The biggest problem facing the Caribbean region in its efforts to adapt to changes in the world economy are based on its high level of dependence on export products. Export products range from around 71% of gross domestic product (GDP) on the larger islands to 186% for the smaller islands, with an average of approximately 112% for the region as a whole. Further, many of the Caribbean islands are highly dependent on exports centered on a handful of raw materials that represent 50% of the total exports from the region. These include sugar from Cuba, bauxite from Jamaica, Suriname and Guyana, petroleum from Trinidad and Tobago and the Dutch Antilles, bananas from St. Lucia, Dominica, Grenada, St. Vincent, Guadeloupe and Martinique, and coffee from Haiti. This general pattern among Caribbean economies is problematic for the future of the region because raw materials represent the slowest growing market at the global level. A high level of dependence on export products, along with low diversification (of both products and buyers) of exports is one of the reasons that many of the economies of countries and islands in the Caribbean have been classified as “vulnerable” or “at risk” societies.
This problem of dependence on exports and a lack of diversification in export portfolios is seen most clearly in the Greater Antilles, all of which show negative economic growth rates. This differs from the Lesser Antilles which have fewer natural resources and are less dependent on exports. The creation of common markets through free trade agreements has had a negative effect on Caribbean economies and has revealed the problem of training and competitiveness of human resources. Opening markets has resulted in increased poverty, unemployment and sharp social inequality in the Greater Antilles, home to 80% of the total Caribbean island population.
Some economists argue that because of their small size (at least for the smaller islands) it will be highly difficult, if not impossible, for some of these nations to survive as independent states in the 21st century. Eventually, they argue, residents of many of these islands will have to resort to migration and dependence on remittances from abroad for their survival and their governments will, in turn, depend on transfers and aid from powerful countries and international organizations to balance their budgets.
Tourism has been one of the few industries that have shown sustained growth. Tourism has come to play a central role in many of the Caribbean island economies, including in countries such as Cuba, where by the middle of the 1990s the foreign currency from tourism surpassed the income from sugar. This same pattern has been seen throughout the region as a whole. Revenue from tourism in the region has surpassed $18 billion annually and represents more than 50% of the income for many island states.
Author: Luis Galanes
Published: June 24, 2012.
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