REGIONAL INTEGRATION NOTES

Major challenges facing the Caribbean Region

Define the following terms and concepts related to regional integration:

Bilateral agreement, multilateral agreement, common market, single market, single economy, economic
integration, independent state, underdeveloped country, developing country, developed country, trade
liberalization, globalization, multinational corporation, regionalism, trading bloc, fiscal policy, monetary
policy

Major challenges facing the Caribbean Region

Major stages in the integration movement

Functions of the various organizations (OECS Secretariat, CARICOM Secretariat, Conference of Heads
of Government)

Objectives of the various organizations: OECS, CARICOM, CSME

Factors that promote regional integration

Factors that hinder regional integration

Benefits of regional integration

The role of individuals, businesses and government in the integration process

The role of regional agencies in the integration process

Major challenges facing the Caribbean

Region
Small size, small national markets

Lack of diversification

Unemployment and underemployment

Low levels of production and productivity

Differences in resource distribution

High levels of indebtedness (debt burden)

Major challenges facing the Caribbean
Region
High level and cost of imports

Shortage of skilled workers

Inadequate technology

Low value of exports

Difficulties accessing markets of foreign countries

Shortage of capital

Vulnerability to natural disasters

Timeline of Regional Integration

A MULTI-LATERAL agreement is one which involves more than two countries or states e.g.:

CARIFTA (December 15, 1965)

CARICOM (August 1, 1973)

OECS: Organisation of Eastern Caribbean States (1981)

CSME: CARICOM Single Market and Economy (1989)

ACS: Association of Caribbean States (1995)

The West Indian Federation (1958)

The West Indian Federation was one of the first major attempts at regional integration in the Caribbean

Member States
Antigua

Barbados

Dominica

Grenada
Jamaica

Montserrat

St. Kitts/Nevis/Anguilla

St. Vincent

St. Lucia

Trinidad and Tobago

Aims and Objectives of The West Indian

Federation
To generate ideas to solve their social and economic problems

Sugar industry in decline (unprofitable)

Shortages of goods & high prices after WW2

Low wages

High unemployment

Poor social facilities (hospitals, schools, utilities)

To increase their bargaining power thereby securing cheaper prices for imports and better prices for
exports through a united voice

To safeguard the democratic system of government resist the US intervention in the affairs of the
Caribbean (Monroe Doctrine)

To reduce foreign control over their economies (foreigners controlled most of the fertile land)

To strengthen the movement towards independence and self-government

Achievements
Facilitated the move from colonialism to independence through a united voice

Increased effectiveness in dealing with international bodies such as the UN

VOCABULARY
REFERENDUM: a direct vote by the electorate of a country on a single political issue

INTERVENTION: the action of coming between people or things

FEDERATION: a group of states with a central government but independence in internal affairs

COOPERATE: to work helpfully with another person or with other people

DEMOCRACY: a form of government in which the people have a voice in the exercise of power
typically through elected representatives

COMPETENT: having the necessary skills and knowledge to do something successfully

STATUS: the situation at a particular time

MAIN OBJECTIVES OF CARICOM

ECONOMIC INTEGRATION: TRADE LIBERALISATION (CARIBBEAN COMMON MARKET)

FUNCTIONAL COOPERATION

POLITICAL INTEGRATION: COMMON POLICIES FOR DEALING WITH NON-MEMBER

STATES AND TRANS-NATIONAL CORPORATIONS

Increased volume of trade Increased economic development

TRADE LIBERALISATION

Removal of barriers to trade (customs duties, quotas, taxes, licenses):

Increased volume of trade

Increased economic development

Some Institutions of CARICOM

CEHI: Caribbean Environmental Health Institute

CDEMA: Caribbean Disaster Emergency Management Agency

CCJ: Caribbean Court of Justice

CMO: Caribbean Meteorological Organisation

CARDI: Caribbean Research and Development Institute

CXC: Caribbean Examinations Council

CAREC: Caribbean Epidemiology Centre

RSS: Regional Security System

CFNI: Caribbean Food and Nutrition Institute

CARICOM SINGLE MARKET AND

ECONOMY (CSME) 1989…
The main objectives of the CSME are:
full use of labour (full employment) and

full exploitation of the other factors of production (natural resources and capital);

competitive production leading to greater variety and quantity of products and services to trade with other
countries.

Key elements of the Single Market and

Economy
Right of Establishment

A Common trade policy

A Common External Tariff

Free circulation

Free movement of goods and services

Free movement of capital

Free movement of labour

Harmonisation of Laws and common economic, monetary and fiscal measures

Key elements of the Single Market and
Economy Definition
Right of Establishment - to permit the establishment of CARICOM owned businesses in any Member
State without restrictions;

A Common trade policy - agreement among the members on matters related to internal and international
trade and a coordinated external trade policy negotiated on a joint basis;

A Common External Tariff - a rate of duty applied by all Members of the Market to a product imported
from a country which is not a member of the market;

Free circulation - free movement of goods imported from extra regional sources which would require
collection of taxes at first point of entry into the Region and the provision for sharing of collected
customs revenue;

Free movement of goods and services - through measures such as eliminating all barriers to intra-regional
movement and harmonizing standards to ensure acceptability of goods and services traded;

Free movement of Capital - through measures such as eliminating foreign exchange controls,
convertibility of currencies (or a common currency) and integrated capital market, such as a regional
stock exchange;

Free movement of labor - through measures such as removing all obstacles to intra-regional movement of
skills, labor and travel, harmonizing social services (education, health, etc.), providing for the transfer of
social security benefits and establishing common standards and measures for accreditation and
equivalency.

