Caribbean Economies in the Twenty-first Century (review)

Size, population, race, ethnicity, density, political structure, and language separate the Islands in Caribbean Sea. Moreover, products and services of these islands are similar and thus, the integration of economies is not promising in the future. On the other hand, these islands face similar problems such as insufficient investment for physical/human capital, lack of technology, and increases in narcotics traffics.

The history of these Islands is based on triangular trade in which Europeans transport raw materials to produce finished goods in Europe and finished goods are sold in West Africa for slavery trade.

Market failure of these Islands occurred due to the small size and the low population. Indeed, the possibility of achieving greater cohesion and consensus in small countries allows mobilization of the population for the development effort. Since trade volumes of small countries are insignificant, countries may take some economic measures against international trade rules without a trade sanction. Additionally, a single major project can generate significant growth in a small country.

In terms of the Human Development Index constructed by the United Nations, the highest scores are in Barbados, the Bahamas, and Antigua and Barbuda. Medium levels are in St. Kitts and Nevis, Trinidad and Tobago, Dominica, Grenada, Cuba, St. Vincent, the Grenadines, Jamaica, the Dominican Republic, and St. Lucia. The lowest score is in Haiti. The most recommended policy to attain higher Human Development Index is to increase education for the younger population rather than adults.

The chapters in part II give the categorization of economic and social characteristics of Caribbean countries upon the Human Development Index in chapters 3, geography in chapter 4 and languages in 5 and 6. The chapter III includes chapter 8, which deals with the U.S.-Caribbean Trade Relations based on Caribbean Basin Initiative since 1982 in, chapter 9, which examines industrialization and trade, and chapter 10 which concentrates on drugs in the Caribbean. Part IV, chapter 11, deals with prospects for the future.

Economic problems of some countries can be listed this way: Cuban GDP falls by 35% between 1989-1993 after Soviet Union collapsed and machinery imports are declining. The Cuban government's new economic strategies are diversifying exports, searching new trade partners and promoting tourism. As a result, total number of foreign visitors has increased from 314,000 in 1989 to 1.8 millions (target was 2,5 millions) in 2001. Dominican economy suffers from strong government regulations. For instance, the current electric production satisfies 60 % of the domestic demand. The Dominican government has tried to privatize state enterprises and establish free trade and export processing zones. Haitian political stability is very shaky. International Community has implemented sanctions against Haitian undemocratic governments. Barbados cannot attract chained hotels to increase number of visitors. Curacao and Bonaire have very high salary level, which have created high rates of unemployment. In Guadeloupe, agriculture production is subject to variable weather conditions (hurricanes). Reduction of oil prices decreases revenues in oil producing countries such as Aruba, the Bahamas, Netherlands Antilles, and Trinidad and Tobago. NAFTA agreement with Mexico is a threat to all-Caribbean countries since they lost their tariff advantages in the U.S. markets.

The financial sector is crucial for Caribbean. Reduction or elimination of personal and corporate tax, full repatriation of corporate profits, extensive air and telecommunication links, a skilled labor force, preferential access to major markets, and parity with the U.S. Dollar or Euro can be some policy implementations for establishing a successful financial market. Some Caribbean countries apply these policies and as a result, Puerto Rico's financial assets have reached $60 billion in financial institutions and Bahamas' financial assets are $270 billion. In Cayman Islands, more than 40,000 firms are registered, and 600 banks are currently working.

Drugs are a major revenue resource in Caribbean. For instance, $2 billion drug export revenue exceeds any other export in Jamaica. Belize follows by $350...