Editorial | Embryo of an industrial policy?

It appears that the Caribbean Community (CARICOM) has grasped, and is moving to put into effect, what many people have been preaching all along: using the Caribbean’s tourism industry as an incubator of sorts for a CARICOM-wide industrial policy.

So, the aim is to have more of the goods and services consumed by the tourism sector produced in the Caribbean, which means creating jobs and keeping a greater portion of what the industry earns in the Caribbean.

This, of course, is not a new idea. It is almost as old as the modern regional tourism industry. It is what Caribbean economists used to refer to as creating backward and forward linkages between tourism as the rest of national economies.

A bit of this has happened, but most analysts agree that tourism’s role as a catalyst for the expansion of other sectors has been limited. That is why we hope this isn’t another of those CARICOM initiatives inaugurated with fanfare and optimism, only to atrophy to a slow, unnoticed death.

In this case, though, a number of factors give cause for some hope, not least being the regional scope of the effort and that it is a joined-up project with the private sector at the forefront. Moreover, it is, in part, anchored to the Sandal Resorts group, a globally renowned, Jamaica-based hotel brand that operates in several regional Caribbean territories.

Further, the increasingly unstable global political environment, underlined by America’s imposition of high tariffs on trading partners, could lead to new, and deeper disruptions of supply chains.

PRODUCED CLOSER TO HOME

It is reasonable, therefore, that CARICOM countries, including Jamaica, should want to have more of what is used by this critical sector produced closer to home, preferably domestically.

Although it wasn’t framed in those terms, these are likely to be among the considerations that caused CARICOM leaders, at the recent summit in Barbados, greenlight, with the Caribbean Private Sector Organisation (CPSO), an analysis of the potential for cross-industry linkages.

“They agreed that the (CARICOM) Secretariat and the CPSO would undertake a granular study of the linkages between tourism, agriculture, manufacturing, entertainment and cultural sectors in the Region,” the meeting’s communiqué said. “The study should identify the 20 most important products used by the tourism sector from each of the other sectors with a view to facilitating more and better regional production of these products.”

The entire Caribbean, according to estimates by the online data organisation, Statista, earned US$91.2 billion from tourism in 2024, an increase of 7.4 per cent compared to 2023. The industry, across the region, employed 2.9 million people.

In 2022, the latest year for which country-by-country breakouts of tourism earnings were immediately available, CARICOM’s full members grossed just over US$17 billion from the industry, 27 per cent of the income of the entire Caribbean region.

Jamaica, which reported gross tourism income of US$4.38 billion in 2024, and projects that rise to J$5 billion this year, ranks just behind The Bahamas for gross earnings from the sector.

LARGER QUESTION

The larger question, however, is about how much of those earnings are retained in regional economies. Edmund Bartlett, Jamaica’s tourism minister, says that across the region, it ranges from 15 per cent to 50 per cent. In Jamaica, he has said, the retention rate is 40 per cent, which some analysts believe to be an overestimate.

Nevertheless, on Mr Bartlett’s figure it presumes that of every dollar earned by the tourism industry 60 cents goes abroad to cover all the costs associated with bringing visitors to the island: air fares; amortising debt held outside the island; repatriation of profit; the purchase of furniture and food and other services.

Is often the case when CARICOM announces projects, the underlying analyses upon which the initiatives are premised aren’t made public, and readily available to the community’s most critical stakeholders – its citizens. So, too, this time.

That’s the hallmark of a leader-centric institution and of a secretariat that is risk-averse and hidebound in bureaucracy.

What is known, however, is that, at least in Jamaica, food is among the big areas of import expenditure, and one in which domestic production can narrow the gaps.

The island imports around US$1 billion worth of food annually. Large chunk of that is consumed in hotels, restaurants and institutional services – the HRI sector.

A December, 2024 analysis by the US Department of Agriculture said: “Jamaica’s HRI food service sector remains vibrant in light of growing foreign visitor tourism as well as locals’ increased visits to restaurants, which include fast food chains.

“Approximately 60 per cent of food imported goes directly to this sector, with the United States having a 45 per cent market share. The HRI food service sector is also characterised by importers and distributors who procure goods based on demand from the sector. Based on the clientèle, some importers and distributors may carry products, such as meats, peas, beans, fresh fruits and vegetables, fruit and vegetable juices, and alcoholic beverages.”

Jamaica’s experts say that up to a quarter of Jamaica’s food imports (J$39.25 billion) could be substituted from domestic production, which is consistent with CARICOM’s initiative – extended by five years to 2030 – to cut the community’s US$10 billion food import bill by 25 per cent.

CARICOM can’t afford to dither on any element of the tourism initiative.