Domination of Caribbean economies by favoured business groups a key problem
Domination of Carib-bean economies by favoured business groups is among several factors which hinder the economic performance of the region, according to a report released by the Inter-American Development Bank (IDB) which says that the integration strategy currently being pursued is not working.
“Is the Caribbean problem one of sclerosis? It would appear to be so,” says the report titled ‘Is There a Caribbean Sclerosis? Stagnating Economic Growth in the Caribbean.’ “Euro sclerosis” was a term coined in the 1970s to describe stagnant integration, high unemployment, and slow job creation in Europe relative to the United States. Since then, the term has been used more generally to refer to overall economic stagnation.
The sclerosis hypothesis is that special interest groups devote their resources to unproductive rent-seeking to redistribute social wealth. By enlarging their slice of the pie (real GDP), these interest groups reduce the enlargement (economic growth) of the total pie, which in turn reduces total social gains. This happens by influencing policy.
“Small and politically stable societies like those in the Caribbean foster the development and institutionalisation of growth-retarding special interest groups, which are then better able to influence policy to redistribute resources in their favour,” the report says. It noted that large discretionary tax waivers, often used under the banner of industrial policy, …..To continue reading, login or subscribe now.