Report on Competitiveness and

Innovation in the Caribbean

Main findings and interventions proposed by UNIDO and CDE

Structure of the presentation

I. I. Methodology and approach

II. II. Main findings

III. III. Elements of programme.

I. Methodology and approach

Review of published economic data; Review of available sector studies and

recommendations; Identification of comparative advantages; Consultation with stakeholders in the field (public

institutions, enterprises, intermediate organizations, banking sector, industrial exports associations, etc);

Analysis of factors that impact competitiveness.

Sources interviewed

Enterprises; Productive sectors; Service sectors; Technical support

institutions; Government

departments; Intermediary

organizations; Financial institutions.

MEETINGS HELD

33%

30%

21%

6% 5% 5% Enterprises

Government

Associations

Financial Ins

Technical Ins

Other

Sources interviewed (e.g. Guyana)

Public Institutions CARICOM Secretariat CARIFORUM Secretariat GOINVEST Government Analyst - Food

And Drug Department Ministry of Health -Veterinary

Public Health Ministry of Agriculture Ministry of Foreign Trade &

International Cooperation Ministry of Tourism Industry

and Commerce Ministry of Trade - Guyana

National Bureau Of Standards

Private Sector Private Sector Commission of Guyana Berbice Chamber of Commerce and

Development Association Georgetown Chamber of Commerce &

Industry Guyana Furniture Manufacturing Guyana Marketing Corporation Caribbean Containers Limited Forest Products Marketing Council of

Guyana Inc. LAPARKHAN Shipping Precision Woodworking Limited Sterling Products Limited Independent Consultants

II. Main findings

1. Economic situation

Due to their size and openness, the international economic environment drives the performance of Caribbean economies;

Regional trend of declining growth moving from an average of 3.9% in the 1970s to 0.5% in the 2000s;

Caribbean economies have not kept pace in terms of productivity, innovation and competitiveness.

1. Economic situation (2)

Factors affecting productivity include: unproductive public investments (large investments in low

productivity traditional sectors; e.g. traditional sectors that did not grow);

investments in maturing sectors (which need to be re-vitalised) e.g. tourism;

These investments resulted in a build up of debt in many countries which was not counter-balanced by improvements in productive capacity as represented by increased production, export volumes or tourist arrivals

limited skill availability; small and fragmented markets.

Limited destinations of FDI (mining, tourism) flows suggest that the region has few competitive sectors.

2. Foreign trade

Mainly commodities and services with low value added;

Trade to GDP ratios averaged 113.6% in the 1990s and

112.8% in 2000s;

Most countries experienced falling market shares;

Trade increasingly driven by services exports;

Tourism accounted for 66% of services exports in 2005;

Traditional markets still dominant.

3. Cross cutting issuesLabour Mismatch between skills available and those needed; General shortage of technicians; Free movement of labour within the region limited by certain factors while low skilled/unskilled

labour from outside the region are employed in certain states.Machinery Productive sector in the region is not using the most current technology and there is an urgent

need for retooling.Productivity/Product Price Productivity is low within the region, and product prices are high and globally uncompetitive.Barriers to Trade Barriers to trade exist within as well as outside the region, particularly in the area of food and

agricultural products and enterprises, institutions and governments are unsure of how to deal with them.

Innovation and Sophistication factorsBusiness Processes Business processes being used are old and unsophisticated;Productivity Could be enhanced by the implementation of modern management systems.

4. General Operating EnvironmentElectricity

Region is dependent on imported fossil fuels;

Relatively high cost of energy;

Telecommunications

Reasonably well developed infrastructure and penetration but costs is

relatively high compared with Asian countries;

Air Transport

Limited intra-regional connectivity.

Sea Transport

Limited intra -regional connectivity.

High freight charges and port charges.

Areas Identified for Assistance

0

2

4

6

8Efficient State Depts

QMS/ISO Certification

Productivity Enhancement

Chemists/Standards

Electrical and MechanicalTechnicians

Management

Land Issues

Cheaper UtilitiesLow interest loans

Management Training

Coordinated Institutions

Re-tooling of plant

ICT Training and exposure

Trade/Technology Exposure

PR and Advertising

DETAILED AREAS OF CONCERN

Description Frequency

Government Institutions /Governance Increased efficiency of Customs, Ports, Immigration, T&C, Ministries 8 Land/Industrial Areas/Lower Rents/Land Development Plans/Squatter Regularization

