Roger Hosein Trade and Economic Development Unit 30th August 2017 Some suggestions to help improve trade outcomes in Suriname with reference to 2 regional clusters Roger Hosein Trade and Economic Development Unit 30th August 2017

Abraham Lincoln, “You cannot escape the responsibility of tomorrow by evading it today. Can Suriname sow its extractive industry rents to trigger long term growth? Can the economic rents generated from gold and oil be used to motivate change in the structure of production in Suriname?

Albert Einstein, “The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.” Is the CARICOM and Suriname in particular capable of having a different production structure?

Table 1: Suriname: Selected Economic Indicators   2013 2014 2015 2016 2017 2018 Proj. Real GDP Growth 2.9 0.4 -2.7 -9 -0.7 0.9 Consumer Prices (period average) 1.9 3.4 6.9 60.3 38.6 23.3 central govt debt % of GDP 31.6 29 45.7 67.8 Domestic % of GDP 16.7 13.1 24.1 16.5 External % of GDP 14.9 16 21.6 51.2 Terms of Trade (percent change) -10.1 -4 8.8 2.7 -0.3 Gross International reserves (US$ millions) 779 626 330 447 515 417 In months of Imports 2.8 2.1 2.6 2.3 Current Account Balance -3.8 -7.9 -16.6 -3.6 2.5 1.1 Real effective exchange rate (percent change. += appreciation) 1.4 -14.4 1.2 8.5

Table 2: Natural Resource rents Total natural resources rents (% of GDP) Consumer price index (2010 = 100) Suriname Consumer price index (2010 = 100) US 1990 24.1 0.1 59.9 1995 7.9 7.2 69.9 2000 13.1 29.0 79.0 2001 13.7 40.2 81.2 2002 8.6 46.4 82.5 2003 7.6 57.1 84.4 2004 9.3 62.8 86.6 2005 12.3 69.0 89.6 2006 12.4 76.7 92.4 2007 13.2 81.7 95.1 2008 14.8 93.7 98.7 2009 10.9 93.5 98.4 2010 24.3 100.0 2011 35.6 117.7 103.2 2012 34.4 123.6 105.3 2013 28.1 126.0 106.8 2014 23.6 130.2 108.6 2015 17.7 139.2 108.7 2016 .. 216.5 110.1

Table 3: Frequency Distribution of Suriname’s RCA index RCA Range Average 97-99 Average 12-14 0 < RCA ≤ 1 210 216 1 < RCA ≤ 2 7 4 2 < RCA ≤ 4 2 4 < RCA 8 3 Total 225 Mean RCA 4.23 0.32 Maximum 503.51 24.43 Standard Deviation 35.88 2.07

Table 4: Sectoral Share of RCA > 1 ] for Suriname’s RCA index Product Group # of sectors with RCA> 1 (share of total products with RCA>1)   Suriname 97-99 12-14 Agriculture 9 (60.0) 6 (66.7) Mining 2 (13.3) 0 (0.0) Energy 1 (11.1) Resourced-based Manufactures Semi-Manufactures/Capital Goods 4 (26.7) 2 (22.2)

Table 5: Transition Probability matrices for Suriname (97-99 to 12-14) Suriname with world To a b c d 0.967 0.019 0.009 0.005 From 0.857 0.000 0.143 0.875 0.125

Table 6: Harmonic Mass indices for Suriname 1997-99 to 2012-14   Data points HMI Index Critical Values Conclusion 1% 5% 10% Suriname 225 0.02939 0.0894 0.1042 0.1179 No significant change

Improving overall business climate Table 7: Doing Business Index: Starting a Business Region Procedures (number) Time (number of days) Cost (% of income per capita) North America 4 3.6 0.8 Europe & Central Asia 4.9 10.2 4.7 European Union 5.3 10.6 3.8 East Asia 7.6 26.8 13.1 Sub-Saharan Africa 7.9 27.4 54.1 South Asia 8.2 15.5 13.4 Middle East & North Africa 8.3 20.6 26.3 Latin America 9.1 37.9 39.4 Caribbean 6.9 21.4 29 Suriname 13 84 100.7 Source: Computed from EODB report (2016)

