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“Can small business be the new hope for Caribbean economies?”

Updated: Oct 18, 2018

While the definition for small businesses vary greatly, a common context suggests that Caribbean small businesses by definition are firms which typically employ no more than 25 individuals, has maximum capital of US$500k and do not exceed annual revenue of US$1million.

Unlike large developed economies where more than two thirds of all employees work for large enterprises, a significant percentage of the Caribbean workforce is employed by a private sector comprising primarily small and medium-sized enterprises with smaller elements by large and micro enterprises.

Importantly however a broad analysis of statistical data suggests that the share of aggregate economic activity by small firms is somewhat smaller than that of large firms, pointing in the circumstance to the importance of large firms as mobilizers of economic activity that drive the development of small firms.

Critically though, while large firms account for the lion’s share of aggregate economic activity, small and medium enterprises within the Caribbean play a more significant role than their proportion of total employment or aggregate activity might suggest. Not only do they make up the vast majority of firms, but they have been an ongoing source of job creation and more generally social enablement.

Notably as well, especially within the last decade has been an increasing trend towards entrepreneurship among persons within the 18 to 35 age range, resulting in the emergence of several small entities across varying sectors. This is encouraging given the important relation between the economic progressing of a nation and levels of employment.

That small enterprises continue to play a pivotal role in employment is important as economic development is fundamentally dependent on the employability of a nation’s workforce and the availability of opportunities for employment.

The foregoing being said the litmus test on survivability of small businesses and their ability to enhance productive capacity while positioning themselves as highly efficient, globally competitive and the engines of new sources of innovation is important.

If the hope of economic progress is to be pinned on small businesses, then increased levels of national enablement bolstered by the institutionalization of systems and strategies focused on operational efficiencies and global competitiveness will be vital. If the hope of economic progress is to be pinned on small businesses, can we honestly say the machinery to ensure they are not confined to remaining small is in place?

Can we with some clear conscience point to a wide range of small entities that emerged to be medium sized firms, making room thereby for the emergence of a new wave of small enterprises? Can we in actual fact point to current trends that suggest growth and transitioning of existing small businesses to medium sized enterprises? Can we, if placed on the witness stand boast of small firms becoming increasingly productive while developing form and bolstering national export capacity while contributing to real economic growth? Can we empirically conclude that a significant percentage of small businesses in the Caribbean are positioned to be institutions of significance within the next decade?

These are important questions which a vulnerable Caribbean and indeed other Small Island Developing States (SIDS) cannot ignore if economic growth indicators and social relocation goals are to be achieved. In effect there are important actions and decisions which both policy makers and small businesses are obligated to attend to.

Small businesses if expected to play a critical role in bolstering economic activity must be well nourished and be the subject of special attention by policy makers and economic development institutions.

Small businesses must however understand that hard earned economic development dollars and private equity cannot be frivolously injected into entities that lack structural integrity and are not given to an ethos that encourages excellence and the optimization of resources.

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