Neo-Industrialization by Digitization

This conceptual chapter [re]examines what policy options are available to small economies like the Caribbean Community (CARICOM) post-COVID-19. It argues that the borderless world of digital trade presents innovative opportunities for regions willing to master technology for upgrading their export diversification competitiveness using a neo-industrial strategy. The core feature of a neo-industrial strategy is that it allows countries to earn foreign exchange through the development and attraction of specialized high-tech traded information/knowledge-based services such as research and design, business analytics, data centers, and other administrative outsourcing processes to achieve industrialization. To achieve this objective, the chapter introduces the development of a CARICOM digital free trade zone (CDFTZ) as an innovative policy initiative in the ecosystem of digital commerce that harnesses these services to serve as an engine of regional economic development. The CDFTZ offers a more sophisticated rationalization of economic organization unlike the traditional low-tech export processing zones (EPZs) that have been unsustainable and exploitative. Content analysis was used to critically appraise and identify thematic priorities that allowed for the development of an institutional framework to guide incisive policy intervention and best practices for the structuring and positioning of the CDFTZ as a regional center of innovation excellence.