from 6.3 to 5.4 percent. In this case, the Hispanic Caribbean’s market share has grown by 8 percentage points to capture almost 50 percent of European visitors. The OECS sub-region has performed best in capturing intra-regional visitors – it has increased this share by almost 1 percentage point to receive one-fifth of all intra-regional stopover arrivals.

In the Caribbean cruise ship market, the OECS has consistently held a 10 percent market share of arrivals. This has been the result of a strong performance in the mid 1990s, when arrivals grew an average 11 percent a year. However, this performance has been much weaker in recent years – cruise passenger arrivals contracted 1.4 percent a year between 1998-2003. In contrast, other Commonwealth and Hispanic Caribbean destinations have displayed growth of over 10 percent a year during the same period. The Hispanic Caribbean, alone, has more than doubled its share of the cruise passenger market to 18 percent (mainly due to Cozumel’s increasing popularity as a cruise destination). See Tables 5-7 in the Statistical Appendix for more detailed information on Caribbean tourism arrivals.

(ii) Tourism visitor expenditures

Visitor expenditures in the OECS grew at an average 3.4 percent a year since 1993 to reach almost US$ 1 billion in 2003. This was a relatively weak performance given growth of 4 percent for non-OECS CARICOM countries, 4.5 percent for US territories and 7 percent for Hispanic Caribbean destinations. As a result, the OECS share of total visitor expenditures in the Caribbean declined by one-half a percentage point to 4.8 percent. Given that the OECS accounts for a 4.4 percent share of tourism visitors, spending per visitor in the OECS is higher relative to other Caribbean destinations.

100

150

200

250

300

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Vis

itors

('00

0)

United States Europe Caribbean


9

Visitor expenditures in Grenada displayed the strongest growth (almost 14 percent a year), while expenditures in Antigua & Barbuda and St. Kitts & Nevis displayed the weakest performance (both at an average 0.8 percent a year between 1993-2003). The growth in expenditures in Hispanic Caribbean destinations was driven by Cozumel, Cuba and the Dominican Republic, increasing by an average 17, 11 and 9 percent a year, respectively.

There is potential for the OECS to boost tourism expenditures from a variety of sources. First, while cruise ship passengers account for 60 percent of arrivals, they represent less than 10 percent of tourism earnings. It is important that the OECS look into strategies to increase the foreign exchange spent on-shore by cruise passengers on transportation, tour guide, retail sales and entertainment services. Second, the yachting sector is another area of potential growth for tourism earnings. While not yet systematically incorporated in the measurement of tourism expenditures, the yachting sector is a maturing segment with estimated earnings of more than US$ 75 million a year. Some of the sector’s development constraints that should be addressed include a general lack of awareness of yachting’s economic impact, little formal training in yachting-related skills, poor inter-island collaboration and no private sector organization.13

(iii) Price competitiveness

Analysis of the OECS’s price competitiveness of its tourism product yields mixed results. At the macroeconomic level, the real effective exchange rate (REER) is used to: first, analyze trends in a country or region’s international price competitiveness over time, and second, compare these trends with trade partners and competitors. To measure the competitiveness of tourism, the IMF constructs a REER based on tourism customers. IMF calculations of this real exchange rate for the OECS region show a relatively stable trend between 1990 and 2003 (see Figure 3.4). Perhaps the most noticeable change has been sustained depreciation in 2002 and 2003; and while largely on the basis of a depreciating US dollar, this trend has improved the sub-region’s tourism price competitiveness in its major export markets. However, similar trends in the sub-region’s main tourism competitors (such as the Dominican Republic) have also weakened the relative competitiveness of the OECS tourism product.14

Figure 3.4 OECS: Real Exchange Rate (Tourism-based), 1990-2003

13 UN-ECLAC (2004). 14 For more information on the tourism-based REER see IMF (2004a).

95

100

105

110

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

REE

R In

dex

Note: 1990 = 100; decrease = depreciation. Source: IMF (2004a).

10

At the firm level, price competitiveness can be measured through production costs, which are a reflection of the allocation of resources and cost of inputs within an economy. IMF calculations indicate that prices of tourism products in the OECS tend to be among the highest in the Caribbean. This trend is most visible in high food and accommodation prices, which are the direct result of high labor and utility costs. A strategy to pursue the high-end tourism market and offer a differentiated product is a valid one; however, there is evidence that the OECS tourism product is not that different from other lower-cost Caribbean destinations. Hence, the sub-region may be pricing itself out of the market and suffering a loss in price competitiveness.15 For more on cost structures in the OECS, see Chapter V of this report.

(iv) Tourism competitiveness monitor

The tourism competitiveness monitor is an indicator calculated by the World Travel & Tourism Council that ranks over 200 countries on the basis of seven indices of competitiveness.16 As Table 3.1 shows, in 2004, the OECS ranks very low in price competitiveness. Only one member state, Dominica, ranks among the top 100 countries in price competitiveness of its tourism product. Also, relative to other Caribbean tourism destinations, the OECS ranks relatively poorly in the human resources index. This is a worrying trend for the OECS given the importance of human resources – in terms of skills, training and customer service – as a key input to the tourism industry.

The OECS performed well in the infrastructure and social indicators. Grenada, St. Vincent & the Grenadines and St. Kitts & Nevis all rank in the top 16 countries in terms of infrastructure; all OECS member states are among the top 54 countries in the social indicator. At the same time, the Hispanic Caribbean does not display high marks in the social area. Other CARICOM countries (The Bahamas, Barbados, Jamaica and Trinidad & Tobago) displayed high rankings in the technology, human resources and openness.

Among OECS member states, St. Kitts & Nevis had the highest overall tourism competitiveness index, pointing to the relatively high potential to further develop its tourism product. While Dominica displayed a high mark in price competitiveness, it had the lowest overall index due to poor values in environment, human resources and openness. It is important to note that these rankings should not be interpreted strictly, but rather as indications of the general areas where individual member states, and the OECS as a whole, appear to require additional resources to improve its tourism product’s competitiveness.

15 IMF (2003a, 2004a). 16 The indices are related to the tourism industry: Price Competitiveness is based on hotel prices, power purchasing parity, and taxes on goods and services; Infrastructure is based on roads, railways, and access to sanitation and drinking water; Environment is based on population density, CO2 emissions, and environmental treaties; Technology is based on internet hosts, telephone mainlines, high-technology exports, and mobile phones; Human Resources is based on life expectancy, adult literacy, school enrolment, urban population, gender indicators, and various travel and tourism-related employment statistics; Openness is based on visa requirements, trade openness, and international taxes; and Social is based on the human development index, daily newspapers, personal computers, television sets, and crime. For more detailed information on the tourism competitiveness monitor visit http://wttc.org.

11

Table 3.1 Tourism Competitiveness Monitor, 2004

(v) The tourism satellite account

A satellite account is a statistical methodology to measure the impact of economic sectors that are not defined as “specific industries” in a country’s national accounts. Using a satellite account to measure tourism is beneficial because a variety of sectors and industries (transportation, hotel, food and beverage, etc) contribute to create one tourism product. Since tourism does not supply one homogenous product, the tourism satellite account (TSA) is calculated from the demand-side of economic activity. The TSA allows for comparisons between countries and sectors, a valuable tool for policymakers in the OECS in order to understand the economic and social impacts of tourism in their countries. The World Travel & Tourism Council published the first Caribbean tourism satellite account report in 2004.17

Travel and tourism consumption is an aggregate demand-side indicator that measures the value of consumption of tourism-related goods and services by and on behalf of visitors in a resident economy.18 Between 1993-2003, travel and tourism consumption in the OECS grew, on average, by 1.6 percent a year, compared to 5.0 percent growth for the Caribbean as a whole. As a result, the OECS has gone from a 5.9 percent share of Caribbean travel and tourism consumption in 1993, to 4.2 percent a decade later. Consumption increased fastest in Grenada (5.5 percent a

17 For TSA data see WTTC (2004). 18 Travel and tourism consumption is made up of four demand-side accounts: personal travel & tourism (personal spending by an economy’s resident’s on tourism); business travel (public and private sector spending goods and services during business travel); government expenditures (expenditures by government agencies to provide tourism services to visitors); and visitor exports (expenditures by international visitors on goods and services in a resident economy).

TourismIndex

Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Index Rank Avg.Antigua & Barbuda 6 (118) … … 57 (73) 90 (45) 44 (99) 86 (5) 69 (38) 59Dominica 37 (84) … … 40 (131) 67 (76) 37 (106) 47 (101) 65 (51) 49Grenada … … 81 (6) 48 (95) 62 (82) 55 (82) 48 (96) 69 (41) 61St. Kitts & Nevis 5 (120) 73 (16) 66 (49) 70 (68) 96 (9) 70 (44) 69 (37) 64St. Lucia 12 (112) … … 65 (51) 60 (83) 63 (61) 59 (73) 74 (28) 56St. Vincent & Grens … … 79 (8) 47 (98) 54 (90) 39 (105) 67 (56) 64 (54) 58OECS Avg. 15 78 54 67 56 63 68

The Bahamas … … 69 (27) 51 (91) 77 (59) 63 (61) 72 (37) 58 (69) 65Barbados 27 (98) 87 (3) 43 (121) 79 (56) 84 (25) 73 (33) 67 (44) 66Jamaica 18 (109) 63 (39) 19 (164) 72 (64) 51 (90) 79 (17) 64 (52) 52Trinidad & Tobago 19 (108) 69 (24) 16 (170) 66 (78) 60 (66) 52 (92) 67 (43) 50Other CARICOM 21 72 32 74 65 69 64

Costa Rica 55 (56) 72 (17) 55 (83) 77 (58) 60 (66) 52 (91) 54 (79) 61Cuba … … 63 (40) 41 (130) 57 (87) 72 (43) … … 60 (63) 59Dominican Rep. 58 (51) 54 (57) 42 (127) 42 (106) 49 (96) 63 (65) 42 (107) 50Puerto Rico … … … … 88 (9) 85 (50) … … 47 (102) … … …Hispanic Carib. 57 63 57 65 60 54 52

Source: WTTC Competitiveness Monitor (2004).

Comp.Price

structureInfra- Environ-

ment nologyTech-

SocialResourcesHuman Open-

ness

12

year); it contracted in St. Kitts & Nevis and remained stagnant in Antigua & Barbuda (-0.5 and 0.1 percent growth a year, respectively) over the same period.

A closer look at the external component of travel and tourism consumption (visitor exports, or spending by international visitors on goods and services) yields similar results. Visitor exports account for a majority of tourism consumption in the OECS. Between 1993-2003, OECS travel and tourism exports were relatively stagnant, posting growth of just 0.5 percent a year versus 4.5 percent in the Caribbean. Grenada’s and St. Vincent & the Grenadines’s exports grew at 4.7 and 4.3 percent a year, respectively; this rate was -2.4 percent a year for St. Kitts & Nevis.

The competitiveness of tourism can also be evaluated through capital investment, a TSA concept that captures investment by the private and public sector in tourism-related facilities, equipment and infrastructure. Capital investment in travel and tourism in the OECS increased by almost 5 percent a year to reach US$ 390 million in 2003; compared to growth of 7 percent a year in the Caribbean as a whole (US$ 6.7 billion in 2003). Travel and tourism capital investment has displayed strong growth in Antigua & Barbuda, Grenada, St. Kitts & Nevis and St. Vincent & the Grenadines (growth of over 5 percent a year over the last decade). However, investment in Dominica and St. Lucia has decreased over the same period, a poor sign for the development and maintenance of the tourism infrastructure in these countries.

The TSA methodology uses the demand-side aggregates to construct supply-side accounts. One such account is travel and tourism GDP, measuring the direct and indirect value-added of travel and tourism to the resident economy. Consistent with the results from the demand-side data, the OECS’s performance in travel and tourism GDP has been weak (relative to the Caribbean as a whole) and worsening (tourism GDP increased 2.4 percent a year between 1993-2000 and decreased 0.7 percent annually over the next three years). Hence, it is crucial that OECS member states address the constraints that are weakening their tourism competitiveness and affecting economic output. This is particularly important for countries that rely heavily on tourism for economic activity. In Antigua & Barbuda, over 85 percent of its GDP is tourism-related; this figure is almost 50 percent in St. Lucia. For more detailed data on the OECS tourism satellite account see Table 8 in the Statistical Appendix.

D. Commercial and Transportation Services

Commercial services are the fastest growing sector in the OECS services export structure. Antigua & Barbuda, Grenada and St. Vincent & the Grenadines account for roughly two-thirds of total OECS commercial services; while Dominica, St. Kitts & Nevis and St. Lucia make up one-third of the total. A breakdown by category (or sub-sector) shows that insurance and financial services exports each account for roughly a 15 percent share of total commercial services; “other business” services makes up the remaining 70 percent. Due to a lack of detailed data it is difficult to analyze the “other business” services sub-sector.

OECS insurance services exports are characterized by strong growth in the mid 1990s (22 percent growth a year) and a strong contraction over the last five years (-8 percent a year). Antigua & Barbuda accounts for most trade in the sub-regional insurance services sub-sector, characterized by a relatively large reinsurance sector. The decline in receipts could be attributed

13

to the departure or downsizing of many reinsurance brokers in Antigua due to increasing severe weather activity across the Caribbean.19

Similar to the performance of insurance services, OECS financial services exports have demonstrated strong growth between 1993-1998, but have declined in subsequent years. St. Vincent & the Grenadines dominates sub-regional financial services, accounting for roughly half of all OECS financial services receipts. The decline throughout the OECS is, in part, the result of increased scrutiny by the OECD and other international actors to curb harmful international tax practices. This scrutiny has enhanced supervision and regulation throughout the OECS offshore financial sector and prompted a general decline in size, and therefore earnings, of the sub-sector. For example, in 2001, St. Vincent & the Grenadines had 44 offshore banks; this number stood at 11 in late 2003.20

As mentioned earlier, OECS transportation services exports have increased at a moderate and consistent pace over the last ten years. This growth has been driven by Antigua & Barbuda – its exports of transportation services account for roughly 60 percent of the OECS total. The other member states each make up between a 5 and 10 percent share of OECS transportation exports. A breakdown by category shows that air transport services make up the majority of total transportation services receipts (a 66 percent share), while maritime services receipts make up the rest.

Air transport services exports represent primarily the foreign exchange earnings (passenger fares) of the sub-regional airline, LIAT, based out of Antigua. LIAT is partly owned by the governments of some OECS member states and Trinidad & Tobago. While the airline’s operations provide an important share of total transportation services earnings and help diversify services exports outside of the tourism sector, the airline’s efficiency and competitiveness have been in question. LIAT has suffered from financial and operational troubles in recent years. A failed privatization in 1995 has led to financial injections of US$ 36 million by Caribbean governments. Also, efforts to secure regional routes and air access for LIAT have been costly and, so far, have failed to provide reliable and low-cost supply within the sub-region.21

Maritime transport services account for roughly one-third of OECS transportation services. In recent years, growth in maritime transport services has remained relatively stagnant, with foreign exchange earnings registered at around US$ 40 million a year. Each OECS member state accounts for an equal share of the regional total, and is probably attributed to port handling and maintenance fees in the islands’ shipping and cruise ship port operations. A lack of detailed data for this sub-sector limits the scope of analysis. More research is needed to understand the impact and performance of commercial (i.e. insurance and financial) and transportation services sectors on member states and the regional economy.

19 WTO (2001). 20 IMF (2005c). 21 World Bank (2005).

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E. The Provision of Services via Modes 3 and 4

The provision of services by a foreign company through its commercial presence in a resident economy (Mode 3) is another mode of supply for services. While the WTO has developed a statistical tool (the Foreign Affiliates Trade in Services or FATS) to measure Mode 3 trade, few countries currently report this data. As a result, the use of foreign direct investment statistics, particularly those inflows and outflows in services-related industries, is considered an acceptable proxy for measurement.

Foreign direct investment into the OECS sub-region targets mostly services-related industries. Between 1997 and 2003, FDI into the tourism sector averaged US$ 150 million a year, while investment into manufacturing, agriculture and fuels (together) averaged just US$ 5 million a year. Other services sectors such as retail, financial, insurance, education and construction (together) received on average US$ 11 million over the same period. FDI inflows targeting the OECS tourism industry focused on St. Lucia and St. Vincent & the Grenadines in the late 1990s, and on St. Kitts & Nevis and Grenada between 2000-2003 (see Figure 3.5).

Figure 3.5 FDI Inflows into Tourism Sectors, 1997-2003

Analysis of the sub-region’s total FDI inflows, into both services and non-services sectors, shows a volatile and overall stagnant performance over the last decade. In the OECS, FDI as a percentage of GDP fluctuated from 8 percent in the mid 1990s, up to 11 percent in the late 1990s, and 9 percent between 2000-2003. St. Kitts & Nevis displayed a strong performance in attracting FDI inflows – more than doubling its ratio to 23 percent of GDP.

The OECS sub-region’s share of total FDI into CARICOM demonstrates similar trends. In 1998, the OECS accounted for 17 percent of inflows into CARICOM, this share declined to 13 percent in 2001, and then rose to 16 percent in 2003. This volatility in FDI shares is expected given the “lumpiness” of foreign investment, particularly in the tourism sector. At the same time, FDI

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inflows relative to all developing countries have remained stagnant and maintained a share of 0.13 percent over the last decade.

Foreign direct investment is an important source of foreign exchange for OECS member to maintain healthy balance of payments and to boost growth and development. Given this, and the relatively stagnant growth in FDI inflows in recent years, it is important for the OECS to focus on a strategy to improve its investment climate. A recent survey of Grenada’s investment climate highlighted a number of constraints to attracting FDI, including high costs of doing business, inefficient transport operations and the high cost of capital.22 These bottlenecks appear to be relevant for the OECS sub-region as a whole (for more information see Chapter V).

Furthermore, the OECS’s wide use of incentives to attract foreign direct investment appears to be a liability. First, the benefits of investment incentives such as corporate income tax holidays and concessions on import-related taxes appear limited. While investment incentives have increased in recent years, the sub-region’s FDI performance has not improved. Second, the costs of investment incentives appear significant. It is estimated that the annual foregone fiscal revenue from tax concessions is approximately 9.5 to 16 percent of GDP.23 In addressing the overall constraints to an improved investment climate, the OECS should pursue a regional framework (preferably with all CARICOM partners) for investment incentives to avoid the current competition that is yielding marginal benefits.

The provision of services by foreign national persons who enter a resident economy on a temporary basis is the fourth and final mode of supply of services. Measurement of Mode 4 trade also suffers from a general lack of statistics. The value of trade via Mode 4 can be estimated, imprecisely, through the balance of payments (namely through compensation of employees and worker remittances) and other migration statistics.24

Analysis of Mode 4 using these proxies suggests that this mode of supply is an important source of foreign exchange for the region. First, the Caribbean as a whole, has the highest emigration rates in the world with roughly 12 percent of its labor force emigrating to industrialized countries, and it is the largest recipient of worker remittances in the world (more than 10 percent of GDP in 2002). Second, total remittances are a relatively large source of foreign exchange in the OECS. For example, Grenada, St. Kitts & Nevis, Dominica and St. Vincent & the Grenadines are among the top 30 countries in terms of total remittances as a percent of GDP.25 However, questions remain regarding the benefits of remittances versus the costs of emigration. More research in this area is necessary to understand the precise implications of Mode 4 trade for the OECS member states.

22 FIAS (2004). 23 IMF (2005a). 24 Compensation of employees captures compensation to individuals working abroad for less than one year. Workers remittances capture transfers from abroad by individuals working for more than one year. It is important to note that these proxies both under- and over-estimate Mode 4 trade, since they do not distinguish between workers in services or non-services related sectors, and do not measure those flows through unofficial channels. See World Bank (2004). 25 IMF (2005a).

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F. Evaluating Services Trade

This analysis of OECS services trade yields a number of interesting observations and conclusions:

• Services sectors are extremely important for OECS economies, as they accounted for 80 percent of the total exports while providing jobs for approximately two-thirds of the regional labor force. OECS travel (tourism) services receipts, alone, accounted for 75 percent of total services exports and represented three times the value of all merchandise exports in 2003.

• The OECS has been characterized by slowing growth of services exports, which has translated into a general loss of market share in global services. Travel services receipts have displayed volatility with a general downward trend (behind poor growth performances by Antigua & Barbuda, St. Kitts & Nevis and St. Lucia). At the same time, OECS commercial services exports have lost significant global market share (resulting from poor growth performances by Antigua & Barbuda, Dominica and Grenada).

• The OECS has performed moderately in terms of growth of tourism arrivals, and has lost some competitiveness in the US and European markets at the expense of Hispanic Caribbean destinations. However, the sub-region has become more competitive in attracting intra-regional tourists – it now captures one-fifth of all Caribbean visitors.

• Analysis of the OECS tourism product’s price competitiveness yields mixed results. At the macroeconomic level, it appears to have gained competitiveness in the main consumer markets from a depreciating United States dollar. At the firm level, high cost structures appear to be pricing the OECS out of the market, particularly relative to some of the low-cost tourism destinations in the Hispanic Caribbean.

• Tourism-related output has been weak and worsening. Tourism GDP increased 2.4 percent a year between 1993-2000 and decreased 0.7 percent annually over the next three years. OECS member states, particularly those that rely heavily on tourism for economic activity, should address the constraints that are weakening their tourism competitiveness and affecting economic output. Policy measures could focus on improving the region’s cost structures and price competitiveness, and increasing visitor arrivals through the development of transport links (i.e. airlift capacity).

• Diversification at various levels of the services sector can help boost export sales. For example, economies can diversify within tourism services by tapping potential sources of earnings such as on-shore cruise passenger expenditures and the yachting sector; diversify within travel services by focusing on promising sectors such as education and health-related travel; and diversify within services, in general, into potentially competitive areas such as ICT-based services (i.e. internet gaming) and other business services.

• Trade in services via Modes 3 and 4 are important sources of foreign exchange for the OECS countries. A majority of foreign direct investment is targeted at the tourism sector, while total remittances (relative to GDP) into Grenada, St. Kitts & Nevis, Dominica and St. Vincent &

17

the Grenadines are among the highest in the world. More research is needed in these areas to understand the full impact and potential of this trade to OECS economies.

In the next chapter, the report focuses on the trade performance and competitiveness of the merchandise sector.

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IV. MERCHANDISE TRADE

In the OECS, goods make up 20 percent of total exports and 70 percent of total imports. Between 2000 and 2002, the OECS imported four times as many goods (in value terms) than it exported, up from approximately 2.5 times a decade earlier. Merchandise exports are relatively more important as a source of foreign exchange in St. Kitts & Nevis and Dominica (42 and 37 percent of total exports, respectively), and a less important source for Antigua & Barbuda (9 percent). This chapter looks at the merchandise trade performance of the OECS sub-region and individual member states, and attempts to evaluate their export competitiveness, specialization and trade complementarity.

A. Trade Performance

(i) Growth and patterns in the direction of trade

In the last decade, OECS merchandise trade has been characterized by relatively stagnant exports and rising imports. Between 1993 and 2003, total exports contracted by an annual average of 1.2 percent to reach US$ 320 million in 2003 (see Figure 4.1). Goods destined to non-OECS CARICOM partners grew the fastest (6.5 percent a year), while exports to the EU displayed the worst performance – declining by an annual average of 6 percent since 1993.26 Exports to the United States and Canada displayed poor growth in the first half of the decade (-4.4 percent), but recovered strongly with growth of almost 10 percent a year.

Figure 4.1 OECS: Merchandise Trade, 1993-2003

While the sub-region’s overall merchandise export performance was relatively weak, some member states performed better than others. Grenada and St. Kitts & Nevis displayed relatively

26 Note that in the direction of trade section, the category “non-OECS CARICOM partners” includes The Bahamas, Barbados, Belize, Guyana, Haiti, Jamaica, Suriname and Trinidad & Tobago. In all other cases, trade with “CARICOM” refers to all 15 member states.

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robust growth of 6.7 and 5.9 percent a year, respectively, while the other OECS member states all saw their total goods exports decline during this period. At the same time, the impressive growth of exports to non-OECS CARICOM members was the result of strong performances by St. Lucia and Dominica (11.6 and 7.9 percent growth to that destination, respectively).

The OECS relies on markets that grant it preferential access as its major export destinations. CARICOM, the EU, and the Unites States and Canada account for an 88 percent share of OECS goods exports. As Figure 4.2 shows, CARICOM is the most important destination accounting for over one-third of exports (the OECS sub-region holds a 14 percent share, while other CARICOM partners have increased their share markedly to almost 20 percent). The EU accounts for another third, however, this mark has declined by almost 10 percentage points. The United States and Canada hold a 25 percent share of OECS goods exports, up from 21 percent a decade earlier. The remaining goods are destined to Latin America (3 percent share) and other countries (9 percent).

