THE CARICOM Single Market and Economy (CSME) was intended to benefit the people of the region by providing more and better opportunities to produce and sell their goods and services and to attract investment in a larger economic space. Sir Ronald Sanders, a regional diplomat, hit the nail on the head when he explained: “Foreign investors would be more greatly attracted to a larger regional market than to the individual small markets of most CARICOM countries. It would be one effective way of creating a larger economic space for the employment of young people.”
Let me hasten to add that without critical mass, political solidarity and unification of economic policies, international investors will view the Caribbean region simply as isolated islands with no real investment and economic prospects. Bottom line: Companies often locate in countries or regions precisely because they are part of an efficient and functioning single market and economy.
In a world where size, scope and geographic proximity matter for the luring of foreign direct investment (FDI), trading blocs and economic single markets are an unavoidable necessity. Not only do single markets serve as facilitators for the free movement of goods, people, capital and technology, they are critically important for trade, investment and jobs.
Membership of a single market is commonly assumed to be a key factor in encouraging foreign investors to choose to invest in a region. An increase in foreign direct investment benefits the economies of participating countries on account of larger markets, resulting in lower costs to manufacture products locally, market access and trade creation.
Yet, it is most regrettable that the CSME, an integrated development strategy envisioned by heads of CARICOM countries more than 25 years ago, has only partially been implemented and explored. To the chagrin of many CARICOM nationals, the critical institutional constructs, such as labour and capital mobility, aviation, integration of the services market and the harmonization of economic policies, have been given scant attention.
Although many of the initial ideals of the CSME are credible, regional governments in the past have not been able to muster the courage and will to complete the process of the CSME. Economic integration, foreign policy coordination, functional cooperation and security, the four pillars upon which the idea of CARICOM was first established in 1973, are yet to be fully grounded and strengthened.
Of further disquiet is the fact that every CARICOM country seems to have those preconceived notions of political autonomy and economic self-determination. Rather than cooperate and collaborate, each island would rather go it alone and render itself insignificant; the so-called “Big-Fish-Little-Pond” effect.
One repeated chord in the symphony of shock and dismay is the lack of collective commitment among CARICOM member countries at the levels of institutions and sectors to the sharing of a single economic space. Trinidad should have taken a lead role in the CSME, but has not. Jamaica seems far away from everything and has never taken a lead role in any integration movement. As a matter of fact, some observers in the region believe that individual countries may be deliberately placing restrictions on the free flow of intra-regional trade to the disadvantage of others.
Ramesh Dookhoo, President of the Guyana Manufacturing and Services Association (GMSA), has made his displeasure known publicly: “Trinidad and Tobago, for example, clearly believes that it is the only country that ought to enjoy the privilege of unhindered access to intra-regional markets under the single market arrangement. The stronger producing countries of the region are seeking to impose their economic strengths on the region’s less-developed economies without going the distance to promote products from those weaker economies. If we are to create this single economic space, the concept of harmonization of the economic environment is paramount. Unless we take these steps, we are heading for a situation of massive trade distortions.”
He does not believe that the Georgetown-based Caribbean Community Secretariat was doing “as much as it should” to synergise the needs and opportunities of the various countries in the region: “We are, for example, all absorbing the high costs of extra-regional food imports without seriously pursuing intra-regional opportunities to develop regional food security and, by extension, reduce the high cost of extra regional food imports.”
Taken as a whole, the lack of initiative and will of the CSME to promote growth, competitiveness and jobs have resulted in grave social dislocation and missed opportunities in economic development throughout the region. The CSME was supposed to be a single market space within which Caribbean-based businesses and professionals in the private sector operated with minimum barriers and costs. If the single market had worked as it was intended, there would be substantial gains in investment and market opportunities extending beyond the borders of any one member country.
Growth is the most important factor in the eradication of unemployment. The base of all economic development is investment. The future challenges of economic development give rise to three foundational principles upon which economic development investments should be based: exports, productivity and sustainability. Given the intractable challenges facing small island states, there hasn’t been any significant coordination of foreign and investment policy in the region both at the CARICOM and OECS levels.
Maintaining the status quo means to advocate reinforcing poverty. The grandiose speeches about the single destiny of the Caribbean must be translated into more concrete steps to collaborate and deal collectively with the rapidly changing circumstances of global alliances and competing interests.
(For comments, write to Clementwulf@hotmail.com. Clement Wulf-Soulage is a Management Economist, Published Author and Former University Lecturer).