Working Paper Series: Special Edition of 2016 to 2018 Interns

Chart 4: Growth Rates: ECCU FDI, -ECCU and USA GDP per Capita

-60 -40 -20 0 20 40 60 80 100

fdi

gdpc

usd

Source: World Bank Database

Over the past 30 years, the region has been able to attract roughly $1b in annual net FDI inflows averaging an annual growth rate of 14.7 per cent and representing 10.2 per cent of regional GDP. On a per country basis, net FDI has played a role in all the economies of the ECCU. For instance, annual average net FDI taken as a percentage of GDP shows its contribution ranges from as low as 7.5 per cent (Dominica) to 13.4 per cent in the case of St. Kitts and Nevis. Although, FDI inflows are increasing, it is important to note the fact that for the most part they have been directed into the tourism industry while other industries receive substantially less FDI. This implies the need for these countries to be creative in attracting foreign investment such that other areas of the economy can be advanced and hence diversify the economy. 3.2.2 Trade openness ECCU nations, since post-independence have relied heavily on preferential trade arrangements to export the produce from these once heavily agriculture based economies. However, although there were preferential arrangements and other trade arrangements, there have always been exogenous shocks that have affected long-term benefits from such agreements. For instance, around the 1970s and 1980s these territories needed to supplement the declining main industry of sugar with the banana industry in many of the Windward Islands while Grenada went the way of cocoa, mace

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