5

National Security crime fighting, anti-smuggling, coast guard resue capacity 4 Revision and Enforcement of government legislation 3 Transparency in awarding government contracts 3

Infrastructure Cheaper electricity, utilities, fuel 5

Financial Market Sophistication Lower interest loans 5

DETAILED AREAS OF CONCERN (contd)

Higher Education and Training Management Training 5 Technical and vocational training 4 Marketing Training 3 Quality Training 3 Alignment of educational system and employer needs. 3

Labour Market Chemists/Standards 6 Electrical and Mechanical Technician 6 Management 6 Computer Skills 3 Construction Trades 3 Economics/Finance 3

DETAILED AREAS OF CONCERN (contd)

Market Efficiency (Business Environment) Coordinated institutional network 5 Elimination of trade barriers for intra Caribbean Trade 3 Promotion of regional programmes/Public awareness campaign 3 SME Capacity Building 3

Technological Readiness Modernizing and Re-tooling of plant 5 ICT Training and exposure 5 ICT Redesign & Upgrade 4 System Implementation 4

DETAILED AREAS OF CONCERN (contd)

Business Sophistication Implementation of QMS/ISO Certification 7 Productivity enhancement 7 Exposure 5 PR and Advertising 5 Environmental Management System/Recycling 4 Food Safety Training/Certification/HACCP 4 Market Intelligence/Surveys 4 Bureau of Standards development 3 Uncompetitive pricing 3 Identification of new business opportunities/contacts 3 Market Development 3

DETAILED AREAS OF CONCERN (contd)

Innovation Research & Development 4 Product Development/Differentiation 3 STI support for the agricultural and manufacturing sectors 3

Survey of existing support activities There is a wide range of technical assistance funds operating

in the region;

All of the areas of competitiveness are covered by at least one

of the funds;

Most of the funding is available for technical assistance to

address the business environment and for the public sector

programmes;

Direct assistance to the private sector is relatively small when

considered among all funds.

Existing support activities (2)

In addition to technical assistance funding, some funding is

available for equity investments in enterprises;

Programmes targeting the public sector appear to offer more

long-term programme assistance based on country strategies;

Assistance to the private sector is more demand driven/ad-hoc

rather than programmed.

III Elements of Programme

1. Objectives - what is needed

Overall objectives:

To develop and improve the supply side of the trade equation in these countries;

To promote innovation and technological development, and; To improve access to regional and international markets;

Specific objectives

To support the dynamics of upgrading and innovation of industries and related services, and;

To improve their competitiveness, growth and access to national, regional and international markets within the framework of trade liberalization and economic diversification.

2. Main beneficiaries

Productive enterprises;

The regional and national productive support

institutions including Technical Centres/ R&D as well

as intermediary institutions in the CARIFORUM

countries;.

3. Programme approachImprove competitiveness and innovation by:

Upgrading and modernising enterprises;

Strong involvement of stakeholders;

Upgrading technical support institutions, R&D;

Strengthening economic information infrastructure;

Development of partnership for increased market access

better integration.

4. Process for Strengthening Industrial Competitiveness and Promoting Innovation

ENTERPRISE ENVIRONMENT

Strategic diagnosticsInstitutional & regulatory environment

Formulation of the competitiveness and innovation scheme

Technical and innovation support infrastructureApproval of the competitiveness and innovation plan

Funding decision

Incentives and promotion of investments to strengthen competitiveness and innovationImplementation and follow-up of

the competitiveness and innovation plan

EMPLOYMENT LOCAL MARKET/EXPORT

Organisation &

management techniques

Production, energy

Training plan

Quality,certificatio

n,traceability

Marketing, exp.

consortium,communication

s

Partnership

innovationEquipment renewal

COMPETITIVENESS

5. Example of Programme Structure

COMPETITIVENESS AND INNOVATION PROGRAMME FOR CARIFORUM COUNTRIES

Component I Component II

Support to strengthen

competitiveness of industries and

to promote innovation

Establishment/up-grading of technical support institutions

5.1. Component 1 - Support to enterprises

Outcome I.1: Studies on strategic positioning for the priority and contributing products/sectors (e.g.: tourism, agro-food and fish, ICT, etc.) taking into account national specificities and capacities determining diversification;Outcome I.2: Thorough diagnosis and competitiveness strengthening plans for the companies eligible to the Programme;Outcome I.3: SMEs received technical support and coaching in the implementation of activities related to the competitiveness building (priority to business process improvement);Outcome I.4: HACCP, ISO 17025, ISO 22000, ISO 14000, Green Globe, Blue Flag and OSHA certification launched for selected companies and institutionsOutcome I.5: Enterprises having specific and priority products carrying high potential for export (meats, fish, fruits and vegetables, flowers, coffee, cocoa…) receive assistance with the implementation of programmes of traceability

