{
  "title": "Regional Integration in a Globalizing World: Priorities for the Caribbean — Key note speech by Agustín Carstens, Deputy Managing Director, IMF",
  "publication": "IMF News, May 1, 2006",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp050106",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp050106",
  "overlayPath": "/en/news/articles/2015/09/28/04/53/sp050106/index.md",
  "summary": "At the Biennial International Conference on Business, Banking and Finance",
  "publishDate": "2006-05-01",
  "sections": [
    {
      "heading": "The Caribbean in perspective",
      "content": "- Strengths:\n  - Vibrant democracies, transparent institutions, pluralism, and entrenched respect for civil and economic liberties.\n  - Strong education and health indicators; poverty lower than many other parts of the world.\n  - Ability to seize emerging comparative advantages (example: tourism).\n- Challenges:\n  - Erosion of trading preferences with Europe leading to sustained decline in traditional agricultural export earnings.\n  - Large emigration of skilled labor; evidence cited that losses from emigration to OECD countries have outweighed the value of remittances received.\n  - Financial markets increasingly developed but largely used to finance public debt rather than high-growth sectors.\n- Key statistics:\n  - Ratio of broad money to GDP increased, on average in the region, from about 50 percent to about 80 percent in the decade to 2005.\n  - Average level of public debt to GDP rising above 90 percent in 2005, up from 70 percent in the mid 1990s.\n  - Region is home to seven of the world's ten most indebted emerging market countries (as of 2005)."
    },
    {
      "heading": "Integration: rationale and current state",
      "content": "- Observations:\n  - Regional integration has been a top agenda item for nearly half a century; action has not fully matched rhetoric.\n  - Launching of the Caribbean Single Market and Economy (CSME) initiative noted in the speech year.\n- Imperatives for integration:\n  - Reduction of trade barriers within the region and with the rest of the world.\n  - Convergence and coordination of economic policies.\n  - Steps to strengthen financial sector linkages.\n- Complementarity:\n  - Regional integration should complement, not substitute for, global integration to avoid trade diversion (imports from low-cost third countries replaced by higher-cost intra-regional sources)."
    },
    {
      "heading": "Integration as a way to improve competitiveness",
      "content": "- Potential benefits:\n  - Achieve economies of scale across islands for production not feasible individually.\n  - Facilitate politically challenging reforms via regional agreements.\n  - Realize gains from specialization along value-added chains (examples: mass vs boutique tourism; Jamaican Blue Mountain coffee).\n- Policy priorities:\n  - Relax rigid labor market laws to increase flexibility, reduce wage/productivity distortions, and enable greater labor mobility.\n  - Reassess education and migration policies to ensure social investment benefits the region.\n- Risks to manage:\n  - Trade diversion — must continue reducing external trade barriers."
    },
    {
      "heading": "Policy convergence and coordination",
      "content": "- Necessity:\n  - Convergence of macroeconomic policies is essential before considering full monetary union.\n  - Coordination needed on exchange rate, fiscal, and monetary policies to avoid undue cross-country impacts.\n- Specific policy areas requiring coordination:\n  - Tax concessions: widespread use of tax incentives and tax holidays has led to large revenue losses and questionable investment benefits; IMF studies indicate a \"race to the bottom\" where marginal effective tax rates come down to near zero or become negative.\n  - Harmonization of investor requirements and procedures — significant differences remain even within OECS (ECCU).\n  - Natural disaster risk mitigation: strengthen and enforce building codes and land zoning; incorporate contingencies into macroeconomic frameworks and budgets.\n  - Consideration of a regional risk pooling scheme (viability being studied by the World Bank).\n  - Collective provision of government services (example: trade negotiation expertise); potential for regional tax administration or regional financial oversight bodies."
