Stephen Meardon: The gist of Mauricio Mesquita Moreira and Eduardo Mendoza's answer to the question posed in their title is persuasive. I grant their main argument: the CARICOM members' "prospects of trade-related gains are modest and conditional on common market rules being strictly enforced." It is harder to grant the parenthetical point at the end of that sentence: "(and distributional risks being managed)." That is not to say that a concern with the possible distributional consequences of the CARICOM is necessarily misplaced. The distribution of industry among countries, and of income among countries and classes, clearly has consequences. One may worry about those consequences either for moral reasons or for fear of popular resentment and its repercussions on economic policy. But Moreira and Mendoza have in mind a particular "distributional risk" that is overstated. This may seem a narrow point in the context of their expansive article, but it is worth making because their note of concern is not heard just once: it is carried throughout the paper. Yet it seems discordant with reason and evidence.
The distributional risk that preoccupies the authors is that of "the agglomeration of economic activities" in the big and rich CARICOM countries at the expense of the small and poor ones. The authors state that the larger members, particularly Trinidad and Tobago, have benefited from CARICOM's diversion of trade, to the extent that their shares of intraregional (as well as extraregional) manufacturing exports are increasing. Concerted action is required before the larger and wealthier countries crowd out the smaller countries altogether.
The preoccupation is amiss for three reasons. First, in CARICOM, smaller does not mean poorer, and larger does not necessarily mean wealthier. The authors know this well—hence their avoidance of using common categories like less-developed countries and more-developed countries interchangeably with their chosen categories of OECS countries, which are generally small, and non-OECS countries, which are generally large. In the Caribbean, however, [End Page 133] the association of size and wealth should arguably not just be avoided, but rather reversed.
Generally, small OECS countries, like St. Lucia and St. Kitts and Nevis, are modestly to moderately prosperous. Generally, large non-OECS countries are a mix, including a moderately prosperous country (namely, Trinidad and Tobago), a less prosperous one (Guyana), and an even less prosperous one that also happens to be one of the largest (Jamaica). All of the OECS countries had higher per capita income levels in 2003 than Guyana and Jamaica. Moreover, based on figure 1 in the paper, the smaller countries, most of which are in the OECS, appear at least vaguely to have seen higher growth rates of per capita income from 1971 to 2003 than the larger countries. Moreira and Mendoza themselves call attention to this fact early in the paper. Consider what this implies for their distributional fears!
Second, inasmuch as agglomeration is occurring in one particular big and prosperous country (Trinidad and Tobago), it is a stretch to say that what is being agglomerated there are "economic activities." In some instances, Moreira and Mendoza speak more precisely of the agglomeration of manufacturing industry or "the production of goods," but the alarm of the other formulation continues to ring in one's ears.
The production and export of tangible goods, especially manufactured goods, is fetishized. It is hard to see why. The intraregional division of labor appears to favor a pattern of production and trade that can be characterized simply, if a little crudely, like this: among non-OECS countries, Trinidad and Tobago exports fuels and manufactured goods both intraregionally, to the likes of St. Lucia and St. Kitts and Nevis, and extraregionally, to the United States; Jamaica and Guyana struggle. Among OECS countries, St. Lucia and St. Kitts and Nevis export tourist services extraregionally to the United States and Europe. Judging from the data already surveyed, the pattern appears to be serving St. Kitts and Nevis very well—and St. Lucia, too, in terms of growth rates of income if not yet levels. Instead of giving manufactured goods the privileged place among economic activities and worrying on behalf of the OECS about their agglomeration...