Accelerating Trade and Integration in the Caribbean

Emmanuel Pinto Moreira And Pamela Coke-Hamilton

Description

The main objective of this report is to help policymakers in the Caribbean design an agenda of policy actions to accelerate trade integration and growth and reduce poverty. The report is a joint response from the World Bank and the Organization of American States (OAS) to a demand statement from the member states of CARICOM, formulated by the Caribbean Regional Negotiating Machinery and the CARICOM Secretariat, to strengthen the analytical underpinnings of the linkages between trade, economic growth, and poverty. It aims at centering the Caribbean's next round of trade reforms and its overall agenda around trade on these key thematic areas.
The report provides an overview of the economic and trade system context of the Caribbean, under which the new trade environment is operating. It then discusses the opportunities and challenges for the Caribbean associated with the new trade environment. It finally quantifies the gains from global trade integration using a dynamic macroeconomic analysis.
The report provides policy priorities to accelerating Caribbean integration into the world economy and to reap the benefits of global competition. Each part of the report focuses on a key question and adds value by providing an in-depth analysis of the issues raised and laying the foundations for policy recommendations described in the last chapter of the report:
* Part I (Overview of economic and trade system context): is Caribbean's economic and trade system sound enough to sustain the new era of its global trade relations which is being shaped?
* Part II (Focuses on the analysis of the new opportunities and challenges of the new trade environment): what are the opportunities and challenges that the new trade environment offers to the Caribbean?
* Part III (Presents an assessment of the impact of the EPA on growth and poverty using two types of macroeconomic models): what are the gains in terms of growth and poverty reduction of the recently negotiated EPA?

Informations

• Publié par: world-bank-publications
• Publié le: 17 juillet 2009
• Nombre de lectures: 20
• EAN13: 9780821380178
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

A WORLD BANK COUNTRY STUDY
Accelerating Trade and
Integration in the Caribbean
Policy Options for Sustained Growth, Job
Creation, and Poverty Reduction
THE WORLD BANKA WORLD BANK COUNTRY STUDY
Accelerating Trade and Integration
in the Caribbean
Policy Options for Sustained Growth, Job Creation,
and Poverty Reduction
Emmanuel Pinto Moreira
Pamela Coke-Hamilton
Document of the World Bank and the Organization of American States,
co-produced with the Governments of CARIFORUM Countries
THE WORLD BANK ORGANIZATION OF AMERICAN STATES
Washington, D.C. Washington, D.C.Copyright © 2009
The International Bank for Reconstruction and Development/The World Bank
1818 H Street, N.W.
Washington, D.C. 20433, U.S.A.
All rights reserved
Manufactured in the United States of America
First Printing: June 2009
Revised Printing: June 2010
printed on recycled paper
2 3 4 5 12 11 10
World Bank Country Studies are among the many reports originally prepared for internal use
as part of the continuing analysis by the Bank of the economic and related conditions of its
developing member countries and to facilitate its dialogs with the governments. Some of the reports
are published in this series with the least possible delay for the use of governments, and the aca-
demic, business, financial, and development communities. The manuscript of this paper there-
fore has not been prepared in accordance with the procedures appropriate to formally-edited
texts. Some sources cited in this paper may be informal documents that are not readily available.
The findings, interpretations, and conclusions expressed herein are those of the author(s)
and do not necessarily reflect the views of the International Bank for Reconstruction and
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ISBN-13: 978-0-8213-8017-8
eISBN: 978-0-8213-8019-2
ISSN: 0253-2123 DOI: 10.1596/978-0-8213-8017-8
Cover photos: Early evening over St. George’s harbour by Lawrence Worcester/ Lonely Planet
Images. St. George’s Market Square courtesy Grenada Board of Tourism.
Library of Congress Cataloging-in-Publication Data
Accelerating trade and integration in the Caribbean : policy options for sustained growth, job
creation, and poverty reduction.
p. cm. -- (A World Bank country study)
“Document of the World Bank and the Organization of American States, co-produced with
the Governments of CARIFORUM Countries.”
Includes bibliographical references.
ISBN 978-0-8213-8017-8 -- ISBN 978-0-8213-8019-2 (electronic)
1. Caribbean Area--Economic integration. 2. Free trade--Caribbean Area. 3. Caribbean Area--
Economic policy. I. World Bank. II. Organization of American States. III. Caribbean Forum.
HC151.A53 2009
337.1'7729--dc22
2009015959Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Part I: Overview of Economic and Trade System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Macroeconomic and Structural Constraints Facing Trade Reform
in the Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Caribbean Economy and Macroeconomic Constraints . . . . . . . . . . . . . . . . . . . . . . . . 4
Structural and Physical Constraints. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. Caribbean Regional and Global Trading Relations . . . . . . . . . . . . . . . . . . . . . . . . . 27
Intra-Caribbean and Regional Integration Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Caribbean and the Global Trading Environment . . . . . . . . . . . . . . . . . . . . . . . . 41
Structural, Institutional, and Political Constraints to Trade Integration . . . . . . . . . 55
3. Trade Patterns and Flows, and Competitiveness Issues. . . . . . . . . . . . . . . . . . . . . . 61
Trade Performance, Trade Flows, and Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Competitiveness, Specialization, and Complementarity70
Binding Constraints to Competitiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Part II: Challenges and New Opportunities81
4. New Areas of Opportunities and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Trade in Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Financial Services88
Services in the CARIFORUM-EC Economic Partnership Agreement . . . . . . . . . . . 92
5. Capitalizing on a Changing International Environment . . . . . . . . . . . . . . . . . . . . 95
Longer-term Trade Strategy and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Managing Transitional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Alleviating Structural and Institutional Constraints on “Old” and “New”
Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
iiiiv Contents
Part III: Quantifying the Impact of Trade Reform on Growth, Job Creation,
and Poverty Reduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
6. Quantifying the Gains from Global Trade Integration—A Dynamic
Macroeconomic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Assessing the Gains from Trade: A Dynamic Multi-Country Analysis . . . . . . . . . 113
Aom Trade: A Dynamic Analysis for Jamaica . . . . . . . . . . . . 125
Aid for Trade, Growth, and Poverty Reduction: A Dynamic Analysis for the
Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
7. From Diagnosis to Policy Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Reducing Macroeconomic and Fiscal Imbalances, and Investing
in Trade Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Accelerating National Trade Policy Reforms and Improving Investment
Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Adjusting to Preferences Erosion, Accelerating the Implementation
of the CSME, and Using the EPA for Enhanced Competitiveness
and Global Trade Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Developing a Long-term Trade Strategy with a Focus on Increased
Competitiveness and New Areas of Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . 148
Reinforcing CARIFORUM Regional Institutions with a Focus
on Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Implications for the Aid for Trade Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
A p p e ndix T ables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
T e c hnical A p p e ndix es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
A. Infrastructure, Trade, and Growth—Evidence and Implications
for Trade Reform in the Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
B. Aid for Trade—Rationale and Implications for Trade Reform in Caribbean
Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .