Despite the title “the Caribbean,” this book deals nearly exclusively with the 12 independent English-speaking members of CARICOM and Suriname, representing 13 percent of the region’s population. The editors divide its 15 chapters and 31 authors (virtually all IMF researchers) into 9 “tourist-intensive” states: Antigua/Barbuda, The Bahamas, Barbados, Dominica, Grenada, Jamaica, St. Kitts/Nevis, St. Lucia, St. Vincent/Grenadines, and 4 “commodity exporters”: Belize, Guyana, Suriname, and Trinidad/Tobago. Only occasional reference is made to Central America, Panama, and the Dominican Republic.
As distinct from the IMF’s historical emphasis on crisis intervention, with its much-disliked recommendations for “structural reforms” of the belt-tightening type, this volume ventures into several new areas of urgent contemporary concern in the region. Under the general rubric of “structural impediments to growth,” these are convincingly discussed under five headings.
The first discussion is climate change and natural disasters (chap. 5). At a time when the President and his administration in the United States are characterizing the ill effects of climate change as a “hoax,” the authors in chapter 5 argue that the increasing frequency and intensity of natural disasters, such as hurricanes and earthquakes, represent serious challenges to small islands in particular. “Small” is defined as those with fewer than 1.5 million inhabitants. While the economic costs of natural disasters in large states tend to be, more or less, 1 percent of their GDP, in small states they are 30 percent. In addition, 60 percent of losses to disasters in large states tend to be covered by insurance; in small states it is a mere 20 percent (90). No patience with science doubters among IMF researchers.
A second major concern is the “pervasive and increasing” crime in the region (chap. 15). This chapter summarizes three studies of the Inter-American Development Bank in which the authors argue that violent crime is of “overarching” concern (334) in the region. The authors regard crime as an even greater threat to development and social well-being than poverty and increasing inequality. They calculate that crime now incurs an eye-popping cost of 4 percent of GDP per year. The one reservation with this otherwise excellent treatment of violent crime is that nowhere is the role of the drug trade and drug use analyzed. These small islands are no longer mere stepping stones on drug routes to bigger markets, they are themselves significant markets for a variety of drugs. (This author argued more than two decades ago that this dramatic consequence would invariably occur. See Anthony P. Maingot, “The Decentralization Imperative in Caribbean Criminal Enterprises,” in Transnational Criminal Enterprises in the Americas, ed. Tom Farer, 1998, 143–70.)
Not unrelated is the third major concern, the “surging” (123) numbers and ease of acquiring economic citizenship. Granted that the authors quite rightly attribute improvements in many a Caribbean island’s fiscal situation to the inflow of monies seeking new residences and citizenship, they are also keenly aware of the upsurge in vulnerabilities. They call the latter “integrity challenges” and cite money laundering, tax evasion, and criminal and even terrorist activities. It is not at all difficult to acquire a new (or another) citizenship in many a Caribbean island. Compare St. Lucia and Malta. Minimum investment required: Malta, €1.5 million, St. Lucia, US$100,000; residency requirement: Malta, 6 months, St. Lucia, none; qualifying waiting period: Malta, one year, St. Lucia, immediate receipt. The authors are absolutely correct in warning that the heated competition in the region for economic citizenship gains is engendering “a race to the bottom” (135, 146).
A fourth major concern is energy dependence on fossil fuels and the resulting cost of electricity. It is a major constraint to doing business in the region. Especially vulnerable are the tourist-based economies, which consume more energy than the commodity exporters. In Barbados, air conditioning alone represents 48 percent of the total electricity bill of hotels (301). While the authors point to low collection of user fees, the record indicates that the largest scofflaws are large state-run utilities and corporations. The point is that few countries can afford the kind of investments necessary to upgrade existing power plants, and few citizens are willing to forgo the use of even the most expensive electricity. The region is lax regarding renewables (wind and solar particularly).
The fifth area of concern is certainly not a new one for the IMF: the effects of emigration and the role of remittances in the development process. What appears to be new is the way the authors develop the issue in terms of opportunity costs. They begin by noting that while emigration (defined as brain drain) incurs, on average, a cost of 2 percent of the GDP of more developed countries and 5 percent for Latin American societies, it is 20 percent for the Caribbean (315). Emigration coming from the latter tends to be from the most educated and productive sectors. Conclusion: even as the remittances of their diasporas amount to 7 percent of the region’s general GDP and act as macroeconomic stabilizers through consumption and fiscal revenues, these cannot compensate for the loss from the brain drain.
This volume is evidence that the IMF is now casting its research and advisory net wider than its historical concern with remedial structural reforms. In so doing, it is providing a real service to those small countries that opt to follow its recommendations. That said, two related enquiries are necessary. First, why is Cuba (not a member) the only country given a separate chapter? This might be explained in that like so much of the rest of the volume, the Cuba case study deals exclusively with the tourist industry. Unfortunately, it is based exclusively on theoretical models measuring the potential impact of a hypothesized “unrestrictive travel to Cuba” (64) rather than standard geopolitical analysis. Given the vagaries of U.S. policy toward Cuba, the latter tends to hew closer to reality than such models do. That said, one cannot but wonder why the editors did not choose the case of the Dominican Republic, whose successful Bávaro-Punta Cana development exemplifies the kind of public–private sector collaboration called for repeatedly in the book.
In conclusion, it is impossible to miss the repeated calls for a “regional” approach to development. This is, of course, a wish of long standing in this area. Such a constructive step has never in the past, as it has not now, been achieved. It should say something that it has been 66 years since the dissolution of the West Indies Federation, and 25 years since the call for a Caribbean Single Market and Economy (CSME) has gone without enactment. One has to question why the IMF would not temper its advocacy for regionalism with the knowledge that thoughtful academics and policymakers in the region are demonstrating increasing skepticism that it can ever be achieved. (See the conclusions of the sobering Report of the Commission to Review Jamaica’s Relations Within the CARICOM and CARIFORUM Frameworks, Jamaican Ministry of Foreign Affairs, March 2017.) The IMF might want to start paying attention to their concerns.
