Caribbean Region: Review of Economic Growth and ... - USITC

CHAPTER 2Current Level of Caribbean EconomicDevelopment: Regional OverviewThis chapter presents information on economic development and trade at the regional levelfor the 18 Caribbean Basin countries covered in this report. This regional overviewdescribes economic development indicators for the CBERA countries, the importance oftrade for the countries, and the extent of each country’s utilization of CBERA preferences.This chapter also covers the Caribbean tourism and financial services industries, which havea widespread presence throughout the region, as well as the ethanol dehydration industry,which is the second-leading U.S. import under the provisions of the original CBERA. Thechapter concludes with an overview of non-U.S. policies and institutions that influenceeconomic growth and development in the CBERA countries. This chapter also includes fourcase studies of industries that serve the Caribbean regional market—the mobile telephoneindustry in Jamaica, the rum industry in Guyana, medical tourism in Panama, and financialservices in Trinidad and Tobago.Regional OverviewThe economies of the 18 Caribbean Basin countries covered in this report share manycharacteristics. They are generally small island economies that are heavily dependent on theUnited States, the EU, and increasingly, China and other Asian countries for trade,investment, and economic assistance. Their geographic location offers the advantages ofproximity to the large U.S. market, a strategic location adjacent to major shipping lanes, anda climate favorable to the production of certain tropical crops and the development of a yearroundtourism industry. Their location within the hurricane belt, however, makes themhighly susceptible to weather-related natural disasters that can cause sharp downturns intheir economic performance through damage to property, economic infrastructure, andcrops, as well as associated societal devastation. Environmental degradation, includingexcessive deforestation, soil erosion, and increased susceptibility to floods and landslides,also are common problems facing the countries in Caribbean Basin region. 1Historically, the Caribbean Basin economies have been focused on the production andexport of a few agricultural products (primarily sugar and bananas), the assembly and exportof apparel and light manufactured goods (which are aided by preferential tariff programsoffered by the United States, the EU, and Canada), tourism, and, more recently, financial2services. Exports of goods and services to the United States are a significant portion of totalexports for many of the Caribbean Basin countries. Many countries in the region also havebecome increasingly reliant on international migration, which provides an outlet for1According to one report, “[c]limate change, the more pronounced rainfall patterns and rising sea waterlevels, could put additional ecological stress on the low lying coastal and flood prone land areas of theislands.” World Bank, A Time to Choose, 21.2For a discussion of U.S. trade with the Caribbean Basin countries as well as U.S. trade programs toencourage economic diversification, see the series USITC, The Impact of the Caribbean Basin EconomicRecovery Act.2-1