Figure 4.2 OECS Merchandise Exports by Destination, 1993-2003

The OECS, as a sub-region, has increased the share of merchandise exports destined for CARICOM relative to extra-regional partners. Between 1993-1998, CARICOM accounted for 26 percent of exports; this share rose to 31 percent in the period 1998-2003. A closer look at intra-regional trade flows shows that the OECS relies mainly on Trinidad & Tobago, Barbados and Jamaica as destinations for its goods. Exports to Trinidad & Tobago have shown relatively strong growth since 1998, with average growth of 13 percent a year to reach a one-quarter share of the total. It is also important to note that since 1993, exports to Belize and Suriname have displayed the fastest growth (although from a low base), evidence of growing trade links between the sub-region and these two CARICOM partners. For the OECS, its sub-regional partners account for 40 percent of intra-regional exports, with Antigua & Barbuda and St. Lucia each accounting for a 10 percent share of sales.

During the period 1993-2003, OECS goods imports grew at an annual average of 6.2 percent to reach US$ 1.7 billion. The region’s total imports displayed stronger growth in the first half of the decade (over 9 percent a year) than in the second half (3.3 percent a year). Imports from Latin

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America and non-OECS CARICOM partners displayed the fastest growth of 11 and 6.5 percent a year, respectively. Imports between OECS member states demonstrated a relatively slow rate of growth (1.6 percent a year) over the last decade. Imports grew fastest in Antigua & Barbuda (12 percent a year), while St. Lucia displayed relatively slow growth (3 percent).

The most important source of goods for the OECS is the United States and Canada – sourcing 40 percent of imports, although this share has declined in recent years. Another 30 percent of imports arrive from the European Union; this share has increased by roughly 5 percentage points from the first half of the decade. Non-OECS CARICOM members account for another 15 percent, while the OECS sub-region holds a 3 percent share. Latin America and other countries source 4 percent and 10 percent of OECS goods imports, respectively.

CARICOM is responsible for a small and decreasing share of imports into the OECS – currently 17 percent, down from 20 percent a decade earlier. The goods sourced from the CARICOM region come predominantly from Trinidad & Tobago. Roughly 64 percent of the OECS’s intra-regional imports come from Trinidad, up from a 58 percent share in the first half of the decade. Trinidad & Tobago accounts for at least a 60 percent share of intra-regional imports of Grenada, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines. Barbados is the source of 14 percent of intra-regional imports, while Guyana, Jamaica, St. Vincent & the Grenadines, Dominica, St. Lucia and Grenada each hold another 3-5 percent share. For more information see Tables 10-12 in the Statistical Appendix.

(ii) Composition of trade by sectors

Analysis of the composition of trade by sectors shows a changing trend in the export structure of OECS member states. During the period 1993-1995, 58 percent of OECS exports were food products, and 41 percent were manufactures. Over the next decade, manufactured exports grew by almost 3 percent a year, driven by sales of electrical machinery, telecommunications equipment, boats and floating structures and cosmetics; while the food sector contracted by almost 6 percent a year (from US$ 177 million to just over US$ 100 million in 2003). As a result, food exports now make up a 37 percent share, and manufactured products 57 percent. The OECS did not export many fuel products during the 1990s, however, their share rose to 4 percent in 2002-2003 as a result of rising kerosene exports by St. Lucia.27 Exports of ores and metals, and raw agricultural materials are negligible and have remained stable at 0.8 and 0.3 percent, respectively (see Figure 4.3).

A breakdown of the composition of exports by destination shows that the OECS exports mostly manufactured goods to the United States and mostly food products to the European Union. Between 1993-2003, 86 percent of exports to the US were manufactures and 13 percent were food products. Conversely, 87 percent of exports to the EU were food products while 12 percent were manufactures. The share of food products in total exports to the EU has been declining steadily over the last decade, (from a 90 to 75 percent share) as a result of a weak performance in banana exports. OECS exports to CARICOM are relatively diversified, roughly half of exports

27 Anecdotal evidence suggests that these are re-exports, that is, products that are exported in the same state (no value-added) as they are imported.

21

are manufactures and another 40 percent are food products. Exports of fuels, ores and metals, and raw agricultural products are negligible for all OECS countries, with the exception of St. Lucia’s kerosene exports (or re-exports).

Figure 4.3 OECS: Sector Composition of Exports, 1993-2003

During 1993-2003, Dominica and Grenada demonstrate a relatively balanced export structure by sector, with food and manufactured products each accounting for half of merchandise exports. Manufactured exports by these two countries have, similarly to the overall OECS trend, increased their importance at the expense of food products. St. Kitts & Nevis displays a relatively manufacture-intensive export structure. On the other hand, St. Lucia and St. Vincent & the Grenadines are relatively food-intensive exporters.

The composition of OECS imports by sector shows that most goods coming into the region are manufactured products. Between 1993-2003, approximately 65 percent of total imports were manufactures, while another 25 percent share were food and raw agricultural products. The remaining imports were fuels (8 percent share) and ores and metals (1 percent share). All these shares have remained relatively stable over the last decade, with the exception food and raw agricultural products – they have declined slightly in importance at the expense of fuels. This could be the result of price effects (higher international fuel prices), rather than real changes in the quantity traded. Imports by individual OECS member states are characterized by similar trends, each country’s manufactured goods represent between 63 and 72 percent of imports.

Analysis of the composition of imports by destination also yields similar results. OECS imports from the US and the EU are predominantly manufactured products (72 and 70 percent, respectively). The remaining goods from the EU are mostly food products; from the United States they include food, raw agricultural and fuel products. Between 1993-2003, 45 percent of imports from CARICOM partners were manufactures, 30 percent were food products, and another 25 percent were fuels. It is important to note that the OECS imports almost three-quarters of its fuel needs from CARICOM member states (mostly Trinidad & Tobago).

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(iii) Export concentration and principal products

Analysis of the sub-region’s export structure shows an improvement in the concentration of products. Between 1993-1996, the top 20 products accounted for 70 percent of total exports; this share decreased to 66 percent in 2000-2003. The decline in concentration appears to be related to a decreasing dependence on bananas as a source of foreign exchange across the OECS. Furthermore, at the beginning of the decade, four products made up half of total exports; at the end of the decade, nine products covered this share. A breakdown of the top 20 exports to the world shows that nine are agricultural and food products, ten are manufactures and one is a fuel-related product (see Table 4.1).28

Table 4.1 OECS: Top 20 Products Exported to the World and CARICOM, 2000-2003

The export concentration of individual OECS member states varies significantly. Export structures are most concentrated (that is, the top 20 products account for the highest share of total exports) in St. Kitts & Nevis (91 percent) and Dominica (87 percent). Exports are least concentrated in Antigua & Barbuda (56 percent) and St. Lucia (75 percent). Another indicator to measure the relative concentration of exports is the Hirschman-Herfindahl Index (HHI).29

28 Note: seven of the ten manufactured exports and kerosene were not in the Top 20 at the beginning of the decade. 29 The Hirschmann-Herfindahl Index is a measure of product concentration. It is calculated as HHIj=Σi[(Xij/Xtj)^2], where Xij is export of product i by country j, and Xtj is the total exports of country j. The index runs from 0 to 1, with 1 indicating the greatest concentration.

World Share Acc. CARICOM Share Acc.Code Product Description (%) Share Code Product Description (%) Share0573 Bananas, fresh or dried 17.8 17.8 5541 Soap; organic surface-active product 11.2 11.27721 Elect's such as switches & relays 9.1 26.9 04601 Flour of wheat or of meslin 10.3 21.4

07524 Nutmeg, mace and cardamoms 5.1 32.0 1123 Beer made from malt 8.4 29.85541 Soap; organic surface-active product 4.5 36.5 5530 Perfumery, cosmetics, etc 7.3 37.2

04601 Flour of wheat or of meslin 3.6 40.1 33421 Kerosene 4.9 42.11123 Beer made from malt 3.0 43.1 0573 Bananas, fresh or dried 3.5 45.65530 Perfumery, cosmetics, etc 2.5 45.6 11102 Lemonade & flavoured waters 3.0 48.6

77884 Elect. capacitors & condensers 2.2 47.8 04221 Rice, semi/wholly milled 3.0 51.57599 Parts for office machines 2.2 50.0 05481 Manioc, arrowroot, salep 2.8 54.3

77323 Electrical insulators of ceramic 2.1 52.1 08199 Sweetened forage 2.5 56.80611 Sugars, beet and cane 1.9 54.0 7810 Passenger motor cars, for transport 2.3 59.1

33421 Kerosene 1.8 55.8 64243 Toilet paper in rolls 2.2 61.405481 Manioc, arrowroot, salep 1.6 57.4 53342 Other paints & enamels 2.1 63.579321 Yachts & other vessels for pleasure 1.6 59.0 5542 Organic surface-active agents, n.e.s. 1.8 65.47810 Passenger motor cars, for transport 1.3 60.2 59141 Disinfectants packed for sale 1.8 67.2

11102 Lemonade & flavoured waters 1.2 61.5 67491 Other sheets & plates 1.8 69.07643 Radiotelegraphic & radiotelephonic 1.2 62.7 05797 Avocados, mangoes, guavas 1.4 70.4

04221 Rice, semi/wholly milled 1.2 63.8 04212 Rice, husked 1.1 71.57723 Resistors, fixed or variable 1.1 64.9 72346 Other excavating & extracting eq't 0.8 72.4

08199 Sweetened forage 0.9 65.8 81242 Lamps & lighting fittings 0.8 73.2Top 20 Exports 65.8 Top 20 Exports 73.2Total (1,077 products) 100.0 Total (627 products) 100.0

Source: Author using UN-COMTRADE.

23

Calculations of the HHI for OECS member states yield similar results, namely that St. Kitts & Nevis and Dominica enjoy the most concentrated export structures (HHI of 0.26 and 0.19, respectively); while St. Lucia is the least concentrated with an HHI of 0.09. Product diversification can also be measured using a proxy – the total number of product lines exported in a given time period. Grenada shows the greatest diversification over the last decade, from exporting 414 different products during 1993-1996 to almost 500 products a decade later. St. Kitts & Nevis is characterized by less diversification, exporting 694 products at the beginning of the decade, versus just 570 products in 2000-2003.

The OECS export structure to CARICOM is more concentrated than to the world, and the concentration is increasing. The top 20 products account for 73 percent of intra-regional merchandise exports, up from a 69 percent share during the period 1993-1996. This is also the case in individual member states, as a few products dominate intra-regional export structures. In Dominica, the top five exports are chemical products such as soap and disinfectants. Together, these five products represent almost 80 percent of Dominica’s intra-regional exports. Grenada’s intra-regional exports are dominated by one product (flour of wheat), while in St. Kitts & Nevis this is the case with lemonade, flavored waters and margarine. In both countries, these products make up one-third of intra-regional merchandise exports. In St. Lucia, two products (beer and kerosene) account for half of intra-regional exports, while in St. Vincent & the Grenadines this share is held by five food products (flour of wheat, rice, manioc, bananas and flavored waters). For more on the principal products exported to the world and the region see Tables 14-15 in the Statistical Appendix.

While concentrated at the product level, OECS intra-regional exports show a relatively balanced structure by technology content.30 In 2002 (the latest year for which data was available), roughly 30 percent of intra-regional exports were resource-based manufactures, another 30 percent were medium-technology manufactures, 25 percent were primary products, and the rest were low-technology manufactures. The share of medium-technology manufactures in total intra-regional exports has increased by seven percentage points since 1993, mainly due to growth of soap and other chemical exports by Dominica. It is interesting to note that almost one-third of OECS exports to CARICOM partners are high- and medium-technology manufactures; this share is 20 percent for Barbados, 16 percent for Jamaica and 5 percent for Trinidad & Tobago.

B. Competitiveness, Specialization and Complementarity

In this section, measures of international competitiveness, export specialization and trade complementarity are presented through a variety of indicators. For consistency, all the indicators (except the real effective exchange rate) are calculated at the SITC Revision 2 three-digit level of aggregation.31

30 See Lall (2000) for more detailed information on the classification of exports by technology content. 31 One caveat to using such a high level of aggregation is that it can mask specific product performances. However, in the case of the OECS, its export structure is characterized by three-digit sectors dominated by one or few products.

24

(i) Real effective exchange rate

As mentioned in the previous chapter, the real effective exchange rate (REER) is a measure of international price competitiveness. To measure the competitiveness of merchandise trade, the IMF constructs a REER based on consumer prices and weights of unit prices of exports and imports. Figure 4.4 displays this REER for the OECS, and shows a sustained appreciation through the 1990s (with a slight correction between 1993-1995) that resulted in a general loss of price competitiveness in merchandise trade during this period. Between 2001 and 2003, the REER depreciated approximately six percent a year, driven largely by the depreciation of the US dollar, providing an improvement in the international price competitiveness of the sub-region.

Figure 4.4 OECS: Real Effective Exchange Rate (CPI-based), 1990-2003

The IMF has calculated various REER measures for the individual OECS member states during the period 1990-2003. These reveal that St. Kitts & Nevis and St. Vincent & the Grenadines experienced the greatest loss in international price competitiveness (or appreciation) during the 1990s. The least appreciation occurred in Antigua & Barbuda and Dominica. The results in Grenada and St. Lucia are somewhat contradictory, depending on the real exchange rate used.32

(ii) Market access and penetration

The OECS’s preferential access in major export markets has an impact on the region’s competitive position relative to its competitors. The region receives preferential treatment in all of its major export markets through CARICOM, the Cotonou Agreement (EU), the Caribbean Basin Initiative and Caribbean Basin Trade Partnership Act (US), the CARIBCAN (Canada), and the Generalized System of Preferences (both in the EU and US). Over the last decade, the OECS has lost relative competitiveness, either through the erosion of preferences or through the expansion of preferential treatment to competitors, in its major export markets. To measure the effects of this loss of competitiveness one can analyze the levels of market penetration over time.

The OECS’s market penetration in the European Union has improved marginally over the last decade to reach 0.02 percent of total EU imports. Of the 186 different product lines exported to the EU, 119 of them have gained market share. However, two of the top three exports (in value

32 For more REER data and an explanation of how it is measured see IMF (2004a).

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140

150

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

REE

R In

dex

Note: 1990 = 100; decrease = depreciation. Source: IMF (2004a).

25

terms) have lost significant market penetration – namely bananas (1.2 to 0.2 percent share) and sugar (0.5 to 0.2 percent share). With these two examples, one can see the impact of preference erosion and the lack of competitiveness of some OECS countries – based on inefficiencies, lack of economies of scale, and high labor and transport costs – versus other more efficient producers. Further erosion of preferences in the EU market will likely see these trends continue. However, there have been some important “gainers” as measured by EU market penetration. Ships and floating structures have increased their share by 2 percentage points to 2.5 percent, spices have increased their share by almost 1 percentage point, while feedstuffs have increased by 0.1 percentage point.

Penetration into the US market has been weaker, as the OECS share in total US imports has halved to 0.007 percent since 1993. Of the 115 products exported to the US, just under half of them have gained some, if only marginal, market share. As in the EU market, spices have increased their share significantly to reach roughly 0.3 percent of US imports of that product. Fresh fish have also increased their market share (though only marginally). The biggest “loser” in market penetration has been sugar, going from a 1.2 percent share in 1993 to 0.02 percent in 2003. It is interesting to note that the top three products exported to the US in 1993-1996 – dresses, jerseys and pullovers, and brassieres – all lost significant market shares to reach almost zero in 2003. This could be the result of preference erosion in apparel production vis-à-vis Mexico and other Central American competitors.

Table 4.2 OECS Market Penetration in CARICOM, 1993-2003

Analysis of the OECS sub-region’s penetration into the CARICOM market yields mixed results.33 During the period 1993-1998, the sub-region experienced a loss of market share from 1.1 to 0.6 percent of CARICOM imports. However, this share improved slightly over the next five-year period to reach 0.8 percent in 2003. A closer look at the product performance shows that in 1993, three OECS products held a greater than 25 percent share of CARICOM imports, another two held a share greater than 10 percent. As Table 4.2 demonstrates, this trend worsened in 1999, yet recovered in 2003 to display two products above a 25 percent market share and six

33 Note that CARICOM import shares include OECS member states.

1993 1999 2003

Market 3 1 2Share flour of wheat, flour of wheat flour of wheat,> 25% vegetable oils, scrap metal

soap

2 2 6fresh fish,

Market fruit & nuts (bananas), fruit & nuts (bananas), crustaceans & molluscs,Share non-alcoholic beverages soap fruit & nuts (bananas),> 10% alcoholic beverages

stone & sand, and soap


26

above a 10 percent share. Over the last decade, the big “gainers” in market penetration have been fresh fish, alcoholic beverages, and crustaceans (improving by 10, 9 and 6 percentage points, respectively). The big “losers” have been vegetable oils and soap (losing 38 and 16 percentage points, respectively).

(iii) International competitiveness of exports

The international competitiveness indicator charts all OECS exports into four categories based on supply-side performance (measured through their growth in world market share) and demand-side trends (measured through growth in global imports).34 The four categories include: “champions” – export sectors that increase their world market shares and face growing global demand; “achievers in adversity” – sectors increasing their world market shares while global demand falls; “underachievers” – sectors facing growing demand but with supply-side constraints leading to declines in market share; and “declining sectors” – those exports facing constraints in both supply and demand, with falling market shares and decreasing growth in global imports.

This competitiveness analysis is useful because it identifies products that face supply- and demand-side constraints. In response, countries can pursue export promotion or niche marketing strategies to improve supply performance, and boost international demand by opening new markets via multilateral trade liberalization. At the same time, one can identify in which sectors these efforts may be least cost-effective. Figure 4.5 shows OECS exports divided into the four categories, with the size of the “bubble” representing the export value between 1997-2003.

Figure 4.5 Competitiveness of OECS Exports, 1997-2003

34 Here, OECS excludes Antigua & Barbuda and Montserrat due to lack of comparable data. This indicator was calculated at the SITC Revision 2, three-digit level of aggregation and excludes re-exports. International demand is measured by the average annual growth in world imports between 1997 and 2003. The national or regional export

-12%

-6%

0%

6%

12%

-40% -20% 0% 20% 40% 60%

Avg. Ann. Increase in OECS World Market Share

Avg

. Ann

. Gro

wth

in W

orld

Impo

rts

.


ACHIEVERS IN ADVERSITY

CHAMPIONS

DECLINING SECTORS

UNDERACHIEVERS

fruit (bananas)

elect. switches

soap

spices

flour of wheatsugar rice

alc. beverages

elect. machinery

27

• 79 product groups accounting for 36 percent of total exports are classified as “champions”. In the top 20 exports there are eight “champions”, three of these products are food and agricultural products, while the other five are manufactures. Electrical switches and relays, electrical machinery and ships are some of the best performers having gained significant world market share while facing robust global import growth.35

• 14 product groups representing 4 percent of total exports are “achievers in adversity”. One product, flour of wheat, dominates this category. It increased its world market share by an average 1 percent a year between 1997-2003, while global imports contracted by 8 percent a year over the same period.

• 89 products accounting for 53 percent of total exports are “underachievers”. One export sector, fruit and nuts (namely, bananas), accounts for half of all underachievers (in value terms) and has lost an average 12 percent a year in world market share.

• 15 products representing 6 percent of total OECS exports are “declining sectors”. Two of these products are sugar and rice. For more information see Tables 16 in the appendix.

The international competitiveness of the top 20 exports was also calculated for the individual OECS member states to identify the sectors that could benefit from additional national resources.

• In Dominica, 16 of the top 20 products (more than 80 percent in value terms) are “underachievers” – led by the top two products bananas and soap. Two “champions” displaying significant increases in world market shares are perfumery and cosmetics, and non-alcoholic beverages.

• Between 1997 and 2003, Grenada had 11 of its top 20 products (more than 50 percent in value terms) labeled as “champions”. This category was led by its most important export (spices, namely nutmeg), as well as, equipment for distributing electricity, and paper and paperboard.

• St. Kitts & Nevis had 7 “champions” representing 60 percent of total exports. Electrical switches and relays and electrical machinery represent the majority of this category, while sugar (the second most important export) dominated the “declining sectors”.

• For St. Lucia, 11 of its top 20 exports were “champions”, however, they accounted for only one-quarter of exports in value terms. Of these, alcoholic beverages, kerosene and telecommunications equipment experienced strong growth in world market shares. The country’s top export (bananas) was the biggest “underachiever”.

performance is measured by taking the average annual growth of the exporter’s world market share in each three-digit product/sector over the same period. 35 Electronics exports from St. Kitts & Nevis include cable network switches and light dimmer switches from two firms (sourcing the North American markets), which enjoy comparative advantages versus Asian competitors in proximity (speed to market and sourcing of specialized skills), cheap access to inputs, and language. See World Bank (2005).

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• Finally, St. Vincent & the Grenadines had 15 of its 20 exports as “underachievers” or “declining sectors” (accounting for over 90 percent of total exports). Of the country’s top 13 exports all lost world market shares, with 8 of them being agricultural and food products.

(iv) Export specialization

The OECS’s export performance and international competitiveness can also be evaluated using the export specialization index (ESI).36 It measures a country’s (or region’s) international specialization in specific products by dividing that product’s share in a country’s (or region’s) total exports, by its share in world imports. It is assumed that if a specific product’s share in OECS exports is greater than the product’s share in world imports, that is, an ESI greater than one, then the region is specialized in production and appears to be an efficient producer of that product. Trends in ESI over time and across different markets can help identify increasing (or decreasing) specialization, comparative advantages and sectors where promotional resources can be targeted.37

The OECS appears to be specialized in 32 out of a total of 222 products exported to the world between 2000-2003. Of these 32 products, 24 of them either increased or maintained their ESI from earlier in the decade (1993-1996); their breakdown is relatively diversified between food and agricultural products (10 of them), crude materials (7) and manufactures (7). Of the 190 products that do not display an ESI, 10 of them lost it between the two periods. It is interesting to note that eight of these were manufactures, namely apparel products.

Specialization versus different export markets allows one to compare (both at the aggregate and sectoral levels) export performances in the region’s major export destinations. The OECS appears specialized in 26 out of 192 different products exported to CARICOM. Of the 16 products that increased their ESI, half of them did not appear specialized at the beginning of the decade – they include products such as stone, perfumery, image and sound recorders and some apparel sectors. Of the remaining 166 products that did not have an ESI in 2000-2003, 12 of them (8 of which are manufactures) lost it from the earlier period of 1993-1996.

The OECS was specialized in 18 out of 166 products exported to the EU in 2000-2003, 16 of these having increased their ESI from 1993-1996. Two products, sugar and bananas, either maintained or decreased their specialization, a sign of preference erosion and weakening competitiveness over the last decade. In the US market, the OECS appears specialized in 35 out of the 189 products exported to that destination, although 13 of these (mostly manufactures) have experienced a decrease in their ESI. Twenty products have increased their specialization – 5 of them are food and agricultural products, 3 are crude materials, 11 are manufactures (namely

36 The ESI is calculated as ESIijk= (Xijk/Xijt) / (Mjk/Mjt), where Xijk is the exports of partner i to partner j of product k, Xijt is the total exports of partner i to partner j, Mjk is the imports of partner j of product k, and Mjt is the total imports of partner j. Note that: (1) re-exports, that is a country’s recorded exports that have not received any domestic value added, are not included in the calculation of the ESI; and (2) the index was calculated at the SITC Revision 2, three-digit level of aggregation. 37 One weakness of the ESI indicator is that it does not isolate the effects of preferences on export performance in particular markets, which could lead to distortion in trade flows and weak conclusions regarding competitiveness.

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electrical equipment) and 1 product is not classified elsewhere. It is interesting to note that of the 19 products that lost ESI over the decade, half are in apparel sectors. For a breakdown of ESI by export market see Table 4.3 below.

