MELISSA GUEVARA TOPICS IN ECONOMIC DEVELOPMENT 2nd April 2013 Explain how the establishment of the CARICOM Single

Market and Economy (CSME) has assisted its members to respond to the challenges of globalization.

The establishment of the CARICOM Single Market and Economy (CSME) in 2006, after a period of seventeen years, has assisted in addressing regional challenges of globalization including an increase in economic competition and a loss of negotiating bargaining power. Leaders of the Caribbean Community suggested that the CARICOM Single Market and Economy (CSME), which would transition the Caribbean integrated economy from a common market to a single market and economy, would encourage economic and regional integration thereby improving regional economic performance through the establishment of a common trade strategy. However, the focus of the CARICOM Single Market and Economy (CSME) on market forces, although extensive has prevented adequate response to some of the challenges posed by globalization. The key elements of the CARICOM Single Market and Economy (CSME) include free movement of goods and services, rights of establishment, free movement of capital and labour, common trade policy, economic, fiscal and monetary policy harmonization, harmonization of policy with respect to competition, consumer protection including sanitary and phytosanitary measures, dumping and subsidies, support to disadvantaged countries, regions and sectors and other policy harmonization. As member countries of the CARICOM Single Market and Economy (CSME), including Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname and Trinidad and Tobago are relatively small individually in relation to the global market and their lack of resource variety has contributed to a high dependency on activities of more developed economies where capital and technical expertise tend to be concentrated, it was intended that the CARICOM Single Market and Economy (CSME) would integrate the economy of the Caribbean region thereby increasing its market size and enhancing its competing power as a strategic response to these challenges of globalization. Globalization, which can be defined as the elimination of barriers to the international flow of productive resources, has provided numerous opportunities to the Caribbean region including technical innovation and knowledge about improved methods of production, increased access to quality goods and services, new management techniques, increased access to export markets and economic policies, creation of employment opportunities and improved time saving methods of communication. Along with these benefits, globalization has also presented various challenges to the region including an increase in economic competition, a reduction in real income growth as a result of being unable to compete, an increase in unemployment, poverty and
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income inequality, the dependence on trade which has allowed the region to be easily affected by international changes in prices and policy and an increase in economic change as a result of the advancement of technology. The challenge of increased economic competition has resulted in circumstantial constraint on the accomplishments of the external region, stagnation, decrease and substantial economic modification in some sectors and a reduction in real income growth. The CARICOM Single Market and Economy (CSME) in recognition that the ability of individual member countries to compete affects the regions ability to compete internationally, has enabled goods, services, labour and capital to be freely moved within the region in order to stimulate adjustments that will enhance individual member countries performance, ensuring their survival and the survival of the region. In addition to facilitating free trade, to assist members in overcoming the challenge of increased economic competition there was the conceptualization and establishment of the Regional Development Fund which primarily assisted disadvantaged countries. The Regional Development Fund, which sought to address economic issues of cost and benefit related to the CSME through temporary of transitional intervention, provides assistance by analyzing industries strengths and weaknesses to determine their competitive viability and facilitates corrective measures where possible or closure of the industry where necessary with minimization of the economic and social cost. This Fund also provides financial support in the form of interest subsidies on loans and blending with grants which allows access to more resources. Globalization has international implications and the establishment of the CARICOM Single Market and Economy (CSME) has been very instrumental in providing assistance to member countries in response to some of these challenges. However the focus on market forces involving trade of goods and services instead of human resource development and technology to improve the competitiveness of the region has prevented adequate response to some of the challenges posed by globalization.

References: Retrieved from http://www.caribank.org/uploads/publications-reports/staffpapers/Globalisation%20and%20the%20CSMEA.pdf Accessed on 01/04/2013. Retrieved from http://www.caricom.org/jsp/pressreleases/pres109_05.jsp Accessed on 01/04/2013.