The Functions of Major Economic Institutions and Systems
Topic Eleven

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CARICOM - CARICOM was established on July 5, 1973 with the signing of the Treaty of Chaguaramas. It was built on the lack of success of previous unification efforts, beginning with the West Indies Federation (1958-62), which sought political and economic unification. Despite encouragement by Great Britain, it dissolved rapidly when Jamaica and Trinidad and Tobago withdrew in favor of national self-determination. Caricom is seen as one of the ways in which Caribbean countries can survive in today’s globally competitive trading world. 

Caribbean Single Market Economy CSME

With the challenges faced by Caricom as a result of NAFTA and the loss of preferential treatment from the CBI, the Caribbean Single Market Economy (CSME) was the response.  CSME is 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.  The main objectives of the CSME are:

  • full employment and full exploitation of the factors of production
  • competitive production leading to greater variety and quantity of products and services to trade with other countries.

The World Bank and the International Monetary Fund

Both are in a sense owned and directed by the governments of member nations. The main purpose of the World Bank is to provide long-run capital to member countries for economic reconstruction and development while the main purpose of the International Monetary Fund is to promote international monetary cooperation through a permanent institution which provides the mechanism for consultation and collaboration on international monetary problems and to promote exchange stability and to avoid competitive exchange rate depreciation.

Caribbean Development Bank (CDB)

The Caribbean Development Bank was established in 1970.  Its functions are: to assist the borrowing member countries to optimise the use of their resources and develop their economies and expand

Inter-American Development Bank (IADB)

The Inter-American Development Bank (IADB) was established in 1959 with the purpose of providing funding for development purposes to the Caribbean and Latin America.  The IADB  makes loans to the governments of its borrowing member countries at standard commercial rates of interest, and has preferred creditor status, meaning that borrowers will repay loans to the IDB before repaying other obligations to other lenders such as commercial banks. 

Organisation of Eastern Caribbean States (OECS)

The Organisation of Eastern Caribbean States (OECS) is an International Organisation dedicated to economic harmonisation and integration, protection of human and legal rights, and the encouragement of good governance among independent and non-independent countries in the Eastern Caribbean. The OECS came into being on June 18th 1981, when seven Eastern Caribbean countries signed a treaty agreeing to cooperate with each other while promoting unity and solidarity among its Members.

Association of Caribbean States (ACS)

The Association of Caribbean States is a product of the desire of the 32 States, Countries and Territories of the Greater Caribbean to enhance cooperation within the region.

United Nations Economic Commission for Latin America (ECLA)

The United Nations Economic Commission for Latin America and the Caribbean, known as ECLAC is a United Nations regional commission to encourage economic cooperation. ECLAC includes 45 member States (20 in Latin America, 13 in the Caribbean and 12 from outside the region), and 13 associate members which are various non-independent territories, associated island countries and a commonwealth in the Caribbean

World Trade Organization (WTO)

The General Agreement on Tariffs and Trade (GATT), which was signed in 1947, is a multilateral agreement regulating trade among about 150 countries. According to its preamble, the purpose of the GATT was the substantial reduction of tariffs and other trade barriers and to eliminate preferences, on a reciprocal and mutually advantageous basis. 

African, Caribbean and Pacific Group of States

The African, Caribbean and Pacific Group of States (ACP) is an organization that was formed in 1975 where the member states received preferential access for their products into the market of the European Union

Caribbean-Canada Trade Agreement (CARIBCAN)

The Caribbean-Canada Trade Agreement (CARIBCAN) was a trade agreement between Canada and the countries of the Caribbean.  It was established in 1986 and the purpose was to allow goods and services from the Caribbean to enter Canada duty free.  This preferential agreement allowed Caribbean countries to seek better investment opportunities and improve their balance of payments position.

Free Trade Area of the Americas (FTAA)

After NAFTA, the USA started plans to promote free trade in the hemisphere.  This was to be achieved by the Free Trade Area of the Americas (FTAA).  The aim was to foster free trade among all member countries of the western hemisphere which includes the Caribbean

Lomé Convention

The Lomé Convention was a trade and aid agreement between the European Economic Community (EEC) and seventy (71) African, Caribbean, and Pacific (ACP) countries.  The first Lomé Convention which came into force in April 1976, was designed to provide a new framework of cooperation between the then European Economic Community (EEC) and developing ACP countries, in particular former British, Dutch, Belgian and French colonies.

The Cotonou Partnership Agreement

Signed in June 2000 in Benin, the Cotonou Partnership Agreement (CPA) is the newest trade and economic cooperation arrangement between the Member States of the European Union (EU) and the African Caribbean and Pacific (ACP) states.  This agreement replaced the Lomé IV Convention. The new agreement is supposed to be effective for twenty years ending in 2020 with reviews scheduled every five years.  At the end of Lomé IV, the European Commission produced a series of reports reviewing the results of the previous trade agreement.  These reports emphasized the need for a new agreement that would be more focused on trade more readily compatible with the requirements of the trade regime that had been revitalized in 1994 by conclusion of the Uruguay Round (UR).

European Union

The European Union (EU) is a unified monetary body that seeks to balance the needs of its member countries, all of whom are independent fiscal and political entities. It has all the advantages of a large, unified trading area.  The EU eliminates all border controls between members and allows for the free flow of goods and people. The EU is not a government, an association of states or an international organization. Rather, the member states have given up part of their sovereignty to EU institutions, with many decisions made at the European level.

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