Abstract
A lack of growth remains a major concern for Caribbean countries. Private sector development has been identified as vital in addressing this problem. Innovation, a necessary condition for competitiveness, is a key channel through which the private sector can help to stimulate growth. An analysis of innovation at the firm level for Caribbean manufacturing and services sectors shows that patent rights, the level of domestic sales, collaboration for innovation purposes, innovation intensity (that is, the efficiency with which innovation funds are managed), availability of technology, knowledge about new market trends, domestic sales, and the size of the workforce are critical to the innovation process in both sectors. Several differences also exist. Innovative service firms are older, in contrast to manufacturing firms, which tend to be younger; foreign ownership is key for service firms; and both types of firms face different obstacles to innovation. Policymakers should tailor policies that take such differences into account.
Highlights
Economic growth remains a serious challenge for Caribbean countries
The European Commission notes that, “as a driver of inclusive growth and job creation, responsible for 84% of GDP and 90% of jobs in developing countries, the private sector is ideally placed to improve the lives of the poor and deliver on the promise of sustainable and socially inclusive economic development”, and that “private sector development plays a key role in creating economic growth, employment and improved living
Findings could provide insight into innovation in small states, which are underrepresented in the existing literature. Another area of departure is that this study investigates innovation in both the manufacturing and services sectors
Summary
Economic growth remains a serious challenge for Caribbean countries. While economic performance among countries varies, they each share a daunting outlook. The last significant growth periods occurred when Caribbean countries still enjoyed preferential arrangements with Europe for bananas and sugar, which have since eroded, and in the early 21st century from tourism, which has stagnated due to the maturity of the product in several states and the emergence of other tourism destinations. Regional countries are severely indebted and have very limited fiscal space to promote growth from public investment. Faced with the current circumstances, prospects for economic growth in the Caribbean will depend on the ability of the private sector to increase its productivity and competitiveness. The European Commission notes that, “as a driver of inclusive growth and job creation, responsible for 84% of GDP and 90% of jobs in developing countries, the private sector is ideally placed to improve the lives of the poor and deliver on the promise of sustainable and socially inclusive economic development”, and that “private sector development plays a key role in creating economic growth, employment and improved living
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