Table 4.3 OECS: Trends in Export Specialization Index by Destination, 1993-96 to 2000-03

222 World 192 CARICOM 166 European Union 189 United States

Increase ESI No. Products No. Products No. Products No. Products

Total 22 16 16 20

Food/Tobacco 9 (034,036,046,054,075, 6 (036,046,057,075, 7 (034,042,054,072, 5 (022,025,046,081,098,111,112) 081,112) (075,098,111) 075,111)

Crude Materials 6 (273,533,551,553, 4 (273,282,553,591) 3 (273,551,562) 3 (263,273,551)591,592)

Manufactures 7 (691,723,759,772,773, 6 (674,736,763,812, 6 (759,763,772,773, 11 (621,657,723,727,759,772,778,793) 844,846) 793,892) 773,778,786,881,892)

Others 0 0 0 1 (951)

No Change

Total 2 5 1 2

Food/Tobacco 1 (042) 3 (042,054,122) 1 (061) 1 (034)

Crude Materials 1 (554) 2 (288,592) 0 0

Manufactures 0 0 0 1 (764)

Others 0 0 0 0

Decrease ESI

Total 8 5 1 13

Food/Tobacco 4 (057,061,072,091) 2 (091,111) 1 (057) 2 (054,098)

Crude Materials 0 2 (533,554) 0 3 (269,554,592)

Manufactures 3 (642,716,845) 1 (642) 0 7 (656,692,716,771,793,845,847)

Others 1 (941) 0 0 1 (941)

World CARICOM European Union United States

No ESI

Total 190 166 148 154of which lost: 10 12 1 19

Food/Tobacco 0 1 (058) 0 3 (036,057,072)

Crude Materials 2 (269,424) 1 (424) 0 3 (277,282,553)

Manufactures 8 (696,697,843,844, 8 (641,681,697,723, 1 (893) 13 (658,694,696,742,744,842,846,848,893,897) 775,831,881,899)

Others 0 2 (941,961) 0 0

Note: See Table 16 of the Statistical Appendix for a list of SITC Revision 2, three-digit sectors/products.Source: Author's calculations using UN-COMTRADE.

843,844,846,848,884,893,897)

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(v) Trade complementarity and intensity

Analyzing trade complementarity is important to get a measure of how a country’s (or region’s) export supply fits into the import demand of its trading partners. In this case, the trade complementarity index calculates the OECS’s export commodity profile versus the import commodity profiles of its major trading partners (CARICOM, US and EU) relative to the world norm.38 The TCI has a threshold of one, with an index greater (lower) than one indicating a greater (lower) level of complementarity between trade commodity profiles.

Table 4.4 shows that the OECS has a relatively high and increasing degree of complementarity with CARICOM – as the index has gone from 1.60 to 1.92 between 1993-1998 and 1998-2003, respectively. On the other hand, while trade complementarity with the EU has been above the world norm, its strength has been decreasing over time. Relative to the United States, the degree of complementarity has increased, although marginally, yet is still below the world average. This analysis only shows that intra-regional trade is relatively complementary for the OECS countries, and should not be interpreted as a priority list for desirable export destinations.

Table 4.4 Trade Complementarity Index, 1993-2003

38 The trade complementarity index is defined as TCIij= Σk [(RCAik) * (RCDjk) * (Mwk/Mw)], where RCAik= (Xik/Xi) / (Mwk/Mw) and RCDjk= (Mjk/Mj) / (Mwk/Mw). RCAik is the revealed comparative advantage of country or region i in product k, RCDjk is the revealed comparative disadvantage of country or region j in product k, and Mwk/Mw is the share of product k imports in total world imports. Note that X and M signify exports and imports, respectively.

Export Profile Import Profile 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-98 98-03OECS CARICOM 1.4 1.6 1.7 1.5 1.8 1.5 2.2 1.9 2.0 2.0 1.9 1.60 1.92

United States 0.8 0.8 0.7 0.7 0.7 0.8 0.7 0.8 0.8 0.8 0.8 0.75 0.77European Union 1.2 1.2 1.2 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.18 1.11

Dominica CARICOM 1.3 1.7 1.9 1.9 1.9 .. 2.3 2.3 2.1 2.3 1.9 1.72 2.16United States 0.6 0.6 0.5 0.5 0.5 .. 0.6 0.6 0.6 0.6 0.6 0.56 0.56European Union 1.3 1.4 1.4 1.4 1.4 .. 1.3 1.3 1.3 1.3 1.3 1.36 1.30

Grenada CARICOM 1.5 1.7 1.8 1.6 1.8 1.6 2.8 1.5 1.7 2.4 2.8 1.67 2.13United States 1.0 0.9 0.8 0.8 0.9 1.0 0.9 0.9 0.9 0.8 0.9 0.89 0.89European Union 1.1 1.1 1.1 1.0 1.0 1.0 0.9 0.9 0.9 1.0 1.0 1.05 0.96

St. Kitts CARICOM 2.1 2.5 2.6 2.6 2.3 .. 1.7 1.7 1.4 1.0 1.1 2.42 1.40 & Nevis United States 0.8 0.7 0.7 0.7 0.8 .. 0.8 0.8 0.7 0.8 0.7 0.76 0.76

European Union 1.0 0.9 0.9 0.9 0.9 .. 0.9 0.9 0.9 0.9 0.9 0.91 0.90

St. Lucia CARICOM 0.7 0.8 0.9 0.6 0.8 0.8 1.1 1.2 1.0 1.4 1.4 0.79 1.17United States 1.0 0.9 0.9 0.8 0.8 0.8 0.9 1.0 1.0 0.9 1.0 0.87 0.94European Union 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.1 1.1 1.27 1.21

St. Vincent CARICOM 2.7 2.7 2.6 2.0 2.7 2.3 3.3 2.6 3.6 2.9 3.0 2.49 2.95 & the Grens. United States 0.6 0.6 0.6 0.6 0.5 0.6 0.6 0.6 0.6 0.7 0.7 0.60 0.64

European Union 1.2 1.1 1.1 1.1 1.0 1.1 1.1 1.1 1.1 1.2 1.2 1.10 1.12

Note: OECS excludes Antigua & Barbuda and Montserrat.Source: Author using UN-COMTRADE.

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There are some interesting points to highlight at the national level. First, Dominica has the lowest degree of complementarity with the United States (relative to other OECS countries), since the island’s trade is dominated by a few products that do not figure prominently in the US import profile. Second, St. Kitts & Nevis is the only OECS country where the degree of complementarity with CARICOM has worsened over time (as measured between the two periods 1993-1998 and 1998-2003). Finally, in the latter period, St. Lucia and St. Vincent & the Grenadines display the highest degree of complementarity with the United States and CARICOM, respectively, relative to other OECS member states.

While the OECS appears to have a strong and increasing degree of complementarity with CARICOM, bilateral trade between member states enjoy different levels of intensity. The trade intensity index can be used to explore the strengths or weaknesses of bilateral trade links between OECS and other CARICOM partners. The indicator measures the intensity of trade flows, with an index greater (lower) than one indicating bilateral trade flows greater (lower) than expected on the basis of the trading partners importance in intra-regional trade.39 During the period 1995-2003, all OECS countries display a higher than expected degree of intensity with Trinidad & Tobago. Dominica is the only OECS country to have a high index with Guyana and Jamaica. At the same time, Barbados seems to show greater than expected intensity with Grenada, St. Lucia and St. Vincent & the Grenadines. For more detailed information on the trade intensities among CARICOM partners see Table 17 in the Statistical Appendix.

C. Evaluating Merchandise Trade

On the basis of this analysis of trade performance and competitiveness for the OECS sub-region and individual member states, a series of important conclusions can be drawn:

• Over the last decade, OECS merchandise trade has been characterized by relatively stagnant exports and rising imports. Since 1993, exports destined to non-OECS CARICOM partners have experienced the fastest growth; those destined to the European Union have experienced the worst growth performance.

• The OECS trade structure shows an improvement, over the last decade, in the concentration of export products. During this period the number of products that account for half of OECS exports to the world has doubled – in part due to a decrease in dependence on bananas for foreign exchange.

• The OECS, as a sub-region, experienced a general loss of international price competitiveness in the 1990s as measured by consistent appreciation of its real effective exchange rate. Since 2001, this trend has been reversed, in large part due to the depreciation of the United States dollar.

39 The trade intensity index is calculated as TIIij= (Xij/Xic) / (Mj/Mc), where Xij/Xic is the share of country i exports to partner j in country i’s intra-regional exports; and Mj/Mc is the share of partner j in total intra-regional imports.

32

• Analysis of the OECS’s international competitiveness highlights some important conclusions. First, in terms of market penetration, the sub-region has “gainers” in spices to the US and EU, and seafood and alcoholic beverages to CARICOM; and “losers” in bananas and sugar. Second, most OECS exports (in absolute and value terms) are “underachievers” and dominated by bananas. Excluding this product, a majority of exports are “champions” characterized by electrical switches and relays, electrical machinery, ships and floating structures, spices and alcoholic beverages.

• The OECS sub-region’s export specialization appears to be relatively diverse, with food and agricultural products, crude materials and manufactures all enjoying equal shares (in absolute terms) of total exports. It appears that some comparative advantages have been established over the last decade, especially in electrical equipment and some seafood products. Again, the worst performances in terms of specialization were by bananas, sugar and certain apparel products.

• The OECS export profile appears most complementary to the CARICOM import profile. This complementarity has increased over time, perhaps, one reason why intra-regional exports have performed better than those to extra-regional destinations.

The previous chapters have looked at OECS performance and competitiveness in both services and merchandise trade. In the next section, the focus turns to competitiveness issues, through the production and trade cost structures faced by firms in the region.

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V. COMPETITIVENESS THROUGH COST STRUCTURES

In the previous chapters, this report identified the importance of trade to OECS member states, and analyzed the performance and competitiveness of both merchandise and services sectors and products. To complement this analysis, it is important to evaluate factors that impact the competitiveness of firms, given that ultimately, it is firms that produce goods and provide services, trade and compete. The OECS sub-region is characterized by relatively high cost structures, including inputs and factors of production (goods, services, capital and labor) and infrastructure services (transportation, telecommunications and electricity), which are affecting the private sector’s capacity to compete in world markets. However, countries can eliminate some of these cost constraints through domestic reforms and regional integration initiatives.

A. Inputs and Factors of Production

(i) Labor

Labor markets in OECS member states are characterized by relatively high wages and low flexibility compared to other Caribbean and middle-income countries. Problems arise from two sources: (i) high wages across skill levels and sectors appear to be rising faster than productivity and are reflected in high unemployment rates; and (ii) the sub-region suffers from skill mismatching and shortages. This suggests a failure in the efficient allocation of labor resources, which translates into higher costs and a loss of competitiveness for those firms using this factor of production.

There are four main factors attributed with the misalignment between wages and productivity. First, OECS countries are characterized by strong unions – unionization rates range from 47 percent to 12 percent of the labor force in Grenada and St. Vincent & the Grenadines, respectively. These labor unions exert their political and bargaining power during collective negotiations and are responsible, rather than productivity levels, for determining wages. Second, OECS countries have large public sectors that impact wage setting across the economy. Since the public sector employs more than 20 percent of the labor force, increases in government wages for specific labor groups also push up wages for private sector firms seeking similar services. Third, rigid labor regulations such as minimum wage laws make it difficult to hire and fire workers. This affects the ability of firms to adjust their labor allocation to changes in productivity. Finally, remittances also impact the functioning of labor markets by raising reservation wages (that is, the specific wage rate an individual requires to work in given market) since their income is supplemented by external sources.

The OECS also appears to be suffering from skills mismatching and a shortage of skilled workers, which are impacting efficiency and competitiveness across the sub-region. A shortage of skills is reported in both the public and private sectors. This is due to a relatively low level of educational attainment, in terms of quality and access, to secondary and tertiary education. Skills mismatching means that those skills demanded by growing sectors are not available in the resident economy. Workers in the sub-region are unable to shift into new, perhaps expanding,

34

sectors because they either lack skills or enjoy skills not demanded in the growing sectors. A lack of access to re-training and the safety nets to afford foregone income further exacerbate the problem.40

In its latest Article IV consultation with the countries of the Eastern Caribbean Currency Union, the IMF provides a list of recommendations to address the labor market rigidities and inconsistencies. These include the implementation of performance and productivity based wage increases, civil service reform, and focus on raising the quality and access to education and training.41 Another important strategy to address skill shortages and mismatching is the mobility of labor within the region. As a key element of the CSME, the free movement of labor would allow greater flexibility and efficiency in the allocation of labor resources to firms and sectors in need. Implementation of this policy (currently targeting certain skilled labor groups) and analysis of the movement of unskilled labor should be CSME priorities for the OECS.

(ii) Capital

Capital is another important factor that impacts the capacity of firms to produce and trade at competitive levels. While OECS member states have formed a currency union, integration of their financial markets remains fragmented. A number of financial regulations still constrain the free movement of capital throughout the sub-region. This segmentation, within the sub-region and in CARICOM as a whole, is hindering access to capital on favorable terms, ultimately constraining private sector-led economic diversification and growth.

Firms operating in the OECS appear to be credit constrained, without access to the financial instruments they need to expand operations and grow. The OECS financial sector is dominated by commercial banks, and therefore bank credit is a major source of financing throughout the sub-region. However, bank credit, or debt financing in general, is not the appropriate method of financing for those risk-taking enterprises that will fuel export diversification and growth. Instead, these firms require access to equity financing, an area of the financial sector that appears underdeveloped across the OECS. Furthermore, the commercial banking sector is focused on long-term credit instruments, making trade financing difficult to access. There are few export-import financing schemes in the sub-region; those in place, such as the ECCB’s trade financing mechanism, appear to be burdensome and inefficient.

Firms in the sub-region also suffer from the high cost of borrowing. In the late 1990s, prime-lending rates averaged 9-12 percent, while other lending rates reached a maximum of 28 percent across the OECS (see Table 5.1). Some factors that are credited with increasing the cost of lending include the financial system’s lack of economies of scale, a reduced capacity to spread risk, and an established floor on deposit rates.42 The high cost of capital puts resident firms at a competitive disadvantage relative to firms in other markets that have access to financing on cheaper terms.

40 World Bank (2005). 41 IMF (2005a). 42 World Bank (2005) and IMF (2005a).

35

Problems of high cost and poor access to capital in the OECS could be addressed through regional integration initiatives. First, while the Eastern Caribbean Stock Exchange has yet to improve the private sector’s access to capital, a CARICOM-wide stock exchange could provide a larger pool of equity to finance new and growing ventures. A Regional Capital Markets Committee is working with CARICOM’s Council for Finance and Planning (COFAP) to develop recommendations for a regional stock exchange. Second, a CARICOM Financial Services Agreement (drafted in 2004 but not yet implemented) strives to reduce the barriers and inefficiencies to cross-border financial flows, and enhance transparency and standards in financial systems across the region. Third, the establishment of the Caribbean Credit Rating Agency should provide financial institutions and investors the necessary tools (i.e. risk profiles) to make informed lending decisions.43 This should help spread risk and lower costs. It is important that the OECS engage in these regional initiatives as a strategy to reduce the cost of lending, improve the access to different financial instruments, and hence, promote the competitiveness and development of its private sector.

Table 5.1 Commercial Banks' Lending Rates, 1995-2004

(iii) Inputs as goods and services

The competitiveness of firms is also affected by relative prices of goods and services used as production inputs. While most imports into the OECS are final goods rather than intermediate goods, sectors such as tourism depend on some imports as inputs for the final “tourism product”. At the same time, many of these inputs are subject to the highest levels of protection (via tariff and non-tariff barriers) from both intra- and extra-regional competitors. This external protection may benefit domestic producers in OECS countries, but it also adds “at-the-border” costs to domestic tourism and hospitality firms, and impacts their ability to compete with firms in other countries with access to inputs at world prices.

One of the most protected sectors in the sub-region, which is also a key input to the tourism industry, is the beverage sector. For example, the World Bank reports that in 2004, St. Kitts & Nevis was applying unauthorized import duties on beer and aerated beverages, St. Vincent & the Grenadines was applying a tax on CARICOM rum imports, and Antigua & Barbuda, Grenada, Dominica and St. Vincent & the Grenadines were applying environmental surcharges on intra-

43 IDB (2005).

Prime Rates Other RatesLending Rates (%) 1995 2000 2004 1995 2000 2004Antigua & Barbuda 10.0 - 11.5 10.0 - 11.5 10.0 - 11.5 7.0 - 24.0 6.5 - 24.0 3.0 - 23.6Dominica 9.0 - 10.5 9.5 - 10.5 8.5 - 10.5 7.5 - 19.0 7.5 - 20.8 7.5 - 20.0Grenada 9.5 - 10.5 9.5 - 10.5 8.5 - 9.5 7.0 - 16.0 5.8 - 16.0 3.0 - 16.0Montserrat 10.0 - 10.5 9.5 - 10.5 9.5 - 9.5 9.0 - 27.6 9.0 - 27.6 9.0 - 19.5St. Kitts & Nevis 9.5 - 12.0 9.5 - 11.0 8.5 - 9.0 9.0 - 21.6 8.5 - 19.9 7.5 - 22.0St. Lucia 9.0 - 10.0 9.5 - 10.5 9.5 - 10.0 8.5 - 23.0 7.5 - 23.0 6.0 - 23.5St. Vincent & Grens. 9.5 - 11.0 9.5 - 11.0 9.0 - 11.0 7.0 - 16.5 5.0 - 16.5 3.0 - 21.6OECS 9.0 - 12.0 9.5 - 11.5 8.5 - 11.5 7.0 - 27.6 5.0 - 27.6 3.0 - 23.6

Source: ECCB (2005).

36

regional bottled beverage imports.44 Furthermore, this sector enjoys high levels of protection relative to other imports. For example, beer imports to Antigua & Barbuda and Dominica are subject to a 45 percent and 75 percent MFN tariff, respectively; while vodka faces a 45 percent tariff when entering St. Lucia. Unfinished liberalization agendas can have serious implications for developing economies. Applying measures of protection to benefit some domestic interests may also weaken the competitiveness of other equally important domestic enterprises.

B. Infrastructure Costs

(i) Transport

For firms operating in small island economies, competitive access to reliable transport services is a critical element for their overall competitiveness. Firms using maritime services to transport their goods to market face both shipping and port handling costs. Freight costs across the OECS appear to be provided at competitive prices, particularly for intra-regional transport. However, many traders in the sub-region cite a lack of reliable and quality service as their main competitive disadvantage. Irregular maritime transport services add to operational costs, since firms have to increase their inventories to compensate for the uncertainty. At the same time, most ports in the sub-region are publicly owned and operated, making related port costs high as a result of outdated labor regulations and inefficient operations.45

Air transport services also impact the cost structures of firms operating in the region, particularly those in the tourism industry. It is unclear if the current levels of airlift and airport infrastructure capacities throughout the member states are adequate to promote growth. OECS countries could benefit from more regional cooperation on air transport issues since it could address current inefficiencies and high costs. The air transportation issue requires more attention, in order to improve the cost structure for traders and service providers across the OECS member states.

(ii) Telecommunications

The efficient provision of telecommunications services within an economy is another important factor in determining the competitiveness of firms, particularly those operating in services-related sectors. In the OECS, while access to fixed and mobile telephony is widespread, the cost appears to be higher than those of its competitors. For example, a three-minute call to New York from the OECS costs 1.5 times the rate from other countries in the Caribbean (on average); for local calls this ratio is 2 times the cost.

The internet is an increasingly important mode of communication around the world and particularly for developing countries. Many small states appear to be aggressively expanding their internet connectivity and usage as a strategy to overcome scale and geographic disadvantages. However, in the OECS, commercial internet access is very expensive, much more expensive than for residential use. A firm in Antigua & Barbuda reported that its unit cost per

44 World Bank (2005). 45 Ibid.

37

transaction over the internet (through a T1 connection) was 25-30 percent more expensive than for counterparts in Europe.

While the cost of access and usage of telecommunications services for OECS firms appear to be high, the sub-region has made significant progress in recent years. OECS governments have identified the lack of competition in the telecommunications sector as a key constraint to the price competitiveness. In response, some member states implemented the OECS Telecommunications Reform Project, whose main output has been the establishment of the Eastern Caribbean Telecommunications Authority (ECTEL). This regional regulatory agency has, in concert with national telecommunications regulators, liberalized the sector and lowered prices, and has been able to attract additional investment and increase employment in the sector.46 However, more work is needed to continue this trend and further improve the price competitiveness of private sector firms in the sub-region that rely on telecommunications for their operation.

(iii) Electricity

The high cost of electricity is cited as the biggest infrastructure-related constraint for firms operating in the OECS. In Grenada, electricity costs appear to be three times higher than those in the United States, and are identified by foreign firms as a key constraint to doing business on the island. Furthermore, electricity costs in Dominica and St. Vincent & the Grenadines are three times higher than in the Dominican Republic, and nine times higher than in Trinidad & Tobago (see Figure 5.1).

Figure 5.1 Electricity Costs

46 Ibid.

0

5

10

15

20

25

30

Domini

ca

St. Vin.

& G

rens.

OECS (avg

)

Grenad

a

St. Luc

ia

Barbad

os

Surina

me

St. Kitts

Jamaic

a

Dom. R

ep.

Trin. &

Tob.

US

cent

s per

kW

h

Source: World Bank (2005).

38

Perhaps more problematic than the high cost, is the unreliable supply of electricity. In a recent IFC survey of 201 firms in Grenada, half claimed to have experienced electricity outages in the last 12 months, while 13 percent claimed problems at least once a month. Power interruptions often affect a firm’s output and therefore have a serious impact in terms of lost revenues, as well as additional costs in items such as private generators.47

There are four factors that adversely impact the price of electricity in OECS countries. First, the cost of energy for electricity generation is high. Most public utilities in the sub-region use diesel fuel to power generators, rather than a heavier more economical fuel source. Second, there is an inherent scale problem in terms of the cost of supply in small capacity generation assets. Generation systems below 150 megawatts, which characterize the systems in all OECS countries, are relatively more expensive to buy and operate than larger systems. Third, utility companies in the OECS suffer from substantial operational inefficiencies. In Dominica, almost one-fifth of output is lost during transmission and distribution; this figure is around 14 percent for Grenada and St. Lucia (an optimal rate is considered between 4 and 11 percent). Fourth, many OECS governments provide subsidies or transfers in electricity pricing from large commercial consumers to households. As a result of higher utility prices, large firms operating in the OECS, particularly in the tourism sector, are placed at a relative disadvantage.

A 2005 World Bank report provides some recommendations to address the high cost and poor reliability of electricity in the OECS. They include: (i) strengthening the regulatory structure in the OECS member states to improve operations, investment and pricing in the utility sector; (ii) attract private investment to play a greater role in different aspects of supply; and (iii) pursue a regional and international process of benchmarking to improve standards across the sub-region.48

In sum, the high cost of factors of production and infrastructure-related services in the OECS is hurting private sector competitiveness. But, are the high costs merely a problem of scale, or also problems of mismanagement and inefficiency? Issues of scale definitely impact the cost structures of small island economies, particularly in areas such as utilities and access to capital. An effective way to address the lack of economies of scale can be through regional integration initiatives. At the same time, high cost structures across the sub-region are also attributed to mismanagement and inefficiencies. Countries should engage in domestic reform programs that focus on problem areas, such as labor markets and education, maritime transport and electricity.49

47 FIAS (2004). 48 World Bank (2005). 49 It is important to note that in September 2005, the World Bank approved a new Country Assistance Strategy for the OECS offering assistance of US$ 103.4 million between 2005 and 2009. The strategy focuses on improving competitiveness and promoting regional approaches to reach economies of scale through a variety of projects including public sector management, skills enhancement and public utilities reform.

39

VI. TRADE AND INTEGRATION: A STRATEGY FOR GROWTH

Trade and integration are fundamental factors for sustainable economic growth in the small islands across the Eastern Caribbean. The OECS faces a number of obstacles that impact the capacity of its firms to compete in the global marketplace, and hence, affect export sales and economic growth. What could be driving this weak performance? On one hand, the small size of markets and firms across the OECS limit resources, promote inefficiencies, and make it difficult to realize economies of scale. At the same time, firms face competitive disadvantages in high costs of doing business and an erosion of preferences in major export markets. In response to these growth bottlenecks, commitment to a strategy to improve competitiveness through unilateral action (innovation and entrepreneurship), a multilateral agenda (to seek market access and special treatment, and promote internal reforms), and regional integration (to deepen regional links) has the potential to improve export performance and restore economic growth across the region.

A. Exports and Growth

The OECS is characterized by small and open economies that are deeply integrated into the global trading system. A recent IMF study suggests that growth in the Caribbean is “strongly influenced” by export performance.50 Hence, trade (and particularly exports) is extremely important for the region’s development prospects. However, export growth in recent years has been weak and worsening. OECS exports grew an average 4.7 percent a year in the early 1990s, 3.7 percent in the late 1990s, and contracted 0.1 percent since 2000. Similarly, economic output for the OECS sub-region has deteriorated, from roughly 5.7 percent a year in the 1990s, to 2.1 percent a year since 2000.51 This section provides an overview of the challenges and opportunities for higher export and economic growth.

