By NEIL HARTNELL
Tribune Business Editor
The Bahamas could increase goods exports by some $177m if it maximises its “nearshoring” potential, an Inter-American Development Bank (IDB) study disclosed yesterday.
Released to coincide with the Summit of the Americas, the IDB suggested that The Bahamas could generate $57m worth of “quick wins” - and increase valuable foreign exchange earnings - via attracting US, Caribbean and Latin American businesses to either domicile in this nation or outsource work to third parties already here.
Such so-called “nearshoring” could give The Bahamas some $33.2m in “quick wins” via increased goods exports to the US, and $32.8m via trade with the rest of Latin America and the Caribbean. The IDB added that The Bahamas also has the opportunity to exploit “medium term opportunities” worth $119.9m, taking the total potential benefit to $177m.
The figures were not broken down by industry or goods category, and the multilateral lender provided no basis for how it had come up with these calculations. And, set against the likes of the US and Mexico, the potential benefits for The Bahamas pale by comparison.
“Nearshoring could add an annual $78bn in additional exports of goods and services in Latin America and the Caribbean in the near and medium term, with opportunities for quick wins in the auto industry, textiles, pharmaceuticals, and renewable energy, among others,” the IDB said.
“Mexico and Brazil would see the biggest gains, though all countries would benefit from nearshoring according to data contained in a forthcoming study. The $78bn includes $64bn in exported goods and $14bn in services.
“The estimate was provided to senior government officials from Latin America and the Caribbean, including ministers of trade and foreign affairs, and senior executives from companies of the Western Hemisphere, who gathered to analyse options for taking advantage of the opportunities provided by the reconfiguration of global supply chains, trends in trade sustainability and climate change, and the increasing digitisation of economies.”
“Increased environmental concerns, along with the health crisis and the recent invasion of Ukraine by Russia, has presented an opportunity in which the region can contribute to the global economy and the fight against inflation by taking a more active role in global supply chains in a way that is sustainable and equitable,” said IDB president, Mauricio Claver-Carone.
“This meeting is a demonstration that leaders, from the public and private sectors, can put aside their differences to find ways to create jobs and improve the well-being of our citizens – and trade is one of the main avenues to accelerate our prosperity.”
The IDB said recent studies showed the participation of companies in global value chains (GVC) brings multiple benefits, in addition to traditional gains from extra trade and investment. It added that involvement in GVC increases productivity through transfers of technology and knowledge, with a 10 percent rise in participation growing a country’s per capita GDP by 11-14 percent.