- Sanjaya Panth, Paul Cashin, and W. Bauer
- Published Date:
- October 2008
© 2008 International Monetary Fund
Production: IMF Multimedia Services Division
The Caribbean : enhancing economic integration/Andreas Bauer, Paul Cashin, and Sanjaya Panth, editors—[Washington, D.C.]—International Monetary Fund, 2008.
Includes bibliographical references.
1. Caribbean Area—Economic integration. 2. Finance—Caribbean Area. 3. Tax incentives—Caribbean Area. 4. Investments, Foreign—Caribbean Area. 5. Tariff preferences—Caribbean Area. 6. Caribbean Area—Economic policy. 7. Caribbean Area—Economic conditions—1945–I. Bauer, Andreas, (W. Andreas) II. Cashin, Paul. III. Panth, Sanjaya. IV. International Monetary Fund.
HC151 .C375 2008
Disclaimer: This publication should not be reported as representing the views or policies of the International Monetary Fund. The views expressed in this work are those of the authors and do not necessarily represent those of the IMF, its Executive Board, or its management.
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Goohoon Kwon, Sanjaya Panth, Jingqing Chai, Alejandro Guerson, Greta Mitchell Casselle, and Rafael Espinoza
Luis Cubeddu, Andreas Bauer, Pelin Berkmen, Magda Kandil, Koffie Nassar, and Peter Mullins
Montfort Mlachila, Paul Cashin, and Judith Gold
Caribbean economies have historically been among the most open in the world. While this has allowed the Caribbean to garner the benefits of trade integration and globalization, it also poses challenges, particularly given the small size of many of these island countries. Strengthened regional cooperation has enabled Caribbean countries to compete more effectively for productive foreign investment, and adjust more readily to changing patterns in global trade.
In recent years the Caribbean has made substantial progress in implementing economic reforms, both at the national and regional level. The benefits of such reforms are being realized, as over the last decade the Caribbean has seen accelerating economic growth, robust increases in foreign direct investment flows, continued low inflation, and sustained reductions in poverty. Nonetheless, the Caribbean continues to be buffeted by adverse external shocks, chiefly declining terms of trade and trade preferences, frequent natural disasters, the collapse in official development assistance, and economic and financial fragility emanating from major trading partners.
In response to the economic challenges facing the Caribbean, the International Monetary Fund (IMF) has heightened its engagement with the region, including through enhanced regional analysis of the Eastern Caribbean Currency Union and of the wider Caribbean. In our discussions with national and regional authorities, we have consistently emphasized that efforts to strengthen public finances, upgrade the investment climate, and advance regional integration and policy coordination will be key to durably raising the Caribbean’s growth performance.
Caribbean integration efforts have been focused on three areas that are currently high on policymakers’ agendas. First, regional financial integration, as a means of deepening financial systems and raising regional growth; second, tax incentives and investment, where harmonized regional action is key to overcoming collective action problems; and third, devising strategies to manage the erosion of trade preferences in key export markets.
The papers in this book arose from the IMF’s regional surveillance work in the Caribbean and have benefited from discussions with key regional policymakers, and from the comments of participants in regional conferences, workshops, and seminars. They represent summaries of our analytical work for the region, and this volume is the second of its kind coordinated by our team in the Western Hemisphere Department. The International Monetary Fund remains fully committed to supporting the efforts of the Caribbean people to achieve their development goals, and we look forward to continuing our close policy dialogue in the region.
Director, Western Hemisphere Department
International Monetary Fund
The material presented in this publication was previously published in papers prepared as background for discussions on Caribbean regional issues in the IMF Executive Board in September 2007. The publication team was led by Andreas Bauer, Paul Cashin, and Sanjaya Panth, respectively Deputy Division Chief in the Western Hemisphere Department’s Atlantic Division, and Division Chiefs of the Department’s Caribbean I and Caribbean II Divisions.
The authors would like to thank Anoop Singh, Markus Rodlauer, and José Fajgenbaum for their comments and guidance, and the many colleagues in the IMF’s Western Hemisphere and functional departments for their assistance. Thanks are also due to current and former IMF Executive Directors Michael Horgan, Jonathan Fried, and their staff for their valuable contributions, and to Western Hemisphere Department colleagues Christina Daseking, Christopher Faircloth, and Montfort Mlachila for their willing efforts in assisting with the preparation of this book. The authors are particularly grateful to the Caribbean authorities for their frank discussion of the issues covered in the papers, and for their provision of data and other source material.
Special thanks are due to Andrea Aquino for producing the manuscript under tight deadlines. The authors also wish to thank Cleary Haines, Rituraj Mathur, and Usman Khosa for excellent research assistance, and Alicia Etchebarne-Bourdin and Marina Primorac of the External Relations Department for their editorial support in the production process.
The opinions expressed in this publication are solely those of its authors and do not necessarily reflect the views of the International Monetary Fund, its Executive Directors, or the authorities of the countries of the Caribbean.