Outcome I.6: Quality Management Systems implemented in beneficiary companies/ institutions and certified;Outcome I.7: Intermediary/professional organizations from CARIFORUM region and EU strengthened and involved in international networking;Outcome I.8: Projects on industrial partnership/coaching among the companies eligible to the Programme promoted . Support to negotiating process (business-plan and fund-raising)/strategic coaching provided;Outcome I.9: Complementary studies for formulation of national/regional competitiveness and innovation programmes, and their linkage to EPA partner framework programmes on innovation for each beneficiary country and the region conducted;Outcome I.10: Cooperation in the areas of competiveness and innovation at the institutional/enterprise levels of the supported sectors strengthened.

Outcome I.11: Regional /national programmes of communication and promotion of the Programme (development of promotional materials and thematic website for the CARIFORUM Secretariat and each country) designed and implemented;Outcome I.12: “CARIFORUM Competitiveness and Innovation Tour” for the managers of industries at the regional/national levels and organization undertaken. Information and dissemination seminars on Programme’s results for the different sectors conducted;Outcome I.13: Monitoring Framework for Competiveness and Innovation Programme at national /regional levels established.

5.2. Component 2 -Support to institutions

Outcome II.1: Thorough diagnostics, formulation and implementation of the upgrading plans for technical centers promoting priority and export potential sectors (R&D institutions, technology parks, national technical expertise, sectoral technical support and innovation, promotion centers, export promotion agencies, test and analysis laboratories, specialized training institutions, information networks);Outcome II.2: Assistance in development of the legislative framework and procedures for the Competitiveness and Innovation Programme implementation at regional /national levels provided;Outcome II.3: Feasibility study and assistance in establishing financing schemes in order to facilitate access of the local SMEs to funding for the implementation of the competitiveness and innovation plans provided

Outcome II.4: Capacity building for the ministries in charge of industry and trade, competitiveness and innovation centers, SME, employer associations, banks, experts/consultants and trainers for the implementation /follow-up of the Programme provided;Outcome II.5: Promotion, establishment and running export consortia supported. Institutional support provided and creation of favorable legislative framework for export consortia assisted;Outcome II.6: Capacities of investment promotion agencies strengthened and an investment platform established in order to respond to the needs of investors /operators in the area of competiveness and innovation;Outcome II.7: Industrial coaching in innovation activities provided, new products developed and industrial diversification in the CARIFORUM region promoted;Outcome II.8: Technical and professional training institutions at the regional level strengthened.

7. A Monitoring structure is required

TECHNICAL UNIT FOR COMPETITIVENESS AND INNOVATION

NATIONAL OFFICE FOR COMPETITIVENESS AND INNOVATION

NATIONAL STEERING COMMITTEE

NATIONAL OFFICES FOR UPGRADING AND

MODERNIZATION

ENTERPRISES/CENTRES FOR TECHNICAL

SUPPORT

Partnershipagreement

Management Contract

TECH

NICA

L AS

SIST

ANCE Promotional, technical and financial support

Management of financial resources according to contract

NATIONAL STEERING COMMITTEE

NATIONAL OFFICES FOR UPGRADING AND

MODERNIZATION

ENTERPRISES/CENTRES FOR TECHNICAL

SUPPORT

CARIFORUMMEMBER STATES

EXECUTING ORGANIZATIONREGIONAL STEERING COMMITTEE

TECHNICAL UNIT FOR COMPETITIVENESS AND INNOVATION

NATIONAL OFFICES OR COMPETITIVENESS AND

INNOVATION

NATIONAL OFFICES FOR COMPETITIVENESS AND

INNOVATION

8. Respective roles at regional and national level

At regional level: horizontal issues of relevance to all the Member States: Harmonized regulatory framework and procedures for Programme

implementation; Harmonized information system; Sectoral studies and strategic positioning of priority and specific

branches, products and sectors; Introduction and management of the follow-up and evaluation tools; Upgrading of technical centers and similar institutions; Capacity building of the staff of administrative institutions and

companies; Training of a core team of regional experts and creation of the

regional database of experts; Supporting development of the national capacities;

At the national level: to deal directly with companies’ competitiveness and innovation activities

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