Caribbean Investment Forum Magazine

FDI for Sustainable Transformation of Caribbean Economies

f a rmi ng t o h i gh-va l uec r op s w i t h i n sophisticated value chains (McMillan et al 2017). For this economic transformation to be sustainable, the process must be informed by a sustainable development framework. Indeed, the concept of “sustainable development” has been the dominant paradigm of development since the 1990s. In i ts groundbreak i ng 1987 Repor t , the Brundtland Commission de fi ned sustainable development as “development that meets t he need s o f t he p r e s en t w i t hou t compr omi s i ng the ab i l i ty of futu r e generations to meet their own needs” (Brundtland Commission 1987). Fol lowing on from the Mi l lennium Development Goals (MDGs), the United Nations’ Agenda 2030 encompasses 17 sustainable development goals (SDGs) and their 169 targets which all countries, including Caribbean States, have committed to achieve by 2030. As identi fi ed in the Addis Ababa Action Agenda (2015), FDI is one of the fi nancing channels from which countries could raise the fi nancing needed to meet their development objectives. Sustainable economic transformation has been a post-independence pol icy imperative of Car ibbean governments. Caribbean economies have largely moved from monocrop economies, focused on the export of agr icultural commodities, to services-based economies buoyed primarily by tourism and fi nancial services exports. The commodities-based economies of Trinidad & Tobago, Guyana, Suriname have also been underdoing diversi fi cation e ff orts. The region has seen generally high levels of human d e v e l o pme n t . H o w e v e r , e c o n om i c transformation of regional economies has been constrained by several structural factors,

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here is a popular saying which goes “never let a good crisis go to waste”. The world faces a panoply of crises: climate change, the COVID-19 pandemic and a likely global recession if recent predictions from the International Monetary Fund (IMF) and World Bank pan out. Faced with this trifecta of crises, Caribbean governments have evinced greater urgency to work closer with the private sector for diversifying and transforming their economies to sustainable growth and development paths. This article argues that, while not a panacea , at t r ac t i ng fo r e i gn d i r ec t investment (FDI) in high-value sectors is one of the ways Caribbean governments could ach i eve sus ta i nab l e pos t-COV I D- 1 9 transformation of their economies. The article further contends that the bene fi ts of FDI are not automatic and that Caribbean countries’ foreign investment promotion and facilitation e ff orts must be informed by data, their national development strategies and focused on also wooing regional and diaspora investors. In their study entitled “Supporting Economic Transformation”, McMillan et al. (2017) de fi ne economic transformation as “a process of moving labour and other resources from lower- to higher productivity activities.” This, they argue, entails not just shi ft ing resources between sectors to higher value activities, such as shi ft ing from agriculture to manufacturing, but also such change within sectors, such as shi ft ing from producing low productivity subsistence The Economic Transformation Imperative

CARIBBEAN INVESTMENT FORUM

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