BUAD 8005 - INTERNATIONAL MARKETING

RESEARCH PROPOSAL

CULTURAL FACTORS AFFECTING THE GLOBALIZATION EFFORTS OF CARIBBEAN ORGANIZATIONS

SUBMITTED BY: JENNIFER PRINCE

LECTURER: DR. BARNEY G. PACHECO

When people think of the Caribbean, many visions come to mind: tropical island breezes, ocean waves crashing ashore, idyllic vacation getaways, Reggae and Soca music wafting through the air, and a relaxed laid-back lifestyle. Most people usually do not think of the Caribbean islands as business hubs that are deeply engaged in the global economy. It proves difficult to talk about The Caribbean as one cohesive entity, because the island countries are quite diverse in language, culture, and religion. Cuban scholar Antonio Benitez Rojos once said that: Caribbeanness is a system full of noise and opacity, a nonlinear and unpredictable system. In short a chaotic system beyond the total reach of any specific kind of knowledge or interpretation of the world (qtd. LaRose, 2008, n.p.).

The nonlinear and unpredictable nature of Caribbean systems undoubtedly plays a role in the countries lack of involvement in the global marketplace. While the notion of being so unpredictable sounds a bit romantic, it makes it difficult for people in the Caribbean to be organized and motivated in order to compete in the economic realm. Also, foreign investors are likely to shy away from supporting ventures that are started in places that are so opaque, nonlinear, chaotic, and unpredictable. These qualities do not instill

confidence in those looking to invest in sustainable enterprises that are capable of competing in the global market. An essay by David Jessop in the book No Island is an island: The impact of Globalization on the Commonwealth Caribbean, states that many nations of the Caribbean, with the exception of the Dominican Republic and Trinidad and Tobago, are not at all interested in engaging in the global economy (2007, 5). Jessop explains that the small and fragmented economies of the region, its intense nationalism, its vulnerability, and its strong sense of identity prevent the region from being part of a process that requires the cessation of elements of state control, free access to onceprotected markets and nearly open competition with vastly larger neighbors (Jessop, 2007, p. 5). While it is daunting to try to go up against countries that are larger, more economically-established, and with a longer history of being players in the international economic markets, it is essential for the survival of the Caribbean that people who originate from the islands become involved in creative entrepreneurial ventures to establish new industries and new business models for the twenty first century. My research will argue that three key issues are keeping the Caribbean from becoming important participants in the global economy. These issues are all culture-based. They include: the cultural images of the laid-back laissez fair Caribbean lifestyle, the unpredictable and chaotic systems that are part of Caribbean culture, and the intense nationalism of Caribbean

countries that causes them to cling to individual identities rather than joining forces in an effort to become more competitive. These factors are keeping the Caribbean from creating vibrant sustainable businesses that are capable of competing in the global marketplace. Arguably, there are several systemic historical, political, and economic factors that are contributing to the lack of Caribbean presence in the global economy. This proposal will provide a review of recent literature about these systemic factors. The next section will explore the scant scholarly debates that have taken place in the past decade about how the culture of the Caribbean affects its place in the business world. Finally, this proposal will describe how my work will enter into these debates to provide a fresh perspective and new outlook regarding why the people and countries of the Caribbean are failing to compete in the globalized economy. A Brief Overview of Systemic Issues Rapid globalization is threatening the survival of Caribbean economies. The Caribbean island nations are small, but they need to step into the global marketplace if they want to survive. One of the largest issues keeping Caribbean nations from fully participating in the global economy is the crippling levels of debt that many nations face. In 2005, seven out of ten of the most indebted nations that were in emerging markets were Caribbean nations. This debt represents one of the main crises facing the region (Newstead, 2009, p. 158). A report from 2009 states that while Caribbean

nations seem to be ready for growth, their small size combined with high levels of debt have convinced most investors to stay away from business opportunities in the region (Hughes, 2009, 95). Many of the governments of Caribbean nations have mismanaged funds for decades and incurred large national debts which make the island nations look like risky places for foreigners to invest. Ratna Sahay from the International Monetary Fund (IMF) pointed out that in 2003 fourteen of fifteen Caribbean countries ranked among the top 30 highly indebted emerging markets (Hughes, 2009, 95). Since the mid-1990s, the average national public debt in the region has virtually doubled, with debt-to-GDP ratios exceeding 100% in some countries (Hughes, 2009, 95). The emergence of the Caribbean Community and Common Market (CARICOM) is having an impact on the Caribbean economy as well. In some ways CARICOM can be considered both the oldest and in terms of the number of member countries, the largest integration group in the western hemisphere (Sandberg, Seale and Taylor, 2006, 795). Even with this elder

