Characteristics of Caribbean Economies
The Caribbean region comprises of about fifteen (15) relatively small territories. These territories have certain unique characteristics. The following are some of the main characteristics of Caribbean economies which make them unique as compared to other countries.
Smallness - there seems to be varying definitions of a small economy. The commonwealth uses 1.5 million as its definition of a small economy. Using the Commonwealth’s use of 1.5 million as the threshold for a small country, 45 developing countries are considered to be small. Besides Haiti, Jamaica, the Dominican Republic and Cuba, all Caribbean countries fall into this category of being small. It has been shown that smallness in size of economies creates unique economic management problems.
Lack of Natural Resource - most of the Caribbean countries lack natural resources which they can tap into to be competitive. Consequently, these countries are less developed than most of the other countries of the world.
Open Economies – the countries of the Caribbean are open economies since they rely heavily on international trade with other countries of the world. As a result, they are vulnerable to external shocks. This can be a setback for such economies.
Economic structure - economic structure is also another very important characteristic that can determine the state of development of a country. In terms of the countries of the Caribbean, they depend substantially on primary sector production such as basic agriculture including food production
Economic Problems Associated with Caribbean Economies
Due to the characteristics of Caribbean countries, there are associated problems which these countries encounter which can affect their development. Some of these are as follows:
Brain Drain - the term brain drain refers to the situation where highly skilled people from Caribbean countries migrate to the income-rich developed countries seeking better opportunities. This trend will tend to keep Caribbean countries at a low level of economic development. . The brain drain will not be felt in unskilled occupations as much as in highly skilled areas of medicine, law, science, etc. When highly skilled Caribbean nationals migrate to developed countries, this leaves a void or shortage of these critical services in the Caribbean.
Limited Range of Products - Caribbean countries produce a limited range of products and services. The effect of this is that these economies rely on a limited or narrow source of income. This will definitely have a negative impact on the economic development of these countries. Most Caribbean territories do not tend to venture or graduate to the secondary or even the tertiary level of production except that of tourism.
Reliance on Preferential Trade Arrangements - Caribbean countries have greatly relied on preferential trade agreement through trading blocs for their economic growth and development. Markets in some develop countries for products of the Caribbean were assured. However, the emergence of the World Trade Organization (WTO) would have prevented this to some extent. The WTO supports the removal of all forms of trade barriers.