Innovative Clusters in the Caribbean and Their Contribution to Economic Diversification: The Case of ICT in Jamaica

Economic and export diversification have been highlighted as a key challenge facing developing countries. The high dependency in many of these countries on a small number of commodities leave their economies highly vulnerable to external shifts in commodity prices and limit their ability to move into dynamic and more knowledge intensive activities. Paths toward upgrading and diversifying the economies of developing countries by moving into such sectors have received significant policy attention. Two research/policy frameworks which became highly influential in this agenda were industrial clusters and global value chains (GVCs) (Gereffi 1999; Schmitz and Nadvi 1999). As outsourcing and offshoring have become major trends in the global economy, opportunities were created for developing countries to link into global markets. In the context of the shifts taking place in the global economy, it was argued that clusters of firms can integrate into production networks serving the advanced economies while gradually upgrading and moving into higher value added activities (Humphrey and Schmitz 2002). The combination of cluster dynamics and GVC connections is intended to create what some scholars have called the “local buzz and global pipelines” needed to boost economic diversification and upgrading (Bathelt et al. 2007).

Some of the difficulties in integrating and upgrading in GVCs are exacerbated in small and undiversified small economies such as those in the Caribbean region. The development of industrial clusters has been a way to overcome these challenges (OTF Group 2010). Recently new forms of clusters have been developing in the Caribbean, considered as rising and innovative clusters (Rabellotti et al. 2014). However, the way they will shape Caribbean economic development and how countries integrate into GVCs is not clearly understood. Focusing on the ICT sector, this paper considers questions related to the contribution of clusters to economic diversification, the role of policy interventions in supporting ICT clusters and how the growth of innovative clusters will shape how countries integrate into GVCs.

Traditionally, Caribbean clusters have focused on areas such as tourism and natural resources. Over the last two decades, however, the potential to tap into the rapidly growing global ICT industry was promoted as a potential way to transform the economies of the region. This included different technological waves from call centres, to outsourced business services, to the current focus on developing a software industry. Broadly, this study considers the growth of innovative clusters in the Caribbean with a more detailed exploration of the case of the ICT cluster in Jamaica. To explore this case, industry and trade data for Caribbean countries are reviewed and analysed along with data from interviews with firms working in Jamaica’s ICT cluster and key policy makers.

This study assess the outcomes of previous waves of technology and policy interventions focused on these technologies and the growth of these clusters. It also examines the current efforts to link these clusters with emerging global technological systems. Thus, it is expected to provide a deeper understanding of how innovative clusters are changing the ways that Caribbean economies link in with GVCs.