REGIONAL INTEGRATION DEFINITIONS

1. BILATERAL AGREEMENT

A trade agreement or treaty between two countries.

2. MULTILATERAL AGREEMENT

An agreement signed among numerous countries.

3. INFRASTRUCTURE

All support systems which are put in place to allow for the proper
running of society e.g. water, roads, electricity, buildings etc.

4. COMMON MARKET

One large market where goods and services are bought and sold by
member countries which have a common trading policy.

5. SINGLE MARKET

A situation where the market for goods and services of a number of

countries are seen as one.

6. SINGLE ECONOMY

A situation where the economies of different countries are seen as one

due to common policies which have been put in place by the various
governments

7. ECONOMIC INTERGRATION

The mutual adjustment of different economies to form a single

harmonious system..

8. INDEPENDENT STATE

A state which is not ruled by another.

9. UNDERDEVELOPED COUNTRY

A state which has not fully utilized its resources for the improvement of
its citizens and therefore growth is limited.

10. DEVELOPING COUNTRY

A country which has not yet reached the stage of economic growth to
stand on its own.

11. DEVELOPED COUNTRY

A country which has reached the stage of economic growth to stand on

its own.

12. TRADE LIBERALISATION

The removal of various limitations such as tariffs and other restrictions

which prevent trade.

13. GLOBALISATION

The penetration of trade, capital and technology throughout the world

14. MULTINATIONAL CORPORATION

This is a large company with various branches in many countries.

15. REGIONALISM

The organisation of regional economic and political integration groups,

leading to the development of a shared economic and or political zone.

16. TRADING BLOCS

Groups of individuals or countries which come together for the purpose

of trade/exchange of goods and services e.g. OPEC, CARICOM

17. FISCAL POLICY

That part of government policy which is concerned with raising

revenue through taxation etc.

18. MONETARY POLICY

A policy which regulates the flow of money in an economy e.g.

reducing interest rates to encourage borrowing

REGIONAL INTEGRATION
Major Challenges Facing Caribbean Region
Small size and small national market
This limits production because demand is also limited

Lack of diversification
Many countries produce the same goods. This floods the market causing a glut which drives
down the price of the good/service.

Unemployment and underemployment

With the relatively small job market many may be unemployed or if employed, may not be
working in a job for which they have been educated.

Low levels of productions and productivity

Most countries do not have the technology or equipment in order to produce goods and
services efficiently and in the quantities desired.

Differences in resource distribution

Resources are not evenly distributed and in some cases many countries have the same resources. This
can create problems especially when it comes to deciding where to set up industries

High levels of indebtedness

Since many Caribbean countries are poor, they have to borrow money needed to
develop the country. This money is often used to improve health facilities, education,
infrastructure etc. However, many of these loans have harsh terms and conditions attached to them.

High level and cost of imports

Since overall levels of production on the islands are low due to scarce resources, a large range of
products have to be imported. This means that a large portion of a countrys income is used to imports
items instead of going to develop the country. The exchange rate which fluctuates will also increase the
cost of goods coming from abroad.

Shortage of skilled workers

With limited educational/training facilities, individuals may not be able to get adequate training in areas
which could assist in the development of the nation. This can create a shortage of skill.

Inadequate technology
Some technology may be old and outdated because of lack of funds to purchase up-to-date ones. This
can have a great effect on productivity.

Low value of exports

A lot of products exported from the Caribbean are exported in their raw state or first stage of processing
e.g. cotton, sugar & bauxite. These products are then further refined in developed countries and are
then often sold back to the Caribbean at much higher prices.

Difficulties in accessing markets of developed countries

Many development countries have placed a lot of requirements on countries wishing to export items to
them e.g. goods must be extensively labeled showing all ingredients, nutritional content etc. Most of
these requirements cannot be met by small businesses. In some cases the quantities requested by the
large countries cannot be accommodated by the small firms.

Shortage of capital
Investment is scarce in many Caribbean countries and this reduces the level of development of many
businesses.

Vulnerability to natural disasters

The region is prone to disasters such as hurricanes, earthquakes, volcanoes and floods. When these
events occur, it can take a number of years before recovery is made. E.g. in 2005, Hurricane Ivan
destroyed Grenada which still has not totally recovered.

REGIONAL INTEGRATION
Factors That Promote Regional Integration
Common Cultural heritage
Most Caribbean countries are of African descent. This common background has
provided us with a common culture which the majority of citizens can related to. Even
though other cultures have been introduced to the region, the basic culture has
helped to unify the Caribbean. Most of the countries also share the common
language (English) as their first/second language which facilitates communication.
Common Economic and Social issues
These include:
Lack of finances
High unemployment
Crime
Lack of services e.g. health and educational facilities,
With these common issues, there is the need to come together to find common
solutions by pooling resources.
Effects of globalisation, trade liberalisation and trading blocs
The world is slowly being viewed as one when it comes to trade and barriers to trade
are being removed. This opens up the Caribbean to unwanted competition from other
low cost locations. In order to compete, the region would have to integrate so that it
would be seen as a large bargaining unit when dealing with other trading partners
such as the EU
Vulnerability to economic shocks and natural disasters
In our region, we are faced with common threats such has hurricanes, earthquakes
and volcanoes. In order to recover when such disasters occur, the region will have to
cooperate as one.

