Report No. 3937-CRG CaribbeanGroup: Current Situation and Prospects Public Disclosure Authorized

May 24,1982 LatinAmerica and the CaribbeanRegional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Documentof the WorldBank

Thisdocument has a restricteddistribution anid may be usedby recipients only in the performanceof their officialduties. Its contentsmay not otherwise be disclosedwithout World Bankauthorization. r FOR OFFICIAL USE ONLY

TABLE OF CONTENTS

Page No.

I. THE ECONOMIC SITUATION IN 1981 ...... 1

II. REGIONAL PROGRAMS ...... 3

A. Caribbean Regional Tourism Promotion ...... 3 B. Private Sector Development ...... 4 C. Export Promotion ...... 5 D. Energy ...... 6 E. Transportation ...... 7 F. Agriculture ...... 8 G. The Special Problems of the LDCs of the Eastern Caribbean ...... 8

III. THE FUTURE OF THE CARIBBEAN ECONOMY ...... 11

A. The Overall Framework ...... 11 B. Production and Trade: Structure and Policy Issues ...... 12

IV. EXTERNAL FINANCING ...... 20

A. External Financing ...... 20 B. Donor Reporting System ...... 23

V. FUTURE CGCED ACTIVITIES ...... 24

ATTACHMENTS:

1. Country Notes ...... 26 2. Statistical Appendix ...... 32 3. International Trade Commission Export Promotion Program ...... 48

| This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

I. THE ECONOMIC SITUATION IN 1981

1. The past year has been a difficult one for most countries of the Caribbean. Not only has the worldwide recession continued to decrease the demand for a key source of foreign exchange, tourism, but their other major exports, sugar, bauxite/alumina and bananas also experienced declining markets. As a result, only a few of these highly dependent economies achieved real growth in 1981, including those countries which were recovering from the ravages of the natural disasters, hurricanes and volcanic eruptions, of the two previous years. Last year, as never before, the necessity to use scarce financial and human resources efficiently and optimally was vital to the countries of the Caribbean.

2. In 1980, as in 1974, high prices for sugar shielded many Caribbean countries from the jump in petroleum prices. In 1981, as in 1976, the fall in these prices brought to bear on these small, open, and energy deficient economies much of the impact of escalating energy costs, although in some cases careful forward selling of sugar has delayed the full effect of falling prices until 1982. In some Caribbean economies, Jamaica and Guyana are examples, there is an additional problem arising from the fact that the domestic cost of producing sugar is now often higher than the world market price. In many countries the industry is a major employer and retrenchment is politically difficult. While the Caribbean still enjoys a comparative advantage in producing sugar, there are difficult questions concerning the future of the sugar industry in many islands which now have to be faced.

3. In tourism the situation is also cause for concern. In general tourism arrivals and tourist earnings were down in 1981, as compared to 1980. However, this was not universally true; a few Caribbean countries such as Jamaica, Haiti, and St. Kitts-Nevis actually managed to increase tourism last year. In many countries, labor movements in the tourist industry are strong and have managed to increase real wages, while demand was weak; Barbados and the Bahamas are examples of this problem. Rapidly rising costs in the tourist industry during this period of slackening demand have presented a difficult economic and political problem to governments. In some countries, tourism prices were raised to match costs and tourists responded by shifting to cheaper destinations. In others, price increases were moderate, but tourism still declined. Jamaica managed to show an increase in tourism in 1981, but this was due to a modest recovery from the very depressed year of 1980; tourist numbers did not return to the 1979 peak. Certainly 1982 should be good for the island as it has obtained special tax incentives with respect to convention tourism from the United States, incentives previously enjoyed only by Canada and Mexico. The recession in the US, exacerbated by price increases, has sharply cut into Bahamas' tourism earnings. - 2 -

4. The banana industry, vital to the economies of the Windward Islands, faces some particularly difficult problems. This is the only cash crop for the great majority of farmers on these islands and it continues to depend on access to a protected market in the UK under the Lome Agreement. Hurricane disasters in 1979 and 1980, and a weak market in the UK in 1981, exacerbated by the decline in the pound sterling, have dangerously weakened the Banana Growers Associations on these islands in spite of a significant amount of disaster relief. It is thus becoming exceedingly difficult to cover the relatively high costs of producing bananas, but the alternatives for the farmers are almost non-existent and governments with already weak fiscal situations are reluctant to initiate subsidy schemes.

5. Other main export activities of the region also faced serious difficulties during 1981. Bauxite exports from all major producers-- Jamaica, Guyana, Suriname, Dominican Republic, and Haiti--declined substantially. Alumina sales also declined for Guyana and Suriname, but increased slightly for Jamaica. Meanwhile, the growth of nontraditional exports, which had been quite fast during previous years in several countries, slowed down substantially in 1981.

6. The poor export performance in 1981 worsened an already serious balance of payments situation in most Caribbean countries, and increased, also substantially, their external assistance requirements. These developments also indicated the need for these countries to undertake comprehensive adjustment programs to deal with their immediate financial problems and with their longer-term development requirements. The urgency to undertake such programs--which have already been adopted by several countries--is likely to become even more acute during 1982, and perhaps 1983, in view of the continuing low level of economic activity of the industrialized countries, and of the further weakening in the first few months of 1982 of the world market for several key Caribbean exports.

7. The economic trends referred to above are described in somewhat more detail in Appendix 1. The tables in Appendix 2 show very preliminary estimates of the growth in GDP in the countries of the Caribbean in 1981; information on balance of payments and fiscal performance; and data on tourism, sugar, bauxite, alumina and banana exports over the past five years. - 3 -

II. REGIONAL PROGRAMS

8. The Caribbean Group for Cooperation in Economic Development (CGCED) has assisted the Caribbean countries in their efforts to cope with the unfavorable economic trends summarized in Section I by helping individual countries to formulate and execute appropriate economic programs, and to obtain the required external financial and technical assistance. This Section II refers to what has been done up to now to complement the actions at the individual country level with regional programs. Two of those programs--tourism and private sector development--are already in the implementation stage, and should yield specific benefits for the development of the region in the immediate future, although they still require additional financial support from the donor community. Others have reached the point in which important policy decisions are required--e.g., export promotion--or in which a decision by the donors' community on whether to support those programs is now needed--e.g., energy.

A. CARIBBEAN REGIONAL TOURISM PROMOTION

9. At the second meeting of the Caribbean Group for Cooperation in Economic Development held in Washington, D.C. in June 1979, it was agreed that a program to expand regional tourism promotion in the Caribbean-- including Haiti, the Dominican Republic, Suriname, the Netherlands Antilles and the Commonwealth Caribbean--should be prepared by the World Bank and the UNDP in consultation with the Caribbean Tourism Association (CTA), the Eastern Caribbean Tourism Association (ECTA) and the Caribbean Tourism Research and Development Centre (CTRC). This program was reviewed at subsequent meetings of the Caribbean Group for Cooperation in Economic Development and an agreed version was presented at the meeting of the CGCED held in Washington in June 1981. Total regional tourism promotion expenditures were projected at some US$15 million over five years and donor contributions totalling some US$8 million were requested in support of the program.

10. The program was approved by the Council of Ministers of CARICOM and formally submitted to the EEC by the CARICOM Secretariat in October 1980. After further discussion with staff of the EEC in Brussels in September 1981, the European component of the program was slightly amended and re-submitted through the Delegate of the EEC in Barbados in December 1981. The amount requested from the EEC in support of the program was some US$6.4 million, which would support technical assistance in the Caribbean and the expansion of tourism promotion activities in Europe. Following a meeting in Brussels in March, 1982 with representatives of the CTRC, CTA and ECTA, the EEC has agreed to finance a tourism program designed to promote tourism from Europe and to lay the basis for the development of a multi-island tourism package. It is expected that the support from the EEC might be limited to some US$5.1 million.

11. The recently completed study of North American demand for tourism to the entire Caribbean area, carried out by consultants in cooperation with the CTRC and the OAS and funded by the IADB, pointed to the inadequacy of the resources of the less developed countries of the Caribbean which -4-

preclude them from mounting effective promotion and marketing programs. The study strongly supported a strengthened Caribbean regional promo- tion program in North America as outlined in documents submitted to the CGCED. To enable such an expanded program to be carried out, donor support will be required in addition to that expected to be provided by the EEC.

12. UNDP is currently financing a project on tourism development in the Caribbean designed to assist members of the Caribbean Tourism and Research Centre (CTRC) in the compilation of tourist statistics as a basis for effective tourism promotion.

13. In the last year, tax concessions were granted by the US to its nationals for convention expenses in Jamaica. Were these benefits also extended to other Caribbean countries, they would no doubt equally assist the tourism sector in those countries.

B. PRIVATE SECTOR DEVELOPMENT

14. In June 1979, the World Bank submitted several proposals to the CGCED concerning the required participation of the private sector in the development of the region. It was decided then to establish a Private Sector Task Force, which would examine the issues involved. This Task Force submitted its conclusions and recommendations to the CGCED 1980 meeting in a report entitled "Measures to Promote the Role of the Private Sector in the Caribbean Region". As a direct result of the Task Force recommendations, a project development facility has already been established (see paras. 14-16 below). Other initiatives, described below, have also been adopted or are now receiving serious consideration.

(i) Caribbean Project Development Facility

15. In June 1980 the Caribbean Group asked the International Finance Corporation, in consultation with other interested parties, to design a regional facility which could identify and prepare private sector investment projects of moderate size in the Caribbean area. By early 1981 such a facility had been designed and at the June 1981 meeting of the Caribbean Group it was decided to launch it. Formally known as the Caribbean Project Development Facility (CPDF), the institution was created under the auspices of the UNDP and is currently being operated under the guidance of the International Finance Corporation. Its purpose is to help identify promising new medium-sized investment projects and to assist firms and businessmen in Caribbean countries in preparing such projects for financing.

16. The Caribbean Project Development Facility became operational in October 1981. The initial meeting of the Advisory Panel of the Facility, chaired by the UNDP Deputy Administrator, Mr. G. Arthur Brown, was held in Kingston on March 5, 1982. In May 1982, the Facility successfully concluded its first project: a plant to produce industrial detergent in Antigua. The Facility has a project pipeline of about 24 active projects, over half of which are in the less developed countries and ranging in size from $400,000 to $2.5 million. Some of the more advanced proposals include: shrimp growout ponds in the Bahamas, non-soap detergent in Barbados, banana plantation in Belize, hotel in Dominica, saw-milling in Guyana and fruit canning in Haiti and St. Lucia. -5-

17. Regarding the financing of the project, the following commitments have been made: IDB ($1 million), USAID ($500,000), UNDP ($255,000), CDB ($100,000) and the Netherlands ($100,000). In addition, CIDA is giving active consideration to making a contribution of $640,000, while USAID is considering a possible increase in its contribution to $1 million. This would bring total contributions to the project to $3,055,000, leaving a balance of $1,445,000 to achieve the contribution target of $4.5 million required to finance the project over a period of three-and-a-half years. UNDP is continuing its efforts, in cooperation with the IFC, to mobilize the required sum. Donors are therefore requested to cooperate in ensuring that the target is reached in view of the importance of the project and its overwhelming endorsement by members of the Group.

