September 2017

By Daniel P. Erikson

As Hurricane Irma completes its destructive march through Florida and the southeastern United States, we must remember that the small island nations of the Caribbean have also been left to contend with extensive damage to infrastructure, thousands of newly homeless, and dozens of deaths. 

Hurricane Irma struck the tiny twin island nation of Antigua and Barbuda as a peak-strength Category 5 storm and Prime Minister Gaston Browne estimated that 95 percent of the properties on the smaller island of Barbuda were destroyed. Irma then raked across the U.K. territories of Anguilla, British Virgin Islands, and Turks and Caicos, and the French territories of St. Bart’s, Guadeloupe, and St. Martin (which shares the island with the Dutch territory of St. Maarten). Cuba also suffered as the storm swept across its northern coast and ravaged the third largest city of Camaguey. The U.S. territories of Puerto Rico and the U.S. Virgin Islands were also badly affected before the storm moved on towards the Florida Keys and then the mainland United States.

While the damage is still being assessed, it is already clear that the lives of thousands of people who live on these islands will never be the same and that property damage will extend into the billions. Some of the smaller, remote islands may be uninhabitable for weeks to come. French President Emmanuel Macron and the King of the Netherlands will travel to the region to show solidarity with their afflicted citizens in the region. Once the challenges of treating the injured and assisting with basic human needs are met, much of the early reconstruction effort is likely to focus on rebuilding tourist infrastructure. This will be necessary, but not sufficient, to create a full recovery. 

Expanding the competitiveness of the Caribbean service sector beyond tourism is a way to draw on regional strengths and broaden the basis for economic growth. Caribbean leaders have increasingly recognized that developing globally competitive services industries offers one way to retain high-skilled workers and mitigate the risk of external shocks to the tourist sector.

Several years ago, the Centre for International Governance and Innovation based in Waterloo, Canada, asked me to assess what steps the Caribbean islands could take to diversify their economies away from an over-reliance on tourism to create a more sustainable future. Then, as now, a series of powerful storms had severely impacted these vulnerable islands: Hurricane Ivan in 2004, Hurricanes Dean and Felix in 2007, and Hurricane Ike in 2008. The results of that study, “Beyond Tourism: The Future of the Service Industry in the Caribbean,” contain lessons that remain relevant today.

Hurricane Irma reminds us once again that the Caribbean remains extraordinarily vulnerable to natural disasters – especially their lucrative tourist sectors. Against this backdrop, the services sector in the Caribbean may serve as an important source of economic growth, but only if the region begins to move beyond tourism to take advantage of opportunities in banking and financial services, call centers and information and communication technology, off-shore education and health services, and transportation.

Hurricane Irma has dealt a tragic and costly blow to the Caribbean. Rebuilding a stronger and more diversified service sector may offer one path towards a sustainable and much deserved recovery for the people of the region.