The World Bank says while self-employment is on the rise in the Caribbean, quality jobs remain elusive.
In launching a new report in Miami, the Washington-based financial institution said almost 70 percent of employees in the Caribbean work for businesses with five or fewer employees, compared to 60 percent in Latin America.
But while entrepreneurship is often considered to be a driver of development, the World Bank said the resulting companies grow at a much slower rate than in other middle-income regions.
Furthermore, the high percentage of small businesses reflects a lack of quality jobs in the region’s larger or multinational businesses, the bank said.
Declaring that “this should ring warning bells,” the report says that, in the Caribbean, almost 70 percent of business owners have opened a business out of fear of losing their job or because jobs were not available.
The report notes that, in the past 10 years, Latin America and the Caribbean have “benefited significantly from favorable economic tailwinds.”
But, as these tailwinds die, it says “growth has to come from within,” adding that innovation is “key if the Caribbean is to build upon the social gains of recent years.”
The report says that Caribbean firms develop new products less frequently than their counterparts in other developing regions.
It says in Jamaica, for example, the rate of product development is less than half than that of Thailand or Macedonia, adding that while Grenada topped the region for new product development, six of the “worst offenders” also hailed from the Caribbean. The report did not identify these “worst offenders.”
The report cites four possible reasons for the less frequent development of new products in the Caribbean: Human capital, intellectual property, risk taking and logistics.
It says while science, technology and engineering graduates are at “a premium, it’s a scarcity that has a direct effect on innovation.”
Closely related to the quality of education, the report recognizes this will be a major challenge for the region.
With separate laws governing copyright in every country, the report says “the complicated panorama lends less protection to the product creators, deterring much-needed investment for new product research and development.”
It says “a deep cultural shame of failure is hindering innovation by dissuading entrepreneurs from taking risks.”
The report says this is evident as much in “individual reticence at a business level as in the low levels of investment in research and development, especially from the private sector.”
The report says modernizing ports, transport and customs can add a competitive edge to products from the region.
Currently, it says poor public services, communication links and transport infrastructure are hindering efforts to boost production capacity in the region.
The report says younger firms “far outshone” more established ones in terms of job creation.
“The key is identifying and supporting those startups, which have the most potential through start up programs, subsidies or policy,” it says.
The bank said entrepreneurs are “key actors in turning low productivity around to create lasting economic benefit and quality jobs,” but it said the vast majority, some 70 percent, of business owners across the Caribbean work alone.
Consequently, the report recommends establishing an economic environment, where entrepreneurs will “innovate and compete in order to increase productivity and enable them to grow into quality employers.”
