IDB report emphasizes need for economic diversification
BRIDGETOWN, BARBADOS — Despite the harsh lessons of the COVID-19 pandemic, many countries in the Caribbean and Latin America remain heavily dependent on tourism.
This is according to a new report by the Inter-American Development Bank (IDB), which underscored just how little that has changed since the onset of the pandemic.
The findings underscore the dire need for economic diversification among countries in the region if they are to bolster their resilience to external shocks like the pandemic.
According to the IDB, “Many Latin American and Caribbean countries rank among the most dependent on tourism.
“The Tourism Dependency Index (TDI) developed by Mooney et al., based on the relative contribution of the sector to GDP, exports and employment, suggests that Latin American and Caribbean countries are arguably the world’s most tourism-dependent.”
The TDI ranks some 175 countries around the world, based on region. Of these rankings, it found that “about half of the 20 most tourism-intensive economies on earth are in the Caribbean.”
The IDB noted, “While these Caribbean economies tend to be relatively small in size and population, tourism is significant for some of the largest countries as well…
“In aggregate, about 28 million Latin American and Caribbean citizens depended on the tourism sector for some part of their incomes and livelihoods in 2018 — the last year for which final data are available.”
Tourism jobs in the Caribbean especially vulnerable
The IDB’s findings come as it and other global organizations have continued to urge Caribbean nations to take action to minimize job informality in the region.
Tourism jobs were especially vulnerable during the pandemic, which nearly wiped out the region’s tourism product.
Many Caribbean workers lost their jobs that had been secure up until that point. But the situation was even more dire for those who held informal jobs that relied on high tourist arrivals.
The harsh lessons of the pandemic ushered in an urgent, renewed focus on economic diversification among many Caribbean nations. This aimed to help make Caribbean jobs more resilient to external shocks, and ensure workers could continue to earn a decent living.
Up until now, serious efforts to diversify from tourism have continued in countries like Barbados, Jamaica, Guyana and The Bahamas.
However, the IDB report underscored just how critical such diversification is, even as the region steadily recovers from the worst of the pandemic.
It serves as a sobering reminder of the need for such efforts to continue and possibly even expand well into the future.
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Inter-American Development Bank report, “Preparing the Macroeconomic Terrain for Renewed Growth”