(i) Challenges in scale, cost and preference erosion

The small size of markets and firms operating in the region makes competing with foreign firms difficult. OECS member states lack a diverse range in domestic resources, making them dependent on few export products for foreign exchange. Small market size facilitates the presence of monopolies and a lack of domestic competition, especially in trade-related services, translating into additional costs for firms. OECS firms are mostly characterized as small and medium enterprises, therefore they have limits to resources for export promotional efforts and research and development. Furthermore, firms may find it difficult to achieve economies of scale and compete with larger, more efficient foreign suppliers. For example, Caribbean banana producers are characterized as small (less than 1 hectare), often family-owned ventures operating on mountainous terrains that lack mechanized technology. On the other hand, Latin American and African producers are large, highly mechanized plantations between 50 and 5,000 hectares.52

50 IMF (2005a). 51 Source: Exports (goods and services) using COMTRADE and WTO data; GDP using IMF data. 52 Note: three multinational firms (Chiquita, Dole and Del Monte) control a majority of Latin American and African banana producers. See NERA/OPM (2004).

40

The high cost of doing business in the OECS puts firms at a comparative disadvantage relative to main competitors. As Chapter V illustrates, firms operating in the OECS sub-region face high cost structures as a result of high wages and poor flexibility in labor markets, high cost and poor access to capital, and high at-the-border costs for many imports used in production. At the same time, poor reliability and high cost of infrastructure across the region create an additional burden to firms trying to compete in domestic and foreign markets.

High cost structures affect both merchandise and services firms. In goods sectors, the high cost of capital makes it difficult for firms to develop new niche products, identify buyers and market their goods effectively. High infrastructure costs also impact the provision of services. For example, the tourism industry faces relatively high electricity and transport costs, making it difficult to compete with other low-cost competitors offering a similar tourism product. As a result, competitors have been gaining visitor arrival market shares. Over the last decade, the Hispanic Caribbean destinations have gone from holding 28 percent to 37 percent of total Caribbean stopover arrivals, and from 8 percent to 17 percent of cruise passenger arrivals. Reducing the high cost of doing business in the OECS would impact all sectors of the economy and improve the capacity of both goods and services firms to compete.

The erosion of preferences for agricultural products entering the EU market is an important challenge for the OECS. The European Commission recently announced a 39 percent cut in the guaranteed price of white sugar for ACP sugar exporters. Reform of the EU sugar regime is expected to take place over four years and cost Caribbean sugar producers approximately € 100 million a year. In the OECS, St. Kitts & Nevis’s economy is the most dependent on sugar as a source of foreign exchange since raw sugar exports account for 13 percent of total exports. However, the erosion of preferences and the uncompetitive nature of the island’s sugar production prompted officials to shut down the state-owned sugar industry in July 2005. It is estimated that the government of St. Kitts incurred annual losses of 3 percent of GDP to sustain sugar industry operations. While this is a challenging step for St. Kitts & Nevis, effective and timely management and international technical assistance have helped mitigate the impacts of the shutdown.

Another agricultural product facing increasing erosion of preferences in the European market is bananas. In 2001, the European Commission agreed to move from a tariff-quota to a tariff-only system governing MFN banana imports. In September 2005, the proposed tariff for MFN bananas was announced at € 187 per ton.53 Regional leaders and experts have indicated that this new tariff will have serious implications for the relative market access of windward island bananas. Bananas account for a large share of merchandise exports in three OECS countries: Dominica (20 percent of exports), St. Lucia (31 percent) and St. Vincent & the Grenadines (32 percent). The effects of preference erosion have already been felt across the sub-region as banana exports for these three countries, together, have fallen 75 percent since the early 1990s, when the EU began removing protectionist measures for banana imports.

53 Note that the tariff rate quota regime included a € 75 per ton in-quota rate for 2.2 million tons and a € 680 per ton out-quota rate.

41

The erosion of preferential access to major export markets poses a significant problem for OECS countries. Yet, it also poses an important opportunity to negotiate for adjustment and restructuring assistance for uncompetitive sectors. For example, more research is needed to assess the viability and impact of alternative crops to bananas and sugar, and to assess other ways to use the land through ventures such as golf courses and plantation tourism sites. The region could also explore moves into higher value-added agricultural products using branding as a way to develop competitive advantages.

(ii) Opportunity in diversification

An opportunity to improve the sub-region’s trade performance lies in export diversification within goods and services. While small size and geography limit the OECS’s natural resources to expand commodity production, they do not impact the sub-region’s capacity to develop niche products and services. OECS countries have established competitive advantages in export products such as electrical equipment, beverages, seafood and spices, using strategies of speed to market, branding and niche marketing. In agriculture, enterprises that find it difficult to compete without preferential treatment can move into niche and higher value-added areas. These include, among others, organic production, oils and snacks for bananas; and rum, ethanol and feedstuffs for sugar.

The development and diversification of the service sector is another important opportunity to boost export sales for the OECS. Tourism is important for OECS economies and a main source of foreign exchange. However, in recent years the sub-region has been losing market share in total tourist and cruise passenger arrivals to the Caribbean at the expense of more competitive Hispanic Caribbean destinations. Policy measures should focus on improving the price competitiveness of the OECS tourism sector, and addressing supply side constraints such as airlift capacity. There are also opportunities to diversify within tourism by expanding cruise passenger on-shore services and developing the yachting sub-sector; as well as diversifying outside tourism into health and education-related services. More research is needed on identifying those services sectors within transportation and business services (such as high-end call centers and software development) that may be competitive and merit promotional efforts.

It is critical that the OECS member states improve their competitiveness and boost exports or face the prospect of weak economic growth. Addressing development challenges such as small size, high cost structures and preference erosion, and diversifying export portfolios are important steps toward sustained growth. However, more action is needed to improve the competitiveness of firms across the region.

B. A Strategy for Competitiveness

As this report highlights, the trade performance and competitiveness of OECS countries has suffered since the early 1990s. OECS services exports have been characterized by slow growth. The tourism industry, the sub-region’s most important source of foreign exchange, appears to lack competitiveness versus some lower-cost destinations in the Caribbean. Merchandise exports have also performed poorly, in light of eroding preferences in major markets and increased competition from foreign suppliers. Implementation of a strategy to improve competitiveness

42

through innovation, liberalization, internal reform, and deeper regional integration has the potential to improve the sub-region’s poor growth performance.

(i) Unilateral action

Improve competitiveness across economic sectors by focusing on innovation and entrepreneurship.

Innovation and entrepreneurship are important factors for transition from a purely commodity-based economy to a more competitive knowledge-based economy. For this transition to take place, countries should facilitate an innovation-friendly environment by focusing on educational attainment, the business climate and technology infrastructure.54 First, it is important that the public sector promote an “environment of learning” in subjects such as math and sciences, and skills such as business management and technology; and the private sector focus on specialized training for their skilled workforce. Universities and research institutes can also promote ideas by funding and performing research and development activities. Second, government policies should strive to promote an innovation-friendly business environment. For example, improvements in factor and infrastructure costs and the elimination of red tape can free enterprises to focus resources and time to improving products and services, business strategies and organizational systems.

Third, reliable and quality access to the infrastructure that enables information and communication technology as a tool for development is also important. Technology infrastructure includes assets for telecommunications and internet access (both land and wireless), and transportation. Technology allows firms to build business strategies based on customer demands and competitive positioning through consumer feedback and market intelligence in real time. ICTs also enhance logistics systems to improve speed to market, and make distance irrelevant, both critical elements of competitiveness for niche merchandise and services trade.55 There is potential for OECS countries to improve their technological infrastructure to facilitate innovation and entrepreneurship, and likewise, implement complementary reforms to their legal and regulatory frameworks.

It is important to note that innovation is not always linked to technological progress and high-technology sectors, but can also occur through creativity or “organizational innovation”. A notable example is the St. Lucia Jazz Festival, which was established in 1991 and has flourished into an internationally recognized event. While the island does not have a strong tradition in jazz, it has a rich culture of music (in general) that feeds into the general atmosphere of the event. The island’s comparative advantage in sand, surf and sun also offers beautiful venues for performance. However, the festival’s success is strongly linked to its effective management, by the St. Lucia Tourist Board, and three elements of its innovative business strategy. First, the festival functions on the principle of universal access, hence, performances range from free at “Jazz on the Square” in Castries to US$ 60 at the luxurious Pigeon Island. Second, interested foreign sponsors such Black Entertainment Television (BET) have been involved since the

54 Aubert (2004). 55 This section draws from OTF Group (2005).

43

festival’s inception and provide exposure to millions of fans worldwide. Third, the strategy focuses on the attraction of the biggest names in jazz and other musical genres. Across the OECS sub-region, more of this “innovation” could boost tourism competitiveness and export growth.

(ii) A multilateral agenda

Seek broad market access for goods and services, and special and differential treatment through multilateral trade negotiations.

The coordination of foreign economic policies and cooperation in external trade negotiations is one of the pillars of integration for the Caribbean Community. The OECS member states are engaged with CARICOM partners in a number of external negotiations including the WTO Doha Round, CARIFORUM-EU Economic Partnership Agreement, and the FTAA.

The successful negotiation and implementation of the WTO Doha Round agenda is an opportunity for OECS countries to gain access to new markets for their goods and services. The OECS’s main offensive interests appear linked to services exports. All WTO member states have committed, through the General Agreement on Trade in Services or GATS, to the progressive liberalization of services trade. As a result, services negotiations within the Doha Round began in 2000, based on a request-offer method of negotiation. Thus far, however, only one OECS country (Grenada) has made a request for liberalization in the negotiations. It is critical that all OECS countries engage in these negotiations to secure the “best-possible” access for their exporters.

At the same time, multilateral trade negotiations offer an opportunity to gain some special and differential treatment (SDT) for the liberalization process. There are four main arguments for developing countries in the SDT debate: (i) preferential access to developed country markets; (ii) the right to restrict imports to a greater degree than developed countries; (iii) freedom to subsidize exports; and (iv) flexibility or postponement in the application of new rules.56 While the development benefits derived from the first three methods of SDT are inconclusive and mixed, there may be a valid argument for OECS member states to receive extended time to implement and adjust to new rules. Furthermore, it is important that along with new and complex rules, which translate into additional adjustment costs, developing countries (including the OECS) receive financial resources and capacity building measures to implement any new multilateral commitments.

Use external agreements to implement pro-competitiveness and pro-growth reforms.

Negotiation of multilateral trade agreements can provide offensive interests such as secure and improved market access through lower tariffs and less restrictive rules of origin. But, equally important, is the opportunity for OECS countries to use these agreements to implement internal reforms to promote trade and economic growth. First, trade agreements can be used to lower MFN tariffs and converge on the common external tariff, important objectives since high tariffs and dispersion undermine competitiveness and facilitate trade diversion. Second, inclusion of

56 WTO (2004).

44

trade facilitation measures, such as improvement of customs and port operations, can lower trade costs. Poor trade facilitation is a significant development constraint for OECS traders and it deserves more attention. Third, as Chapter II shows, OECS countries are dependent on international trade taxes as a source of fiscal revenue. The prospect of multilateral liberalization could provide the impetus to introduce more efficient tax regimes (such as the VAT) and harmonize with regional partners. Finally, negotiations can also be useful to discuss non-market access issues such as rules on investment and intellectual property, which can reduce barriers, establish clear rules and secure a level playing field for all firms.57

(iii) Regional integration

Continue to deepen integration with regional partners as a strategy to enhance efficiency and improve international competitiveness.

The OECS member states are party to the CARICOM Single Market & Economy (CSME). Their commitment is based on the principle that regional integration can assist small countries to enhance efficiency and improve their international competitiveness. As such, OECS countries should continue to implement CSME provisions with the objective to create one common economic market across the Caribbean. The provisions governing the free movement of goods within the region have largely been implemented. External trade policies such as the CET are in place, yet suffer from a number of tariff suspensions and national derogations. The right of establishment, and the free movement of services, capital and labor are also important elements of the CSME. Member states have agreed to curtail introduction of new restrictions in these areas and have committed to a schedule for their removal. However, much work still remains to be done to fulfill these obligations in the OECS countries.58

Implementation of the remaining CSME provisions should bring benefits to OECS countries. Efficiency is gained from regional harmonization of laws and the pooling of resources. For example, OECS countries would be better served with one harmonized regime (rather than seven national ones) on intellectual property rights as a way to spur and protect innovation and attract foreign investment throughout the sub-region. Furthermore, a pooling of resources to establish common initiatives such as standards bureaus and capital markets facilitates efficiency in international transactions. OECS countries also face cost disadvantages as a result of their small scale and lack of resources. Deeper integration should provide reliable access to less costly inputs and other factors of production and trade (i.e. labor, capital, utilities and transport), and improve the capacity of OECS firms to compete with foreign competitors.

Deeper integration within the Caribbean Community will face many difficult obstacles along the way. Implementation of the CSME is a complex process that requires significant financial resources, political support and institutional capacity. However, the OECS sub-region’s trade performance and competitiveness has been weak in recent years. A strategy to improve competitiveness through innovation, liberalization, reform and deeper regional integration has the potential to facilitate sustainable export-led growth across the Eastern Caribbean.

57 This draws from a paper on Economic Partnership Agreements; see Hinkle et al (2005). 58 IDB (2005).

45

STATISTICAL APPENDIX

Table 1. CARICOM Member States: Composition of Exports, 2002

Table 2. Services Exports by Area, 1993-2003

Table 3. Services Imports by Area, 1993-2003

Table 4. Balance of Services Trade by Area, 1993-2003

Table 5. OECS Tourism Statistics, 1993-2003

Table 6. Caribbean Tourist Arrivals by Destination, 1993-2003

Table 7. Caribbean Cruise Passenger Arrivals by Destination, 1993-2003

Table 8. OECS Tourism Satellite Account, 1993-2003

Table 9. OECS: Foreign Direct Investment Inflows by Sector, 1997-2003

Table 10. Merchandise Exports by Destination, 1993-2003

Table 11. Merchandise Imports by Origin, 1993-2003

Table 12. Intra-regional Merchandise Trade, 1993-2003

Table 13. OECS: Merchandise Trade by Sector, 1993-2003

Table 14. Top 20 Exports to the World, 1993-1996 and 2000-2003

Table 15. Top 20 Exports to CARICOM, 1993-1996 and 2000-2003

Table 16. OECS: International Competitiveness of Exports, 1997-2003

Table 17. OECS Member States: Trade Intensity Index, 1995-2003

46

Table 1. CARICOM Member States: Composition of Exports, 2002

Country Goods ServicesAntigua & Barbuda 8.8 91.2Dominica 36.7 63.3Grenada 30.6 69.4Montserrat 16.2 83.8St. Kitts & Nevis 41.6 58.4St. Lucia 12.8 87.2St. Vincent & the Grens. 22.9 77.1OECS 20.3 79.7

The Bahamas 28.1 71.9Barbados 19.5 80.5Belize 62.8 37.2Guyana 74.2 25.8Haiti 66.9 33.1Jamaica 40.5 59.5Suriname 90.6 9.4Trinidad & Tobago 87.2 12.8

CARICOM 52.8 47.2CARICOM (-) T&T 38.3 61.7

Source: IDB INTAL (2005).

Share of Total Exports (%)

47

Table 2. Services Exports by Area, 1993-2003

Share (%) Avg Ann Growth (%)Country Sector 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03Antigua & Barbuda Transportation 65 66 67 67 73 66 60 66 76 76 80 17.4 17.5 17.0 2.1 0.3 3.9

Travel 277 293 247 258 278 282 290 291 272 274 300 69.8 70.7 68.4 0.8 0.4 1.2Insurance 2 2 2 4 4 20 30 16 12 9 7 2.4 1.5 3.7 11.0 53.6 -19.8Other Business 29 29 32 35 47 56 50 36 35 29 29 9.3 9.9 9.4 0.3 14.4 -12.2Government 4 1 0 0 3 5 9 8 8 4 4 1.0 0.5 1.5 0.4 5.2 -4.1Total 377 391 348 364 405 429 439 417 403 392 420 100.0 100.0 100.0 1.1 2.6 -0.4

Dominica Transportation 6 5 6 7 7 7 7 7 6 5 5 8.2 9.4 7.2 -1.8 3.1 -6.5Travel 29 32 42 44 48 47 51 48 46 46 55 58.9 60.2 56.9 6.6 10.1 3.2Insurance 3 2 2 3 3 3 3 3 2 2 2 3.3 3.7 3.0 -4.2 -3.0 -5.5Other Business 9 11 12 13 21 28 36 29 19 25 17 26.6 23.6 29.9 6.7 26.0 -9.7Government 1 0 0 2 4 4 4 2 2 2 1 2.7 2.8 2.8 -1.1 29.8 -24.6Total 49 52 61 69 83 88 101 90 75 80 80 100.0 100.0 100.0 5.2 12.7 -1.9

Grenada Transportation 4 5 4 5 5 4 6 6 8 8 9 4.8 4.3 5.0 8.4 0.0 17.6Travel 64 78 76 79 78 83 88 93 83 91 107 69.6 73.8 66.4 5.3 5.3 5.2Insurance 1 1 1 1 1 1 2 3 3 5 3 1.8 1.1 2.3 10.2 2.3 18.7Other Business 18 17 17 21 21 28 45 45 34 26 18 21.8 19.5 23.7 -0.1 9.2 -8.6Government 1 1 1 1 2 4 3 6 4 3 2 2.2 1.7 2.6 3.9 25.3 -13.8Total 88 102 99 107 106 120 144 153 133 133 139 100.0 100.0 100.0 4.7 6.4 3.0

Montserrat Transportation 2 2 2 3 2 0 1 1 1 1 1 8.4 9.3 5.8 -6.7 .. ..Travel 18 20 17 8 5 6 8 9 8 9 7 60.2 62.7 54.7 -9.0 -19.7 3.1Insurance 1 1 1 0 0 0 0 0 0 0 0 2.1 2.2 1.8 -6.5 -31.3 27.2Other Business 3 4 4 5 7 7 11 5 4 4 3 29.3 25.7 37.7 -2.3 15.2 -17.1Government .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..Total 24 27 24 16 14 13 20 15 13 14 11 100.0 100.0 100.0 -7.5 -11.5 -3.3

St. Kitts & Nevis Transportation 4 5 5 7 7 8 8 11 11 10 9 8.2 6.6 9.5 8.4 14.9 2.4Travel 70 77 63 68 72 71 69 58 62 56 74 71.3 77.7 65.3 0.6 0.3 0.8Insurance 1 1 2 1 2 3 1 3 2 2 2 2.0 1.9 2.4 6.9 28.3 -10.9Other Business 8 9 10 12 12 16 20 23 20 18 18 15.9 12.3 19.1 8.5 14.2 3.0Government 1 1 2 1 2 3 3 3 4 4 4 2.7 1.7 3.6 17.4 25.3 10.0Total 83 92 82 89 95 101 101 99 99 91 107 100.0 100.0 100.0 2.5 3.8 1.3

St. Lucia Transportation 13 14 14 12 14 17 11 12 17 16 17 5.1 5.3 5.0 2.7 5.5 0.0Travel 178 207 230 237 253 283 263 279 237 215 288 86.8 87.8 86.2 4.9 9.7 0.4Insurance 3 3 3 4 4 3 3 4 5 4 4 1.3 1.2 1.3 5.6 4.4 6.9Other Business 10 12 17 13 16 15 28 25 23 22 17 6.4 5.3 7.1 4.7 7.3 2.3Government 1 1 1 1 1 1 1 1 1 1 1 0.4 0.4 0.5 3.8 5.2 2.4Total 203 238 265 267 288 320 306 321 283 258 327 100.0 100.0 100.0 4.9 9.5 0.5

St. Vincent & Transportation 4 4 5 5 6 10 10 11 10 10 10 7.4 6.8 8.0 9.6 20.1 0.0 the Grenadines Travel 44 44 53 64 69 73 77 75 80 83 83 64.5 68.9 62.1 6.6 10.7 2.6

Insurance 1 1 1 1 1 1 1 2 2 2 2 1.2 1.1 1.2 5.8 -1.5 13.6Other Business 11 11 13 26 22 22 36 36 38 40 34 25.1 20.9 27.3 12.1 15.0 9.2Government 2 3 2 1 1 1 2 2 2 2 2 1.7 2.0 1.4 -0.4 -3.1 2.3Total 62 63 74 97 99 107 126 126 131 137 131 100.0 100.0 100.0 7.7 11.5 4.0

OECS Transportation 98 101 103 106 114 112 103 114 129 126 131 10.3 10.4 10.1 2.9 2.7 3.2Travel 680 751 728 758 803 845 846 853 788 774 914 72.9 75.1 70.8 3.0 4.4 1.6Insurance 12 11 12 14 13 32 41 32 27 24 21 2.0 1.5 2.5 5.6 21.5 -8.2Other Business 88 93 105 125 148 171 225 198 172 164 135 13.6 12.0 15.0 4.4 14.2 -4.6Government 9 7 7 7 13 17 22 24 21 16 14 1.3 1.0 1.6 3.9 13.4 -4.8Total 886 964 954 1,008 1,091 1,177 1,237 1,220 1,138 1,104 1,215 100.0 100.0 100.0 3.2 5.9 0.6

Source: Author using IMF, WTO and ECCB data.

48

Table 3. Services Imports by Area, 1993-2003

Share (%) Avg Ann Growth (%)Country Sector 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03Antigua & Barbuda Transportation 50 56 56 56 58 60 62 54 55 56 61 35.4 37.4 33.8 1.9 3.7 0.2

Travel 23 24 23 26 27 29 30 31 32 33 35 17.7 16.9 18.3 4.1 4.3 3.9Insurance 14 11 16 19 16 16 27 16 28 31 31 12.7 10.2 14.4 8.2 2.3 14.5Other Business 36 37 45 51 59 60 52 44 48 46 51 29.9 31.9 29.1 3.6 11.2 -3.4Government 5 7 8 5 4 3 6 10 10 8 8 4.2 3.5 4.4 5.8 -5.1 18.0Total 128 134 148 157 164 169 177 154 172 175 186 100.0 100.0 100.0 3.8 5.7 1.9

Dominica Transportation 17 17 17 20 23 20 21 22 20 18 19 40.0 41.4 38.0 1.0 2.9 -1.0Travel 5 6 6 7 7 8 9 9 9 9 9 15.8 14.2 17.1 6.1 10.7 1.8Insurance 3 3 4 4 4 5 4 5 4 5 4 8.8 8.8 8.7 3.2 9.2 -2.6Other Business 8 7 13 12 14 15 20 12 13 17 8 26.0 25.1 26.9 -0.2 13.0 -11.9Government 2 5 4 4 5 8 5 5 3 4 4 9.4 10.6 9.3 5.0 28.0 -13.9Total 36 38 44 47 54 56 59 53 50 54 44 100.0 100.0 100.0 2.1 9.4 -4.7

Grenada Transportation 19 22 21 26 28 32 30 34 33 30 39 43.9 50.2 40.5 7.3 11.0 3.8Travel 4 4 5 5 5 6 7 8 8 8 8 9.4 9.9 8.9 6.9 6.9 7.0Insurance 4 4 3 3 5 6 7 8 8 8 9 9.3 9.1 9.4 7.3 7.3 7.3Other Business 8 9 8 10 15 20 32 33 29 38 22 31.4 23.9 35.5 10.5 19.7 2.1Government 5 2 2 2 3 6 4 4 4 4 6 6.0 7.0 5.7 0.8 1.7 -0.2Total 41 41 38 46 56 70 80 87 82 88 84 100.0 100.0 100.0 7.4 11.2 3.6

Montserrat Transportation 6 7 7 7 4 3 4 4 3 4 5 26.8 36.1 18.2 -1.2 -11.4 10.1Travel 3 3 4 4 1 1 1 2 2 2 2 12.6 17.5 8.0 -2.6 -12.6 8.7Insurance 1 1 1 1 1 0 1 1 1 1 1 4.3 5.8 2.8 -0.9 -8.3 7.2Other Business 2 2 2 2 4 4 7 5 5 4 5 21.5 17.1 24.1 11.2 14.7 7.8Government 1 1 1 4 3 12 9 8 13 12 5 34.8 23.6 46.9 25.2 87.1 -16.2Total 11 14 15 17 13 21 22 19 24 23 18 100.0 100.0 100.0 4.7 12.8 -2.7

St. Kitts & Nevis Transportation 17 17 21 23 26 27 29 32 31 32 33 39.1 38.8 39.8 6.9 9.5 4.4Travel 5 6 5 5 6 6 7 9 8 8 8 10.0 10.1 9.9 4.3 3.2 5.3Insurance 4 6 6 6 6 6 7 9 8 10 9 10.3 9.9 10.5 8.8 8.3 9.2Other Business 18 14 20 23 24 19 39 23 23 25 25 34.8 35.4 33.8 3.2 1.0 5.4Government 2 2 4 3 4 4 4 4 4 5 6 5.8 5.8 6.0 11.5 17.7 5.6Total 46 45 55 61 65 62 85 76 75 80 81 100.0 100.0 100.0 5.7 6.1 5.4

St. Lucia Transportation 43 41 42 42 44 42 45 46 42 44 54 36.6 36.7 35.6 2.3 -0.6 5.2Travel 20 23 25 29 29 31 33 33 32 33 35 24.3 22.6 25.8 6.0 9.7 2.3Insurance 7 7 7 7 8 8 8 9 8 8 11 6.6 6.4 6.7 4.8 2.9 6.6Other Business 15 27 43 35 32 40 42 29 26 34 31 26.7 27.7 26.4 7.3 20.9 -4.8Government 5 6 6 10 8 11 8 7 5 6 5 5.8 6.6 5.5 -0.7 18.0 -16.5Total 90 104 124 122 122 132 136 124 113 125 136 100.0 100.0 100.0 4.2 8.0 0.5

St. Vincent & Transportation 19 18 20 20 23 27 29 25 26 26 29 38.5 34.3 41.5 4.6 8.0 1.3 the Grenadines Travel 5 6 7 8 7 8 9 9 10 10 11 13.2 10.8 14.7 8.6 9.3 8.0

Insurance 4 3 4 4 4 5 5 5 5 6 6 7.5 6.5 8.2 5.2 4.7 5.6Other Business 16 22 23 23 38 34 19 17 15 15 16 35.2 42.5 29.9 -0.3 16.3 -14.6Government 1 5 2 3 4 5 4 4 3 3 3 5.6 5.8 5.6 6.4 28.3 -11.7Total 45 55 55 58 76 79 66 60 60 60 65 100.0 100.0 100.0 3.8 12.0 -3.9

OECS Transportation 171 177 183 194 205 212 219 217 210 212 240 37.6 38.6 36.6 3.4 4.3 2.6Travel 65 71 74 83 84 89 97 101 100 103 108 16.4 15.8 16.7 5.2 6.6 3.9Insurance 37 35 41 46 46 46 59 51 62 68 72 9.4 8.5 10.0 6.8 4.5 9.2Other Business 103 120 154 155 186 192 210 164 161 180 157 30.0 30.8 29.7 4.3 13.2 -3.9Government 21 29 26 32 31 51 40 41 43 42 36 6.6 6.4 7.1 5.3 19.0 -6.8Total 397 431 479 510 551 589 625 573 576 604 613 100.0 100.0 100.0 4.4 8.2 0.8

Source: Author using IMF, WTO and ECCB data.