Factors that promote regional integration

Common history

Colonialism, slavery and indenture ship

Common cultural heritage

Language, dress, cuisine, music, general lifestyle

Close proximity

Common economic and social issues

Effects of globalization, trade liberalization and trading blocs

Vulnerability to economic shocks and natural disasters

Factors that Hinder Regional Integration
Geography of the region Caribbean countries are separated by water and inter-island transport is not
always easy.

Absence of a common strategy for development Different emphases on strategies for growth: one
depends on petroleum, some on tourism, others on agriculture (common policies difficult to achieve)

Differences in stages of growth and development

Competition for location of industries Territorial interests often supercede regional ones eg the countries
compete among themselves to attract foreign investors

Absence of common currency and non-acceptance of each other’s currency

Fear of political integration

Unequal distribution of resources the more developed member states that are fortunate to have mineral
resources often utilize income gained from this wealth only for their country’s benefit rather than shared
regional benefit.

Factors that Hinder Regional Integration

Influence of MNCs / TNCs TNCs still bargain with individual governments for tax-free holidays, duty
free import of raw materials, repatriation of profits etc in contravention of CARICOM objectives

Lack of diversification in production and duplication of effort since member states produce similar
products (sugarcane, bananas, cocoa, coffee, ground provisions) intra-regional trade is stifled. Each
country has its own factories rather than there being different types of factories in several CARICOM
countries to produce items for the entire region and for export.

Insularity

Delayed implementation of policies agreed on at meetings of regional heads

Citizens know little about CARICOM organizations and what they do

Poor information dissemination, slow implementation and ratification of plans

Poor media coverage insufficient information about CARICOM countries in newspapers, on radio and
cable television
 Benefits of Regional Integration
Reduction in unemployment and underemployment

Better response to globalization and trade liberalization

Improvement in the quality of life

Reduction in the inequality of wealth distribution

Free movement of goods, labour and capital

Increased market size

Improved levels of international competitiveness

Expansion of trade

Increased cooperation among member states

Increased chances of achieving sustainable development

The Role of Individual Citizens in the

Integration Process
Entrepreneurship

Supporting regional producers

Showing solidarity and mutual support towards regional fellow citizens

Investing in local and regional businesses

Being informed

The Role of Businesses in the Integration

Process
Improving competitiveness
Increasing range and quality of goods and services

Providing opportunities for investment and employment

The Role of Government in the Integration

Process
Enacting enabling legislation

Harmonizing policies

Honoring protocols

Educating citizens about the objectives and benefits of integration

Definitions
Bi-lateral Agreement: An agreement between two parties or states setting out the conditions under which
trade between them will be conducted

Multi-lateral Agreement: An agreement among more than two parties or nations setting out conditions
under which they would cooperate with each other

Common market: a type of trade bloc with free movement of goods, labour and capital between member
states

Single market: a more advanced form of common market. In comparison to a common market a single
market envisions more efforts geared towards removing the physical (borders), technical (standards) and
fiscal (taxes) barriers among the member states.

Economic integration refers to trade unification between different states by the partial or full elimination
of customs duties, tariffs, quotas, licenses and non-tariff barriers (anti-dumping measures and
countervailing duties ) on trade taking place between them. This is meant in turn to lead to lower prices
for distributors and consumers (as no customs duties are paid within the integrated area) and the goal is to
increase trade.

Independent state: A state which has achieved independence (self-government; exercising sovereignty)

Fiscal policy: refers to the expenditure a government undertakes to provide goods and services and to the
way in which the government finances these expenditures. There are two methods of financing: taxation
and borrowing. Taxation takes many forms in the developed countries including taxation of personal and
corporate income, so-called value added taxation and the collection of royalties or taxes on specific sets
of goods.
 Developed country: country with a relatively high per capita income, where most people have a higher
standard of living with access to more goods and services than most people in developing countries.
Highly industrialized nations such as Australia, Austria, Canada, France, Germany, Italy, Japan, Russia,
the UK, and the US.

Developing country: A country whose resources and/or capital are insufficient to have sustained
reasonable standards of living a country with a relatively low per capita income, where most people have
a lower standard of living with access to fewer goods and services than most people in developed
countries. Also known as a third-world country.

Underdeveloped country: A nation which, comparative to others, lacks industrialization, infrastructure,

developed agriculture, and developed natural resources, and suffers from a low per capita income as a
result. High income Upper-middle income Lower-middle income Low income

Trade liberalization means reducing the limitations on trade that countries around the world have erected
over a number of years (tariffs, duties, quotas, licenses).

