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May 2011
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Towards a borderless regionBy Dr Lester Henry
The latest quest by the Community for integration is the Single Development Vision by Member States and the Strategic Plan for Regional Development (SPRD). Various discussions have been undertaken with the Heads of Government and regional stakeholders to set targets for achieving the integral goal. In 2007, a report entitled “Towards a Single Development Vision and the Role of the Single Economy” was adopted by the CARICOM Heads of Government. This was a broad framework for addressing the development needs of CARICOM and identified many drivers of regional economic growth. In fact it is a CSME roadmap which foresaw implementation of the Single Economy by 2015. In November 2010, the regional stakeholders in CARICOM held a conference on The Strategic Plan for Regional Development in which the main highlight was the provision of Regional Public Goods (RPGs). RPGs are services or resources whose benefits are shared by the member countries, are used freely or at subsidized prices and whose use result in accelerated regional development. According to the Strategic Plan, examples of RPGs include, “(i) non-country specific investments in knowledge, research, training, negotiation to promote international competitiveness; (ii) inter-country mechanisms for managing adverse cross-border externalities or creating beneficial ones (i.e. policies, legislation, institutions/organisations); (iii) investments in cross-border infrastructure to enhance the preconditions for growth/development through trade and integration among countries and external competitiveness of commodities/sectors; (iv) creation or re-organisation of regional institutions to facilitate solutions in a range of areas (finance and banking stability, environmental stability, etc)”. Generally, RPGs are policies, institutions, legislation, regulation and infrastructure. The Caribbean Trade and Investment Report 2010 was also launched at the conference. The publication, in its third edition, focused on Strategies for Recovery, Renewal and Reform and covered regional issues such as intra-regional trade, conglomerates and cross border investments, reducing disparities in the region, tourism and the indebtedness of CARICOM Governments. The influx of Ponzi schemes in Jamaica and Grenada and the debacle of the CL Financial Group magnified the regulatory issues concerning the non-bank financial sector which is of increasing significance in the region. Therefore, there has been a keen focus on firm weaknesses – the concept of “too big to fail” and regulatory reform of the non-bank financial sector highlighted this issue. Also emphasized was the vulnerability of the region to external shocks. The recent financial and economic crisis caused a decline in remittances, government revenue, investment, employment activity and the overall growth rate. In addition, the crisis strained the process of reducing the disparities between the LDCs and the MDCs. The decline in economic activity is dampening efforts to harmonize policies as countries have to implement their own stabilization methods to shield and restore their own economy. A devastating earthquake in January 2010 deeply affected the latest of the 15-member Community, Haiti. With a population of 9.7 million, it accounts for more than half of the total population of CARICOM. CARICOM is committed to assisting and announced in February that a Haiti-CARICOM Development Fund would be launched. The reality is that after 40+ years, the region is far from operating as one collective body. The regional stock exchange proposed in 1989 is still not realized. Moreover, compliance by all member states to the targeted schemes is still an issue. A study by Norman Girvan on Caribbean Community: The Elusive Quest for Economic Integration, showed that of some of the existing targets, the introduction of the CET was met by 11 of 13 participating member states. With respect to the removal of legal restrictions on services, there is a ‘legislative compliance gap’ of 56 per cent. Abolition of exchange controls is required to facilitate the free movement of capital but, with a fixed exchange rate still implemented in some countries, this objective is yet to be achieved. Moreover, there is little headway in policy coordination (macro-economic, fiscal and financial policy, to name a few). For the CSME to be successful a commitment must be made by each of the Heads of Government to harmonize and comply with the agreed targets. The mentality must change to one of coordination and teamwork. A collective effort has to be made by all involved as each country must make a borderless region its foremost goal. The 4th Biennial International Business, Banking & Finance Conference themed "Restoring Business Confidence and Investments in the Caribbean" will include a discussion on “CARICOM at cross-roads and future prospects”. The issues mentioned previously, among others pertaining to the implementation of policies and the progress towards the Single Development Vision will be discussed. –Dr. Lester Henry is a lecturer in the Department of Economics, Faculty of Social Sciences, The UWI, St. Augustine Campus. |
The 4th Biennial Business, Banking and Finance Conference will feature an array of regional academics and policy makers. It is useful, therefore, to reflect on the key issue of the state of regional integration. For the past four decades, economic and regional integration has been a central goal of the Caribbean region. The drive for unity in the region has moved from the British West Indies Federation, to the Caribbean Free Trade Association (CARIFTA), to CARICOM and now the CARICOM Single Market and Economy (CSME) and the Single Development Vision. The main goal of CARICOM was to have a common market; for the region to act as ‘one entity’. The objective was to coordinate the economic, industrial and foreign policies and to have convergence between the ‘less developed countries’ (LDCs) with the ‘more developed countries’ (MDCs). Trade would continue to expand along with the intention to improve individuals’ standard of living, increase productivity and enhance international competitiveness. By 1989, the CARICOM model was extended to CARICOM Single Market and Economy (CSME). The CSME was expected to act as a large market for member countries with free movement of labour, capital and goods and services. Other elements included the harmonization of legislation (e.g. company, intellectual property and other laws), coordinated external trade, monetary and macroeconomic policies and a Common External Tariff (CET).