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 The
economies of the 32 countries of the Caribbean archipelago (Anguilla,
Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bonaire, British
Virgin Islands, Cayman Islands, Cuba, Curacao, Dominica, Dominican Republic,
Grenada, Guadeloupe, Guyana, Haiti, Jamaica, Martinique, Montserrat, Puerto
Rico, Saba, St. Barthelemy, St. Eustatius, St. Kitts and Nevis, St. Lucia,
St. Martin, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago,
Turks and Caicos, and U.S. Virgin Islands) are "mostly small, very
open, are typically limited in their export base and are very vulnerable to
natural disasters". (World Bank, 2000: p.1)
By
per capita income measures, Caribbean economies are classified as middle
income countries with the exception of Guyana and Haiti which are decidedly
low income countries. By measures related to physical capital accumulation,
intellectual capital and technological enhancing capabilities, the Caribbean
economies are much less advanced than other middle income countries like
Brazil, Argentina, Chile, and Mexico. A subset of 15
of these countries which are representative of the Caribbean economies
experienced a revival of economic growth in the late 1990s. After a
disappointing annual average growth rate of 1.0% during 1981 to 1990, the
economies achieved an annual average rate of growth of about 3% during the
period 1991 to 1999.
(World Bank, op.cit).
The disparities in the annual average rates of growth
during the earlier period-a high of 6.1% in Antigua and Barbuda to the low
of an annual average decline of 2.7% in Guyana-were reduced in the latter
period when the Dominican Republic averaged annually a growth rate of 6.4%
as compared with an annual rate of decline of 1.4% in Haiti. Weak
statistical data make it difficult to interpret the growth experience of the
Caribbean countries. Investment data are measured by a methodology that does
not estimate net investment.
Value added aggregates are not broken down to separate wages and salaries,
profits, rents, interest and depreciation. In a disaster prone environment,
net investment data are crucial. The World Bank, in a recent study , adopts
cross-country econometric analyses that avoid direct reference to net
investment and labor productivity as factors explaining growth. Data
weakness are not overcome by these alternative approaches. Solutions to
Caribbean development suffer terribly from these "soft options" in
the study of the Caribbean growth experience.
Much of the growth resulted from the expansion in the services sectors,
particularly from tourism but also from off-shore financial services. The
value of agricultural value added which amounted to about 17% of GDP in 1980
declined to 8% in 1998. During that period, tourism receipts increased from
a little more than 7% of GDP to about 11% of GDP in 1994 to 1997.
Construction activity contributed significantly to growth as The Bahamas,
Barbados, and St. Kitts and Nevis modernized their tourism plants and as
Guyana, Belize and Trinidad and Tobago upgraded their physical
infrastructures. While sugar output increased, banana output fell reflecting
the uncertainties of the WTO ruling against the European Union proposals for
banana imports from the Caribbean. The manufacturing sector also performed
well while mining performances were mixed- adverse effects from falling
prices of gold and bauxite and increases in prices from oil in 1999-2000
which benefited Trinidad and Tobago.
Inflation rates reflected both the trends in the developed countries and the
flexibility of exchange rates-fluctuating between 10% and 30% in the early
1980s and falling to between 2% and 10% in the late 1990s. Haiti is the
exception where double digit rates of inflation still prevail. Fiscal
deficits as a proportion of GDP have fallen steadily in most countries.
External financing reflected the adjustments which the countries have made
to the need for a greater reliance on private financing. Net external flows
increased from an annual average of about U.S. $935 million in the 1985 to
1990 period to an estimated U.S. $3.4 billion in 1997 and U.S. $3.3 billion
in 1998. While official development flows fell from 1985 to 1990 levels of
about U.S. $650 million to an average of U.S. $550 million in 1996 to 1998,
total private flows from external sources increased 8 times from an annual
average of roughly U.S. $240 million in 1985 to 1990 to an annual average of
U.S. $1.9 billion in the 1996 to 1998 years. This remarkable change in
external financing reflected a nine fold increase in financing from foreign
direct investment which rose from about U.S. $200 million in the 1985 to
1990 period to approximately U.S. $1.85 billion annually during 1996 to
1998.
The larger economies of Cuba and Puerto Rico do not fit into this pattern.
Reference
World Bank, Caribbean Economic Review,
Caribbean Group for Cooperation in Economic Development, 2000.
Source: www.welcometothecaribbean.com
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