(ii) The Caribbean Association of Industry and Commerce

18. During the last three years there has been a growing realization of the need for the Caribbean private sector to organize itself better, in order to achieve a meaningful and fruitful participation in the development process of the countries of the region. The Caribbean private sector--with the important participation of several enterpreneurs who were members of the Private Sector Task Force referred to above--have decided to reorganize and strenghten the Caribbean Association of Industry and Commerce (CAIC), which should play an essential role in this process. The CAIC--which now can include not only Commonwealth Caribbean members but also entrepreneurs from the Dominican Republic, Haiti, Suriname and the Netherlands Antilles-- has been invited to participate in the CGCED meetings and should become actively involved in some of the proposals made in Section V below.

(iii) The financing of private sector development.

19. One of the proposals made in 1979 by the World Bank was to increase the availability of resources for financing private sector development in the region, through existing institutions (national development banks, CDB, IFC) and/or by establishing new mechanisms for this purpose. Since then, both CDB and IFC have indicated their willingness to increase their support of the Caribbean private sector, and efforts are under way in a number of countries, with external support, to strengthen their national development banks. Moreover, the group of Caribbean entrepreneurs who strenghtened CAIC (see para. 18 above) are also involved in an effort to recapitalize and revitalize the Caribbean Investment Corporation (CIC), to have it operate under private sector management, and to extend its operations--which initially were limited to the CARICOM LDCs--to other Caribbean countries. These issues were discussed in the Annual Meeting of the CIC Board of Governors, which took place in St. Lucia on May 14, 1982. Depending upon the results of that meeting, some proposals in this respect might be submitted to the Fifth CGCED meeting.

C. EXPORT PROMOTION

20. A World Bank report submitted to the 1979 CGCED meeting ("Industrial Investment Incentives in the Caribbean", Report No. 2501-CRD) observed that there was an urgent need to modify at the national and regional level the incentives system prevailing throughout the Caribbean. This was necessary in order to eliminate the strong pro-import-substitution bias and in general encourage exports both within the Caribbean and to the outside world and promote efficient development of productive activities, particularly in the industrial sector. These conclusions were supported in the meeting and there was also general agreement on the need for further work in this area. Since then, the World Bank and other international agencies have supported the efforts of individual Caribbean countries to establish efficient export promotion systems and several of them are now executing comprehensive programs directed at this objective. In June 1980 CGCED meeting, it was decided to start two programs at the regional level. The first, to be undertaken by the International Trade Center, would deal with institution building and training in various aspects of export promotion. Attachment 3 contains the progress report on this program. The second, on the required reforms of the export incentives system (particularly at the CARICOM level) would be carried out jointly by the World Bank and other international institutions.

21. With respect to the export incentives program, agreement was reached in 1980 to conduct a joint study which would cover export incentives for industry and agriculture, a review of the CARICOM tax harmonization system, and an analysis of relevant experiences within and outside the region, not only with export promotion but also with the broader field of industrial development and planning. It was agreed to carry out such a study jointly by the World Bank and the CARICOM Secretariat, with the participation of the OAS, and with financing to be provided by these institutions as well as by UNDP and USAID.

22. The World Bank and the CARICOM Secretariat designated Professor Gustav Ranis, former Director of the Yale University Economic Growth Center, as head of the study in early 1981. Shortly thereafter, a working group consisting of four economists from Yale and Cornell Universities and a larger number from the Region, was formed and work on the study was launched. At the fourth meeting of the CGCED (June 1981), an interim report noted that most of the countries in the region hold the view that import substitution as a development policy tool has largely run its course and that the need now exists to address with greater emphasis export incentives and export possibilities. The study focussed initially on fiscal incentives; its scope was subsequently broadened to cover the entire range of incentives and disincentives across the economies of the CARICOM countries. The study raises a number of development issues which are of concern to these countries in general and to the Caribbean Group in particular. These issues are discussed in Chapter III.

D. ENERGY

23. The report on Caribbean Energy Policy Coordination which was financed by UNDP from its Energy Account is being updated based on comments made at the fourth meeting of the Group and will be submitted in its final form to the fifth meeting.

24. The report has served a useful purpose in identifying the various initiatives being undertaken in the field of energy in the Caribbean. It indicates, among other things, that the important problems to be tackled in - 7 -

this field are energy conservation, the improvement of existing energy generation systems, the development of indigenous energy sources, including petroleum, and, in the longer term, the identification and promotion of alternative energy sources.

25. Regarding the problem of energy conservation, UNDP is financing a preparatory assistance mission aimed at developing and eventually installing energy saving devices in hotels in Antigua, Barbados, Grenada and other interested countries in the Eastern Caribbean. This preparatory assistance may provide the basis for the implementation of a full-fledged project in this field.

26. In terms of the development of indigenous energy sources, the World Bank has formulated a regional technical assistance program on Petroleum Exploration that is designed to assist governments in the region to evaluate geologic and geophysical data, to upgrade their petroleum legislation, to introduce improved contractual arrangements for exploration, to train technical and legal personnel in the area of petroleum exploration and contracts, and to investigate known, but undeveloped, hydrocarbon resources. The project has still not received the required external support. UNDP is committed to providing the sum of $500,000 towards the financing of the project which is budgeted at $3.5 million. Approaches have been made to other donor members of the CGCED in an effort to raise the additional financing of $3 million, with a view to determining by June 1982 whether or not it will be feasible to proceed with the execution of this program.

E. TRANSPORTATION

27. Satisfactory progress has been made in the implementation of the St. Lucia-based technical assistance regional project on the development of small vessels and schooners. This project is designed to improve, through the provision of training and the upgrading of technical standards, the operation of these vessels which account for over 60% of intra-regional trade. The Steering Committee of the project met in Georgetown in March, 1982. The UNDP contribution to this project amounts to approximately $846,000.

28. In the area of civil aviation, a commitment was made by the Canadian Government at the fourth meeting of the Caribbean Group to provide $50 million to finance high priority capital and technical assistance needs identified in the Caribbean Airport Maintenance and Operations Study prepared by ICAO. Informal consultations were held subsequently in Washington between representatives of UNDP, CIDA, ICAO, and ECLA, and the Director of Civil Aviation for the Leeward and Windward Islands. Further consultations were held between UNDP and the CARICOM Secretariat on the subject. More recently, a CIDA mission visited the Caribbean to hold discussions with governments in order to identify the specific high priority activities to be financed. The report of the mission will provide the basis for the disbursement of the funds committed during the fourth session of the Group. -8-

F. AGRICULTURE

29. During previous years the main focus of the Caribbean Group within the agricultural sector has been in the field of agriculture research. In this connection, the UNDP-financed project on Agricultural Research has served as the basis for discussions among governments of the region in an effort to determine the most appropriate institutional arrangements to carry forward the initiatives in this area.

30. There are also a number of other regional initiatives in agricul- ture designed to increase food production in the region. For example, UNDP is currently financing the CARDATS project which is designed to develop appropriate agricultural techniques esuitable for small scale farming in the LDCs of the Eastern Caribbean linked to the operation of a revolving credit scheme. In addition UNDP has submitted a project document on the establishment of a Management Services Delivery Unit within the Caribbean Food Corporation (CFC) for financing by the OPEC Fund as a follow up to the Caribbean Regional Food Plan project which was also financed by the OPEC Fund. The project is expected to cost $1.05 million over three years.

31. The problems of the banana industry referred to in para. 4 above, underscore the need for hard decision-making on the future of the industry. In view of the "captive" market with preferential prices and the dependence of an overwhelming proportion of farmers on the crop for a livelihood, concerted efforts are necessary to formulate and execute institutional and operational improvements to restore both the immediate as well as medium-term financial viability of the industry. It is recommended that donors give consideration to supporting a Windward Islands' Banana Improvement Scheme which would emphasize strong institution-building actions designed to assure sound management, efficient operations, greatly improved yields and satisfactory farm gate prices. There is real concern that barring such comprehensive action promptly, the outlook for the Windward Islands' banana industry is grim indeed.

G. THE SPECIAL PROBLEMS OF THE LDCs OF THE EASTERN CARIBBEAN

32. From the very start of the Caribbean Group the sponsoring insti- tutions as well as the donor community at large have been cognizant of the special problems of the LDCs of the East Caribbean. Their relatively small size and their limited resource base contribute to the need for special and innovative approaches to move them in the direction of financial, fiscal and economic viability. At the first meeting of the Caribbean Group in June 1979, the World Bank submitted a document entitled "Economic Survey of the East Caribbean Common Market Countries", which dealt with a number of these special problems and made some recommendations for coping with them. The continued preoccupation with these problems of the "micro-states" finally culminated in the meeting in Antigua in April 1981, sponsored by the Government of Canada in collaboration with the World Bank to deal specifically with the special problems of the LDCs of the East Caribbean. In this meeting a long list of issues was presented in a document tabled by the East Caribbean Common Market Secretariat. Although many of the issues raised require further consideration, in the case of a number of crucial ones, action has already been taken or is under way. -9-

33. The Antigua meeting recognized the paucity of management resources in the public sectors of "micro-states" as the constraint on the absorptive capacity for public sector investments, as well as on the imple- mentation of sound policies conducive to economic development and growth. As a consequence of this recognition it was decided to create an Inter- Agency Resident Mission which would assist in the preparation and execu- tion of investment programs and development policies, and in the identifi- cation of needs and sources of external technical and financial assistance for specific projects and other development activities. The Mission will establish close links with the OECs Economic Affairs Secretariat, with the goal of eventually transferring a substantial part of its functions to that organization. Special attention will be given by the Mission to ways to increase these islands' absorptive capacity, including the identification of specific problems affecting project execution, and of the assistance required for their solution. The Mission will be supported by the World Bank, IMF, UNDP, CDB, OAS and three bilateral donors--the US, UK, and Canada. The Mission, which will be located in Antigua, is expected to become operational during the Summer of 1982.

