WASHINGTON, CMC—The Inter-American Development Bank (IDB) says that while most Caribbean businesses are either innovative or potentially innovative, they still face challenges.
However, a new IDB report, which delves into the critical role of innovation in driving economic growth and productivity in the Caribbean region, noted that innovative businesses in the Caribbean have 26 to 35 percent higher levels of productivity and 21 to 81 percent higher sales per worker than non-innovative firms, depending on the type of innovation.
The report, “Innovation for Faster Economic Growth in the Caribbean: Are We There Yet?” is part of IDB’s Caribbean Economics Quarterly publication series, which focuses on the economic performance of the Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago.
The report also reveals that many firms are poised to innovate but face significant barriers. The report draws on data from a survey conducted by the Compete Caribbean Partnership Facility to identify the main obstacles businesses face in achieving innovation.
These include macroeconomic conditions, the regulatory environment, access to finance, and labor market constraints. Challenges were amplified during the COVID-19 pandemic, and even at the end of 2024, several Caribbean countries have only just recovered their pre-pandemic levels of economic activity.
Other key findings from the report include nearly 57 percent of firms being potential innovators for general forms of innovation, 85 percent for digital innovation, and 48 percent for green innovation.
In addition, the percentage of firms filing patents increased from 7.9 to 12.7 percent between the 2014 and 2020 surveys. The report notes that the percentage is slightly higher among female-led firms than among male-led firms.
The report also notes that policy measures to foster an enabling environment for innovation include improving labor market matches, providing dedicated support services for entrepreneurs, increasing access to innovative finance, and digitalizing public services.
“Innovation is one of the key drivers for growth and resilience in the Caribbean. This report highlights the remarkable potential of our region’s businesses. By addressing the barriers they face, we can unlock even greater opportunities for sustainable development and competitiveness,” said Anton Edmunds, IDB general manager for the Caribbean.
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