Protectionism is a means of attempting to ensure that domestic industries are protected from competition
from foreign producers through tariffs, which raise the price of goods coming into a country (imports),
quotas - a physical limit on the number of goods that can be brought into a country, and other non-tariff
barriers such as regulations and legislation that make it very hard for foreign competitors to sell goods
into another country.

Globalization: the greater movement of people, goods, capital and ideas due to increased economic
integration. This in turn is propelled by increased trade and investment. It is like moving towards living in
a borderless world.

There has always been a sharing of goods, services, knowledge and cultures between people and
countries, but in recent years improved technologies and a reduction of barriers means the speed of
exchange is much faster.

Globalization

Globalization refers to a variety of developments which have reduced the world to a “global village.” It is
largely the result of technological developments, greater access to information and faster communication
(computer technology, satellite communications, development of the Internet, air travel) Small countries
have always depended on international trade i.e. they have never been self-contained. But today, all
countries are more interdependent than ever before.

GLOBALISATION Characterized by:

Trade links being established around the globe (comparative advantage-purchase from cheapest source)

Job creation by inflow of direct foreign investment

Technological development in production of goods and services demands a skilled labour force – C’bean
lagging behind

Migration of skilled labour – brain drain from Caribbean to developed countries

AS A RESULT OF GLOBALIZATION,
SMALL, DEVELOPING COUNTRIES
MUST UNITE IN ORDER TO SURVIVE
Globalization provides opportunities and challenges

Globalisation provides opportunities and challenges. Bigger markets can mean bigger profits which leads
to greater wealth for investing in development and reducing poverty in many countries.

Weak domestic policies, institutions and infrastructure and trade barriers can restrict a country's ability to
take advantages of the changes. Each country makes decisions and policies that position them to
maximise the benefits and minimise the challenges presented by globalisation.

Globalization

Airbus: Holding capacity and speed of airbuses allow people to travel across the globe in a relatively
short space of time.

News Agencies: News is reported across the world via satellite, wire-photo, television, internet etc.

Internet: the internet is an intricate web which covers the entire globe. (provides information on any topic
imaginable, facilitates distance education, trade etc)

Issues to consider

Communicable Diseases can easily become pandemics (spread throughout the world) – SARS, H1N1,
Bird Flu

World climate: All countries are affected by global warming, ozone depletion, melting of the ice-caps,
rising sea levels, deforestation and pollution. All are responsible for preservation of the environment.

Transnational Corporations: These operate throughout the globe exploiting host country resources and
sending profits to their own home countries.

Issues to consider

People from many countries eat the same foods and watch the same TV programmes.

Tourism has grown into a globalised industry because of international travel (negative impact on
environment and societal values etc.
Barriers to international trade are being removed: ↑ competition, ↑ unemployment

A war or disaster in one country may have worldwide impact (refugees, interruption of supply, disruption
of air-travel etc)

Production is increasingly international (↑ unemployment in some countries, ↑ exploitation of workers in

underdeveloped and developing countries where labour is cheaper)

Challenges facing Caribbean countries

With the opening up of world markets and free trade, how can we be competitive and produce high
quality goods at cheap prices?

Should we finance development projects by taking loans from international lending agencies or should we
open our doors to foreign investors?

How can we improve productivity in the workplace with the existence of powerful trade unions which
consistently seek higher wages for members?

What can be done to train our nationals for jobs in an environment which is highly technological?

What can be done by Caribbean countries to reduce the food import bill and to be self-sufficient in food
production?

What can be done to combat the effects on consumer tastes and spending of television programmes and
other media (internet, books, magazines, newspapers etc) with a heavy foreign content?

Globalisation Definition:

An economic phenomenon?

A social phenomenon?

A cultural phenomenon?

The movement towards the expansion of economic and social ties between countries through the spread
of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic
terms.

Globalisation

Globalisation could involve all these things!

Integration of Economies
The increasing reliance of economies on each other

The opportunities to be able to buy and sell in any country in the world

The opportunities for labour and capital to locate anywhere in the world

The growth of global markets in finance

Stock Markets are now accessible from anywhere in the world!

Integration of Economies
Made possible by:

Technology

Communication networks

Internet access

Growth of economic cooperation – trading blocs (EU, NAFTA, etc.)

Collapse of ‘communism’

Movement to free trade

Benefits of Trade:
Increased choice

Greater potential for growth

Increase international economies of scale

Greater employment opportunities

Trade has led to massive increases in wealth for many countries.

Disadvantages of trade:
Increase in gap between the rich and the poor

Dominance of global trade by the rich, northern hemisphere countries

Lack of opportunities for the poor to be able to have access to markets

Exploitation of workers and growers

How far does trade help children like these?

Corporate Expansion
Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one
country but with business operations in a number of others.No matter where you go in the world, certain
businesses will always have a presence.

Corporate Expansion Characteristics:

Expanding revenue Lowering costs
Sourcing raw materials

Controlling key supplies

Control of processing

Global economies of scale

Controlling supplies may be one reason for global expansion.

Corporate Domination Key Issues: Damage

to the environment?
Monopoly power

Economic degradation

Non-renewable resources

Damage to cultures