5 - Economic Integration

Summary

Lewis said that Caribbean national markets were too small to support the level of import-substitution industrialization (ISI) that was needed for individual nations to realize high levels of employment and income (Lewis 1950, 39). Some economists at the University of the West Indies (UWI), who undertook a study on Caribbean economic integration, agreed and warned that national ISI offered a false promise of achieving full employment (Brewster and Thomas 1967, 66). Consequently, like Lewis and others, they recommended that Caribbean nations establish a regional trade bloc because it would help to overcome the limitations of small national markets. Lewis called for a customs union among Caribbean nations, but Brewster and Thomas argued that, within the context of the Caribbean, a customs union was an inadequate basis for integrating trade. They called for functional and sectoral integration, defined as trade integration and the integration and planning of certain economic activities, because production integration would bring the most dynamic gains to the region (ibid., 24).

Before the publication of Brewster and Thomas's study, three Caribbean Heads of Government, Premiers Vere Bird of Antigua, Errol Barrow of Barbados and Forbes Burnham of Guyana, had met at Dickenson Bay, Antigua, and had agreed to establish a Caribbean Free Trade Association (CARIFTA), an objective of which was to “fulfil within the shortest possible time the hopes and aspirations of their peoples and of the peoples of other Caribbean countries for full employment and improved living standards” (Agreement Establishing the Caribbean Free Trade Association, n.d.). However, they agreed to postpone its implementation in deference to a request that as many British Caribbean nations as possible should participate in the economic integration process. During the waiting period, a new agreement was drawn up on May 1, 1968, and its signatories were Antigua and Barbuda, Barbados, Guyana, and Trinidad and Tobago. Dominica, Grenada, St. Kitts-Nevis-Anguilla, St. Lucia, and St. Vincent and the Grenadines joined on July 1, 1968; Montserrat and Jamaica joined on August 1, 1968; and, Belize became a member in May 1971. The Bahamas, however, did not participate in CARIFTA.