34. It has been also recognized that adequate project preparation, including technical, economic and financial aspects, was a serious problem for the LDCs of the East Caribbean. Although extensive technical assis- tance resources have been available for this purpose, they had not fully coped with the problem. As a result, the European Economic Community placed at the disposal of the Organization of Eastern Caribbean States (OECS) EUA2 million. The purpose of this fund is to underwrite the hiring of short-term experts to prepare prefeasibility and feasibility studies for projects for the public sector of the "micro-states" of the East Caribbean. Although the fund has not been active as yet, it is to be hoped that with the creation of the Economic Affairs Division of the OECS it will now become operational. The successful operation of this fund in project pre- paration, and the activities of the Inter-Agency Resident Mission, should help in filling the gaps in the limited management capabilities of the LDCs.

35. Early in the deliberations on the needs of the LDCs it was recog- nized that the private sectors needed to be activated and that their resources were inadequate to achieve this task. Investment opportunities needed to be identified, prefeasibility and feasibility studies needed to be formulated and promotion activities, domestically as well as overseas, needed to be undertaken or stimulated. All these objectives have now been faced, directly or indirectly, through the Caribbean Group. The Caribbean Project Development Facility established by IFC (see paras. 15-17 above) is actively pursuing its task in a number of the Eastern Caribbean States. At the same time USAID has contracted consultants to identify private invest- ment opportunities in the Eastern Caribbean States and to engage in an investor-search by means of the same consultants' international network of accounting and management services. The tasks facing these undertakings are formidable but, given the experience of these organizations, the outlook is promising. Given the limited resources and capabilities of the private sectors in these countries, the need to utilize them to a maximum is imperative if development and growth are to take place. - 10 -

36. The requirements of the "micro-states" of the East Caribbean for achieving self-sustaining growth are numerous and it will take much time to cope with their special problems. Nevertheless, the above actions on their behalf under the aegis of the Caribbean Group or in conjunction with it, are expected to make important contributions in assisting them to move towards viability. A number of other special programs involving the LDCs of the East Caribbean are worthy of mention. Their subregional organization on tourism has now been effectively coordinated with the overall Caribbean tourist promotion effort. It is hoped that this step will enhance the tourism potential of the subregion and thus assist one of the major contributing sectors to their growth and balance of payments. At the request of the LDCs of the East Caribbean the Canadian Government has hired consultants to prepare an inventory of official development assist- ance programs, which will, inter alia, identify the activities and sectors supported by each external bilateral or multilateral agency; this infor- mation, once placed at the disposal of the authorities, should be of considerable help in assisting preparation and submission of requests for various types of external assistance. Lastly, the World Bank Group has initiated direct lending activities to the "micro-states" of the East Caribbean. Although the Bank continues to maintain its position of rendering most of its financial assistance to the "micro-states" through the CDB, in cases where it finds it justifiable for financial and/or technical reasons it may engage in direct operations with the "micro-states". While many of the problems of the Eastern Caribbean States will continue to require special attention, it is hoped that the actions listed above will help cope with some of the major problems. - 11 -

III. THE FUTURE OF THE CARIBBEAN ECONOMY

A. THE OVERALL FRAMEWORK

37. During the four years of the Caribbean Group for Cooperation in Economic Development, it has become increasingly clear that the 1980s are going to be a critical period for the economies of the Caribbean. What has been documented in the approximately 100 reports and studies that have been presented to the Group is that, for each and every state of the region, economic circumstances are becoming inexorably more difficult. This is partly due to the increasing stagnation of the world economy and to the fact that, despite significant progress during the 197 0s, the Caribbean remains a fragile trading area of the world economy, continually at the mercy of the fluctuations of the economies of the industrialized nations. The potential for significant long-run growth is severely limited by the size of the regional market: in total, the Commonwealth Caribbean has only 5.7 million people, about the population of Hong Kong; adding Haiti, the Dominican Republic, Suriname, and the Netherlands Antilles brings the total to only 16.4 million, smaller than Peru. Yet this population is spread over 20 separate countries and territories. 1/ The a sets are limited; the total agricultural land amounts to some 64,000 km and two-thirds of this is on the island of Hispanola. Mineral production is primarily bauxite, and the industrial base is relatively small. Only Trinidad, and to a much lesser extent, Barbados, have known exploitable petroleum resources; in both the reserves are very limited, and only Trinidad has a surplus for export. Tourism, which had been particularly buoyant in the 1970s (growing by an average of over 10 percent per year) has long-run limitations in terms of both capacity and social considerations. Finally, these states are relatively crowded and migration between them and to countries outside the region--particularly of unskilled workers--is very restricted.

38. Country development strategies have to address multiple objectives--e.g., growth and satisfaction of basic needs, exports outside the region and production for national and regional markets. Priorities must be defined in view of a country's overall economic situation, so that emphasis may be placed on export promotion, and efficient import substitution, when serious balance of payments problems are encountered. In view of the widespread balance of payments problem within the region and the limited size of the regional market for extensive efficient import substitution efforts, it will be necessary now for the region to adopt a more outward looking development strategy. The development of the Region must be based on increased exports of labor-intensive agricultural and manufactured goods. Tourism may or may not grow depending on the evolut of the world economy, but exports of agricultural and manufactured goods have the potential to perform relatively well even in the face of a stagnant world economy. However, to achieve this potential both the private and the public sectors of the economies should work in close cooperation.

1/ Including 14 independent countries, one associate state and five dependent territories. - 12 -

39. A group of distinguished experts from the Commonwealth Caribbean 2/ recently met to consider the role of the Caribbean Community in the 198Us. They indicated, among their many important conclusions, that:

"While there are still opportunities for further national, sub- regional and regional import substitution in manufactures, the need to increase extraregional exports of manufactures is also very urgent. Here the closely related instruments of fiscal incentives to industry and protection (both through tariffs and quantitative restrictions) are relevant...."

It appears necessary to tilt the balance of incentives and protection somewhat more in favour of extraregional exports as against national and regional import substitution. This would entail increasing the fiscal incentives for production for the extraregional market and reducing to some extent such incen- tives available for production for the national, subregional and regional market...."

"...the entire protection policy should also be examined with a view to determiling the extent of possible "over-protection" of industries...."-/

These are only a few of the many recommendations of this panel. They all point, however, to the urgent need for coherent and coordinated action on the part of the states and territories of the Region.

B. PRODUCTION AND TRADE: STRUCTURE AND POLICY ISSUES

(i) Introduction

40. This section summarizes the main trends in regional and extra- regional trade in CARICOM member countries, focussing on the changes between 1967 and 1978, and reviews the current structure of production and export incentives in the region with a view, to assessing their likely

2/ The Group was formed by Messrs. William G. Demas, G. Arthur Brown, Silbourne St. A. Clarke, Kurleigh King, W. Arthur Lewis, Shridath S. Ramphal, Edwin Carrington, Charlesworth Edwards, Vaughan Lewis, Alister McIntyre, and Charles A. T. Skeete.

3/ Quoted from The Caribbean Community in the 1980s, Report by a Group of Caribbean Experts. CARICOM Secretariat, 1981, p. 66. - 13 -

impact on future development of these countries. Finally, several areas for possible policy action--both at the national and the CARICOM levels-- arising from the analysis of the current policy framework are identified.

41. Since Dominican Republic, Haiti, the Bahamas, Suriname, and the Netherlands Antilles are not members of CARICOM and, therefore, are not affected directly by regional policy decisions, the following paragraphs do not deal specifically with the situation of these countries. It should be noted, however, that the basic conclusions of the analysis apply to them as well. Given their size, resource endowment and their current economic situation and prospects, all of these Caribbean countries require for their future development the adoption of an export-oriented strategy directed towards increasing the efficiency and dynamism of the productive sectors.

(ii) CARICOM Regional and External Trade

42. The total amount of trade among CARICOM member countries increased substantially between 1967 and 1978, from US$47 million to US$298 million (Table 1). During this period, the commodity structure of trade also experienced some changes, as the share of consumer goods increased from 40 percent to 47.5 percent of the total. Regional trade grew at an average annual rate of 18.3 percent in current US$ terms, or about 10.6 percent annually in real terms.

Table 1: CARICOM REGIONAL TRADE

Average Amount (US$ million) Structure (%) Annual Growth(%) 1967 1978 1967 1987 1967/78

Producer goods a/ 26 151 55.3 50.7 17.3 Food 2 6 4.3 2.0 10.5 Consumer goods 18 127 38.3 42.6 19.4 Luxury consumer goods 1 14 2.1 4.7 27.1 Total _7 298- 100.0 10. a/ Includes oil.

43. The relatively fast growth of regional trade has changed only marginally the overall structure of Caribbean trade, which is still over- whelmingly directed towards countries outside CARICOM. Thus, regional trade accounted for only 5 percent of the region's total imports in 1967, and the share grew to 7.6 percent in 1978 (Table 2). Similarly, the share - 14 -

of regional exports in total exports increased from 6.3 percent in 1967 to 8.6 percent in 1978. The small shares of regional trade in total imports and exports indicates that all the countries in the CARICOM are primarily oriented towards the rest of the world in terms of their import requirements and main primary exports.

Table 2: CARICOM TOTAL AND REGIONAL TRADE

1967 1978 US$ million % US$ million %

Exports

CARICOM 47 6.3 298 8.6 Outside 705 93.7 3151 91.4 Total 752 100.0 3449 100.0

Imports

CARICOM 47 5.0 298 7.6 Outside 892 95.0 3621 92.4 Total 939 100.0 3919 100.0

44. The trade pattern was very similar at the individual country level particularly in 1967. By 1978, however, regional trade had become very important in two countries. Barbados and Guyana (Appendix 2, Tables 2.15 and 2.16). Barbados' exports to other CARICOM countries had reached 30 percent of its total exports, well above the corresponding shares of all other member countries. This reflects the different structure of Barbados' exports in which manufactured products now enjoy a relatively large share. In the case of Guyana, which obtained 29 percent of its import requirements from other CARICOM countries in 1978, the main reason is the high share of oil imports (from Trinidad). It should be noted that the LDCs' participation in regional trade has followed a different pattern than that of the MDCs. This is reflected in a fall in the share of CARICOM imports in their total imports (from 15 percent in 1967 to 11.5 percent in 1978).

