The Caribbean Needs a New Business Model
I think the Caribbean needs a new business model.
Let me explain why.
If you look at the GDP of most Caribbean countries, you will realize that most of it is attributed to two big sectors:
Tourism and Banking.
Why is that a problem?
Let’s look at the tourism and real estate sector first.
A big part of the current business model of Caribbean countries is to sell their land.
Either to big hotel chains or other, often foreign, tourism companies or high net worth individuals.
So how is that supposed to work as a long-term income stream?
Beachfront property is limited and most countries are small islands. So sooner or later, that source of money will dry up. You just run out of land to sell.
Wouldn’t you rather cultivate and enjoy your own land instead of selling it to the highest bidder?
The second big industry is financial services.
You may ask yourself now: “How can it be that the banking industry is one of the biggest sectors but the offered services are often so mediocre for the own citizens?
I have to be honest here and have to admit that I don’t have a satisfying answer.
What I know is that the term “offshore banking” isn’t coined by coincidence.
It literally stands for banks that are “prohibited from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income.” Source: Wikipedia
What does that mean in plain English?
Someone could play devil's advocate here and claim that the Caribbean banks are primarily used to hide or invest money from questionable sources.
That is the reason why on the one hand they contribute so much to the GDP, but on the other hand, the available banking services for the population are so little.
Or have you recently tried to get a bank account, send and receive money from different jurisdictions or convert it to a foreign currency?
And don’t get me started on the non-existing access to international capital and stock markets.
So let us recap really quick:
What is the actual problem?
We have small island nations, with small populations and little to no valuable natural resources.
The main income sources are shady bank services for foreigners and selling the prettiest and most valuable landscapes to tourist resorts or investors from overseas.
So what can we do?
Let’s have a look at countries that are in a similar situation: Small land area, small population, no natural resources.
E.g. eastern European countries like Lituania or Estonia. Or if we look more to the Asia Pacific Region, Singapore.
What all of these countries have in common is that they are relatively wealthy.
Primarily because of their strong service and technology sectors.
What does that mean for the Caribbean?
If the Caribbean wants a sustainable long-term business model, it needs to invest in education to create a highly skilled workforce that can offer high-quality services and technology solutions to the global market.
It also needs to make sure to put policies in place that are attractive for companies and investors alike to foster economic growth and don’t put unnecessary hurdles in the way of founders and start-ups.
It starts with education.
“An investment in education always pays the highest returns.”, Benjamin Franklin
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