stature, CARICOM has very little economic power. Also, the CARICOM countries have strong historical connection with the United Kingdom and also have relatively young status for operating as independent nations. All of these combined factors make the current trade policies particularly challenging for CARICOM countries (Sandberg, et al., 2006, 796). According to economist Debbie Mohammed, the countries that are part of CARICOM are also facing serious macroeconomic challenges that

threaten not only their developmental prospects but arguably their survival (2008, 288). Trade liberalization is spreading throughout the globe which is serving to erode the preferential trade agreements that used to exist between Caribbean nations and the United States and United Kingdom which is making it difficult for the Commonwealth countries to compete effectively in international markets (Mohammed, 2008, 288). The situation is quite urgent, and Caribbean nations need to develop new strategies in order to increase revenue-generating capacity and stimulate economic growth necessary for sustained development (Mohammed, 2008, 288). The Caribbean economy is also greatly influenced by the United States economy, which is problematic now because of the economic downturn in the United States (Palmer, 2009, 154).

Traditional Caribbean Industries The Caribbean island nations have few natural resources, except for oil in Trinidad and Tobago. Many of the agricultural industries that are present in the countries can trace their roots back to Europeans who set up plantations to grow bananas, sugar, cocoa and other products. Back when these plantations were still the main providers of these products, many economists believed that the size of the land and the amount of natural resources present on the land played a large role in determining a countrys economic structure of production (Griffith, 2007, 939). Now, the size of a

country has very little to do with what it can produce, especially since the industries of today are less geared toward agriculture and more focused on knowledge and skills rather than on land mass (Griffith, 2007, 939). Economist Winston H. Griffith contends that the countries that make up CARICOM need to accumulate sufficient quantities the appropriate knowledge skills in order to establish a diversified economic structure of production that will help them to develop new products and services that will attract the interests of foreign investors (Griffith, 2007, 941). For example, the Caribbean islands once were some of the largest producers of bananas in the world. These nations once had preferential trade agreements with European nations, but these are no longer in effect. A major contributing factor to these problems is that Caribbean island nations have mostly been excluded from being part of the decision-making processes about trade agreements (Clegg, 2008, 228). Currently, the Caribbean is in competition with many other Latin American countries to produce and export bananas to Europe. In the past decade bananas could enter the EU largely duty-free because farmers in the Commonwealth are prohibited from paying the dirt poor wages offered to peasants in Latin America which creates a situation where Latin American countries can push the Caribbean out of the market by offering the same product at a much lower price (Wilkinson, 2009, 14). The preferential agreement once held by the Caribbean banana industry with the EU, has over the last fifteen years been systematically

dismantled by the World Trade Organization (WTO) which has been a devastating blow to Caribbean banana farmers (Wilkinson, 2009, 14). Cocoa also was once a significant crop, especially in Trinidad and Tobago, where John Cadbury, one of the founders of the Cadbury confectionary company established a cocoa plantation in the nineteenth century to produce cocoa to manufacture Cadbury products (Dassrath, 2008, n.p.). The country of Trinidad and Tobago is very proud of the fine quality of its cocoa, which is said to possess and interesting fruity, mildly floral, winey, even raisiny overtones that are quite distinct from bulk cocoa which is due to the unique planting material, local environment, and post-harvest processing methods(Global Research on Cocoa, 2004, 3). Having a premium product like this attracted buyers from around the world, but even that is changing. Now, even the cocoa industry is being threatened by globalization and technology. There are new advances in biotechnology that are funded by multinational corporations that are being used to develop trees that provide higher yields as well as creating new hybrids of cocoa that can now be grown in places like Australia and Vietnam (Cocoa market, 2005, n.p). The Cadbury-Schweppes company, which first established cocoa farms in Trinidad and Tobago, is now looking toward Australia as a key site where they can introduce cloned cocoa(Cocoa market, 2005, n.p).

