A strategy for growth and economic transformation of Caribbean economies
ECLAC advocates that the Caribbean’s high debt dilemma was not principally driven by policy missteps, or the international financial crisis. Rather, it finds its roots in external shocks, compounded by the inherent structural weaknesses and vulnerabilities confronting Caribbean SIDS and their limited capacity to respond. A major factor has been the underperformance of the export sector, partly due to a decline in competitiveness and a slowdown in economic activity especially among the tourism-dependent economies.
Caribbean countries have also accumulated debt as a consequence of increased expenditures to address the impact of extreme events and climate change attendant difficulties. Most Caribbean countries are located in the hurricane belt and are also prone to earthquakes and other hazards. Indeed, a disaster resulting in damage and losses in excess of 5 per cent of GDP can be expected to hit any Caribbean country every few years. Moreover, over the period 2000-2014, it is estimated that the economic cost of natural disasters in Caribbean countries was in excess of US$30.7 billion. The English Speaking Caribbean countries are extremely vulnerable to natural disasters.
Meanwhile, Caribbean economies have had limited access to concessional external finance, given their classification as middle income developing countries. This has constrained the availability of finance for growth and development. Evidence also shows that ODA had been in decline in the region since the early 2000s. The decision to concentrate international cooperation on poverty and to target lower-income countries assumes that as incomes grow, countries have more resources to combat poverty and finance their development.
However poverty and inequality are both a cause and effect of development (ECLAC, 2012). Increases in per capita income do not reveal that a single hurricane can wipe out half the capital stock of a society in a day or the impact of sea level rise on the tourism sector a mainstay of several economies. Such existential threats are not revealed by per capita income.
For presentation at the Fourth meeting of the Caribbean Development Roundtable, Basseterre, Saint Kitts and Nevis, 21 April 2016.
UN Symbol: LC/CAR/L.492