45. The small share and limited increase of regional trade within CARICOM with respect to total exports reflects inter alia, the lack of complementarity of the CARICOM countries' economies. Their factor endowment is, in most cases, quite similar and the resulting productive structures are, therefore, rather competitive. Another factor contributing heavily to the slow growth of intra-CARICOM trade is the structure of effective protection prevailing in the region, which provides excessive protection to final products while discouraging backward linkages which could encourage additional production and trade within the area. - 15 -

46. It should be noted that the country (Barbados) which has maintained for a longer period policies for encouraging exports outside CARICOM is also the country whose exports within the region have grown fastest since 1967. This suggests that for increasing the complementarity of the CARICOM economies, and trade among them, there will be a need to increase incentives to efficient export industries, capable of competing outside as well as within the region. For this purpose, and for promoting backward linkages, there will also be a need to modify the existing structure of effective protection and of other incentive systems (See Section B(iii) below).

47. The need to attach the highest priority to the objective of expanding nontraditional exports to countries outside CARICOM has been recognized by several countries, notably Barbados as noted above, (as well as, among nonCARICOM countries, Dominican Republic) and, more recently, Jamaica. In this respect, an export-oriented strategy that would achieve these objectives requires the support of the policy framework at the domestic and regional levels. The following section briefly reviews the main elements of the current policy framework, their impact during the recent past, and their ability to achieve the desired objectives.

(iii) CARICOM Trade and Incentives Policy

48. The main instruments of CARICOM trade and incentives policy are its Common External Tariff (CET) and the Harmonization Treaty on Fiscal Incentives. In addition to these two regional instruments, the individual countries have developed a plethora of other policy measures, including non-tariff barriers to imports (quotas and prohibitions), subsidized land or factory buildings in industrial parks, and special credit lines. Finally, some countries have started to consider possible new measures to promote nontraditional exports to countries outside CARICOM.

49. The objective of the main regional instruments (CET and fiscal incentives) was to promote industrial production to substitute imports, mainly of consumer goods, and to provide roughly equivalent levels of pro- tection among CARICOM member countries. However, a lower CET for the LDC's was temporarily adopted, presumably with the intent to reduce the cost of imported products to the consumers. The combination of relatively high tariff rates on consumer products and widespread tariff exemptions on raw materials and capital goods resulted in high levels of effective protection (on value added) for producers of the consumer goods. Thus, inefficient firms were allowed to be established and to prosper, behind a high protec- tive barrier at a considerable cost to the domestic consumers, who had to pay the resulting high prices.

50. In addition to the protection granted by the combination of tariffs and tariff exemptions, several countries gradually developed an additional network of import prohibitions, quotas and other quantitative barriers (QRs) that further increased the level of protection to some - 16 -

industries. Such QRs were sometimes used among CARICOM countries, thus departing from the objective of developing a free trade zone. The existence of QRs has also contributed to create large differences in the levels of protection across products and across countries.

51. The high levels of effective protection implicit in the current policy framework have been documented in several country specific studies. The findings of these reports can be summarized as follows:

(i) The average level of effective protection is high in all countries;

(ii) There is a wide variation in effective protection rates among products in each country;

(iii) There are large variations in protection levels among coun- tries;

(iv) The high protection rates are generated mainly by the tariff exemptions on raw materials and other inputs, combined with low percentages of value added by many firms. Effective protection would be lower and more evenly distributed if the tariff exonerations were reduced;

(v) The QRs (particularly on consumer goods) have also been an important factor in determining the high effective protec- tion levels prevailing in some countries; and

(vi) The income tax exemptions have had only a limited impact in encouraging new investments.

52. The high average level of effective protection found in all the CARICOM countries has serious implications in terms of the future growth and efficiency of the countries' industrial sector. In particular, the high effective protection granted at both the national and the regional level, generates an equally high anti-export bias for exports outside CARICOM, the area to which a large expansion of nontraditional exports might otherwise be feasible. Thus, a main prerequisite of output and export growth for nontraditional products will be a gradual reduction of the high levels of effective protection.

53. The wide dispersion of protection rates among products introduces additional distortions in the allocation of resources, by generating excessive investment in the relatively more protected subsectors (or mono- polistic profits if barriers to new investment are introduced) and less than optimal investment in the relatively less protected subsectors. Simi- larly, the large variations in protection rates among countries indicate that a major objective of the regional policy instruments--approximately equal treatment to all countries to promote their fair competition--is not being achieved. This is mainly the result of the use of quantitative restrictions to imports. - 17 -

54. The widespread use of tariff exemptions for raw materials and capital goods as a production incentive favors the use of imported raw materials instead of domestic resources, and of imported capital goods instead of labor. Also, the combination of high tariff rates on final pro- ducts and tariff exemptions on their inputs encourages the establishment of firms that generate a small percentage of value added. Thus, one of the major incentive systems (also in terms of its fiscal cost) has economic effects which are contrary to the regional objectives of promoting the use of domestic raw materials and of creating employment.

55. The major export promotion effort required for increasing pro- duction and employment, and for solving on a permanent basis the balance of payments problems of the CARICOM countries, will have--as indicated above--to include important actions at both the national and the regional levels. These actions should be adopted in a way conducive also to strengthen the CARICOM integration process. The recent technical work sum- marized in this report, as well as the ongoing analysis by World Bank staff of the individual economies of the region, indicates clearly that there is no contradiction here between the national and the regional interest, or between the objectives of increasing exports to the rest of the world and of increasing intraregional trade. The policy decisions required to increase exports to the outside world would also be needed to promote backward linkages and to increase substantially trade within the region. On the other hand, to promote the establishment of additional inefficient, over-protected, industries would increase the existing bias against exports to the outside world, and would limit the possibility of increasing backward linkages and intra-regional trade.

56. The export promotion effort suggested in this report (and in the country reports being submitted to the Fifth CGCED Meeting) should also enable all the Caribbean countries to take advantage, in better conditions, of the trade opportunities that might be open to them in the framework of the Caribbean Basin Initiative (CBI). It should be noted in this respect that the Commonwealth Caribbean countries may soon find themselves in the unique position of enjoying preferential trade access to the two largest markets of the world: the EEC and--when the CBI trade measures become operational--North America.

(iv) Policy Conclusions

57. The promotion of efficient industries, able to compete in markets outside CARICOM, the increase in the use of domestic resources and intra-regional trade, and generation of increased employment, would require changes in the structure of incentives summarized above. At the country level, the elimination of the current anti-export bias will require a gradual elimination of the quantitative barriers to imports. At the regional level, the main immediate change would relate to the tariff exemptions on raw materials and on capital goods. It would be desirable to eliminate completely these exemptions, establishing a moderate tariff rate (say 10 to 20 percent) on all such products. Also, the higher tariffs on final products should be reviewed in order to determine the specific future changes that might be required to avoid too high protection levels, and to - 18 -

reduce the large differences that in some cases exist in effective protection rates among products.

58. The gradual elimination of quantitative restrictions on imports and the reduction of effective tariff protection would go a long way towards reducing the current anti-export bias in CARICOM countries and would generate additional fiscal revenues. However, the process would have to span a period of several years, in order to avoid sudden dislocations in economic activity. In the interim, the existence of an anti-export bias would continue to be a severe limitation to export growth, unless other measures are taken to increase the profitability of nontraditional exports to countries outside CARICOM.

59. The current system of incentives for nontraditional exports out- side CARICOM is centered around the concept of "enclave" industries which generally import all their inputs and export mostly to the US under the 806 and 807 categories of the US Customs Law. Such fully export-oriented industries, often established in Free Zones, operate under a system that approximates free-trade, generate considerable employment, and should con- tinue to be strongly supported by the countries. However, there is a large number of other industries--existing and potential--that might contribute substantially to further industrial development of the region by selling partly within the country where they are located, partly within CARICOM and also to third countries. These "local" industries are the ones which have in the past benefitted from protection on CARICOM and domestic sales and which should be encouraged to reorient part of their production to new markets.

60. The establishment of additional export incentives for such indus- tries is already under consideration in some countries and it would be desirable that they be undertaken by all CARICOM countries in the context of an overall review of industrial and trade policies. One of the main instruments (already in use in a large number of countries outside the region) is the establishment of tax credit certificates for nontraditional exports outside CARICOM. These certificates would amount to a certain percentage of the value of the exports (e.g., 10 to 20 percent), would be acceptable for payment of any tax liability to the government and would be fully transferable. Thus, they would result in an immediate increase in the profitability of exports.

61. The main objective of such incentive would be to compensate, at least partially, the anti-export bias created by the protection system. This anti-export bias will continue to be important for several years even if a gradual program of eliminating quantitative barriers to imports and reducing effective tariff protection is adopted. However, even after the transition period is completed, a tax credit certificate on nontraditional exports outside CARICOM would continue to be needed if a flat tariff on raw materials and other imported inputs is used without exemptions. The com- bination of, for example, a 20 percent tariff on imported inputs and a 20 percent tax certificate on the F.O.B. value of exports would reduce sub- stantially, and automatically, the anti-export bias prevailing up to now in these countries' incentives system. - 19 -

62. The net impact of the countries' incentive system, including pro- tection for domestic and regional sales and incentives to third-country exports, cannot be properly analyzed without an assessment of the adequacy of the exchange rate. Thus, import quotas or prohibitions may in fact be acting in some cases as a compensation for an overvaluation of the exchange rate and the anti-export bias may be higher than it appears for the same reason. The need to monitor closely the competitiveness of the country's exports has become increasingly important recently owing to the appreciation of the US dollar. Since the Caribbean currencies are pegged to the US dollar, they have appreciated considerably against European, Canadian and Japanese currencies during the past year. This development has affected negatively the possibility of increasing exports--traditional as well as nontraditional--to those areas, and it has also rendered tourist services more expensive for visitors from them.

63. The general ideas referred to above could be developed further, into a more detailed regional action program. Such program could include, as a first, immediate stage, the decisions required to eliminate the tariff exemptions on imports of raw materials and capital goods by establishing a moderate tariff rate on them, as suggested in para. 57, as well as to adopt export incentives as referred to in para. 60. A second stage--for which the required studies could be started in the immediate future--would deal with the gradual adjustment, where necessary, of tariff rates on products other than raw materials and capital goods, and, at the national level, the gradual elimination of QRs. This second stage could also include the identification of other requirements (for instance, the expansion of essential infrastructure and of training programs) that would have to be met to develop export-oriented production. The World Bank and the other CGCED sponsoring institutions have discussed some of these issues with the Commonwealth Caribbean Countries in a meeting that took place in St. Lucia on May 14, 1982. The possible characteristics of this regional export promotion effort, and the external support that may be required for it, could be discussed further in the June 1982 CGCED meeting. - 20 -

IV. EXTERNAL FINANCING1 /

A. EXTERNAL FINANCING

64. During the four years since the creation of the Caribbean Group for Cooperation in Economic Development, over US$5.0 billion in gross external capital flows has been obtained by the recipient members of the Group, including $1.45 billion of the type of financing which is channelled within the framework of the Caribbean Development Facility (CDF).2 / Table IV-1 summarizes the available information on CDF flows over the past four years. As can be seen in this table, commitments have amounted to about $150 million more than disbursements over the last four years.

