SUPPORTING THE GROWTH OF SERVICE EXPORTS IN THE CARIBBEAN: IS THERE A ROLE FOR POLICY INTERVENTION

The Caribbean is highly dependent on services as a means of generating growth, employment and foreign exchange earnings. In large measure, however, there is a limited understanding of the factors that encourage service companies in the region to enter foreign markets. This paper uses micro-econometric models of the export propensity of service companies in the region in order to identify the key variables that either support or hinder export services activity in the region. The regression results suggest that company size, export promotion support, the type of industry, the level of informal competition, theft and disorder as well as the availability of labour skills were the most important determinants of the export decision as well as export propensity. In addition, support for export promotion efforts in the Caribbean had the largest marginal effect on firms export decisions. The paper therefore recommends that policymakers in the region need to refocus their policy interventions as most support to date as focused on issues that would enable firms capturing a greater share of the domestic market.