A Bold New Caribbean

connect firms with domestic and international cus- tomers. It is the lubricant for global trade and the enabler of global supply chains. The logistics and transportation sector has under- gone tremendous transformation in recent years. Greater use of robots and automation, for in- stance, on factory floors and in fulfillment centers for product sorting and retrieval, is helping to boost firms’ competitiveness by improving the efficiency of operations, capacity, and productivity, reducing wastage, and decreasing lead times, which allows for greater customer satisfaction. It is expected that newer technologies, such as Blockchain, Artifi- cial Intelligence and other technologies, will contin- ue to have an even greater impact in years to come in the logistics and transportation sector. Besides greater technological adoption, green lo- gistics – ensuring a more environmentally friendly and sustainable supply chain – is another major trend in the logistics sector 14 . Indeed, United Na- tions (UN) Sustainable Development Goal 9 (SDG 9 - Industry, Innovation and Infrastructure) recog- nizes the important role that investment in quality infrastructure could play in achieving sustainable development. UNCTAD has named ‘transport in- frastructure’ as one of the ‘SDG sectors critical for achieving the SDGs. In other words, investing in the logistics and transportation sector can have sustainable development benefits once done in an environmentally friendly manner. As small, open economies dependent on interna- tional trade, Caribbean countries have recognized the importance of logistics and transportation to their economies. However, fiscal constraints make it difficult for most developing countries, like the Carib- bean Small Island Developing States (SIDS), to fund the necessary investments needed to construct, ex- pand, and digitize ports and other supporting infra- structure by themselves. Private investment is often required to boost public investment. As such, many have chosen the logistics and transportation sector as one of the sectors for FDI attraction. Some aca- demic literature has found a positive link between FDI in the logistics sector and economic growth (Wang & Wang 2010). The Global Logistics and Shipping Sector

The Global Logistics and Shipping Sector The logistics and transportation sector is one of the four main sectors Caribbean Export has identified for its Ca- ribbean Investment Forum (CIF). Indeed, the spotlight on this sector reflects a larger international trend. Cog- nizant of its role as an enabler of trade and economic activity, many developing countries have highlighted the logistics and transportation sector as a key plank of their diversification and development strategies and are seeking to promote both domestic private and foreign direct investment (FDI) in this sector. This article discusses this sector’s potential for economic transformation. It gives the example of two Caribbean countries’ efforts at repositioning their logistics sector through greater FDI attraction to boost their economic transformation. Investment Monitor reports that the logistics sector was one of only a few FDI sectors to grow in 2020 during the height of the COVID-19 pandemic. Although there was a contraction in 2021, the sector has begun to rebound 13 . Investment Monitor’s database showed that of the 872 logistics FDI projects recorded in 2021, most were greenfield projects, with Western Europe leading the way in the number of logistics FDI projects. They note 22 greenfield FDI projects for 2021 in Central America and the Caribbean. But what exactly is this sector? While often used interchangeably in common par- lance, the terms ‘logistics’ and ‘transportation’ have different meanings. Transportation involves the phys- ical movement of raw materials or goods from one location to another, such as the movement of cut sugarcane to a factory for manufacturing into sug- ar or the movement of refined sugar to a distributor’s warehouse or a retailer. Transportation, therefore, is one of the elements of logistics. The latter refers to the whole process of efficiently coordinating getting the product from the point of origin to the consumer and includes services such as transportation and stor- agethe point of origin to the consumer and includes services such as transportation and storage, among others. The logistics sector and its component services, such as transportation and warehousing and the like,

CARIBBEAN INVESMENT FORUM

45