The Challenge of Diversification in the Caribbean

IMF Working Papers, November 1, 2002

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The Challenge of Diversification in the Caribbean

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Bibliographic details

• Authors: A. Salehizadeh, Peter Berezin, Elcior Santana
• Published: November 1, 2002
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451859973.001

Summary / Key findings

• It is typically assumed that countries in the Caribbean suffer from a lack of output and export diversification; contrary to this perception, the authors find no evidence that output variability is higher in Caribbean countries than in larger, more diversified, developing economies.
• The authors find no evidence that export earnings are more volatile in the Caribbean economies than elsewhere.
• Export earnings are described as "quite stable" in the Caribbean, reflecting the region’s uniqueness: most export earnings are generated from service exports, which tend to be considerably less volatile than goods exports.
• The Working Paper includes a disclaimer that it should not be reported as representing the views of the IMF; the views expressed are those of the author(s).

Analysis and implications highlighted by the paper

• Stability of export earnings in the Caribbean is attributed to the predominance of service exports over goods exports.
• The findings challenge the common perception that limited output and export diversification necessarily imply greater volatility in Caribbean economies.
• By demonstrating comparable output variability and export earnings volatility relative to larger developing economies, the paper implies that policy emphasis on diversification should account for the stabilizing role of services in the region.

Subjects and keywords

• Subjects: Agricultural commodities, Commodities, Consumption, Education, Export earnings, Income, International trade, National accounts
• Keywords: Agricultural commodities, Caribbean, Caribbean country, construction company, consumption, developing country, diversification, Export earnings, firms in core market, foreign direct investment, growth, Income, informatics firm, information processing company, information technology company, North America, physical capital, production diversification, rate of return, risk pooling, risk-sharing, telecommunications company, WP

IMF Working Paper — The Challenge of Diversification in the Caribbean (Working Paper No. 2002/196)

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• The Challenge of Diversification in the Caribbean - WP/02/196
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