49

Table 4. Balance of Services Trade by Area, 1993-2003

Country Sector 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Antigua & Barbuda Transportation 15 10 11 11 15 6 -2 12 21 20 19

Travel 254 269 224 232 251 253 260 260 240 241 265Insurance -12 -8 -14 -16 -13 4 3 0 -16 -22 -25Other Business -7 -9 -13 -16 -11 -4 -2 -8 -13 -17 -21Government -1 -6 -7 -4 -1 1 3 -2 -2 -4 -4Total 248 256 201 207 241 259 262 263 231 217 234

Dominica Transportation -11 -12 -11 -13 -16 -13 -14 -15 -14 -13 -14Travel 24 26 36 37 41 39 42 39 37 37 46Insurance 0 -2 -2 -2 -2 -2 -2 -1 -2 -3 -2Other Business 1 4 -1 2 7 14 17 16 5 8 9Government -1 -4 -4 -2 -1 -4 -1 -3 -2 -2 -3Total 13 14 18 22 29 33 42 37 25 26 37

Grenada Transportation -15 -17 -17 -21 -23 -28 -24 -28 -25 -22 -30Travel 60 74 71 74 73 77 81 85 75 83 99Insurance -3 -3 -2 -3 -5 -5 -5 -5 -5 -3 -5Other Business 10 8 9 11 6 8 13 12 4 -12 -5Government -4 -1 -1 -1 -1 -2 -1 2 0 -1 -4Total 46 60 61 61 50 50 64 65 51 45 55

Montserrat Transportation -4 -5 -5 -4 -2 -3 -3 -3 -2 -3 -4Travel 15 17 13 4 4 5 7 7 6 7 5Insurance 0 0 0 0 -1 0 0 0 0 0 0Other Business 2 2 2 3 3 3 3 0 -1 -1 -3Government .. .. .. .. .. .. .. .. .. .. ..Total 13 13 9 -1 1 -8 -2 -4 -11 -9 -7

St. Kitts & Nevis Transportation -13 -12 -16 -16 -19 -19 -21 -21 -20 -22 -24Travel 65 71 58 63 66 65 62 49 54 48 66Insurance -3 -4 -4 -5 -4 -2 -5 -5 -6 -7 -7Other Business -10 -6 -9 -12 -12 -4 -19 -1 -3 -8 -7Government -1 -2 -2 -2 -2 -2 -1 0 0 -1 -1Total 37 48 27 27 30 39 16 23 24 11 27

St. Lucia Transportation -30 -27 -28 -30 -30 -25 -34 -34 -25 -28 -37Travel 158 184 205 208 224 252 230 246 205 182 253Insurance -4 -4 -4 -4 -5 -5 -5 -5 -3 -4 -6Other Business -5 -15 -26 -21 -16 -25 -15 -4 -3 -12 -15Government -4 -5 -5 -9 -7 -10 -7 -6 -4 -4 -3Total 113 134 141 144 167 187 170 197 170 134 192

St. Vincent & Transportation -15 -14 -15 -15 -17 -17 -19 -14 -16 -16 -19 the Grenadines Travel 39 38 46 56 62 66 68 66 70 73 72

Insurance -3 -2 -3 -3 -3 -4 -4 -3 -3 -4 -5Other Business -5 -11 -10 3 -15 -12 17 19 23 25 19Government 0 -3 0 -2 -3 -4 -2 -2 -2 -1 -1Total 18 9 19 38 23 28 60 66 72 76 66

OECS Transportation -73 -76 -80 -88 -91 -100 -116 -103 -81 -86 -109Travel 615 680 654 675 719 756 749 752 688 671 806Insurance -25 -24 -30 -32 -32 -15 -17 -19 -35 -43 -51Other Business -15 -27 -48 -30 -38 -20 14 35 11 -16 -22Government -12 -22 -19 -25 -18 -33 -18 -18 -22 -26 -22Total 488 533 476 498 540 588 611 647 562 500 602

50

Table 5. OECS Tourism Statistics, 1993-2003

Shares (%) Avg Annual Growth (%)Arrivals ('000) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03Tourist Arrivals 751 817 778 786 824 836 861 861 813 837 918 40 43 38 2.0 2.2 1.9

United States 244 264 253 236 241 254 254 251 245 259 267 30 31 30 0.9 0.9 0.9Europe 224 255 234 244 260 253 276 285 244 236 270 31 31 31 1.9 2.4 1.3Caribbean 171 182 186 196 201 211 218 214 221 252 283 26 24 27 5.2 4.3 6.1Other Countries 112 116 105 111 122 118 113 111 104 90 99 13 14 12 -1.3 1.0 -3.5

Cruise Ship Passengers 833 917 988 1,060 1,200 1,408 1,312 1,544 1,582 1,206 1,314 60 57 62 4.7 11.1 -1.4

Total Visitors 1,584 1,734 1,766 1,847 2,024 2,244 2,173 2,405 2,395 2,043 2,232 100 100 100 3.5 7.2 -0.1

Average (%) Avg Annual Growth (%)Memorandum: 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03

Cruise Ship Calls (#) 1,682 1,636 1,549 1,504 1,405 1,521 1,529 1,710 1,526 1,436 1,558 1,551 1,550 1,547 -0.8 -2.0 0.5

Visitor Exp. (US$ mn) 706 752 732 763 901 909 942 964 873 860 985 853 794 922 3.4 5.2 1.6

Source: Caribbean Tourism Organization.

51

Table 6. Caribbean Tourist Arrivals by Destination, 1993-2003

Avg Annual Growth (%)Arrivals ('000) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Commonwealth 5,490 5,745 5,735 5,853 5,956 6,031 6,166 6,332 6,129 6,069 6,292 1.4 1.9 0.9

OECS 751 817 778 786 824 836 861 861 813 837 918 2.0 2.2 1.9Other CARICOM 3,746 3,847 3,872 3,937 4,038 4,043 4,155 4,308 4,195 4,166 4,335 1.5 1.5 1.4Other Caribbean 994 1,081 1,085 1,131 1,093 1,153 1,150 1,163 1,121 1,066 1,039 0.4 3.0 -2.1

Hispanic Caribbean 4,368 4,068 4,415 4,967 5,662 5,972 6,649 7,232 6,972 6,650 7,555 5.6 6.5 4.8

Dutch Caribbean 1,377 1,475 1,401 1,303 1,372 1,385 1,406 1,414 1,368 1,314 1,376 0.0 0.1 -0.1

French Caribbean 819 975 1,097 1,102 1,173 1,242 1,275 1,333 1,234 1,212 1,253 4.3 8.7 0.2

US Territories 3,466 3,554 3,594 3,464 3,757 3,633 3,622 4,012 3,832 3,754 3,885 1.1 0.9 1.3

Caribbean Total 15,520 15,816 16,242 16,689 17,920 18,264 19,119 20,323 19,534 19,000 20,361 2.8 3.3 2.2

Shares (%)Shares (%) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Commonwealth 35.4 36.3 35.3 35.1 33.2 33.0 32.2 31.2 31.4 31.9 30.9 33.1 34.7 31.7

OECS 4.8 5.2 4.8 4.7 4.6 4.6 4.5 4.2 4.2 4.4 4.5 4.6 4.8 4.4Other CARICOM 24.1 24.3 23.8 23.6 22.5 22.1 21.7 21.2 21.5 21.9 21.3 22.5 23.4 21.6Other Caribbean 6.4 6.8 6.7 6.8 6.1 6.3 6.0 5.7 5.7 5.6 5.1 6.1 6.5 5.7

Hispanic Caribbean 28.1 25.7 27.2 29.8 31.6 32.7 34.8 35.6 35.7 35.0 37.1 32.5 29.3 35.2

Dutch Caribbean 8.9 9.3 8.6 7.8 7.7 7.6 7.4 7.0 7.0 6.9 6.8 7.6 8.3 7.1

French Caribbean 5.3 6.2 6.8 6.6 6.5 6.8 6.7 6.6 6.3 6.4 6.2 6.4 6.4 6.5

US Territories 22.3 22.5 22.1 20.8 21.0 19.9 18.9 19.7 19.6 19.8 19.1 20.4 21.4 19.5

Caribbean Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Note: Regional groupings include OECS, Other CARICOM (non-OECS), Other Commonwealth (Anguilla, BVI, Bermuda, Cayman Islands and Turks & Caicos Islands), Hispanic Caribbean (Cancun and Cozumel-Mexico, Cuba and the Dominican Republic), Dutch Caribbean (Aruba, Bonaire, Curacao, Saba, St. Eustatius, St. Maarten), French Caribbean (Guadeloupe and Martinique), and US Territories (Puerto Rico and USVI).Source: Caribbean Tourism Organization.

52

Table 7. Caribbean Cruise Passenger Arrivals by Destination, 1993-2003

Avg Annual Growth (%)Arrivals ('000) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Commonwealth 4,823 4,672 4,652 5,104 5,600 5,793 6,243 7,391 7,587 8,136 8,956 6.4 3.7 9.1

OECS 833 917 988 1,060 1,200 1,408 1,312 1,544 1,582 1,206 1,314 4.7 11.1 -1.4Other CARICOM 3,144 2,918 2,691 2,902 3,246 3,210 3,519 4,420 4,407 4,925 5,293 5.3 0.4 10.5Other Caribbean 846 837 973 1,142 1,153 1,175 1,412 1,427 1,597 2,005 2,349 10.7 6.8 14.9

Hispanic Caribbean 772 976 939 1,098 1,359 1,643 1,587 1,688 1,804 2,475 3,107 14.9 16.3 13.6

Dutch Caribbean 1,112 1,148 1,041 1,162 1,420 1,391 1,140 1,710 1,696 1,998 2,047 6.3 4.6 8.0

French Caribbean 691 734 847 1,021 857 749 633 679 564 406 464 -3.9 1.6 -9.1

US Territories 2,228 2,209 2,172 2,341 2,846 2,859 2,551 3,070 3,242 2,943 3,010 3.1 5.1 1.0

Caribbean Total 9,626 9,738 9,651 10,726 12,082 12,434 12,155 14,538 14,892 15,957 17,584 6.2 5.3 7.2

Shares (%)Shares (%) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Commonwealth 50.1 48.0 48.2 47.6 46.3 46.6 51.4 50.8 50.9 51.0 50.9 49.5 47.7 50.4

OECS 8.7 9.4 10.2 9.9 9.9 11.3 10.8 10.6 10.6 7.6 7.5 9.6 10.0 9.6Other CARICOM 32.7 30.0 27.9 27.1 26.9 25.8 29.0 30.4 29.6 30.9 30.1 29.2 28.2 29.4Other Caribbean 8.8 8.6 10.1 10.6 9.5 9.4 11.6 9.8 10.7 12.6 13.4 10.7 9.5 11.4

Hispanic Caribbean 8.0 10.0 9.7 10.2 11.2 13.2 13.1 11.6 12.1 15.5 17.7 12.5 10.6 14.1

Dutch Caribbean 11.5 11.8 10.8 10.8 11.8 11.2 9.4 11.8 11.4 12.5 11.6 11.4 11.3 11.4

French Caribbean 7.2 7.5 8.8 9.5 7.1 6.0 5.2 4.7 3.8 2.5 2.6 5.5 7.6 4.0

US Territories 23.1 22.7 22.5 21.8 23.6 23.0 21.0 21.1 21.8 18.4 17.1 21.1 22.8 20.2

Caribbean Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Note: Regional groupings include OECS, Other CARICOM (non-OECS), Other Commonwealth (Anguilla, BVI, Bermuda, Cayman Islands and Turks & Caicos Islands), Hispanic Caribbean (Cancun and Cozumel-Mexico, Cuba and the Dominican Republic), Dutch Caribbean (Aruba, Bonaire, Curacao, Saba, St. Eustatius, St. Maarten), French Caribbean (Guadeloupe and Martinique), and US Territories (Puerto Rico and USVI).Source: Caribbean Tourism Organization.

53

Table 8. OECS Tourism Satellite Account, 1993-2003

Avg Annual Growth (%)US$ millions 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-00 00-03Travel & Tourism Consumption 965 984 986 1,041 1,101 1,142 1,216 1,184 1,109 1,111 1,128 1.6 3.0 -1.6

Personal Travel & Tourism 124 138 140 161 170 181 195 195 189 195 202 5.0 6.7 1.1Business Travel 42 44 50 52 57 64 68 73 69 71 74 5.8 8.2 0.5Government Expenditures 23 22 22 23 24 26 28 29 32 34 34 4.0 3.3 5.5Visitor Exports 776 780 774 805 851 870 926 887 820 812 819 0.5 1.9 -2.6

Collective Gov't Expenditures 45 51 50 55 56 60 63 66 72 79 77 5.6 5.7 5.4

Capital Investment 245 263 322 279 313 311 337 363 371 359 391 4.8 5.8 2.6

Exports (Non-Visitor) 11 8 10 8 7 9 10 11 9 12 10 -1.0 0.0 -3.4

Travel & Tourism Demand 1,266 1,306 1,368 1,382 1,478 1,522 1,626 1,623 1,561 1,561 1,607 2.4 3.6 -0.3

Travel & Tourism GDP 1,086 1,110 1,115 1,110 1,218 1,243 1,311 1,283 1,244 1,237 1,257 1.5 2.4 -0.7

Note: GDP is for total economy (includes direct and indirect value-added).Source: WTTC (2004).

54

Table 9. OECS: Foreign Direct Investment Inflows by Sector, 1997-2003

AverageUS$ millions 1997 1998 1999 2000 2001 2002 2003 1997-2003Tourism 107.9 177.7 225.3 156.2 124.5 143.8 124.2 151.4Manufacturing 2.7 0.4 1.1 2.9 5.0 0.6 2.1 2.1Transportation 0.0 0.0 1.1 0.0 0.0 0.0 0.0 0.2Construction 5.2 2.2 0.0 0.0 0.0 0.0 22.0 4.2Sporting 3.7 14.8 3.1 0.0 0.0 0.0 0.0 3.1Medical 0.0 0.0 0.0 0.0 0.6 0.9 0.0 0.2Financial 0.0 0.0 0.0 0.0 0.6 3.1 0.0 0.5Banking and Insurance 2.6 0.0 2.0 0.7 0.0 0.0 0.0 0.8Commercial 3.8 0.2 0.0 11.8 2.2 0.0 0.0 2.6Petroleum 2.7 1.7 0.7 0.0 0.0 0.0 0.0 0.7Education 0.0 7.4 5.2 0.0 0.0 0.0 5.8 2.6Agriculture 0.0 0.0 5.6 1.5 0.7 1.7 1.1 1.5Other 50.9 33.1 33.1 79.1 130.9 103.7 241.8 96.1Total FDI 179.5 237.4 277.3 252.4 264.6 253.8 397.0 266.0

AverageShare (%) 1997 1998 1999 2000 2001 2002 2003 1997-2003Tourism 60.1 74.8 81.2 61.9 47.0 56.7 31.3 56.9Manufacturing 1.5 0.2 0.4 1.2 1.9 0.2 0.5 0.8Transportation 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.1Construction 2.9 0.9 0.0 0.0 0.0 0.0 5.5 1.6Sporting 2.1 6.2 1.1 0.0 0.0 0.0 0.0 1.2Medical 0.0 0.0 0.0 0.0 0.2 0.3 0.0 0.1Financial 0.0 0.0 0.0 0.0 0.2 1.2 0.0 0.2Banking and Insurance 1.4 0.0 0.7 0.3 0.0 0.0 0.0 0.3Commercial 2.1 0.1 0.0 4.7 0.8 0.0 0.0 1.0Petroleum 1.5 0.7 0.3 0.0 0.0 0.0 0.0 0.3Education 0.0 3.1 1.9 0.0 0.0 0.0 1.5 1.0Agriculture 0.0 0.0 2.0 0.6 0.3 0.7 0.3 0.6Other 28.4 13.9 11.9 31.4 49.5 40.9 60.9 36.1Total FDI 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memorandum: FDI Inflows to Tourism Sectors1997 1998 1999 2000 2001 2002 2003

Anguilla 11.2 18.6 31.3 35.3 19.0 16.0 7.1Antigua & Barbuda 2.0 13.9 21.5 7.3 19.6 10.3 4.1Dominica 3.1 0.7 7.8 3.6 5.9 4.9 3.6Grenada 0.3 7.4 7.4 14.7 16.0 27.0 38.8St. Kitts & Nevis 4.0 16.5 45.7 51.8 62.7 67.9 40.5St. Lucia 9.3 42.6 69.0 26.7 0.0 14.4 22.7St. Vincent & Grens. 78.0 78.0 42.6 16.9 1.2 3.3 7.3OECS 107.9 177.7 225.3 156.2 124.5 143.8 124.2

Source: Eastern Caribbean Central Bank (ECCB).

55

Table 10. Merchandise Exports by Destination, 1993-2003

Shares (%) AAGR (%)Country Exports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03Antigua World 62 44 53 38 38 36 38 43 40 46 47 100.0 100.0 100.0 -2.7 -10.3 5.5 & Barbuda US and Canada 15 5 3 10 6 4 2 2 4 4 13 14.3 16.1 11.9 -1.4 -24.5 28.7

CARICOM (non-OECS) 1 1 1 2 2 2 2 2 2 2 3 3.8 3.0 4.7 14.0 17.5 10.6OECS 1 1 1 1 2 1 3 2 2 3 3 4.1 2.4 5.7 19.5 12.8 26.6Latin America 4 11 19 4 5 5 4 5 4 5 6 14.8 17.9 11.3 3.2 4.1 2.2EU 4 12 9 12 5 11 6 7 6 6 5 17.0 19.8 16.0 2.0 24.0 -16.1Rest of World 37 13 20 9 18 13 22 25 21 26 18 46.1 40.9 50.5 -7.3 -18.5 5.6

Intra-OECS 1 1 1 1 2 1 3 2 2 3 3 4.1 2.4 5.7 19.5 12.8 26.6Intra-CARICOM 1 2 2 3 4 3 5 4 4 5 6 7.8 5.4 10.4 16.6 15.6 17.6Extra-regional 61 42 51 35 34 33 34 39 35 41 41 92.2 94.6 89.6 -3.8 -11.3 4.3

Dominica World 49 46 47 52 53 62 56 56 45 45 41 100.0 100.0 100.0 -1.9 4.8 -8.1US and Canada 3 4 4 4 4 3 4 5 3 5 3 7.6 6.9 7.8 0.1 1.8 -1.6CARICOM (non-OECS) 9 10 12 17 20 27 23 22 19 17 18 34.9 30.3 41.2 7.9 25.1 -7.0OECS 6 6 7 7 7 9 8 9 9 8 8 15.5 14.3 16.7 2.5 8.2 -3.0Latin America 0 0 0 0 0 1 0 0 0 0 0 0.5 0.6 0.8 3.6 104.7 -47.6EU 26 22 18 23 21 19 19 18 13 12 10 36.1 41.4 29.7 -9.2 -6.1 -12.2Rest of World 5 5 5 1 1 3 1 2 2 3 1 5.3 6.5 3.8 -12.8 -12.7 -13.0

Intra-OECS 6 6 7 7 7 9 8 9 9 8 8 15.5 14.3 16.7 2.5 8.2 -3.0Intra-CARICOM 15 16 20 24 27 36 32 32 27 25 26 50.5 44.6 57.9 5.9 19.2 -5.9Extra-regional 34 30 27 28 26 26 25 25 18 21 14 49.5 55.4 42.1 -8.4 -5.2 -11.5

Grenada World 27 27 23 21 28 43 40 81 63 44 51 100.0 100.0 100.0 6.7 10.2 3.3US and Canada 11 9 8 5 7 16 9 38 24 14 18 35.4 32.8 37.0 5.2 8.5 2.1CARICOM (non-OECS) 4 4 3 2 5 5 5 5 8 7 6 11.7 13.4 10.9 3.8 6.0 1.6OECS 4 4 4 5 6 6 7 9 8 7 8 15.0 16.8 13.9 6.4 8.1 4.6Latin America 1 3 1 2 1 2 4 3 2 1 2 4.3 5.0 3.9 10.4 23.0 -0.9EU 7 7 7 8 9 14 15 24 21 14 17 32.0 30.4 32.8 9.6 15.4 4.1Rest of World 0 0 1 0 0 0 0 2 0 0 1 1.6 1.5 1.5 9.7 -11.7 36.3

Intra-OECS 4 4 4 5 6 6 7 9 8 7 8 15.0 16.8 13.9 6.4 8.1 4.6Intra-CARICOM 8 7 7 6 10 12 11 14 16 14 14 26.7 30.2 24.8 5.2 7.1 3.3Extra-regional 19 20 16 15 18 32 29 67 47 30 37 73.3 69.8 75.2 7.3 11.5 3.2

St Kitts World 29 25 20 25 47 46 30 36 33 29 52 100.0 100.0 100.0 5.9 9.5 2.4 & Nevis US and Canada 10 8 8 5 27 28 21 23 23 27 40 59.7 45.7 72.0 14.4 22.1 7.2

CARICOM (non-OECS) 2 1 0 0 0 0 0 1 0 0 0 1.6 2.2 0.9 -22.5 -36.3 -5.8OECS 3 3 2 1 1 1 1 2 1 1 1 4.3 5.5 2.8 -10.7 -24.6 5.7Latin America 0 0 0 0 0 0 0 0 0 0 0 0.1 0.1 0.1 .. .. ..EU 13 12 8 8 14 12 7 8 8 1 9 26.7 34.5 19.9 -3.1 -1.6 -4.6Rest of World 1 1 1 10 4 5 1 2 1 1 1 7.6 12.0 4.4 -2.8 27.4 -25.9

Intra-OECS 3 3 2 1 1 1 1 2 1 1 1 4.3 5.5 2.8 -10.7 -24.6 5.7Intra-CARICOM 4 4 2 1 2 1 1 3 1 1 1 5.9 7.7 3.6 -13.7 -28.2 3.7Extra-regional 25 21 18 23 45 45 29 33 32 28 51 94.1 92.3 96.4 7.5 12.8 2.4

56

Table 10. Merchandise Exports by Destination, 1993-2003 (Continued)

Shares (%) AAGR (%)Country Exports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03St Lucia World 133 106 124 82 66 64 59 47 50 81 85 100.0 100.0 100.0 -4.4 -13.7 5.8

