Emerging industries can aid job growth in the Caribbean with FDI support
BRIDGETOWN, BARBADOS — Foreign direct investment (FDI) is crucial for Caribbean governments, but they must also ensure it helps to create jobs that will benefit citizens and residents.
This is the recommendation being made by the Economic Commission for Latin America and the Caribbean (ECLAC) in its recently released report on FDI in the region.
It comes as the Inter-American Development Bank (IDB) lauded countries like Jamaica for being ripe for foreign investment.
The ECLAC emphasized the role the regional governing bodies must play in ensuring FDI translates to tangible improvements for residents, including job creation.
The ECLAC says governments should create policies to ensure FDI will be used to bolster job growth.
“The role of policies is increasingly important, not so much — or not only — those specifically geared towards attracting FDI as those designed to shape a new development model,” the UN organization noted.
“FDI can support the investments needed for countries to move towards more inclusive and sustainable development, but, as ECLAC has argued in successive editions of this report, that does not happen automatically.
“Policies are needed to provide the necessary framework so that FDI entering the region is directed towards activities that support virtuous development in respect of inclusiveness, employment quality, environmental sustainability, innovation and technological sophistication.”
Even further, the ECLAC said that public-private partnerships must be strengthened to help this process along.
In so doing, it likewise urged private businesses to work with the government and its efforts to ensure FDI is used in a constructive way for workers, residents, the economy and indeed respective nations on the whole.
FDI can create jobs in emerging industries
The role of FDI in helping along the development of emerging industries was also underscored by the ECLAC.
This recommendation is particularly timely as economic diversification remains a buzzword in the Caribbean.
FDI can aid economic diversification, which in turn can create jobs.
Several countries, including Barbados, Guyana, Jamaica, St. Kitts & Nevis, The Bahamas and more have launched development programmes aimed to support emerging industries as they seek to diversify away from tourism.
These diversification efforts are expected to yield hundreds of new jobs that are more resilient to external shocks such as the COVID-19 pandemic, unlike tourism and hospitality jobs were.
In particular, the ECLAC singled out the technology and pharmaceutical fields as industries for major job growth with appropriate support from FDI.
“The strategic use of FDI to foster local capacity development and increase productivity and employment, particularly in high value added activities, is especially important in technology-and knowledge-intensive sectors such as the pharmaceutical industry,” read the ECLAC’s report.
“In fact, the literature on the role of FDI in manufacturing capacity development shows that FDI in high value added activities can help facilitate the transfer of knowledge and technology.
“However, the benefits of FDI in technology-and knowledge-intensive sectors depend, among other factors, on the capacity of local industry, the technology gap between foreign and domestic firms, local investments and technology policies.
“Therefore, it is essential to design strategies to attract investment that complement industrial and technological development strategies.”
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References:
Economic Commission for Latin America and the Caribbean report, “Foreign Direct Investment in Latin America and the Caribbean 2022”