65. Table IV-2 summarizes the latest estimates of the commitments and disbursements of external financing that would be required during the fifth CGCED year (July 1982 - June 1983). Total CDF-type requirements for that year have been estimated at about $1.1 billion, assuming that all countries would have in place viable economic programs by next July. It should be noted, however, that for several countries, the figures shown in Table IV-2 do not imply yet a recommendation from the Working Group of International Financial Institutions. Those countries are now preparing economic programs or are expected to do so after general elections take place in the near future. The recommendation on CDF-type financing will be made in those cases after viable economic programs are completed and adopted. It should also be kept in mind that the figures shown in Table IV-2 are still subject to important changes, after completion of the country economic memoranda now being prepared for the Fifth CGCED meeting.

66. As it has been indicated in the past, CDF financing was not meant to become the permanent main focus of Caribbean Group activities. While, owing in part to the international economic situation, the needs for CDF-

1/ Some of the figures shown in this section are still preliminary. The section will be updated for the final draft of this report, taking into account the results of the ongoing economic work on several countries.

2/ The CDF, established in June 1978 during the First Meeting of the Caribbean Group, was designed to be a "mechanism for channeling new foreign resources to help finance essential imports and, through the use of the local currency generated by this assistance, to offer supplementary financing--mainly for local costs--to assist in the execution of development programs and projects." a! Table IV-l: CARIBBEAN DEVELOPMENT FACILITY- COMMITMENTS AND DISBURSEMENTS

Undisbursed Commitments Disbursements as of FY78-79 FY79-80 FY80-81 FY81-82 TOTAL FY78-79 FY79-80 FY80-81 FY81-82 TOTAL 6/30/82

MDCs

Barbados 4.9 4.0 6.2 8.5 23.6 0.2 2.4 6.4 9.1 18.1 5.5

Guyana 26.5 16.6 111,7 53.6 208.4 18.4 16.2 102.9 23.6 161.1 47.3

Jamaica 57.1 142.7 141.0 370.0b12710.8 32.6 104.8 151.0 3 67 .0L/'6 55.4 55.4

LDCs 15.9 44.0C/ 4 5.5S/ 42.3 147.7 13.0 28.7.9/ 3 4, 9 c/ 27.5 104.1 43.6

Dominican Republic 88.1 97.4 107.4-/'155.0 447.9 35.2 117.0 134.9-/ 160.8 447.9 0.0

Haiti 13.0 14.4 31.2-/ 14.0 72.6 12.0 13.4 27.0-/ 18.2 70.6 2.0

TOTALS 205.5 319.1 443.0 643.4 1611.0 111.4 282.5 457.1 606.2 1457.2 153.8 a/ Includes CDF pledges at the CG meeting and CDF-type assistance committed during the fiscal year. b/ Includes only commitments made before the Special Meeting of the Country Subgroup on Jamaica, held on February 22, 1982, and disbursements out of those commitments made before the beginning of Jamaica's current fiscal year (April 1st, 1982). c/ Includes "Hurricane Relief". Table IV-2: ESTIMATES OF EXTERNAL PUBIIC CAPITAL REQUIREMENTS FOR FY82/83 (US$ million)

Total Carryover to CDF-Type External Non-CDF CDF-Type Inflows Required FY83/84 of Commitments for Inflows Type Total From Previous From New FY82/83 FY82/83 Required in Required Commitments Commitments Commitments June 1982 (a) (b) (c)=(a)-(b) (d) (e)=(c)-(d) (f) (g)=(e)+(f)

1. MDCs 883.8 191.3 692.5 108.2 584.3 95.0 679.3

Barbados 105.8 59.3 46.5 5.5 41.0 15.0 56.0 Guyana 200.0 50.0 150.0 47.3 102.7 30.0 132.7 Jamaica - 578.0 82.0 496.0 55.4 440.6 50.0 490.6

2. LDCs 143.8 101.0 42.8 16.3 26.5 22.6 49.1

a. OECS 111.5 78.3 33.2 14.3 18.9 18.6 37.5

Antigua 25.3 17.9 7.4 2.2 5.2 3.6 8.8 Dominica 18.4 12.5 5.9 3.8 2.1 3.6 5.7 Grenada 30.6 23.0 7.6 2.0 5.6 3.0 8.6 Montserrat 3.2 2.4 0.8 0.7 0.1 0.6 0.7 St. Kitts-Nevis 9.2 5.8 3.4 1.5 1.9 2.1 4.0 St. Lucia 11.8 7.8 4.0 2.1 1.9 2.6 4.5 St. Vincent 13.0 8.9 4.1 2.0 2.1 3.1 5.2

b. Belize 32.3 22.7 9.6 2.0 7.6 4.0 11.6

3. Dominican Republic 400.0 100.0 300.0 0.0 300.0 40.0 340.0

4. Haiti 140.0 100.0 40.0 2.0 38.0 5.0 43.0

TOTAL 1,567.6 492.3 1,075.3 126.5 948.8 162.6 1,111.4 a/ These figures refer to Jamaica's current fiscal year (April 1, 1982 to March 31, 1983) including as "new commitments" those made, or to be made, on or after the Donors' meeting, held on March 10, 1982. - 23 - type financingare now much larger than expected four years ago, it should be possible to continue to shift the emphasis of the CaribbeanGroup activities to the direct financing of public developmentprojects and to the enhancementof the mechanisms and conditionswhereby private investment can take place in substantiallygreater amounts than has been the case in the past. For this to happen, significantefforts by both donors and recipientswill be required to ensure that appropriatedevelopment policies are set in place, that coherent, realistic,and properly formulatedpublic investmentprograms are executed and that conditions for a significantly greater role for the private sector, both domestic and external, in the Caribbean are established.

B. DONOR REPORTING SYSTEM

67. During the third meeting of the CaribbeanGroup in 1980, it was proposed that an informationsystem on foreign assistanceflows be estab- lished. Its purpose was to aid donors and recipientswith a systematic and timely flow of informationon the financial assistancebeing provided to the region. A preliminarydesign was drawn up by the staff of the IBRD and presented to the Ad hoc Advisory Committee meeting of the CaribbeanGroup in Kingston in March 1981. Notwithstandingthe numerous technical difficultiesthat were foreseen, the establishmentof such a system was approved and preliminarysubmissions were solicited from the donors in April 1981. It was envisioned that thereafter,submissions would be received twice a year, in April and October. The OAS agreed to participate in the processingof the informationsent by donors. It became clear, however, after the preliminarysubmissions, that there were indeed substantialproblems in establishinga workable system. The first problem is that there exists a wide variety of fiscal years among donors and recipientsand thus it is necessary to request data in quarterly form. For many donors such a breakdown is not easily obtained. The second major problem is that in order to obtain accurate data on CDF flows one needs to know a breakdown of disbursementson projects by local and foreign cost financing. This too is a difficult type of informationto assemble properly. A third problem is that many donors do not disaggregatetheir informationon the LDCs.

68. In order to minimize the additional burdens on donors while at the same time use the donor reporting system to best advantage, it is proposed that the followingmodifications be made. First, it would be use- ful to concentratethe system initially on the recipients for whom the informationon assistanceflows is more incomplete,i.e., the LDCs of the Eastern Caribbean. Second, with this in mind, it is proposed that the system be administeredby the Inter-AgencyResident Mission in Antigua as this mission will be the focal point for informationon flows and will be in the optimum situationto monitor and clarify the informationsupplied by the donors. It is proposed that the reporting dates remain the same, April and October, and that the donors redouble and focus their efforts on providing accurate, timely and disaggregateddata on the flows of assistance to the Caribean LDCs. Finally, it is proposed to extend subsequentlythe system--onceit has proven to be workable for the LDCs-- to the other recipientmembers. - 24 -

V. FUTURE CGCED ACTIVITIES

69. The comments and suggestions on the CGCED operations made during the last year by recipient and donor countries, indicate that there is a consensus in maintaining, without major changes, the format and contents of CGCED operations. There is also a need, however, to intensify the changes in emphasis started last year concerning certain CGCED activities, and to introduce some other adjustments in them.

70. External Assistance: While the promotion of CDF-type financing will still be, during the next few years, a major area of CGCED activity, the promotion and coordination of project financing and technical assis- tance should continue to receive growing attention of the CGCED.

71. Export Promotion. The need to undertake major export promotion efforts in all Caribbean countries should remain a major focus of CGCED activities, and the priority attached to this policy area should be further increased. It is proposed that export promotion issues become a specific agenda item in all country subgroup meetings, starting in June 1982. The Fifth CGCED meeting will also deal with the regional suggestions referred to in Chapter III. High priority should also be attached to the export promotion objective in the formulation of donors' technical and financial assistance programs.

72. Private Sector Development. There seems to be a consensus on the advisability of increasing further the already substantial attention being given since 1979 within the CGCED to private sector development. Issues related to this will also become a specific agenda item in all country subgroup meetings next June. It is expected that the Caribbean Project Development Facility will continue to be supported by CGCED members, and that its activities will become increasingly important during the forthcoming year. In addition, several recipient and donor members have suggested to give the private sector some participation in CGCED meetings and activities. This could be achieved through the following actions:

a) the Caribbean Association of Industry and Commerce (CAIC) has already been invited to participate in CGCED meetings;

b) the delegations to the CGCED meetings can include private sector representatives, whenever the country concerned con- siders it appropriate;

c) if any recipient government considers it advisable, it could convoke a meeting of foreign commercial banks; these meetings could be held immediately after the CGCED meetings, and would be supported, at the technical level, by the spon- soring international institutions (this procedure has been followed during the last few years in the cases of several other Bank-sponsored consultative groups.);and 25 -

d) a Seminar on Private Sector Development in the Caribbean could be convoked, perhaps by CAIC; this seminar could be held later this year, in a Caribbean location, and would be attended by private sector representatives from the Caribbean and from other areas.

73. Regional Programs. The experience of the first four years of CGCED operations indicate that it would be advisable to concentrate the regional work sponsored by the Group in those programs which would be actively supported by the Caribbean countries and the donor community. The Fifth CGCED meeting could provide guidance in this respect to the partici- pating international institutions.