US and Canada 37 35 40 13 15 10 11 11 10 21 21 24.7 25.9 21.3 -5.6 -23.3 16.0CARICOM (non-OECS) 8 6 8 5 6 7 7 7 9 21 23 12.1 7.1 19.3 11.6 -2.0 27.2OECS 21 9 11 6 4 5 6 6 6 11 14 10.9 9.8 12.2 -4.0 -23.2 20.0Latin America 1 0 0 0 0 0 0 0 1 0 1 0.4 0.3 0.6 1.6 -10.2 15.1EU 66 53 61 56 38 41 34 23 23 27 24 49.6 54.7 44.4 -9.5 -9.2 -9.8Rest of World 2 2 4 2 2 1 1 1 1 2 2 2.3 2.1 2.4 0.7 -16.6 21.5

Intra-OECS 21 9 11 6 4 5 6 6 6 11 14 10.9 9.8 12.2 -4.0 -23.2 20.0Intra-CARICOM 28 16 19 11 10 13 13 12 15 32 37 23.0 16.9 31.5 2.7 -15.1 24.3Extra-regional 105 91 105 71 56 51 47 35 35 49 48 77.0 83.1 68.5 -7.6 -13.3 -1.5

St Vincent World 61 55 63 54 50 53 54 58 51 42 45 100.0 100.0 100.0 -3.0 -3.0 -2.9 & Grens. US and Canada 6 6 7 5 5 4 3 2 2 4 10 9.1 10.0 8.0 4.8 -6.7 17.7

CARICOM (non-OECS) 10 12 11 11 10 11 13 11 15 11 11 21.4 19.3 23.7 1.0 1.8 0.1OECS 18 19 18 15 18 14 15 14 11 10 11 28.0 30.5 25.0 -4.5 -4.6 -4.3Latin America 0 0 0 0 0 0 0 0 0 0 0 0.2 0.2 0.2 0.0 25.6 -20.3EU 26 17 25 22 16 22 21 27 21 16 12 38.5 38.3 39.5 -7.8 -3.3 -12.0Rest of World 1 1 2 1 1 1 2 4 1 2 2 2.7 1.7 3.5 5.4 -4.0 15.6

Intra-OECS 18 19 18 15 18 14 15 14 11 10 11 28.0 30.5 25.0 -4.5 -4.6 -4.3Intra-CARICOM 28 30 29 27 28 25 29 25 26 21 22 49.5 49.8 48.7 -2.2 -2.1 -2.3Extra-regional 34 24 34 27 22 28 25 33 25 21 23 50.5 50.2 51.3 -3.6 -3.8 -3.4

Shares (%) AAGR (%)Country Exports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03OECS World 362 303 330 272 281 304 278 322 282 287 320 100.0 100.0 100.0 -1.2 -3.4 1.1

US and Canada 82 67 70 42 64 66 50 81 67 74 105 23.0 21.1 24.6 2.4 -4.4 9.8CARICOM (non-OECS) 33 34 36 37 43 51 50 48 53 57 61 15.1 12.7 17.9 6.5 9.5 3.6OECS 52 42 44 35 38 37 40 42 36 39 45 13.5 13.4 13.3 -1.5 -6.8 4.0Latin America 6 14 20 6 7 9 8 8 6 7 8 3.0 3.3 2.6 4.1 10.0 -1.4EU 141 123 127 129 103 118 103 106 92 75 77 35.8 40.1 31.9 -5.9 -3.5 -8.3Rest of World 47 23 33 23 26 23 27 36 27 34 25 9.7 9.4 9.6 -6.3 -13.7 1.8

Intra-OECS 52 42 44 35 38 37 40 42 36 39 45 13.5 13.4 13.3 -1.5 -6.8 4.0Intra-CARICOM 85 76 80 73 81 88 90 90 89 97 106 28.6 26.1 31.3 2.3 0.8 3.8Extra-regional 277 228 250 199 200 216 188 232 192 190 214 71.4 73.9 68.7 -2.5 -4.9 -0.1

Source: Author using UN-COMTRADE (with some estimates using IMF, USITC and WTO data).

57

Table 11. Merchandise Imports by Origin, 1993-2003

Shares (%) AAGR (%)Country Imports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03Antigua World 168 363 298 318 296 416 818 917 584 693 530 100.0 100.0 100.0 12.2 19.9 4.9 & Barbuda US and Canada 88 70 112 112 101 111 113 158 113 96 154 22.7 31.9 18.8 5.7 4.8 6.7

CARICOM (non-OECS) 9 35 37 34 37 39 48 32 35 41 47 7.3 10.3 6.1 17.6 33.2 3.7OECS 6 6 7 7 9 9 11 12 11 12 14 1.9 2.4 1.8 8.8 7.4 10.3Latin America 3 3 4 4 3 3 3 34 36 35 33 3.0 1.1 3.7 26.8 2.0 57.5EU 55 238 120 113 128 212 603 619 293 376 157 54.0 46.6 57.1 10.9 30.8 -5.9Rest of World 6 11 19 48 18 42 40 62 95 134 126 11.1 7.7 12.6 35.6 47.9 24.3

Intra-OECS 6 6 7 7 9 9 11 12 11 12 14 1.9 2.4 1.8 8.8 7.4 10.3Intra-CARICOM 15 41 43 42 46 48 59 44 47 53 61 9.2 12.7 7.8 14.8 25.3 5.1Extra-regional 153 322 255 276 250 369 759 873 537 641 469 90.8 87.3 92.2 11.9 19.3 4.9

Dominica World 94 96 117 130 133 132 133 148 131 116 127 100.0 100.0 100.0 3.1 7.1 -0.8US and Canada 37 36 41 56 59 59 58 62 51 45 51 41.0 41.0 41.6 3.3 9.7 -2.8CARICOM (non-OECS) 16 18 20 24 27 26 26 32 30 28 32 20.6 18.7 22.2 7.2 10.1 4.4OECS 8 10 11 8 8 6 7 7 6 7 6 6.3 7.3 5.1 -2.4 -4.7 -0.1Latin America 3 3 4 5 6 7 7 10 9 8 9 5.2 4.0 6.3 11.2 18.5 4.2EU 18 17 29 25 22 21 19 21 20 16 17 16.7 18.9 14.6 -0.8 2.3 -3.7Rest of World 11 11 12 12 12 13 15 16 14 11 11 10.2 10.1 10.2 -0.1 3.1 -3.2

Intra-OECS 8 10 11 8 8 6 7 7 6 7 6 6.3 7.3 5.1 -2.4 -4.7 -0.1Intra-CARICOM 24 28 31 32 34 32 33 40 36 35 38 26.9 25.9 27.3 4.8 6.1 3.6Extra-regional 70 68 86 98 99 100 100 108 95 80 89 73.1 74.1 72.7 2.4 7.5 -2.4

Grenada World 125 119 129 151 168 200 202 239 212 199 253 100.0 100.0 100.0 7.3 9.8 4.8US and Canada 48 44 58 69 72 86 91 114 105 91 113 44.7 42.4 46.0 8.9 12.5 5.5CARICOM (non-OECS) 36 31 32 38 43 53 52 54 50 51 56 24.8 26.1 24.2 4.3 7.7 1.1OECS 4 4 3 2 3 3 3 3 3 3 4 1.8 2.2 1.4 -2.0 -8.4 4.8Latin America 5 6 5 5 8 8 9 10 9 10 13 4.5 4.2 4.6 10.2 9.8 10.6EU 20 22 20 23 23 29 25 34 25 26 42 14.4 15.3 13.9 7.8 7.5 8.1Rest of World 11 13 11 14 18 21 22 23 19 18 26 9.8 9.9 9.9 8.5 13.4 3.8

Intra-OECS 4 4 3 2 3 3 3 3 3 3 4 1.8 2.2 1.4 -2.0 -8.4 4.8Intra-CARICOM 41 34 35 40 47 56 55 58 53 53 59 26.6 28.3 25.6 3.8 6.3 1.3Extra-regional 84 85 94 111 121 144 147 181 159 145 194 73.4 71.7 74.4 8.7 11.4 6.1

St Kitts World 118 127 132 146 147 177 153 196 189 201 205 100.0 100.0 100.0 5.7 8.4 3.0 & Nevis US and Canada 66 76 76 84 86 72 98 126 117 139 128 59.6 54.3 60.7 6.9 1.6 12.3

CARICOM (non-OECS) 16 16 19 21 23 30 23 32 29 25 33 15.0 14.8 15.4 7.6 13.2 2.2OECS 4 4 4 5 5 4 5 5 4 5 5 2.7 3.1 2.4 0.4 -2.7 3.6Latin America 3 2 2 3 3 1 3 4 4 3 3 1.7 1.5 1.6 .. .. ..EU 17 14 17 17 18 49 13 17 24 17 24 12.7 15.7 12.7 3.2 23.1 -13.5Rest of World 12 13 14 16 13 22 11 12 11 13 12 8.3 10.7 7.2 0.4 13.5 -11.3

Intra-OECS 4 4 4 5 5 4 5 5 4 5 5 2.7 3.1 2.4 0.4 -2.7 3.6Intra-CARICOM 20 21 23 26 28 34 28 37 34 30 38 17.7 17.9 17.8 6.3 10.4 2.4Extra-regional 97 106 110 120 120 143 125 159 155 171 167 82.3 82.1 82.2 5.5 8.0 3.1

58

Table 11. Merchandise Imports by Origin, 1993-2003 (Continued)

Shares (%) AAGR (%)Country Imports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03St Lucia World 299 302 306 314 332 335 355 355 276 315 393 100.0 100.0 100.0 2.8 2.3 3.2

US and Canada 131 131 128 134 152 147 163 160 124 144 192 44.8 43.6 45.9 3.9 2.3 5.5CARICOM (non-OECS) 46 51 55 57 56 60 67 68 59 62 67 18.1 17.2 18.9 3.7 5.2 2.2OECS 12 13 13 11 15 12 9 9 8 7 12 3.4 4.1 2.8 -0.4 -0.4 -0.5Latin America 12 12 13 14 14 14 14 16 12 16 18 4.4 4.3 4.5 4.2 3.4 5.1EU 58 59 56 58 62 63 59 62 44 53 65 17.8 18.9 17.0 1.2 2.0 0.5Rest of World 40 36 40 39 33 39 42 40 29 33 39 11.4 12.0 10.9 -0.2 -0.6 0.2

Intra-OECS 12 13 13 11 15 12 9 9 8 7 12 3.4 4.1 2.8 -0.4 -0.4 -0.5Intra-CARICOM 59 64 68 68 71 72 77 77 67 69 78 21.5 21.3 21.7 2.9 4.1 1.8Extra-regional 241 238 238 245 261 264 278 278 209 246 315 78.5 78.7 78.3 2.7 1.8 3.6

St Vincent World 134 130 134 146 182 192 201 162 186 178 201 100.0 100.0 100.0 4.2 7.5 0.9 & Grens. US and Canada 54 49 55 61 77 82 82 66 71 76 89 41.3 41.1 41.6 5.0 8.5 1.7

CARICOM (non-OECS) 29 31 33 35 41 44 44 46 49 47 53 24.5 23.2 25.3 6.2 8.8 3.7OECS 3 3 3 3 4 3 3 2 2 3 4 1.8 2.1 1.6 3.9 3.0 4.9Latin America 5 4 4 8 10 8 8 8 11 9 13 4.8 4.3 5.1 9.4 9.9 8.8EU 32 32 29 28 37 42 46 25 39 27 26 19.7 21.8 18.4 -2.2 5.6 -9.4Rest of World 11 10 10 11 15 13 18 13 14 15 18 8.0 7.6 8.1 5.0 4.1 6.0

Intra-OECS 3 3 3 3 4 3 3 2 2 3 4 1.8 2.1 1.6 3.9 3.0 4.9Intra-CARICOM 31 34 36 38 44 47 47 49 51 50 57 26.3 25.2 26.8 6.0 8.4 3.8Extra-regional 102 96 98 108 138 145 154 113 136 128 145 73.7 74.8 73.2 3.5 7.2 -0.1

Shares (%) AAGR (%)Country Imports (US$ mn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03OECS World 938 1,138 1,117 1,205 1,259 1,453 1,861 2,016 1,579 1,702 1,709 100.0 100.0 100.0 6.2 9.1 3.3

US and Canada 424 407 471 515 546 557 606 686 582 591 727 38.3 41.1 36.3 5.5 5.6 5.5CARICOM (non-OECS) 153 182 196 209 227 251 261 265 253 253 287 15.9 17.1 15.2 6.5 10.4 2.7OECS 38 40 41 37 43 37 38 38 35 37 44 2.7 3.3 2.2 1.6 -0.6 3.8Latin America 31 30 31 40 44 42 45 83 81 81 89 3.7 3.1 4.1 11.1 6.3 16.2EU 201 384 272 265 289 416 765 778 446 516 330 29.2 25.7 31.5 5.1 15.7 -4.5Rest of World 91 95 106 139 109 151 147 165 183 223 231 10.3 9.7 10.7 9.8 10.6 8.9

Intra-OECS 38 40 41 37 43 37 38 38 35 37 44 2.7 3.3 2.2 1.6 -0.6 3.8Intra-CARICOM 191 222 237 247 270 288 298 304 288 290 331 18.6 20.5 17.4 5.7 8.6 2.9Extra-regional 747 915 880 958 989 1,165 1,563 1,712 1,291 1,411 1,378 81.4 79.5 82.6 6.3 9.3 3.4

Source: Author using UN-COMTRADE (with some estimates using IMF, USITC and WTO data).

59

Table 12. Intra-regional Merchandise Trade, 1993-2003

Exports (US$ mn) Shares (%) Avg Ann Growth (%)Reporter Partner 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03OECS CARICOM 85.0 75.6 79.8 72.5 81.4 88.2 90.1 90.1 89.1 96.8 106.2 100.0 100.0 100.0 2.3 0.8 3.8

Antigua & Barbuda 7.8 7.8 8.5 7.9 9.6 9.0 10.9 10.7 9.0 8.7 9.1 10.4 10.5 10.3 1.5 2.8 0.2The Bahamas 0.2 0.2 0.2 0.3 0.2 0.1 0.1 0.1 0.1 0.5 0.3 0.2 0.2 0.2 4.1 -21.9 38.9Barbados 8.1 9.8 12.1 8.2 10.7 11.7 15.7 14.9 16.5 16.7 15.2 14.6 12.5 16.2 6.5 7.7 5.4Belize 0.3 0.3 0.3 0.2 0.3 0.1 0.2 0.2 0.2 0.2 0.7 0.3 0.3 0.3 9.7 -12.6 37.7Dominica 19.6 9.7 10.7 7.1 5.4 6.0 5.8 6.3 5.4 6.5 7.1 9.4 12.1 6.6 -9.7 -21.2 3.5Grenada 5.1 3.5 4.9 3.2 3.9 3.6 4.0 3.5 3.2 4.1 5.3 4.6 5.0 4.2 0.3 -6.7 7.9Guyana 3.3 4.2 4.8 4.9 5.4 5.9 5.1 5.4 5.5 5.6 6.5 5.9 5.9 6.1 7.1 12.3 2.2Jamaica 6.9 7.2 6.8 12.1 13.4 18.5 15.9 14.9 12.9 11.8 11.1 13.8 13.4 15.2 4.9 21.7 -9.7Montserrat 1.2 1.7 1.2 0.8 1.0 0.4 0.9 0.9 0.8 0.7 0.7 1.1 1.3 0.8 -5.9 -18.6 8.8St. Kitts & Nevis 3.7 5.2 3.5 3.5 4.0 3.9 6.6 8.5 5.7 5.9 6.7 6.0 5.0 6.7 6.0 1.0 11.2St. Lucia 10.7 10.8 11.9 9.8 11.5 10.9 9.4 9.7 9.2 8.8 9.6 11.8 13.6 10.3 -1.1 0.5 -2.6St Vincent 3.4 2.6 2.7 2.7 2.8 2.9 2.1 1.9 2.3 4.0 5.9 3.5 3.6 3.4 5.5 -3.5 15.2Suriname 0.3 0.3 0.2 0.9 1.2 0.4 0.7 0.8 1.0 1.0 1.1 0.8 0.7 0.9 12.3 1.4 24.3Trinidad & Tobago 14.3 12.3 12.1 11.1 12.3 14.9 12.6 12.1 17.2 22.3 27.1 17.6 16.0 18.9 6.6 0.8 12.7

Imports (US$ mn) Shares (%) Avg Ann Growth (%)Reporter Partner 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03 93-03 93-98 98-03OECS CARICOM 191.2 222.9 237.8 247.1 270.4 288.1 298.8 304.2 288.3 290.6 331.7 100.0 100.0 100.0 5.7 8.5 2.9

Antigua & Barbuda 3.5 3.1 2.2 2.7 5.1 1.5 3.1 2.7 2.2 2.4 3.2 1.1 1.2 0.8 -0.8 -14.9 15.5The Bahamas 1.7 0.1 0.1 0.2 2.4 0.4 0.3 0.4 0.4 0.5 0.6 0.2 0.3 0.2 -9.4 -24.9 9.2Barbados 28.0 28.7 36.6 36.6 41.0 46.2 43.2 40.1 36.0 37.5 38.9 13.9 14.9 13.4 3.4 10.6 -3.4Belize 0.2 0.4 0.5 0.5 0.6 0.4 0.5 0.5 0.6 0.6 0.7 0.2 0.2 0.2 11.8 12.5 11.0Dominica 6.3 7.3 7.1 7.8 7.9 10.1 8.9 8.0 6.9 7.4 8.2 2.9 3.2 2.7 2.6 9.7 -4.0Grenada 4.0 3.7 4.1 4.3 6.7 4.8 5.8 8.0 8.7 7.9 10.4 2.3 1.9 2.5 10.0 3.6 16.8Guyana 7.6 9.6 10.8 8.5 11.0 12.6 13.5 16.6 15.6 15.2 16.0 4.6 4.1 5.0 7.8 10.7 4.8Jamaica 16.7 17.2 16.2 17.0 16.9 11.6 12.7 12.7 12.7 15.1 16.3 5.6 6.6 4.5 -0.2 -7.1 7.1Montserrat 0.1 0.3 0.1 0.3 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 -15.7 -28.3 -1.0St. Kitts & Nevis 1.1 1.2 1.3 1.1 1.0 1.0 0.9 0.9 0.8 0.7 0.7 0.4 0.5 0.3 -3.9 -2.0 -5.8St. Lucia 5.4 7.1 9.3 5.3 4.8 4.5 6.5 7.3 7.8 10.1 11.7 2.7 2.5 2.7 8.1 -3.4 20.8St. Vincent & Grens. 17.5 17.4 17.3 15.8 17.5 15.3 12.5 11.5 8.7 7.9 10.1 5.1 6.9 3.7 -5.3 -2.7 -7.8Suriname 0.0 0.0 0.0 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.1 0.1 0.1 82.5 226.3 2.0Trinidad & Tobago 99.1 126.7 132.2 146.6 155.2 179.7 190.6 195.2 187.5 184.9 214.4 61.0 57.6 64.0 8.0 12.7 3.6


60

Table 13. OECS: Merchandise Trade by Sector, 1993-2003

Total Exports Shares (%)US$ millions 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Ag. Raw Materials 1 1 1 1 0 0 0 0 1 0 1 0.3 0.3 0.2Food 177 149 163 153 147 109 142 123 117 109 101 54.2 61.0 48.7Ores & Metals 0 1 1 1 1 0 2 2 2 2 2 0.5 0.3 0.7Fuels 0 0 0 0 0 0 0 0 0 9 12 0.8 0.0 1.5Manufactures 121 108 113 79 91 50 96 153 122 119 157 44.0 38.1 48.6Misc. Manufs. 0 0 0 0 4 0 0 0 0 2 2 0.3 0.3 0.3Total 300 259 277 234 243 160 240 278 242 241 273 100.0 100.0 100.0

Intra-regional Exports Shares (%)US$ millions 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Ag. Raw Materials 0 0 0 0 0 0 0 0 0 0 0 0.1 0.1 0.1Food 36 32 35 30 36 30 38 38 41 35 37 44.1 46.3 44.0Ores & Metals 0 0 0 0 0 0 1 0 0 0 0 0.3 0.1 0.4Fuels 0 0 0 0 0 0 0 0 0 9 12 2.4 0.1 4.2Manufactures 47 41 43 40 41 18 47 47 44 47 51 52.9 53.3 51.0Misc. Manufs. 0 0 0 0 0 0 0 0 0 1 1 0.2 0.0 0.3Total 84 74 78 70 77 49 86 86 85 92 100 100.0 100.0 100.0

Total Imports Shares (%)US$ millions 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Ag. Raw Materials 18 21 20 15 23 17 23 26 21 23 25 2.3 2.4 2.2Food 190 190 206 186 233 177 230 239 223 222 243 23.1 24.7 22.0Ores & Metals 5 6 6 6 12 6 8 8 8 8 7 0.8 0.9 0.7Fuels 56 47 54 58 73 48 71 99 92 86 111 7.9 7.0 8.4Manufactures 501 509 533 475 620 479 710 727 650 669 793 65.9 65.0 66.6Misc. Manufs. 0 0 0 0 1 0 0 0 0 0 0 0.0 0.0 0.0Total 770 774 819 741 962 727 1,043 1,099 995 1,008 1,179 100.0 100.0 100.0

Intra-regional Imports Shares (%)US$ millions 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 93-03 93-98 98-03Ag. Raw Materials 1 1 1 1 1 1 1 1 1 1 1 0.5 0.5 0.5Food 53 55 59 47 68 52 69 70 67 63 70 28.5 30.1 27.4Ores & Metals 1 2 2 1 3 1 2 1 2 2 2 0.8 0.9 0.7Fuels 36 34 40 39 53 34 58 82 76 71 87 25.8 21.1 28.7Manufactures 83 89 93 78 99 86 110 105 96 100 111 44.4 47.4 42.7Misc. Manufs. 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0Total 175 181 194 167 224 174 240 260 241 237 270 100.0 100.0 100.0

Note: OECS excludes Antigua & Barbuda and Montserrat due to lack of comparable data.Source: Author using UN-COMTRADE.

61

Table 14. Top 20 Exports to the World, 1993-1996 and 2000-2003

OECS 1993-1996 OECS 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share0573 "Bananas,fresh or dried" 37.0 37.0 0573 "Bananas,fresh or dried" 17.8 17.85541 Soap;organic surface-active product 5.2 42.3 7721 "Elect.app.such as switches,relays,f" 9.1 26.90611 "Sugars,beet and cane,raw,solid" 4.0 46.3 07524 "Nutmeg,mace and cardamoms" 5.1 32.0

04601 Flour of wheat or of meslin 3.5 49.8 5541 Soap;organic surface-active product 4.5 36.584521 "Dresses,skirts,suits etc,of wool or" 2.5 52.3 04601 Flour of wheat or of meslin 3.6 40.107524 "Nutmeg,mace and cardamoms" 1.7 54.0 1123 "Beer made from malt (includ.ale,sto 3.0 43.11123 "Beer made from malt (includ.ale,sto 1.7 55.6 5530 Perfumery,cosmetics,etc 2.5 45.6

04221 "Rice,semi/wholly milled,excl.broke 1.6 57.2 77884 "Elect.capacitors,condensers, fixed " 2.2 47.87721 "Elect.app.such as switches,relays,f" 1.5 58.7 7599 Parts of and accessories suitable f 2.2 50.0

05481 "Manioc,arrowroot,salep,jerusalem a 1.5 60.1 77323 Electrical insulators of ceramic ma 2.1 52.184512 "Jerseys,pull-overs,etc.of cotton" 1.5 61.6 0611 "Sugars,beet and cane,raw,solid" 1.9 54.084651 Brassieres 1.2 62.8 33421 Kerosene (including kerosene type j 1.8 55.80721 "Cocoa beans,whole or broken,raw o 1.2 64.0 05481 "Manioc,arrowroot,salep,jerusalem a 1.6 57.4

64174 "Paper & paperboard,corrugated,emb 1.1 65.1 79321 Yachts & other vessels for pleasure 1.6 59.011102 "Lemonade,flavoured spa waters & f 0.9 66.0 7810 "Passenger motor cars,for transport " 1.3 60.20341 "Fish,fresh(live/dead)or chilled,exc" 0.9 66.9 11102 "Lemonade,flavoured spa waters & f 1.2 61.57643 Radiotelegraphic & radiotelephonic 0.7 67.7 7643 Radiotelegraphic & radiotelephonic 1.2 62.7

53342 Other paints & enamels;varnishes & 0.7 68.3 04221 "Rice,semi/wholly milled,excl.broke 1.2 63.88933 Ornamental art.and objects of mat.o 0.6 69.0 7723 "Resistors,fixed or variable and par" 1.1 64.9

04212 "Rice,husked but not further prepare 0.6 69.6 08199 Sweetened forage; other preptns.for 0.9 65.8Top 20 Exports 69.6 Top 20 Exports 65.8Total (1,098 products) 100.0 Total (1,077 products) 100.0

Note: OECS includes Dominica, Grenada, St Kitts & Nevis, St Lucia and St Vincent & the Grens.