Table 8: World Bank's 2017 Doing Business Report Indicator 2017 Rank/190 Ease of Doing Business 158 Starting a business 185 Dealing with construction process 112 Getting electricity 84 Registering property 176 Getting credit 175 Protecting Investors 165 Paying Taxes 103 Trading Across Borders 78 Enforcing Contracts 187 Resolving Insolvency 129 Source: World Bank (2017)

Table 9: Global Competitiveness Report 2014-2015   Rank/144 Score 1-7 (best) Global Competitiveness Index 110 3.7 Sub-Index A: Basic Requirements 86 4.4 1st Pillar: Institution 104 3.4 2nd Pillar: Infrastructure 3.6 3rd Pillar: Macroeconomic environment 59 4.8 4th Pillar: Health and Primary Education 73 5.7 Sub-Index B: Efficiency enhancers 121 5th Pillar: Higher Education and training 105 3.5 6th Pillar: Goods market efficiency 129 7th Pillar: Labour Market efficiency 117 8th Pillar: Financial market development 118 9th Pillar: Technological readiness 72 10th Pillar: Market size 137 2.1 Sub-Index C: Innovation and sophistication factors 123 3 11th Pillar: Business Sophistication 122 12th Pillar: Innovation 127 2.6 Source: World Economic Forum 2016

Table 9: Depth of Regional Clusters Cluster Characteristics Gold jewellery Guyana Peppersauce Trinidad Age of Cluster   Location specific comparative advantage/s Georgetown County wide Vertical/horizontal integration amongst firms No Inner Firm level integration Yes Concentration of firms in a single geographic location Lead Firm/s presence in local market Localized firm rivalry for efficiency and innovation Weak Strong Localized firm collaboration and networking Very weak Sophisticated local demand Very strong Sophisticated foreign demand Medium Local suppliers Foreign suppliers Very Strong Labour market pooling Financing Cluster specific Training (local) Public Institutional support Cluster specific Government support Research and Development Coordinated Cluster Association Funding of Cluster Association Na Scope Country Regional Related Clusters existence and linkages Yes-weak Yes-strong  

Absence of trust and visionary leadership in all the clusters Gold jewellery in Guyana and Pepper sauce in Trinidad and Tobago all exhibit many characteristics of economic clusters. Understanding of Clusters in the region superficial and in some cases misunderstood Absence of trust and visionary leadership in all the clusters Absence of strategic direction and competitiveness strategies for all clusters Inadequate availability of cluster information, no dedicated data collection agency Weak private Sector institutions There are no formal Cluster Initiative in any of the countries. In general cluster development in the Caribbean is primarily supply rather than demand driven. Absence of market driven analysis decision making . There are cluster weak segments requiring targeted government support to expand. Summary of Finding

Recommendations Government Support existing clusters except where a national strategic objectives dictate the seeding of new clusters. Support should move from the general or firm level to the cluster level for greater efficiency. Provide funding for early stage Cluster Initiative but ensure counterpart funding is provided in a model that over time reverses the funding formula Support Cluster Initiatives, as a rule of thumb be private sector lead. target incentives and support to strengthening weak cluster segments. Fund training of technocrats and cluster stakeholders in clustering as a tool for industry growth Private Sector Develop leadership competencies to build trust towards collaboration Initiate cluster Initiatives Invest collectively in cluster development initiatives Foster linkages with Institutions to encourage them to respond to the needs of the cluster Educate government on needs of cluster and lobby for appropriate support Institutions Applied driven: respond to the needs for the cluster for skills, and productivity and innovation enhancing support  

Questions and Comments Thank you. Questions and Comments