74. The Scheduling of CGCED Meetings. Following the conclusions reached in June 1981, the number of meetings convoked within the CGCED framework has been reduced substantially this year. It is planned to continue this process in future years. Concerning the LDCs of the Eastern Caribbean, instead of having a special separate meeting, a regional subgroup meeting on them will be held within the CGCED annual meeting. Moreover, when the Inter-Agency Resident Mission becomes fully operational, it should be possible to transfer to it some important aid promotion and coordination activities. This should make it unnecessary to hold individual country subgroup meetings on each LDC every year. A possible approach in this respect could be to prepare a more comprehensive analysis for each LDC every two years; each year there would be individual subgroup meetings for three or four of these countries while specific new assistance needs that could have emerged for the others since the previous year could be dealt with by the Inter-Agency Mission or within the regional subgroup on the LDCs. More generally, for all recipient CCCED members, the decision to convoke a subgroup meeting for a country would be a function of the country's economic situation, of its economic program, and of the interest of the government in question as well as of donors/lenders. On the other hand, special subgroup meetings may be called at any time (as it has been the case up to now) when it becomes necessary for promoting external assistance to cope with natural disasters, or to undertake very large investment projects or economic programs agreed upon with the IMF. - 26 - ATTACHMENT1

COUNTRYNOTES - 27 -

Attachment 1

1.1 The economic growth of Antigua and Barbuda, a newly independent, country, slowed down to 4.0 percent in 1981. Tourism, the country's major earner of foreign exchange, was down somewhat in 1981, as the number of stayover visitors decreased. Public finances deteriorated as a result of large increases in expenditures. The current savings of the consolidated public sector went down from 4 percent of GDP in 1980 to 2.4 percent in 1981.

1.2 The Bahamas' tourism earnings, which are normally as much as those in the rest of the Commonwealth Caribbean, suffered a large drop in 1981. Earnings were less than US$500 million, some 18 percent below the level of 1980. While the number of visitors declined somewhat less, the evidence is that the weak economy in the US is leading to shorter stays by US tourists. Strong union activity in The Bahamas has led to the country becoming one of the more expensive tourist destinations, a factor which seems to have contributed to the decline in the number of tourists and in the length of their stay in the country. This downturn in tourism has coincided with the Government's expansion of the activities of its Hotel Corporation. The Corporation, which was already losing money, borrowed $150 million last year, raising the country's national debt to $420 million, and causing a 43 percent increase in debt service, now the largest item in the budget for 1982. GDP declined about 2.0 percent, the first decline in many years.

1.3 In Barbados, price increases in the hotel industry, as well as high air fares and the US recession, brought, about a modest fall in the number of visitors in 1981. While tourism revenues in current dollar remained virtually at the 1980 level, sugar production declined by 30 percent while sugar export earnings were off by 42 percent. Consequently, GDP declined by about 2.5 percent while the deficit on the current account of the balance of payments widened from 2 percent to 9 per cent of GDP. The declining economy had a significant effect on the finances of the public sector and, by mid-year, the Government had introduced a number of demand management measures including new taxes, as well as a cutback in public investment. However, it seems that the overall public sector deficit for FY81/82 has increased from 4 percent to 9 percent of GDP. The Barbadian economy is one of the better managed in the Caribbean; the fact that it had a disappointing performance in 1981 is a measure of the severity of the problems now facing most countries in the area.

1.4 After a strong growth performance in the early and mid-1970s, Belize's economic expansion has slowed during the past three years. Real GDP grew only 1 percent in 1981, following an average increase of about 2 percent in the two previous years. The slowdown in economic growth was largely a result of poor agricultural performance particularly concerning sugar, and of stagnation in the manufacturing sector. On the other hand, the construction, services and tourism sectors did expand somewhat during 1981. The balance of payments continued to register substantial but

t is t t - 28 - manageable current account deficits. Public finances continued to be relatively well managed, although public sector savings declined from 3 percent of GDP in 1980 to 1 percent in 1981 owing mainly to high wage increases. It is expected that the relaxation of price controls recently introduced, the settlement of groups of expatriate farmers, and the implementation of appropriate projects in transportation and energy will allow the country to return to the high growth rate of the early and mid-70s.

1.5 Dominica, recovering from the natural disasters of 1979 and 1980, grew by 8 percent in 1981, bringing the economy back close to the levels of 1978. Bananas, the island's main crop, increased rapidly, so much so that the island experienced shipping problems for a part of the year. The construction sector, with a steady demand from reconstruction efforts, also was dynamic last year. A determined effort to manage the economy in an efficient manner is bringing about a significant improvement in the finances of the public sector, and it is expected that budget deficits, which traditionally have been about 5 percent of GDP but which reached 14 percent in 1980, could well be eliminated in the near future. The country is continuing to perform well under the EFF program agreed upon with the IMF.

1.6 In 1981 the economy of the Dominican Republic grew at an estimated 3.4 percent compared with 5.4 percent in 1980. Agriculture, including sugar, was the main source of growth, in spite of the fact that flood rains in May so damaged rural roads that the sugarcane crop had to be abandoned in some areas. Mining improved slightly over the previous year, even though the ferronickel operations were closed near the end of 1981. Tourism showed some gains over 1980, but construction and manufacturing stagnated. The slowing of the economy was reflected in deteriorating tax revenues and falling export earnings. Government responded by reducing the capital investment program, curtailing access to the official exchange market, banning imports of cars, and tightening credit. For the year as a whole the public sector deficit, though increased, was held to about 5 percent of GDP. The deficit in the current account of the balance of payments declined substantially, partly as a result of the measures referred to above, but more so as a result of inadequate capital inflows to finance it. Overall, the balance of payments continued to deteriorate and this was reflected in increased arrears in commercial payments. Partly because of external circumstances the rate of inflation fell from about 19 percent in 1980 to under 10 percent in 1981. The level of unemployment is believed to have risen during the year.

1.7 Tourism in Grenada was down sharply in 1981, even below the levels that existed before the abnormal increase in cruise visitors diverted from Trinidad and Tobago in the winter of 1979-80. Agriculture was affected by pests and marketing problems. The level of activity of the construction sector remained high, owing mainly to the continuing construction of an international airport. These trends resulted in a modest GDP growth rate of about 2.6 percent. While--because of the execution of the airport project referred to above--public investment was quite high, private investment remained at a very low level during the year. - 29 -

1.8 The economy of Guyana had a very difficult time in 1981. Although the Government embarked on a structural adjustment program and reentered briefly into an EFF agreement with the IMF, the economy performed very poorly, with GDP falling by about 1 percent as output and exports of the key productive sectors--bauxite, sugar, and rice--remained far below expectations. The poor production performance contributed to a severe deterioration of public finances and the balance of payments. A further increase in the Central Government's current account deficit to nearly G$200 million, and large losses by the national bauxite and sugar companies, caused an overall public sector current account deficit of some 13 percent of GDP. Sharp declines in the volume of bauxite exports, and in international sugar prices, were the main causes for the widening of the current account deficit of the balance of payments to nearly US$200 million, or more than 30 percent of GDP. The deterioration in the balance of payments caused a further loss of international reserves which have now reached precariously low levels. The foreign exchange crisis has intensified during 1982, leading to severe shortage of consumer goods of imported inputs required to maintain production, and to increasing debt servicing problems. The Government is now preparing an economic program aimed at coping with these serious problems.

1.9 Haiti has suffered since the end of 1980 the most serious economic crisis in the last twenty years. Caused initially by a weather related downturn in agriculture, its main productive sector, the financial imbalance worsened due to a rise in fiscal non-budgeted expenditures funded by Central Bank money creation and to a significant drop in revenue. The immediate effect was felt on the already scarce official foreign exchange reserves, seriously dwindled by a significant shortfall in exports. The private sector loss of confidence which ensued aggravated the balance of payments situation as capital flight continued during 1981. Lack of counterpart funds on top of an apparent slowdown in foreign assistance (both grants and loans), culminated a process started in 1978 of a continuous reduction in the nominal and real rate of public investment. Consequently, public investment could not counteract the general trend of the economy.

1.10 Jamaica experienced a modest 1 percent real economic growth for the first time in seven years. A higher growth rate was precluded by the soft international demand in the crucial bauxite and alumina sector, and by the 1980 hurricane damage to export agriculture. The current budgetary deficit showed a significant improvement, falling from 8 percent to 4 percent of GDP, while inflation dropped from 30 percent in 1980 to 6 percent in 1981. It seems evident that the Jamaican economy is slowly and steadily improving, but that the process will take some time before the recovery is complete.

1.11 The economy of Montserrat, the smallest of the Caribbean Group countries, slowed down slightly to 4.6 percent as the construction boom connected with the medical college came to an end. The economic growth in 1981 resulted from increased activity in industry and tourism and from a high level of public investment. Aided by significant improvement in revenue collection, the public finances improved dramatically. - 30 -

1.12 St. Lucia was troubled once again by politicalinstability. In spite of this, however, the country managed to show a positive (3.2 percent) rate of growth,aidedin particular by the rapid recovery of bananas from the hurricanedamage of 1980. Tourism remained strong, although slightly off from 1980, and continues to benefit from being significantlycheaper than St. Lucia's near neighbor, Barbados. Manufacturingincreased by about 5 percent, led by garments and by boxes for bananas. The fiscal situation is currentlya cause for concern; there was a 60 percent increase in the wage of daily workers and productivityin the public sector was significantlyaffected by the political situation. The current account of the public sector went from a surplus of 4.9 percent of GDP in 1980 to a deficit of 0.3 percent in 1981.

1.13 St. Kitts-Nevishad a disappointingyear. GDP did not increase. Tourism improved slightly,and sugar exports and sugar prices were both down. The US recessiondampened export demand for manufactures, particularlygarments and shoes. As a result, growth in the manufacturing sector slowed to about 5 percent. Although some limited effortswere made in the area of public finances,performance, in general, was weak and was exacerbatedby a large wage hike for public employees and a drop in tax revenues from sugar. On the island of Nevis, cotton production increased significantlyin 1981.

1.14 After two years of stagnation caused by natural disaster, the economy of St. Vincent and the Grenadines recovered rapidly in 1981, the estimated increase in GDP being close to 9 percent. Both agriculture-- where bananas increasedby 60 percent--andindustry--where the continued efforts of the DevelopmentCorporation resulted in a sectoral growth of 18 percent, and in another 1,000 jobs being created, primarily in the textile industry (roughly a 3 percent addition to employment)--contributed to this performance. Tourism was off slightly in 1981, both in terms of arrivals as well as earnings. Public finances weakened in 1981 as a 30 percent wage increase was granted by Governmentwhile the UK budgetary assistance for disaster relief ceased. Thus, despite a good performancein raising new revenue, the Government'scurrent account swung from small surpluses in 1979 and 198U to a deficit of 3 percent of GDP in 1981. The current account deficit on the balance of payments,having been 15 percent of GDP in 1979 and 1980, returned to the 1976-78average of 8 percent in 1981.