Dominica 1993-1996 Dominica 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share0573 "Bananas,fresh or dried" 44.4 44.4 5541 Soap;organic surface-active product 24.7 24.75541 Soap;organic surface-active product 28.6 73.0 0573 "Bananas,fresh or dried" 21.2 46.0

05481 "Manioc,arrowroot,salep,jerusalem a 2.9 76.0 5530 Perfumery,cosmetics,etc 13.8 59.853342 Other paints & enamels;varnishes & 2.5 78.4 59141 Disinfectants packed for sale etc. 3.6 63.45542 "Organic surface-active agents,n.e.s" 1.9 80.3 5542 "Organic surface-active agents,n.e.s" 3.6 66.95530 Perfumery,cosmetics,etc 1.2 81.5 05481 "Manioc,arrowroot,salep,jerusalem a 2.9 69.9

09804 Sauces;mixed condiments and mixed 0.9 82.4 53342 Other paints & enamels;varnishes & 2.9 72.805797 "Avocados,mangoes,guavas,fresh or 0.9 83.3 09804 Sauces;mixed condiments and mixed 2.4 75.205722 "Grapefruit,fresh or dried" 0.9 84.2 2733 "Sands,natural,of all kinds,whether " 2.1 77.359141 Disinfectants packed for sale etc. 0.7 84.9 2734 Pebbles and crushed or broken stone 1.6 78.905459 "Vegetables,fresh or chilled,n.e.s." 0.7 85.6 05797 "Avocados,mangoes,guavas,fresh or 1.4 80.307521 Vanilla 0.6 86.2 05711 "Oranges,fresh or dried" 1.2 81.52734 Pebbles and crushed or broken stone 0.5 86.7 05722 "Grapefruit,fresh or dried" 0.9 82.4

05711 "Oranges,fresh or dried" 0.5 87.2 05771 "Coconuts,fresh or dried,shelled or " 0.7 83.15839 Other polymerization and copolimer 0.4 87.7 05459 "Vegetables,fresh or chilled,n.e.s." 0.6 83.8

85101 "Footwear with outer soles & uppers 0.4 88.1 71623 Generating sets with int.comb.pisto 0.6 84.489931 "Candles,tapers,night-lights and the" 0.4 88.5 72342 "Mechanical shovels & excavators,s 0.6 85.08931 Art.for the conveyance or packing o 0.4 88.9 71622 "Generators,alternating current" 0.6 85.62733 "Sands,natural,of all kinds,whether " 0.3 89.2 05798 Other fresh fruit 0.6 86.17810 "Passenger motor cars,for transport " 0.3 89.5 11102 "Lemonade,flavoured spa waters & f 0.5 86.7

Top 20 Exports 89.5 Top 20 Exports 86.7Total (529 products) 100.0 Total (510 products) 100.0

Note: Exports include re-exports and represent total sum for the period.Source: UN-COMTRADE.

62

Table 14. Top 20 Exports to the World, 1993-1996 and 2000-2003 (Cont'd)

Grenada 1993-1996 Grenada 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share07524 "Nutmeg,mace and cardamoms" 18.3 18.3 07524 "Nutmeg,mace and cardamoms" 21.9 21.90721 "Cocoa beans,whole or broken,raw o 12.0 30.4 7599 Parts of and accessories suitable f 9.3 31.20341 "Fish,fresh(live/dead)or chilled,exc" 9.3 39.6 7721 "Elect.app.such as switches,relays,f" 9.3 40.50573 "Bananas,fresh or dried" 6.6 46.2 77323 Electrical insulators of ceramic ma 9.2 49.7

04601 Flour of wheat or of meslin 5.4 51.6 04601 Flour of wheat or of meslin 7.0 56.784843 "Hats & other headgear,knitted or cr 4.9 56.5 0342 "Fish,frozen (excluding fillets)" 3.2 59.989399 "Other articles,n.e.s.of mat.of div." 4.4 60.9 64243 "Toilet paper,cut to size,in rolls o" 3.0 63.064243 "Toilet paper,cut to size,in rolls o" 4.1 65.0 79382 "Light vessels,fire-floats,dredgers " 3.0 65.969731 Cooking apparatus & plate warmers 2.7 67.7 0341 "Fish,fresh(live/dead)or chilled,exc" 2.5 68.577521 Refrigerators of household type 2.6 70.3 0721 "Cocoa beans,whole or broken,raw o 2.3 70.711102 "Lemonade,flavoured spa waters & f 2.4 72.7 08199 Sweetened forage; other preptns.for 2.0 72.705798 Other fresh fruit 2.3 75.1 72346 "Other excavating,levelling,extracti" 1.7 74.453342 Other paints & enamels;varnishes & 2.3 77.4 72848 Other mach.having individual functi 1.6 76.00342 "Fish,frozen (excluding fillets)" 2.2 79.6 71623 Generating sets with int.comb.pisto 1.4 77.4

69605 "Other articles of cutlery,secateurs" 2.0 81.6 81242 Lamps & lighting fittings of base m 1.3 78.705797 "Avocados,mangoes,guavas,fresh or 1.7 83.3 72342 "Mechanical shovels & excavators,s 1.3 79.90360 "Crustaceans and molluscs,fresh,chi 1.6 84.9 89399 "Other articles,n.e.s.of mat.of div." 1.0 81.0

08199 Sweetened forage; other preptns.for 1.5 86.4 67491 "Oth.sheets & plates,of oth.than hig" 0.9 81.967491 "Oth.sheets & plates,of oth.than hig" 0.8 87.2 84629 "Other under garments,knitted,of cot 0.8 82.764284 "Handkerchiefs,cleansing tissues,& o 0.7 87.9 53342 Other paints & enamels;varnishes & 0.8 83.5


St. Kitts & Nevis 1993-1996 St. Kitts & Nevis 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share0611 "Sugars,beet and cane,raw,solid" 43.4 43.4 7721 "Elect.app.such as switches,relays,f" 47.6 47.67721 "Elect.app.such as switches,relays,f" 12.9 56.3 77884 "Elect.capacitors,condensers, fixed " 15.3 62.9

71621 Elect.motors other than direct curr 4.0 60.2 0611 "Sugars,beet and cane,raw,solid" 13.2 76.17169 Parts of rotating electric plant 3.8 64.1 89283 "Unused postage,revenue and simila 3.9 79.9

11102 "Lemonade,flavoured spa waters & f 3.1 67.2 76493 "Parts of a apparatus of 761--,762--" 1.6 81.509141 Margarine 1.9 69.1 11102 "Lemonade,flavoured spa waters & f 1.5 83.072341 "Bulldozers,angledozers & levellers, 1.6 70.7 72342 "Mechanical shovels & excavators,s 1.0 84.07161 "Motors & generators,direct current" 1.5 72.2 7169 Parts of rotating electric plant 0.8 84.8

88412 "Lenses,prisus,mirrors,optical eleme 1.2 73.4 7810 "Passenger motor cars,for transport " 0.7 85.589283 "Unused postage,revenue and simila 1.1 74.6 84394 Other outer garments of man made f 0.7 86.209149 Imitation lard & other prepated edi 1.1 75.7 09141 Margarine 0.6 86.87810 "Passenger motor cars,for transport " 1.0 76.7 79321 Yachts & other vessels for pleasure 0.6 87.4

72342 "Mechanical shovels & excavators,s 0.9 77.6 7642 "Microphones,loudspeakers,amplifie 0.5 87.969401 "Nails,tacks,staples,spiked cramps,s" 0.8 78.4 0360 "Crustaceans and molluscs,fresh,chi 0.5 88.576493 "Parts of a apparatus of 761--,762--" 0.7 79.1 6911 Structures & parts of struc.;iron/s 0.5 89.066332 "Articles of cement,of concrete/of a" 0.7 79.8 74428 "Other lifting,handling,loading mach 0.5 89.40483 "Macaroni,spaghetti and similar prod 0.6 80.4 69912 "Safes,strong boxes,strong room doo 0.4 89.9

84322 "Suits,costumes,women's,of cotton" 0.6 81.0 89972 "Brooms and brushes etc.of mat,bou 0.4 90.30615 "Molasses,whether or not decolouriz 0.6 81.6 62103 Vulcanized rubber thread and cord 0.4 90.60360 "Crustaceans and molluscs,fresh,chi 0.6 82.2 72722 "Mach.used in bakery,chocolate,mac 0.4 91.0



63

Table 14. Top 20 Exports to the World, 1993-1996 and 2000-2003 (Cont'd)

St. Lucia 1993-1996 St. Lucia 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share0573 "Bananas,fresh or dried" 48.0 48.0 0573 "Bananas,fresh or dried" 30.9 30.9

84521 "Dresses,skirts,suits etc,of wool or" 6.0 54.0 1123 "Beer made from malt (includ.ale,sto 11.5 42.41123 "Beer made from malt (includ.ale,sto 3.6 57.6 33421 Kerosene (including kerosene type j 6.9 49.4

84512 "Jerseys,pull-overs,etc.of cotton" 3.5 61.1 7723 "Resistors,fixed or variable and par" 4.4 53.884651 Brassieres 2.9 64.0 7643 Radiotelegraphic & radiotelephonic 4.2 58.064174 "Paper & paperboard,corrugated,emb 2.7 66.7 7810 "Passenger motor cars,for transport " 3.2 61.18933 Ornamental art.and objects of mat.o 1.5 68.2 84521 "Dresses,skirts,suits etc,of wool or" 2.0 63.17723 "Resistors,fixed or variable and par" 1.3 69.6 76381 Television image and sound recorde 1.7 64.87643 Radiotelegraphic & radiotelephonic 1.3 70.9 11102 "Lemonade,flavoured spa waters & f 1.5 66.3

84393 Other outer garments of cotton 1.1 71.9 65751 "Twine,cordage,ropes and cables,pla 1.2 67.67763 "Diodes,transistors and sim.semi-con 0.8 72.8 84522 "Dresses,skirts,suits etc,of cotton" 1.2 68.7

84411 "Shirts,men's,of cotton" 0.7 73.5 3343 Gas oils 1.0 69.772341 "Bulldozers,angledozers & levellers, 0.7 74.2 11249 Spirits and distilled alcoholic bev 0.9 70.684321 "Suits,costumes,women's,of wool or 0.7 74.9 72342 "Mechanical shovels & excavators,s 0.8 71.37721 "Elect.app.such as switches,relays,f" 0.6 75.5 87429 "Parts,n.e.s.& accessories for the i" 0.8 72.14243 Coconut (copra) oil 0.6 76.0 7763 "Diodes,transistors and sim.semi-con 0.7 72.87810 "Passenger motor cars,for transport " 0.5 76.5 89731 Art.of jewellery & parts of preciou 0.6 73.4

84232 "Trousers,breeches etc.of cotton" 0.5 77.0 7821 Motor vehicles for transport of goo 0.6 74.064243 "Toilet paper,cut to size,in rolls o" 0.4 77.4 0751 Pepper ; pimento 0.6 74.672342 "Mechanical shovels & excavators,s 0.4 77.8 77111 Liquid dielectric transformers 0.5 75.1


St. Vincent & the Grens. 1993-1996 St. Vincent & the Grens. 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share0573 "Bananas,fresh or dried" 38.4 38.4 0573 "Bananas,fresh or dried" 32.0 32.0

04601 Flour of wheat or of meslin 13.8 52.2 04601 Flour of wheat or of meslin 10.6 42.604221 "Rice,semi/wholly milled,excl.broke 7.1 59.3 79321 Yachts & other vessels for pleasure 7.3 49.905481 "Manioc,arrowroot,salep,jerusalem a 4.3 63.6 04221 "Rice,semi/wholly milled,excl.broke 6.1 56.004212 "Rice,husked but not further prepare 2.9 66.5 05481 "Manioc,arrowroot,salep,jerusalem a 5.7 61.708199 Sweetened forage; other preptns.for 2.2 68.7 11102 "Lemonade,flavoured spa waters & f 2.6 64.384333 "Dresses,women's,of man-made fibre 2.1 70.8 08199 Sweetened forage; other preptns.for 2.3 66.667491 "Oth.sheets & plates,of oth.than hig" 1.7 72.5 67491 "Oth.sheets & plates,of oth.than hig" 2.3 68.889731 Art.of jewellery & parts of preciou 1.6 74.1 05797 "Avocados,mangoes,guavas,fresh or 2.1 71.011102 "Lemonade,flavoured spa waters & f 1.3 75.4 04212 "Rice,husked but not further prepare 2.1 73.08931 Art.for the conveyance or packing o 0.9 76.3 8931 Art.for the conveyance or packing o 0.9 74.0

84649 "Under garments,knitted of other fib 0.9 77.2 82192 "Furniture,n.e.s. of wood" 0.9 74.908122 "Bran,sharps & other residues of oth 0.7 77.9 7810 "Passenger motor cars,for transport " 0.9 75.805797 "Avocados,mangoes,guavas,fresh or 0.7 78.6 84399 Other outer garments of other fibre 0.8 76.669731 Cooking apparatus & plate warmers 0.7 79.2 0360 "Crustaceans and molluscs,fresh,chi 0.8 77.47929 "Parts of heading 792--,excl.tyres,e" 0.6 79.9 7822 Special purpose motor lorries and v 0.8 78.27643 Radiotelegraphic & radiotelephonic 0.6 80.5 79381 Vessels specially designed for towi 0.7 78.97821 Motor vehicles for transport of goo 0.6 81.1 7821 Motor vehicles for transport of goo 0.7 79.6

72341 "Bulldozers,angledozers & levellers, 0.6 81.7 78681 "Other vehicles,not mechanically pro 0.7 80.374422 "Ships derricks,cranes,mobile liftin" 0.5 82.2 6353 Builders' carpentry and joinery 0.7 81.0



64

Table 15. Top 20 Exports to CARICOM, 1993-1996 and 2000-2003

OECS 1993-1996 OECS 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share5541 Soap;organic surface-active product 15.6 15.6 5541 Soap;organic surface-active product 11.2 11.2

04601 Flour of wheat or of meslin 12.2 27.8 04601 Flour of wheat or of meslin 10.3 21.41123 "Beer made from malt (includ.ale,sto" 5.6 33.5 1123 "Beer made from malt (includ.ale,sto" 8.4 29.8

04221 "Rice,semi/wholly milled,excl.broken 5.2 38.7 5530 Perfumery,cosmetics,etc 7.3 37.264174 "Paper & paperboard,corrugated,embo 3.8 42.5 33421 Kerosene (including kerosene type j 4.9 42.105481 "Manioc,arrowroot,salep,jerusalem ar 3.0 45.5 0573 "Bananas,fresh or dried" 3.5 45.60573 "Bananas,fresh or dried" 2.9 48.4 11102 "Lemonade,flavoured spa waters & fla 3.0 48.6

11102 "Lemonade,flavoured spa waters & fla 2.5 50.8 04221 "Rice,semi/wholly milled,excl.broken 3.0 51.553342 Other paints & enamels;varnishes & 2.3 53.1 05481 "Manioc,arrowroot,salep,jerusalem ar 2.8 54.308199 Sweetened forage; other preptns.for 2.2 55.3 08199 Sweetened forage; other preptns.for 2.5 56.804212 "Rice,husked but not further prepare" 2.1 57.4 7810 "Passenger motor cars,for transport " 2.3 59.164243 "Toilet paper,cut to size,in rolls o" 2.1 59.5 64243 "Toilet paper,cut to size,in rolls o" 2.2 61.467491 "Oth.sheets & plates,of oth.than hig" 1.7 61.1 53342 Other paints & enamels;varnishes & 2.1 63.569731 Cooking apparatus & plate warmers w 1.4 62.6 5542 "Organic surface-active agents,n.e.s" 1.8 65.477521 Refrigerators of household type 1.4 63.9 59141 Disinfectants packed for sale etc. 1.8 67.25542 "Organic surface-active agents,n.e.s" 1.3 65.2 67491 "Oth.sheets & plates,of oth.than hig" 1.8 69.08931 Art.for the conveyance or packing o 0.9 66.2 05797 "Avocados,mangoes,guavas,fresh or d 1.4 70.4

72341 "Bulldozers,angledozers & levellers," 0.9 67.1 04212 "Rice,husked but not further prepare" 1.1 71.54243 Coconut (copra) oil 0.9 67.9 72346 "Other excavating,levelling,extracti" 0.8 72.47810 "Passenger motor cars,for transport " 0.7 68.6 81242 Lamps & lighting fittings of base m 0.8 73.2


Note: OECS includes Dominica, Grenada, St Kitts & Nevis, St Lucia and St Vincent & the Grens.

Dominica 1993-1996 Dominica 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share5541 Soap;organic surface-active product 63.2 63.2 5541 Soap;organic surface-active product 36.9 36.9

53342 Other paints & enamels;varnishes & 6.3 69.5 5530 Perfumery,cosmetics,etc 24.2 61.15542 "Organic surface-active agents,n.e.s" 4.7 74.2 59141 Disinfectants packed for sale etc. 6.1 67.20573 "Bananas,fresh or dried" 3.2 77.4 5542 "Organic surface-active agents,n.e.s" 6.1 73.35530 Perfumery,cosmetics,etc 2.1 79.5 53342 Other paints & enamels;varnishes & 4.8 78.1

59141 Disinfectants packed for sale etc. 1.7 81.2 0573 "Bananas,fresh or dried" 4.5 82.605481 "Manioc,arrowroot,salep,jerusalem ar 1.3 82.5 05481 "Manioc,arrowroot,salep,jerusalem ar 1.8 84.45839 Other polymerization and copolimeri 1.1 83.6 05711 "Oranges,fresh or dried" 1.4 85.7

89931 "Candles,tapers,night-lights and the" 1.0 84.6 05797 "Avocados,mangoes,guavas,fresh or d 1.2 87.085101 "Footwear with outer soles & uppers, 1.0 85.6 05459 "Vegetables,fresh or chilled,n.e.s." 0.9 87.98931 Art.for the conveyance or packing o 0.9 86.5 05771 "Coconuts,fresh or dried,shelled or " 0.9 88.8

05711 "Oranges,fresh or dried" 0.7 87.2 05798 Other fresh fruit 0.8 89.60483 "Macaroni,spaghetti and similar prod" 0.7 87.9 1222 Cigarettes 0.7 90.31222 Cigarettes 0.6 88.5 5543 "Polishes & creams,for footwear,furn" 0.7 91.07416 Mach.plant & sim.lab.equip.involv.a 0.5 89.1 05721 "Lemons and limes,fresh or dried" 0.6 91.6

05797 "Avocados,mangoes,guavas,fresh or d 0.5 89.6 05722 "Grapefruit,fresh or dried" 0.5 92.17239 Parts of the machinery of 723.41 to 0.5 90.1 2734 Pebbles and crushed or broken stone 0.5 92.67810 "Passenger motor cars,for transport " 0.5 90.5 89931 "Candles,tapers,night-lights and the" 0.5 93.1

05857 Juice of any other fruit or vegetab 0.4 91.0 05857 Juice of any other fruit or vegetab 0.4 93.405459 "Vegetables,fresh or chilled,n.e.s." 0.4 91.4 7810 "Passenger motor cars,for transport " 0.3 93.7



65

Table 15. Top 20 Exports to CARICOM, 1993-1996 and 2000-2003 (Cont'd)

Grenada 1993-1996 Grenada 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share04601 Flour of wheat or of meslin 17.6 17.6 04601 Flour of wheat or of meslin 29.0 29.064243 "Toilet paper,cut to size,in rolls o" 13.2 30.9 64243 "Toilet paper,cut to size,in rolls o" 12.5 41.469731 Cooking apparatus & plate warmers w 8.9 39.7 08199 Sweetened forage; other preptns.for 8.1 49.677521 Refrigerators of household type 8.7 48.4 72346 "Other excavating,levelling,extracti" 5.4 54.953342 Other paints & enamels;varnishes & 7.5 55.9 81242 Lamps & lighting fittings of base m 4.7 59.611102 "Lemonade,flavoured spa waters & fl 5.6 61.6 67491 "Oth.sheets & plates,of oth.than hig" 3.9 63.508199 Sweetened forage; other preptns.for 5.0 66.6 84629 "Other under garments,knitted,of cot" 3.4 66.967491 "Oth.sheets & plates,of oth.than hig" 2.8 69.4 53342 Other paints & enamels;varnishes & 3.2 70.164284 "Handkerchiefs,cleansing tissues,& o" 2.3 71.7 72848 Other mach.having individual functi 2.8 72.805798 Other fresh fruit 1.9 73.6 74422 "Ships derricks,cranes,mobile liftin" 2.5 75.384629 "Other under garments,knitted,of cot" 1.8 75.3 66511 "Carboys,bottles,jars,pots,tubular c" 2.0 77.383101 Handbags 1.6 76.9 7642 "Microphones,loudspeakers,amplifier 1.8 79.272346 "Other excavating,levelling,extracti" 1.5 78.5 73621 "Forging & stamping machines,metalw 1.6 80.77764 Electronic microcircuits 1.1 79.6 7929 "Parts of heading 792--,excl.tyres,e" 1.4 82.17810 "Passenger motor cars,for transport " 1.0 80.6 07524 "Nutmeg,mace and cardamoms" 1.1 83.30360 "Crustaceans and molluscs,fresh,chil" 1.0 81.6 7810 "Passenger motor cars,for transport " 1.1 84.4

07524 "Nutmeg,mace and cardamoms" 0.9 82.5 7821 Motor vehicles for transport of goo 1.1 85.464285 Sanitary towels & tampons of paper/ 0.9 83.4 72342 "Mechanical shovels & excavators,sel 1.0 86.47224 "Wheeled tractors,not incl. in 744.1" 0.8 84.2 11102 "Lemonade,flavoured spa waters & fla 1.0 87.3

88122 "Cinematographic cameras,projectors 0.7 84.9 6911 Structures & parts of struc.;iron/s 0.9 88.3Top 20 Exports 84.9 Top 20 Exports 88.3Total (228 products) 100.0 Total (243 products) 100.0

St. Kitts & Nevis 1993-1996 St. Kitts & Nevis 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share09141 Margarine 13.2 13.2 11102 "Lemonade,flavoured spa waters & fla 22.1 22.172341 "Bulldozers,angledozers & levellers," 12.4 25.6 09141 Margarine 10.5 32.611102 "Lemonade,flavoured spa waters & fl 12.3 37.9 79321 Yachts & other vessels for pleasure 8.5 41.109149 Imitation lard & other prepated edi 7.5 45.4 0483 "Macaroni,spaghetti and similar prod" 6.7 47.872342 "Mechanical shovels & excavators,sel 6.6 52.0 6911 Structures & parts of struc.;iron/s 6.3 54.20483 "Macaroni,spaghetti and similar prod" 4.5 56.5 89283 "Unused postage,revenue and similar 5.1 59.3

74422 "Ships derricks,cranes,mobile liftin" 4.0 60.4 7642 "Microphones,loudspeakers,amplifier 4.9 64.189283 "Unused postage,revenue and similar 3.3 63.7 09149 Imitation lard & other prepated edi 4.5 68.709809 "Food preparations,n.e.s." 2.5 66.2 81242 Lamps & lighting fittings of base m 2.4 71.178612 Trailers & semi-trailers for transp 2.3 68.5 09809 "Food preparations,n.e.s." 1.9 73.07810 "Passenger motor cars,for transport " 1.9 70.4 7161 "Motors & generators,direct current" 1.8 74.87233 "Road rollers,mechanically propelled" 1.7 72.1 66511 "Carboys,bottles,jars,pots,tubular c" 1.7 76.67821 Motor vehicles for transport of goo 1.6 73.6 84233 "Trousers,breeches etc.of man-made f 1.5 78.10615 "Molasses,whether or not decolourize 1.5 75.2 7810 "Passenger motor cars,for transport " 1.3 79.4

84239 "Trousers,breeches etc.of other fibr" 1.2 76.3 11249 Spirits and distilled alcoholic bev 1.2 80.769401 "Nails,tacks,staples,spiked cramps,s" 1.1 77.4 72342 "Mechanical shovels & excavators,sel 1.2 81.87643 Radiotelegraphic & radiotelephonic 0.8 78.2 84239 "Trousers,breeches etc.of other fibr" 1.2 83.0

84411 "Shirts,men's,of cotton" 0.8 79.0 89211 "Printed books,booklets,brochures,le" 1.0 84.06911 Structures & parts of struc.;iron/s 0.7 79.7 0149 Other prepared or preserved meat or 0.9 84.9

79328 "Ships,boats and other vessels,n.e.s" 0.7 80.5 0611 "Sugars,beet and cane,raw,solid" 0.9 85.9Top 20 Exports 80.5 Top 20 Exports 85.9Total (209 products) 100.0 Total (125 products) 100.0


66

Table 15. Top 20 Exports to CARICOM, 1993-1996 and 2000-2003 (Cont'd)

St. Lucia 1993-1996 St. Lucia 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share1123 "Beer made from malt (includ.ale,sto" 21.4 21.4 1123 "Beer made from malt (includ.ale,sto" 31.3 31.3

64174 "Paper & paperboard,corrugated,emb 15.6 37.1 33421 Kerosene (including kerosene type j 18.6 49.94243 Coconut (copra) oil 3.4 40.5 7810 "Passenger motor cars,for transport " 6.1 56.0

64243 "Toilet paper,cut to size,in rolls o" 2.5 43.0 11102 "Lemonade,flavoured spa waters & fla 3.8 59.877521 Refrigerators of household type 2.2 45.2 3343 Gas oils 2.4 62.311102 "Lemonade,flavoured spa waters & fl 2.1 47.2 0573 "Bananas,fresh or dried" 2.0 64.359229 "Prepared glues,n.e.s." 1.7 49.0 7643 Radiotelegraphic & radiotelephonic 1.5 65.772842 Mach. for the rubber & artifical pl 1.3 50.3 11249 Spirits and distilled alcoholic bev 1.4 67.20573 "Bananas,fresh or dried" 0.9 51.2 59229 "Prepared glues,n.e.s." 1.3 68.45912 Fungicides packed for sale etc. 0.9 52.1 74422 "Ships derricks,cranes,mobile liftin" 0.9 69.37810 "Passenger motor cars,for transport " 0.9 53.0 66511 "Carboys,bottles,jars,pots,tubular c" 0.8 70.1

72341 "Bulldozers,angledozers & levellers," 0.9 53.8 7821 Motor vehicles for transport of goo 0.7 70.872849 Parts of the mach.of 723.48 & 727.2 0.7 54.5 8931 Art.for the conveyance or packing o 0.7 71.667491 "Oth.sheets & plates,of oth.than hig" 0.6 55.1 84629 "Other under garments,knitted,of cot" 0.7 72.27721 "Elect.app.such as switches,relays,f" 0.6 55.7 72342 "Mechanical shovels & excavators,sel 0.7 72.97822 Special purpose motor lorries and v 0.6 56.3 53342 Other paints & enamels;varnishes & 0.6 73.5

09804 Sauces;mixed condiments and mixed 0.5 56.8 89731 Art.of jewellery & parts of preciou 0.6 74.105795 "Pineapples,fresh or dried" 0.5 57.4 79321 Yachts & other vessels for pleasure 0.5 74.672346 "Other excavating,levelling,extracti" 0.5 57.9 69735 Domestic-type water heaters and par 0.5 75.165224 Oth.woven fabrics cont.85% of cotto 0.5 58.4 76381 Television image and sound recorder 0.5 75.5


St. Vincent & the Grens. 1993-1996 St. Vincent & the Grens. 2000-2003Share Acc. Share Acc.