    },
    {
      "heading": "Financial stability",
      "content": "- Recent trends:\n  - Increased regional financial integration over the last decade: interest rates across countries have converged; cross-listed companies account for nearly 60 percent of total market capitalization, up from zero a decade ago.\n  - Trinidad and Tobago has acted as a financial hub by channeling oil windfall savings to neighbors.\n  - Rapid growth of non-banking financial firms and securitization, particularly in Jamaica and Trinidad and Tobago.\n  - In some markets, funds managed by securities dealers and mutual funds exceed total bank deposits.\n  - In Jamaica, security dealers' core business is retail outlets for government debt.\n- Concerns and prerequisites:\n  - Financial deepening has not been fully tapped to finance private-sector growth; reducing fiscal imbalances and large debt burdens is a precondition.\n  - Uneven regulatory oversight, limited corporate governance, rapid growth of derivatives, and increasing cross-border flows heighten contagion risk.\n- Policy recommendations:\n  - Enhance supervision and strengthen regulatory coordination among country authorities; consider creation of a regional oversight body.\n  - Reduce remaining entry barriers and capital controls.\n  - Harmonize taxation, regulatory and supervisory frameworks and improve market infrastructure.\n  - Extend financial integration beyond the region to diversify risks and enlarge financing flexibility."
    },
    {
      "heading": "Role of the Fund",
      "content": "- Strategic shift:\n  - Increased regional dimension of Fund surveillance, expanding work beyond the ECCU to encompass the entire Caribbean.\n  - Regional surveillance to focus on systemic and cross-cutting issues that lie between bilateral and global multilateral surveillance.\n- Short-term focus areas (coming year):\n  - Tax concessions.\n  - Loss of trade preferences.\n  - Financial integration.\n- Support instruments and activities:\n  - Capacity-building and technical assistance.\n  - Provision of financial resources under various lending windows adapted to country circumstances.\n  - Relatively quick disbursing loans for natural disasters and adverse terms of trade shocks (such as loss of trade preferences).\n  - Emphasis on outreach and engagement with governments, business and labor leaders, and civil society."
    },
    {
      "heading": "Conclusions and policy priorities highlighted",
      "content": "- Integration—both regional and global—is essential for Caribbean prosperity; greater regional integration can complement global integration.\n- Immediate policy priorities include:\n  - Reduce fiscal imbalances and public debt to free financial resources for private sector growth.\n  - Coordinate tax policy to avoid a \"race to the bottom\" and harmonize investor requirements.\n  - Strengthen financial regulation, supervision, and regional oversight mechanisms.\n  - Reform labor market rigidities and reassess education/migration policies to retain and develop human capital.\n  - Improve disaster risk mitigation and explore regional risk pooling.\n- Timing:\n  - The speech emphasizes that \"the right time is now\" for the Caribbean to exploit globalization and regional integration to improve living standards.\n\nSource: Regional Integration in a Globalizing World: Priorities for the Caribbean, Key note speech by Agustín Carstens, Deputy Managing Director, IMF — May 1, 2006.\n\n---\n\n\n References\n\n- Jamaica and the IMF\n- Trinidad and Tobago and the IMF\n- Spain and the IMF\n- IMF Policy Advice -- A Factsheet\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp050106"
    }
  ],
  "bullets": [
    "[Markdown version](/en/news/articles/2015/09/28/04/53/sp050106/index.md)",
    "[Structured JSON version](/en/news/articles/2015/09/28/04/53/sp050106/index.json)",
    "[Bundle manifest](/en/news/articles/2015/09/28/04/53/sp050106/bundle-manifest.json)",
    "Published: May 1, 2006",
    "Strengths:",
    "Challenges:",
    "Key statistics:",
    "Observations:",
    "Imperatives for integration:",
    "Complementarity:",
    "Potential benefits:",
    "Policy priorities:",
    "Risks to manage:",
    "Necessity:",
    "Specific policy areas requiring coordination:",
    "Recent trends:",
    "Concerns and prerequisites:",
    "Policy recommendations:",
    "Strategic shift:",
    "Short-term focus areas (coming year):",
    "Support instruments and activities:",
    "Integration—both regional and global—is essential for Caribbean prosperity; greater regional integration can complement global integration.",
    "Immediate policy priorities include:",
    "Timing:",
    "[Jamaica and the IMF](http://www.imf.org/external/country/JAM/index.htm)",
    "[Trinidad and Tobago and the IMF](http://www.imf.org/external/country/TTO/index.htm)",
    "[Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
  "alternates": {
    "markdown": "/en/news/articles/2015/09/28/04/53/sp050106/index.md",
    "json": "/en/news/articles/2015/09/28/04/53/sp050106/index.json",
    "bundleManifest": "/en/news/articles/2015/09/28/04/53/sp050106/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-27T09:46:11.804Z"
}