1.15 Surinamecontinues to experience economic stagnation. Output of bauxite, alumina and aluminum fell sharply, mainly as a result of weak internationaldemand, while the general economic uncertaintywhich followed the military takeover in early 1980 continued. As a consequence,the overall level of GDP remained unchanged even though public expenditure increased sharply during 1981, and agriculture,especially rice, shrimp, and palm oil,also improved. The decline in demand for the bauxite sector caused a drop in export earnings equivalent to 4 percent GDP, while the deficit on current account of the balance of payments widened from 6 to 10 percent of GDP. Public sector finances deterioratedsharply in 1981 as bauxite sector taxes declined from 8 percent to 7 percent of GDP, while current expendituresrose from 26 to 29 percent of GDP, reflectingin part - 31 -

a significantincrease in military expenditures. Public investment, reflecting a sharp increase in expenditureon social infrastructure,rose significantlyin 1981 as did the recourse by the Government to financingby the Central Bank.

1.16 The economy of Trinidad and Tobago showed signs in 1981 that the oil boom of the 1970s may well be coming to an end. Output in the petroleum sector fell by almost 12 percent while export prices were markedly moderated. Agriculturecontinued to perform poorly, registering its fifth consecutiveyear of decline in real value added, while manufacturingdid not show the dynamism that has characterizedthis sector in recent years. The growth of the economy was concentratedin the constructionsector, where a boom in both public and private building continues unabated,and in the utilities sector where urgent efforts are being made to ease continuingshortages of electricityand water. A realizationthat oil revenues may not be particularlybouyant in the next few years and the observationthat the economy is having difficulty absorbing and completingthe public sector investmentsof recent years has led the new administrationto stop the initiation of new projects and to institute a centralizedmanagement of expenditure includinga resumption of national planning which was abandoned in 1974. - 32 -

ATTACHMENT 2

STATISTICAL APPENDIX

4 Table 2.1: CARIBBEAN - GROWTH OF GDP (%)

(Constant Prices)

Estimate 1977 1978 1979 1980 1981

Antigua n.a. 7.9 8.3 6.2 3.8 Bahamas 3.4 8.0 8.0 4.0 -2.0 Barbados 3.3 4.1 9.0 6.0 -2.7 Belize n.a. 7.9 1.4 3.1 1.0 Dominica 3.4 9.1 -9.1 -9.0 8.0

Grenada 5.8 5.3 2.1 3.0 2.6 Guyana 3.0 -2.6 -1.4 1.8 -0.5 Jamaica -1.9 -0.3 -1.4 -5.4 1.3 Montserrat -4.5 6.1 11.9 7.0 3.4 St. Lucia 5.8 13.5 4.4 -4.5 3.1

St. Kitts-Nevis 0.0 5.9 5.1 3.3 0.0 St. Vincent 3.5 14.7 -0.6 1.1 9.0 Suriname 14.2 13.2 -2.8 -2.0 0.0 Trinidad & Tobago 7.8 7.9 5.3 7.3 6.0

Dominican Republic 5.0 2.2 4.8 5.4 3.4 Haiti 1.9 4.7 3.6 5.4 -2.1 - 34 -

Table 2.2: CARIBBEAN - PUBLIC SECTOR SAVINGS a/

($US millions)

Estimate 1977 1978 1979 1980 1981

Antigua -0.9 +2.0 2.5 7.3 3.0 Bahamas 23.1 40.4 61.8 92.0 81.0 Barbados 2.4 20.6 19.1 22.9 3.0 Belize 1.1 4.5 5.6 4.4 1.2 Dominica -1.6 -2.2 -4.7 -7.2 -4.1

Grenada 2.7 1.6 5.9 3.2 -0.7 Guyana -12.2 21.2 25.9 -14.6 -78.2 Jamaica -98.5 -214.0 -110.6 Montserrat -0.4 -0.6 -0.3 0.1 0.5 St. Lucia 3.3 4.5 4.1 5.6 -0.4

St. Kitts-Nevis 2.7 1.4 3.3 4.8 -3.7 St. Vincent 0.1 -1.9 -0.0 -1.0 -1.1 Suriname -26.8 13.0 4.4 11.9 -28.0 Trinidad & Tobago 699.6 590.9 606.2 1,346.2 1,189.2

Dominican Republic 130.8 58.7 149.2 Haiti 31.9 47.6 43.1 11.3 -9.8

As % of GDP

Antigua -1.5 2.9 2.9 4.0 2.4 Bahamas 3.9 6.0 7.7 9.9 8.1 Barbados 0.5 3.7 2.8 2.8 0.3 Belize 1.0 3.7 3.9 2.7 0.7 Dominica -4.5 -5.1 -10.5 -14.5 -6.9

Grenada 5.4 2.6 8.1 3.7 0.7 Guyana -2.8 4.3 5.0 2.7 -12.7 Jamaica Montserrat -4.5 -6.1 -2.3 1.0 2.9 St. Lucia 4.7 5.2 4.1 4.9 -0.3

St. Kitts-Nevis 9.3 4.1 8.4 10.0 -7.2 St. Vincent 0.2 -5.1 -0.1 -2.0 -1.7 Suriname -3.6 1.5 0.5 1.2 -2.6 Trinidad & Tobago 22.0 16.1 13.0 21.0 16.8

Dominican Republic 6.1 2.8 1.1 2.2 Haiti 3.1 4.6 3.7 0.8 -0.6

a/ Data are uniform for a given country but are not completely comparable across countries due to differences in scope (some data are for central government only) and timing of fiscal year. - 35 -

Table 2.3: CARIBBEAN - BALANCE OF PAYMENTS ON CURRENT ACCOUNT

($US million)

Estimate 1977 1978 1979 1980 1981

Antigua -9.6 -2.2 -23.3 -39.6 -56.1 Bahamas 59.6 33.3 4.7 -24.0 -67.0 Barbados -27.3 -7.5 -25.2 -13.5 -93.7 Belize -19.2 -15.8 -29.5 -12.9 -22.0 Dominica -5.5 -6.2 -14.1 -33.9 -21.7

Grenada 5.3 -4.4 -15.1 -15.1 -21.6 Guyana -98.8 -28.9 -81.9 -101.2 -198.4 Jamaica -47.0 -90.0 -143.0 -209.0 -410.0 Montserrat 1.1 -0.9 -2.6 -5.9 -6.3 St. Lucia -11.4 -23.5 -27.9 -33.3 -51.6

St. Kitts-Nevis -1.2 -0.6 -3.2 -10.4 -11.5 St. Vincent -6.4 0.0 -7.3 -9.4 -7.0 Suriname -81.1 -46.0 -37.0 -58.2 -110.0 Trinidad & Tobago 229.8 52.9 70.5 419.7 532.9

Dominican Republic -264.5 -319.7 -341.1 -720.0 -370.0 Haiti -38.6 -25.4 -60.7 -68.9 -115.0

As % of CDP

Antigua -15.9 -3.2 -27.5 -37.1 -44.7 Bahamas 10.1 4.9 0.6 -2.6 -6.7 Barbados -5.6 -1.4 -3.8 -1.7 -10.4 Belize -18.2 -12.9 -20.8 -7.9 -12.2 Dominica -15.4 -14.5 -31.5 -68.2 -36.7

Grenada +10.7 -7.2 -20.7 -17.6 -21.7 Guyana -22.4 -5.8 -15.8 -17.1 -32.1 Jamaica -7.9 -13.8 Montserrat 13.5 -9.9 -23.5 -40.4 -38.2 St. Lucia -16.3 -27.2 -27.6 -29.2 -39.5

St. Kitts-Nevis -4.1 -1.8 -8.1 -21.8 -22.2 St. Vincent -21.5 -0.0 -17.4 -18.5 -11.2 Suriname -11.0 -5.3 -4.0 -5.9 -10.2 Trinidad & Tobago 1.3 1.5 6.5 7.6

Dominican Republic -5.8 -6.8 -6.2 Haiti -3.8 -2.5 -5.2 -4.8 -7.2 - 36 -

Table 2.4: CARIBBEAN - TOURISM

(Millions of US$)

Estimate 1977 1978 1979 1980 1981

Antigua 24.7 29.4 38.7 42.5 46.4 Bahamas 380.6 457.0 522.0 596.0 488.0 Barbados 130.5 162.2 208.0 251.0 262.0 Belize 7.4 8.6 8.9 8.6 8.9 Dominica 3.0 3.8 3.2 3.8 4.2

Grenada 11.6 14.3 15.3 15.3 14.1 Guyana - - - - - Jamaica 105.6 146.8 195.4 242.0 262.0 Montserrat 2.8 3.0 3.7 4.3 5.4 St. Lucia 17.8 27.7 33.4 39.1 35.0

St. Kitts-Nevis 1.3 3.1 5.7 8.4 St. Vincent 5.9 11.1 18.2 24.0 23.4 Suriname - - - - - Trinidad & Tobago 86.0 109.2 124.3 n.a. n.a.

Dominican Republic 84.2 87.9 115.9 133.3 n.a. Haiti 36.7 42.0 60.6 63.6 57.2

(-) Not available

Sources: IBRD Economic Memoranda and Central Bank Information. - 37 -

Table 2.5: CARIBBEAN - TOURISM a/

('000 of visitors)

Estimate 1977 1978 1979 1980 1981

Antigua 104.1 128.8 169.8 205.0 208.1 Bahamas 1,381.4 1,706.9 1,789.0 1,900.0 1,670.0 Barbados 372.4 442.9 481.0 526.4 495.0 Belize 55.1 60.6 61.7 65.0 b/ n.a. Dominica 31.0 35.6 28.1 24.8 25.8

Grenada 115.2 125.4 143.2 145.9 97.8 Guyana n.a. n.a. n.a. n.a. n.a. Jamaica 386.5 532.9 593.6 543.0 586.4 Montserrat 12.7 15.4 16.9 20.5 20.1 St. Lucia 149.0 158.5 153.3 152.0 130.0

St.Kitts-Nevis n.a. 29.7 36.0 38.5 45.5 St. Vincent 32.3 48.8 56.2 78.0 71.2 Suriname n.a. n.a. n.a. n.a. n.a. Trinidad & Tobago 337.6 334.0 324.5 279.8 n.a.

