The Caribbean Development Bank (CDB) has pointed to an urgent need for broad policy initiatives, including labour market reform and investment in developing the skills of potential workers to move regional economies forward.
In a presentation at the Bank’s Annual Review and Forecast titled, ‘Time to D.E.C.I.D.E.’, Director of Economics, Dr. Justin Ram said governments must aim to become Dynamic, Export-oriented, Competitive, Inclusive, Diverse and Environmentally-resilient economies. This would require, he said, private sector-led growth, an educated and flexible labour force, and better regional integration, with governments acting as business facilitator and efficient regulator.
“We need a strategy that will allow us to take advantage of technological innovation to identify and encourage higher productivity activity. At the same time, we need to improve the investment climate, making it easier for the private sector to thrive,” Dr. Ram added.
Against the background of continuing high unemployment in many countries, he cited the imperatives of labour market reforms to include greater flexibility, freedom of movement, participation, and productivity. In relation to the development of human capital, he said there must also be investment in quality education for all, with an emphasis on science, technology, engineering and mathematics (STEM).
With respect to specific policy actions, Dr. Ram said regional governments must place greater emphasis on fiscal consolidation by increasing the efficiency of revenue collection and expenditure, and prioritising capital investment, among other measures.
Other areas identified for reform were the energy and financial sectors.
“Although we currently have low fuel prices, we still need energy reform that provide the regulatory environment to increase the use of renewable energy in energy mix, as well as energy efficiency,” said Dr. Ram.
Financial policy should be further adjusted to encourage greater access to affordable credit by micro, small and medium size enterprises. He also identified the need to maximise regional integration and take advantage of free trade agreements such as the Economic Partnership Agreement with the European Union, as well as to seek new agreements.
Regional transport and logistics also need to be addressed by increasing efficiency of movement of people and goods across the region.
According to Dr. Ram, physical and social infrastructure should not be ignored. CDB is proposing that governments mandate building and infrastructure codes to improve resilience and that measures are implemented to minimise the spread of new diseases.
There should also be a push to improve the level of national savings to support investment and fiscal buffers to take Caribbean economies to a higher level, Dr. Ram said.