Code Product Description (%) Share Code Product Description (%) Share04601 Flour of wheat or of meslin 28.2 28.2 04601 Flour of wheat or of meslin 22.1 22.104221 "Rice,semi/wholly milled,excl.broken 14.0 42.1 04221 "Rice,semi/wholly milled,excl.broken 11.4 33.605481 "Manioc,arrowroot,salep,jerusalem ar 7.2 49.3 05481 "Manioc,arrowroot,salep,jerusalem ar 8.7 42.304212 "Rice,husked but not further prepare" 5.6 55.0 0573 "Bananas,fresh or dried" 6.3 48.50573 "Bananas,fresh or dried" 4.8 59.8 11102 "Lemonade,flavoured spa waters & fla 5.3 53.8

08199 Sweetened forage; other preptns.for 4.5 64.3 08199 Sweetened forage; other preptns.for 4.8 58.667491 "Oth.sheets & plates,of oth.than hig" 3.4 67.6 67491 "Oth.sheets & plates,of oth.than hig" 4.7 63.311102 "Lemonade,flavoured spa waters & fl 2.5 70.1 04212 "Rice,husked but not further prepare" 4.2 67.58931 Art.for the conveyance or packing o 1.9 72.0 05797 "Avocados,mangoes,guavas,fresh or d 3.9 71.4

08122 "Bran,sharps & other residues of oth" 1.4 73.4 8931 Art.for the conveyance or packing o 2.0 73.469731 Cooking apparatus & plate warmers w 1.4 74.8 79381 Vessels specially designed for towi 1.5 74.97643 Radiotelegraphic & radiotelephonic 1.3 76.0 7810 "Passenger motor cars,for transport " 1.5 76.3

05797 "Avocados,mangoes,guavas,fresh or d 1.0 77.0 6912 Structures & parts of struc.;alumin 1.1 77.41123 "Beer made from malt (includ.ale,sto" 1.0 78.0 07526 Ginger (excl.ginger preserved in su 1.0 78.4

67327 "Bars & rods,forged,cold-formed or c 0.8 78.8 6353 Builders' carpentry and joinery 1.0 79.472833 "Mach.for mixing or kneading earth,s 0.8 79.6 0360 "Crustaceans and molluscs,fresh,chil" 0.9 80.305771 "Coconuts,fresh or dried,shelled or " 0.7 80.3 08122 "Bran,sharps & other residues of oth" 0.9 81.279328 "Ships,boats and other vessels,n.e.s" 0.7 81.1 82192 "Furniture,n.e.s. of wood" 0.8 82.077886 Other elect.appl.having individual 0.7 81.8 64243 "Toilet paper,cut to size,in rolls o" 0.8 82.87821 Motor vehicles for transport of goo 0.7 82.4 71622 "Generators,alternating current" 0.7 83.5



67

Table 16. OECS: International Competitiveness of Exports, 1997-2003

Category Count Export ShareChampions 79 36%Achievers in Adversity 14 4%Underachievers 89 53%Declining Sectors 15 6%Total 197 100%

Export Share World Import Export SumCode Product AAGR 97-03 AAGR 97-03 1997-2003 Category

Food and Live Animals001 Live animals chiefly for food -38% 0% 0.0% Underachiever011 Meat,edible meat offals, fresh, chi 9% 3% 0.0% Champion012 Meat & edible offals,salted,in brin -35% 3% 0.0% Underachiever014 Meat & edib.offals,prep./pres.,fish -19% 6% 0.0% Underachiever022 Milk and cream -7% 3% 0.0% Underachiever023 Butter -47% 1% 0.0% Underachiever024 Cheese and curd -25% 5% 0.0% Underachiever025 Eggs and yolks,fresh,dried or other -100% 2% 0.0% Underachiever034 Fish,fresh (live or dead),chilled o -9% 4% 1.8% Underachiever035 Fish,dried,salted or in brine ; smo -3% 2% 0.0% Underachiever036 Crustaceans and molluscs,fresh,chil 21% 2% 0.3% Champion037 Fish,crustaceans and molluscs,prepa -44% 3% 0.0% Underachiever042 Rice -8% 0% 2.0% Declining Sector045 Cereals,unmilled ( no wheat,rice,ba -100% 0% 0.0% Declining Sector046 Meal and flour of wheat and flour o 1% -8% 4.3% Achiever in Adversity047 Other cereal meals and flours 207% 3% 0.0% Champion048 Cereal prepar. & preps. of flour of -1% 7% 0.2% Underachiever054 Vegetab.,fresh,chilled,frozen/pres. -8% 5% 2.0% Underachiever056 Vegetab.,roots & tubers,prepared/pr 41% 3% 0.0% Champion057 Fruit & nuts(not includ. oil nuts), -12% 4% 25.6% Underachiever058 Fruit,preserved,and fruit preparati -2% 4% 0.1% Underachiever061 Sugar and honey -16% -1% 3.5% Declining Sector062 Sugar confectionery and other sugar -45% 5% 0.0% Underachiever071 Coffee and coffee substitutes 4% -8% 0.0% Achiever in Adversity072 Cocoa -12% 9% 0.6% Underachiever073 Chocolate & other food preptns. con -31% 6% 0.0% Underachiever074 Tea and mate -4% 0% 0.0% Underachiever075 Spices 2% 3% 6.2% Champion081 Feed.stuff for animals(not incl.unm 1% 1% 1.1% Champion091 Margarine and shortening -9% 3% 0.2% Underachiever098 Edible products and preparations n. -4% 6% 0.7% Underachiever

Beverages and Tobacco111 Non alcoholic beverages,n.e.s. -3% 10% 1.4% Underachiever112 Alcoholic beverages 8% 5% 3.4% Champion122 Tobacco manufactured -1% 2% 0.1% Underachiever

Crude Materials except Fuels222 Oil seeds and oleaginous fruit,whol 22% 5% 0.0% Champion223 Oils seeds and oleaginous fruit, wh -50% -1% 0.0% Declining Sector245 Fuel wood (excluding wood waste) an -9% 8% 0.0% Underachiever246 Pulpwood (including chips and wood -100% 0% 0.0% Declining Sector247 Other wood in the rough or roughly 100% 0% 0.0% Achiever in Adversity248 Wood,simply worked,and railway slee -24% 0% 0.0% Declining Sector251 Pulp and waste paper -14% 3% 0.1% Underachiever263 Cotton 100% -4% 0.0% Achiever in Adversity268 Wool and other animal hair (excludi -100% -5% 0.0% Declining Sector269 Old clothing and other old textile 9% 0% 0.0% Champion271 Fertilizers,crude 53% -3% 0.0% Achiever in Adversity273 Stone,sand and gravel 9% 2% 0.7% Champion278 Other crude minerals -25% 0% 0.0% Underachiever282 Waste and scrap metal of iron or st 31% 9% 0.0% Champion287 Ores and concentrates of base metal -100% 2% 0.0% Underachiever288 Non-ferrous base metal waste and sc -19% 1% 0.0% Underachiever291 Crude animal materials,n.e.s. 69% 0% 0.0% Achiever in Adversity292 Crude vegetable materials, n.e.s. -4% 3% 0.1% Underachiever

Fuels322 Coal,lignite and peat -42% 2% 0.0% Underachiever334 Petroleum products,refined 94% 8% 0.8% Champion335 Residual petroleum products,nes.& r -100% 7% 0.0% Underachiever341 Gas,natural and manufactured 100% 11% 0.0% Champion

Animal and Vegetable Oils411 Animal oils and fats -9% 0% 0.0% Underachiever423 Fixed vegetable oils,soft,crude,ref -100% 2% 0.0% Underachiever424 Other fixed vegetable oils,fluid or -44% 6% 0.0% Underachiever431 Animal & vegetable oils and fats,pr -100% 5% 0.0% Underachiever

68

Table 16. OECS: International Competitiveness of Exports, 1997-2003 (Cont'd)

Export Share World Import Export SumCode Product AAGR 97-03 AAGR 97-03 1997-2003 Category

Chemicals511 Hydrocarbons nes,& their halogen.& -21% 8% 0.0% Underachiever512 Alcohols,phenols,phenol-alcohols,& -18% 5% 0.0% Underachiever514 Nitrogen-function compounds 100% 10% 0.0% Champion515 Organo-inorganic and heterocyclic c -100% 7% 0.0% Underachiever516 Other organic chemicals -52% 4% 0.0% Underachiever522 Inorganic chemical elements,oxides -4% 3% 0.0% Underachiever523 Other inorganic chemicals -18% 1% 0.0% Underachiever524 Radio-active and associated materia 100% 8% 0.0% Champion531 Synth.org.dyestuffs,etc.nat.indigo -100% -2% 0.0% Declining Sector533 Pigments,paints,varnishes & related -7% 6% 0.9% Underachiever541 Medicinal and pharmaceutical produc 42% 16% 0.1% Champion551 Essential oils,perfume and flavour -8% 9% 0.8% Underachiever553 Perfumery,cosmetics and toilet prep 17% 9% 2.6% Champion554 Soap,cleansing and polishing prepar -12% 7% 6.5% Underachiever562 Fertilizers,manufactured -22% 1% 0.1% Underachiever572 Explosives and pyrotechnic products 41% 6% 0.0% Champion582 Condensation,polycondensation & pol 20% 6% 0.0% Champion583 Polymerization and copolymerization -13% 5% 0.1% Underachiever585 Other artificial resins and plastic -100% 3% 0.0% Underachiever591 Disinfectants,insecticides,fungicid -3% 2% 0.7% Underachiever592 Starches,inulin & wheat gluten;albu -19% 4% 0.3% Underachiever598 Miscellaneous chemical products,n.e -7% 6% 0.0% Underachiever

Manufactures612 Manufactures of leather/of composit -100% 1% 0.0% Underachiever621 Materials of rubber(e.g.,pastes,pla 58% 6% 0.0% Champion625 Rubber tyres,tyre cases,etc.for whe 19% 5% 0.0% Champion628 Articles of rubber,n.e.s. 37% 6% 0.0% Champion634 Veneers,plywood,improved or reconst 51% 2% 0.0% Champion635 Wood manufactures,n.e.s. 9% 5% 0.2% Champion641 Paper and paperboard -16% 4% 0.1% Underachiever642 Paper and paperboard,cut to size or -5% 4% 2.4% Underachiever651 Textile yarn -24% 0% 0.0% Declining Sector652 Cotton fabrics,woven 95% 1% 0.0% Champion653 Fabrics,woven,of man-made fibres 6% -2% 0.0% Achiever in Adversity654 Textil.fabrics,woven,oth.than cotto -100% -2% 0.0% Declining Sector655 Knitted or crocheted fabrics -40% 4% 0.0% Underachiever656 Tulle,lace,embroidery,ribbons,& oth 38% 4% 0.0% Champion657 Special textile fabrics and related 65% 3% 0.1% Champion658 Made-up articles,wholly/chiefly of -39% 9% 0.3% Underachiever659 Floor coverings,etc. -6% -1% 0.0% Declining Sector661 Lime,cement,and fabricated construc -12% 3% 0.0% Underachiever662 Clay construct.materials & refracto 38% 3% 0.0% Champion663 Mineral manufactures,n.e.s -16% 4% 0.1% Underachiever664 Glass 19% 6% 0.0% Champion665 Glassware 14% 4% 0.1% Champion666 Pottery 4% 1% 0.0% Champion672 Ingots and other primary forms,of i -51% 5% 0.0% Underachiever673 Iron and steel bars,rods,angles,sha -32% 3% 0.0% Underachiever674 Universals,plates and sheets,of iro 2% 4% 0.7% Champion678 Tubes,pipes and fittings,of iron or -10% 2% 0.0% Underachiever679 Iron & steel castings,forgings & st -75% 5% 0.0% Underachiever682 Copper 7% 0% 0.0% Champion683 Nickel 100% 8% 0.0% Champion684 Aluminium 323% 4% 0.0% Champion685 Lead 100% -3% 0.0% Achiever in Adversity687 Tin 100% -1% 0.0% Achiever in Adversity689 Miscell.non-ferrous base metals emp -36% -1% 0.0% Declining Sector691 Structures & parts of struc.;iron,s 7% 4% 0.2% Champion692 Metal containers for storage and tr -14% 3% 0.1% Underachiever693 Wire products and fencing grills -16% 2% 0.0% Underachiever694 Nails,screws,nuts,bolts etc.of iron -3% 5% 0.0% Underachiever695 Tools for use in hand or in machine -3% 3% 0.1% Underachiever696 Cutlery 25% 4% 0.0% Champion697 Household equipment of base metal,n 3% 7% 0.1% Champion699 Manufactures of base metal,n.e.s. -2% 6% 0.1% Underachiever

Machine and Transport Equipment711 Steam & other vapour generating boi 100% -4% 0.0% Achiever in Adversity713 Internal combustion piston engines -6% 6% 0.3% Underachiever716 Rotating electric plant and parts -10% 5% 1.1% Underachiever718 Other power generating machinery an 30% 5% 0.0% Champion721 Agricultural machinery and parts 51% 3% 0.0% Champion

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Table 16. OECS: International Competitiveness of Exports, 1997-2003 (Cont'd)

Export Share World Import Export SumCode Product AAGR 97-03 AAGR 97-03 1997-2003 Category722 Tractors fitted or not with power t 24% 1% 0.0% Champion723 Civil engineering & contractors pla 24% 4% 0.9% Champion724 Textile & leather machinery and par -22% -1% 0.0% Declining Sector725 Paper & pulp mill mach.,mach for ma 3% -1% 0.0% Achiever in Adversity726 Printing & bookbinding mach.and par -19% -1% 0.0% Declining Sector727 Food processing machines and parts 58% 0% 0.0% Champion728 Mach.& equipment specialized for pa 31% 2% 0.4% Champion736 Mach.tools for working metal or met -16% 0% 0.1% Underachiever737 Metal working machinery and parts 52% -2% 0.0% Achiever in Adversity741 Heating & cooling equipment and par 19% 3% 0.1% Champion742 Pumps for liquids,liq.elevators and -4% 5% 0.1% Underachiever743 Pumps & compressors,fans & blowers, 1% 6% 0.0% Champion744 Mechanical handling equip.and parts 36% 2% 0.2% Champion745 Other non-electrical mach.tools,app 18% 4% 0.1% Champion749 Non-electric parts and accessories 1% 5% 0.1% Champion751 Office machines 45% -3% 0.0% Achiever in Adversity752 Automatic data processing machines 6% 4% 0.1% Champion759 Parts of and accessories suitable f -15% 5% 1.7% Underachiever761 Television receivers 38% 10% 0.0% Champion762 Radio-broadcast receivers 11% 0% 0.0% Achiever in Adversity763 Gramophones,dictating,sound recorde 48% 13% 0.2% Champion764 Telecommunications equipment and pa 15% 8% 1.0% Champion771 Electric power machinery and parts 5% 3% 0.2% Champion772 Elect.app.such as switches,relays,f 7% 6% 9.1% Champion773 Equipment for distributing electric 56% 4% 1.7% Champion774 Electric apparatus for medical purp 162% 8% 0.0% Champion775 Household type,elect.& non-electric 5% 7% 0.1% Champion776 Thermionic,cold & photo-cathode val -11% 7% 0.2% Underachiever778 Electrical machinery and apparatus, 51% 5% 1.9% Champion781 Passenger motor cars,for transport -15% 7% 0.8% Underachiever782 Motor vehicles for transport of goo 37% 5% 0.4% Champion783 Road motor vehicles,n.e.s. -4% 3% 0.0% Underachiever784 Parts & accessories of 722--,781--, -18% 7% 0.0% Underachiever785 Motorcycles,motor scooters,invalid 21% 5% 0.0% Champion786 Trailers & other vehicles,not motor 57% 7% 0.1% Champion791 Railway vehicles & associated equip -50% 8% 0.0% Underachiever792 Aircraft & associated equipment and 24% 5% 0.1% Champion793 Ships,boats and floating structures 16% 9% 1.2% Champion

Miscellaneous Manufactures812 Sanitary,plumbing,heating,lighting 74% 7% 0.2% Champion821 Furniture and parts thereof 7% 9% 0.3% Champion831 Travel goods,handbags,brief-cases,p -7% 3% 0.1% Underachiever842 Outer garments,men's,of textile fab -6% 2% 0.1% Underachiever843 Outer garments,women's,of textile f -4% 5% 0.4% Underachiever844 Under garments of textile fabrics -22% 1% 0.1% Underachiever845 Outer garments and other articles,k -18% 5% 1.2% Underachiever846 Under garments,knitted or crocheted -8% 6% 0.4% Underachiever847 Clothing accessories of textile fab 12% 4% 0.1% Champion848 Art.of apparel & clothing accessori 1% 3% 0.0% Champion851 Footwear -15% 2% 0.1% Underachiever871 Optical instruments and apparatus -15% 21% 0.0% Underachiever872 Medical instruments and appliances -9% 10% 0.0% Underachiever873 Meters and counters,n.e.s. 32% 5% 0.0% Champion874 Measuring,checking,analysing instru 8% 5% 0.2% Champion881 Photographic apparatus and equipmen 1% 1% 0.1% Champion882 Photographic & cinematographic supp -15% 0% 0.0% Declining Sector883 Cinematograph film,exposed-develope -6% 9% 0.0% Underachiever884 Optical goods,n.e.s. 7% 8% 0.0% Champion885 Watches and clocks 20% 0% 0.1% Champion892 Printed matter 11% 4% 0.4% Champion893 Articles of materials described in -13% 7% 0.6% Underachiever894 Baby carriages,toys,games and sport 9% 4% 0.1% Champion895 Office and stationery supplies,n.e. 6% 3% 0.0% Champion896 Works of art,collectors pieces & an 0% 3% 0.0% Champion897 Jewellery,goldsmiths and other art. -5% 5% 0.2% Underachiever898 Musical instruments,parts and acces 14% 3% 0.1% Champion899 Other miscellaneous manufactured ar -20% 9% 0.2% Underachiever

Other Commodities (not elsewhere specified)941 Animals,live,n.e.s.,incl. zoo-anima 14% 2% 0.0% Champion951 Armoured fighting vehicles,arms of -100% 6% 0.0% Underachiever


70

Table 17. OECS Member States: Trade Intensity Index, 1995-2003

Dominica 1995 1996 1997 1998 1999 2000 2001 2002 2003 1995-2003Barbados 0.52 0.44 0.84 .. 0.68 0.45 0.47 0.60 0.45 0.54Belize 0.22 0.15 0.25 .. 0.07 0.00 0.00 0.00 1.49 0.24Guyana 1.02 0.77 0.99 .. 1.34 1.35 1.37 1.33 1.13 1.14Jamaica 0.91 1.39 1.28 .. 1.25 1.26 1.10 1.05 1.05 1.18Trinidad & Tobago 1.76 0.97 0.86 .. 0.96 0.94 0.99 1.03 1.62 1.07

Grenada 1995 1996 1997 1998 1999 2000 2001 2002 2003 1995-2003Barbados 2.04 0.84 1.67 1.27 1.24 0.73 0.81 1.25 0.60 1.06Belize 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.18 0.40 0.07Guyana 0.20 0.29 0.33 0.20 0.14 0.10 0.14 0.32 0.29 0.22Jamaica 0.15 0.13 0.06 0.18 0.28 0.12 0.13 0.12 0.13 0.14Trinidad & Tobago 1.03 0.74 1.72 1.59 1.02 1.52 3.23 2.70 3.36 2.00

St. Kitts & Nevis 1995 1996 1997 1998 1999 2000 2001 2002 2003 1995-2003Barbados 0.80 0.48 0.43 .. 0.40 0.67 0.24 1.05 0.52 0.59Belize 0.00 0.00 0.00 .. 0.00 0.31 0.00 0.00 0.00 0.07Guyana 0.41 2.01 0.71 .. 0.21 0.09 0.00 0.00 0.05 0.52Jamaica 0.02 0.13 0.05 .. 0.08 0.02 0.01 0.03 0.09 0.05Trinidad & Tobago 0.44 2.24 0.48 .. 0.37 3.45 1.14 1.11 1.10 1.64

St. Lucia 1995 1996 1997 1998 1999 2000 2001 2002 2003 1995-2003Barbados 1.33 1.28 1.69 1.33 2.38 2.37 2.68 1.62 0.86 1.57Belize 0.56 0.84 1.22 1.06 1.13 1.09 0.50 0.27 0.37 0.62Guyana 0.18 0.29 0.53 0.36 0.34 0.35 0.35 0.16 0.15 0.26Jamaica 0.05 0.00 0.03 0.01 0.00 0.01 0.01 0.04 0.04 0.03Trinidad & Tobago 2.68 2.25 3.03 2.72 1.36 0.58 0.94 4.90 6.57 3.04

St. Vincent & Gren 1995 1996 1997 1998 1999 2000 2001 2002 2003 1995-2003Barbados 0.85 1.08 0.83 0.80 1.37 0.92 1.12 1.61 1.10 1.03Belize 0.00 0.00 0.07 0.00 0.00 0.00 0.00 0.00 0.00 0.01Guyana 0.14 0.18 0.24 0.20 0.25 0.16 0.14 0.11 0.07 0.17Jamaica 0.09 0.12 0.17 0.19 0.16 0.18 0.21 0.23 0.13 0.16Trinidad & Tobago 2.75 2.34 1.71 2.11 1.58 1.97 3.21 2.48 3.61 2.32


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