Dominican Republic n.a. n.a. n.a. n.a. n.a. Haiti 291.1 301.8 303.0 306.1 314.1

a/ These data correspond to total arrivals including cruise ship passengers. b/ Estimate

Sources: IBRD Economic Memoranda and Central Bank Information. - 38 -

Table 2.6: CARIBBEAN - VOLUMEOF BANANAEXPORTS

('000 Tons)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados - - - - - Belize 10.4 9.9 16.0 15.0 10.5 Dominica 30.4 37.0 16.0 7.6 27.0

Grenada 14.0 14.2 14.2 12.5 11.7 Guyana - - - - - Jamaica 74.9 72.7 63.9 30.7 23.1 Montserrat - - - - - St. Lucia 41.4 47.8 48.2 32.8 37.2

St. Kitts-Nevis - - - - - St. Vincent 28.8 33.8 24.6 20.7 33.6 Suriname 27.3 29.0 27.3 n.a. n.a. Trinidad & Tobago - - - - -

Dominican Republic - - - - - Haiti - - - -

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 39 -

Table 2.7: CARIBBEAN - VALUE OF BANANAEXPORTS

(Millions of US$)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas Barbados - - - - - Belize 1.5 1.7 3.4 3.5 3.7 Dominica 6.9 9.2 4.4 2.8 8.4

Grenada 3.2 3.4 3.9 4.1 4.2 Guyana - - - - - Jamaica 13.9 17.3 18.2 10.5 8.1 Montserrat St. Lucia 9.5 12.1 13.5 10.5 14.9

St. Kitts-Nevis - - - - - St. Vincent 5.6 7.4 5.9 6.3 9.5 Suriname 3.4 3.9 4.1 5.9 n.a. Trinidad & Tobago - - - -

Dominican Republic Haiti - - - - -

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 40 -

Table 2.8: CARIBBEAN - VALUE OF BAUXITE EXPORTS a/

(US$ million)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados - - - Belize - - - - - Dominica - - - - -

Grenada - - - - - Guyana 99.1 98.4 107.3 144.2 119.4 Jamaica 205.3 234.0 213.5 197.5 171.5 Montserrat - - - - - St. Lucia - - - - -

St. Kitts-Nevis - - - - - St. Vincent - - - - - Suriname 65.6 72.1 65.6 73.6 63.5 Trinidad & Tobago - - - -

Dominican Republic 22.0 23.1 20.9 18.5 (n.a.) Haiti 17.3 17.2 18.1 19.6 15.5

a/ Includes calcined bauxite

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 41 -

Table 2.9: CARIBBEAN - VOLUME OF BAUXITE EXPORTS a/

('000 Tons)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados - - - - - Belize - - - - -

Dominica - - - --

Grenada - - - - - Guyana b/ 1,575.0 1,577.0 1,553.0 1,588.0 1,483.0 Jamaica 6,400.0 6,400.0 6,400.0 6,100.0 5,360.0 Montserrat - - - - - St. Lucia - - - - -

St. Kitts-Nevis - - - - - St. Vincent - - - - - Suriname 2,172.0 2,241.0 1,737.0 1,775.0 1,225.0 Trinidad & Tobago - - - - -

Dominican Republic 774.1 756.7 634.7 605.8 n.a. Haiti 701.0 629.5 613.0 579.0 480.0

a/ Includes calcined bauxite b/ Long tons. (-) Not applicable. Sources: IBRD Economic Memoranda and Central Bank Information. - 42 -

Table 2.10: CARIBBEAN - VALUE OF ALUMINA EXPORTS

(Millions of US$)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados - - - - - Belize - - - - - Dominica - - - -

Grenada - - - - - Guyana 30.8 31.9 21.1 43.7 32.8 Jamaica 323.2 348.3 368.2 534.7 589.8 Montserrat - - - - - St. Lucia - -

St. Kitts-Nevis - - - - St. Vincent - - - - - Suriname 151.9 175.9 200.7 279.4 263.2 Trinidad & Tobago - - - - -

DominicanRepublic Haiti

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 43 -

Table 2.11: CARIBBEAN - VOLUME OF ALUMINA EXPORTS

('000 Tons)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados - - - - - Belize - - - - - Dominica - - - - -

Grenada - - - - - Guyana a/ 263.0 248.0 145.0 226.0 150.0 Jamaica 2,000.0 2,100.0 2,100.0 2,360.0 2,540.0 Montserrat - - - - - St. Lucia - - - - -

St. Kitts-Nevis - - - - - St. Vincent - - - - - Suriname 1,059.0 1,124.0 1,184.0 1,329.0 1,164.0 Trinidad & Tobago - - - - -

Dominican Republic - - - - - Haiti - - -

a/ Long tons.

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 44 -

Table 2.12: CARIBBEAN - VALUE OF SUGAR EXPORTS

(Millions of US$)

Estimate 1977 1978 1979 1980 1981

Antigua - - - - - Bahamas - - - - - Barbados 23.5 23.5 29.0 54.1 31.2 Belize 23.9 32.9 31.1 47.7 39.4 Dominica - - - - -

Grenada - - - - - Guyana 72.8 92.0 90.4 120.8 106.3 Jamaica 63.4 59.5 56.9 54.5 35.2 Montserrat - - - - - St. Lucia - - - - -

St. Kitts-Nevis 9.4 11.9 11.5 14.3 12.0 St. Vincent - - - - - Suriname - - - - - Trinidad & Tobago 40.4 33.7 35.9 27.9 26.9

Dominican Republic 218.6 172.0 190.9 290.2 438.0 Haiti 0.0 2.3 0.0 6.4 0.0

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information. - 45 -

Table 2.13: CARIBBEAN - VOLUME OF SUGAR EXPORTS

('000 Long Tons)

Estimate 1977 1978 1979 1980 1981

Antigua Bahamas - - - - - Barbados 99.5 77.8 83.0 113.0 72.0 Belize n.a. n.a. n.a. 94.0 88.5 Dominica - -

Grenada - - - - - Guyana 207.7 280.4 264.0 248.1 264.5 Jamaica 213.2 199.2 190.7 132.0 112.0 Montserrat - - - - - St. Lucia - - - - -

St. Kitts-Nevis 36.3 36.8 31.5 28.9 St. Vincent - - - - - Suriname - - - - - Trinidad and Tobago 126.4 100.5 90.8 62.7 65.7

Dominican Republic a/ 1,098.7 904.7 992.4 802.0 941.0 Haiti a/ 0.0 5.3 0.0 19.2 0.0

a/ Metric tons.

(-) Not applicable

Sources: IBRD Economic Memoranda and Central Bank Information - 46 -

Table 2.14: Caribbean Trade: Exports

I. Amounts (US$ million)

1967 1978 CARICOM Outside Total CARICOM Outside Total

Jamaica 5 189 194 47 731 778 Trinidad 22 361 383 143 1900 2043 Guyana 13 86 99 45 249 294 Barbados 3 33 36 39 91 130 LDC's 4 34 38 24 80 204 Total 47 703 750 298 3151 3449

II. Shares (%?

Share in CARICOM Regional Trade CARICOM Share in Total Exports 1967 1973 1967 1978

Jamaica 10.6 15.8 2.6 6.0 Trinidad 46.8 48.0 5.7 7.0 Guyana 27.7 15.1 13.1 15.3 Barbados 6.4 13.1 8.3 30.0 LDC's 8.5 8.1 10.5 11.8 Total 100.0 100.0 6.3 8.6 - 47 -

Table 2.15: Caribbean Trade: Imports

I. Amounts (US$ million)

1967 1978 CARICOM Outside Total CARICOM Outside Total

Jamaica 5 299 304 52 856 908 Trinidad 8 355 363 69 1911 1980 Guyana 13 98 111 81 198 279 Barbados 6 59 66 46 268 314 LDC's 15 81 96 50 388 438 Total 47 892 939 298 3621 3919

II. Shares (%)

Share in CARICCM Regional Trade CARICOM Share in Total Exports 1967 1978 1967 1978

Jamaica 9.9 17.4 1.5 5.7 Trinidad 17.1 23.3 2.2 3.5 Guyana 27.4 27.1 . 11.6 28.9 Barbados 14.1 15.3 10.0 14.5 LDC's 31.5 16.9 15.4 11.5 Total 100.0 100.0 5.0 7.6

Source: Ranis, op. cit. - 48 -

ATTACHMENT 3

INTERNATIONAL TRADE COMMISSION

EXPORT PROMOTION PROGRAM - 49 - Attachment 3

International Trade Commission

Export Promotion Program

3.1 Implementation of the program on export development presented by the International Trade Commission (ITC) at the previous Caribbean Group meetings has continued during the year under review.

(a) The study on export supply for CARICOM member countries started in early 1982 with CDB as the regional counterpart organization. The main objective of the exercise is the identification of readily exportable supply, as well as support to export-oriented investments and joint ventures with foreign partners.

(b) The CARICOM Trade Information Service based at the Secretariat headquarters in Georgetown completed its first year of operation. UNDP has confirmed its continuous financial support for 1982-83. However, additional funds, as referred to at the Caribbean Group meeting in June 1981, will still be required to make the project fully operational.

(c) A detailed analysis of training needs and the existing infrastructure for manpower development in the Caribbean English-speaking countries was completed in 1981. A comprehensive project aimed at developing and strengthening permanent training facilities in export promotion in the sub-region has been formulated by ITC. Financial resources for approximately US$1,400,000 over a period of four years will be required to implement this project. Specific training material in the form of case-studies tailor-made to the characteristics of the sub-region were produced and are now being utilized by national educational institutions.

(d) Productwise, activities in Caribbean English-speaking countries covered the area of:

- A major wood products exhibition in Trinidad and Tobago;

- Spice and oleoresins, as a follow-up to the general study on spices that was completed in 1980;

- Based upon the initial studies covering the mariculture sector, CDB has agreed to finance a pilot plan;

- A study on fashion garments aimed at identifying new market possibilities was carried-out in European resort areas. - 50 -

(e) A new dimension in ITC's technical cooperation has been the initiation of collaboration with private sector organizations, mainly Chambers of Commerce and in particular the Caribbean Association of Industries and Commerce (C.A.I.C.).

(f) Another new aspect of ITC's work is constituted by the cooperation in import operation and techniques with particular emphasis on the needs in this field of the members of the organization of East Caribbean States.

3.2 Activities at country level for non-CARICOM member countries included: support to export development aimed at expanding the production basis in Haiti and the Dominican Republic. Initial discussions have also started with the authorities of Suriname, where a major programming mission is foreseen for mid-1982.

3.3 While the export promotion programme has been received with particular interest by the Caribbean Group countries, it should be underlined that it has not been possible to secure all the financial resources necessary for its full implementation.