How the establishment of the CARICOM Single Market and Economy (CSME) has assisted its members to respond

to the challenges of globalization.

Investerwords.com defines globalization as the process of increasing the connectivity and interdependence of worlds markets and business, in other words it is the manner in which the global world environment has combined to form shared markets and trade liberalization. Since resources enable countries to effectively compete within a global environment, lack of resources will seriously hamper a countrys ability to participate and maintain economic growth with more developed and resource abundant nations. Globalization has made it very difficult for developing Caribbean nations to compete on a global market and has posed a number of challenges for Caribbean nations, namely increases in international competition, unemployment, and declines in domestic and foreign investment.

The CARICOM Single Market and Economy (CSME), was established with the aim of integrating the regional and extra-regional markets and facilitating the movement of goods, services, capitol and labour of member countries. With its creation members are able to combine their resources with the intent of alleviating the strain of globalization.

With the open market economy created by globalization, Caribbean countries were faced with increased international competition from larger more well developed countries, brought on by trade liberalization and a decline in comparative advantage. With their size constraints and scarcity of resources they now have high import bills due to the inability to produce a diversity

of goods to sustain their growing populations, and are unable to compete on a global scale with economies rich in human, natural and technological resources. The CARICOM Single Market and Economy seeks to create a single market in which members can trade regionally and guarantees trade preference and reciprocity with member countries.

A change in the composition of outputs brought on by globalization has forced Caribbean countries to seek economically viable solutions. In the case of Saint Lucia, the introduction of a tariff- only system that controls the importation of bananas into the European Union has led to a marked decline in the banana industry causing the island to explore alternative areas like the saturated tourism sector. With the movement away from its largest export crop in agriculture the island has seen an increase in unemployment and a decrease in outputs of production. With CSME, and the free movement of people policy, the labour market has significantly expanded to include all members of CARICOM, giving employers a greater pool of skilled workers to choose from and providing skilled workers with more employment opportunities.

With Caribbean countries having economic ties to the United States, Canada and the European Union, through tourism, imports and exports, the recent global financial crisis have severely affected those countries causing a sharp decline in foreign direct investment. The alternative for Caribbean countries is to seek stable economies in other regions, like Asia for investment. With the united front posed by the CARICOM Single market and economy, members will adequately be able to request aid, investments opportunities and create trade agreements with nations like the Peoples Republic of China which has become the economic power to contend with.

The members of the CARICOM single market and economy are still in the process of realizing all the benefits of CSME. Once cultural barriers, old beliefs, customs, local laws, policies and politics have been eroded, the members of CSME will become truly integrated and be able to unite against the relentless challenges posed by globalization.

References:

Girvan, N. (2010). The Caribbean in a Turbulent World. St. Augustin: Palgrave Macmillan.

Institute for the Integration of Latin American and the Caribbean (INTAL). (2005). CARICOM Report no. 2. Buenos Aires: Esmeralda 130,16yh and 17th Floors .

InvestorWords.com. (2013, April 1). Retrieved April 1, 2013, from WebFinance: http://www.investorwords.com/2182/globalization.html

Payne, Sutton, A. (2007). Repositioning the Caribbean within Globalisation- Caribbean Paper no. 1. Canada: The Centre for International Governance Innovation (CIGI).

Scribd. (n.d.). Retrieved 2013, from The Effects of globlization on CARICOM Caribbean economies: http://www.scribd.com/doc/54772358/Globalization-Chap11

By: S. Andrew