One industry in the Caribbean that is still very strong is tourism. Tourism now represents the most predominant piece of the Caribbean economy. For example, in the countries of Antigua and Barbuda about ninety-five percent of all employment is related, directly or indirectly, to the travel and tourism industry (Hayle, 2010, 36). Many countries, willingly or unwillingly, are dependent on the fickle tourism trade as the major engine of economic development and social progress (Hayle, 2010, 37). Studies have shown that several factors, including, large gaps in technology, lack of capital investment coupled with a low level of training in administrative and technical skills, tariff and non-tariff barriers, and infrastructural deficiencies are all enormous obstacles that prevent Caribbean nations from entering into new markets (Hayle, 2010, 36). People from the United States continue to visit the Caribbean islands for vacations. In 2004, tourists from the United States made up 52 percent of all tourists visiting the Circum-Caribbean and even a larger percentage visited the Bahamas (87 percent) and Jamaica (70 percent) (Palmer, 2009, 154). Even so, the tourism industry cannot be depended upon to maintain the economies of the Caribbean Commonwealth. The economy in the United States has been shaky since 2008, meaning that many people are foregoing vacations in order to save money. Issues like this have a direct impact on the entire economy of the Caribbean, meaning that these nations need to come up with several back-up options in case the current ways of bringing in funds begin to fail at an extreme level.

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Some new industries are emerging, but even a large number of these are being created by foreign investors, such as, the company called Rainey Compression Essentials which both manufactures and distributes postoperative compression apparel garments that people have to wear after they have had plastic surgery performed on their bodies (Hughes, RossRobinson, Garcia and Smith, 2009, 95). The Rainey Compression Essentials company chose to set up shop in the Caribbean because many people are traveling to the islands in order to get plastic surgery (Hughes et al., 2009, 95). The parent company is located in Atlanta, Georgia, but they began working with doctors in the Dominican Republic who performed plastic surgery. The doctors liked the compression garments, so the company began to export the garments to them. Arrangements like these might look like they are beneficial to the Caribbean islands on the surface; but still, it is people in the United States who are benefiting from these arrangements more than people in the Caribbean. What would benefit the Caribbean would be for companies originating from the Caribbean region to set up successful international operations in other parts of the world. Like the banana and cocoa plantations of earlier centuries, too many businesses operating in the Caribbean are not homegrown. This research will examine what cultural factors are keeping people of the Caribbean Commonwealth from becoming international entrepreneurs in their own right.

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Caribbean Culture This proposal will argue that the culture of the Caribbean is hindering local businesses from venturing into the international arena. The people of the Caribbean may be too relaxed and interested in leisure activities, such as, Carnival. Or they may be content to maintain trade within the CARICOM region only. Perhaps they are too afraid of the global market, or they do not believe that the products they have to offer are worth very much globally. These may all be things that hinder their efforts to set up successful international organizations. The culture of the Caribbean is very different than those of the United States of America and Europe, which are two entities with which Caribbean people conduct much business. One book, entitled Communicating Globally: Intercultural communication and international business describes some of the main differences between the US and the Caribbean. This book groups Caribbean and Latin American countries together when talking about culture and states that people from these regions believe in simpatia and extending kindness to others; confianza, which means mutual trust, and simpatico, which is comfort with Latin ways (Schmidt, Conaway, Easton and Wardrope, 2007, 183). People in the Caribbean embrace a lifestyle where time is flexible and things can be done manana; there is no rush (Schmidt, et al., 2007, 184). Businesspeople in the United States are much less concerned about forming warm and compatible relationships with their business

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associates, and they also value punctuality and formality in business dealings (Schmidt, et al., 2007, 184). Caribbean people are more prone to place importance on the wellbeing of their friends, family, and fellow countrymen over that of themselves. All of these beliefs and values are very different from those in the US and Europe where people tend to be more individualistic and are more interested in looking out for themselves (Schmidt, et al., 2007, 185). There are several aspects of Caribbean culture that poets, painters, historians, and even business analysts contend are difficult to pin down and define, with the term informality being one of them. Informality in the Caribbean marketplace does not just refer to the behavior of people, but to the actual legal frameworks and regulations regarding the economy (Loayza and Serven, 2010, 158). Informality can be described as a latent, unobserved variable, that is, a variable for which accurate and complex measurement is not feasible (Loayza and Serven, 2010, 158-159). This research paper will look at stories of successful business ventures, and ventures that have failed and explore what factors led to these outcomes. It will also highlight some counterexamples of firms that have been highly successful in exporting Caribbean products. Some scholarship, such as the writings described above, focus on the cultural factors that affect Caribbean businesses, but my paper will delve deeper into these issues by conducting research on site in Trinidad and