Close Proximity
The countries are located relatively close to each other by air /sea. This facilitates
trade and movement of people.

Factors That Hinder Regional Integration

Geography of the region
Since the countries are mainly separated by water, there has been the problems of
easy transport of goods.
Absence of common model or strategy for development
Each country has its own ways of achieving development and growth. E.g. some
countries try to focus on tourism, oil, agriculture etc. As a result, countries may only
be interested in policies that suit their specific country e.g. Trinidad may only be
interested in policies dealing with oil development.
Differences in stages of growth and development
Each country in the region is at a different level of its development. Barbados,
Trinidad and Jamaica are considered the more developed countries (MDCs). The
lesser developed ones may feel that they are always at a disadvantage when dealing
with these more developed ones. As a result, they may not be very interested in
integration.
Competition for location of industries
Many countries have the same natural resources and therefore there may be conflict
as to where to locate the industry which would best serve the region and be more
cost effective. This competition can led to envy and resentment among countries.
Conflict between territorial and regional demands and loyalties
Each countrys government wants to satisfy the needs of their citizens. This may be
counter to the desires of the region as a whole and may result in further conflict.
Absence of common currency
Except for the OECS, each country in the region has a different currency. This can
create problems since no country would want to lower its exchange rate in order to
create one regional currency. Some of the currencies in the Caribbean are not even
accepted in some other Caribbean countries.
Unequal distribution of resources
Some countries have more natural resources than others and may not want to share
the wealth they receive from them with others in the region. They may wish to use the
money to develop their own country instead of assisting others.
Lack of diversification in production

If countries are producing the same/similar products, then it restricts trading withinthe
region.
Influence of multinational corporations
Many large corporations enter the region and bargain with individual counties to gain
favours such as tax holidays and duty-fee concessions. This is counter to the
objectives of Caricom and the concept of regional integration. This creates further
tension among member countries.

Benefits of Regional Integration

Reduction in unemployment and underemployment
Wider market to access jobs
Improvement in the quality of life
Greater access to products and services
Free movement of goods, labour and capital
No barriers such as taxes, work permits problems,
Expansion of trade
Larger market, more revenue earned
Improvements in Education
Easier access to educational institutions and training
Increase cooperation among members states
Improved levels of international competitiveness
The region can compete better as a group rather than individual countries
Reduction in the inequality of wealth distribution
Wealth would be shared around instead of remaining in a few countries
Better response to the economic implications of globalisation and trade liberalisation

REGIONAL INTEGRATION
Role of Citizens in the Integration Process
o Entrepreneurship
If individuals start their own business this leads to greater employment, larger
markets and wider variety of goods and services
o Supporting regional producers
This keeps regional businesses open which leads to other benefits e.g. employment,
revenue for government, improved standard of living etc.
o Showing solidarity and mutual support towards regional fellow citizens
This reduces friction and leads to acceptance of different cultures, races etc. It will
then be easier to get persons to see the region as one instead of separates
countries. This is needed if policies are to be accepted and be successful.
o Investing in local & regional businesses
This provides a greater level of capital which is needed for successful operation
o Being informed
The more people know about regional integration the greater the likelihood of
acceptance of its policies.

Role of Business Organisation in the Integration Process

Improving competitiveness
Businesses should ensure that their goods and services are in a position to compete
with those from international countries. To do this they have to try to keep production
cost down
Increasing range and quality of goods and services

As more goods become available to citizens, the standard of living could improve
since person would now have access to products which were previously too
expensive or not available.
Providing opportunities for investment and employment
Encouraging individuals to be self employed along with the facilities to become
trained in areas of their business such as finance, marketing, human resource
management etc.
Encouraging established corporations to set up businesses or invest in local
businesses

Role of Government in the Integration Process

Enacting Legislation

This would allow for easier movement of labour and businesses would
have fewer problems entering other regional markets.
Honouring protocols

When member countries live up to the various policies this strengthens the bond between
countries and results in fewer problems in the long run.
Educating citizens about the

objectives and benefits of integration

If individuals are aware of the opportunities and benefits of integration then they would be
more willing to become a part of the process.
Harmonizing policies

When national rules/laws are in line with regional policies, it makes it much easier to
carry out the various policies across the region. This results in less friction between
countries.