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Tobago, one of the Caribbean countries that has had the most success in exporting to other CARICOM countries. By interacting directly with people and talking with business owners and people with good business ideas I will get a qualitative sense of what it will take for the Caribbean to emerge as a strong economic power in the next several decades. I believe that the people of the Caribbean may be sitting on a gold mine, but need to learn how to use the resources they have. Caribbean people need to become more educated, more technologically savvy, and more prepared to take advantage of the opportunities that present themselves in the rough and tumble, highlycompetitive global marketplace of the twenty first century.

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References Clegg, Peter. 2008. The Commonwealth Caribbean and the challenges of institutional exclusion. Round Table 97, no. 395 (April 2008): 227-241. JSTOR (21 May 2011). Dassrath, Melissa. 2008. Dont cry for cocoa. Trinidad & Tobagos Newsday. 20 January 2008, n.p. Web. <http://www.newsday.co.tt/features/0,71840.html> Fridell, Gavin. The Case against cheap bananas: Lessons from the EUCaribbean banana agreement. Critical Sociology (Sage Publications, Ltd.) 37, no. 3 (May 2011): 285-307. JSTOR (21 May 2011). Print.

Global research on cocoa. 2004. GroCocoa. Issue 5 (June 2004). Griffith, Winston H. 2007. CARICOM countries and the Irrelevance of

economic smallness. Third World Quarterly 28, no. 5 (July 2007): 939-958. JSTOR (21 May 2011). Hayle, Carolyn, Diaram Ramjee Singh, and Allan Wright. 2010. Planning for tourism resilience in the Caribbean. Journal of Eastern Caribbean Studies 35, no. 1 (March 2010): 36-59. JSTOR (21 May 2011).

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Hughes, Alan, Hazel Ross-Robinson, Chana Garcia, and LaToya M. Smith. 2009. The new Caribbean economy. Black Enterprise 39, no. 7 (February 2009): 95-99. JSTOR (21 May 2011). Jessop, David. 2007. Globalization and the Caribbean: An Island is an island: The impact of Caribbean by Gordon overview. In No

globalization on the Commonwealth

Baker, 5-18. London: Chatham House. Print.

Loayza, Norman, Luis Serven. 2010. Business regulation and economic performance. Washington DC: The World Bank. Print. LaRose, Miranda. 2008. Caribbean culture too diverse to be labeledA talk by Professor Nettleford. Starbroek News, 5 Sep 2008. Web. Accessed 20 May 2011. <http://www.stabroeknews.com/2008/news/stories/09/05/caribbeanculture-too-diverse-to-be-labelled-%E2%80%93-prof-nettleford/> Mohammed, Debbie A. 2008. Size and competitiveness: An examination of the CARICOM Single Market and Economy 395 (July 2008): 287-303. (CSME). Round Table 97, no.

JSTOR (21 May 2011). Neoliberalization and

Newstead, Clare. 2009. Regional governmentality:

the Caribbean Community Single Market and Economy. Singapore Journal of Tropical Geography 30, 2011). no. 2 (July 2009): 158-173. JSTOR (21 May

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Palmer, Ransford W. 2009. The United States' win-win relationship with the Caribbean. Brown Journal of World Affairs 16, no. 1 (Fall/Winter 2009): 151158. JSTOR (21 May 2011).

Sandberg, H., James Seale, and Timothy Taylor. 2006. History, regionalism, and CARICOM trade: A gravity model analysis. Journal of Development Studies 42, no. 5 (July 2006): 795- 811. JSTOR (21 May 2011). Schmidt, Wallace, Roger Conaway, Susan Easton and William Wardrope. 2007. Communicating globally: Intercultural international business. London: Sage. Print. communication and

Wilkinson, Bert. 2009. Caribbean upset with new EU banana regime. New York Amsterdam News, 10 December 2009, 100, no. 50: 14. JSTOR (21 May 2011).