International trade and comparative advantage in the Caribbean

Author(s): Lewis-Bynoe, Denny; Webster, Allan (2000)

Created 22 Jul, 2000
Categories Working Papers
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This paper provides an empirical analysis of patterns of export specialisation by, in particular, member countries of CARICOM and in the Caribbean more widely. It focuses on the identification of important similarities and dissimilarities in the pattern of comparative advantage and international trade amongst these countries. Empirical evidence is presented based on a consistent set of data foe trade in goods in 1994. Analysis is conducted mainly by means of indices of revealed comparative advantage and of export similarity and is conducted in several stages. Firstly, patterns of export specialisation are assessed for CARICOM countries and key similarities and dissimilarities are identified. Secondly, this analysis is extended to other Caribbean countries and other key similarities and dissimilarities between CARICOM and the rest of the Caribbean are identified. Finally, the degree of similarity between CARICOM exports and those of other regions of the world is analysed. The paper finds that there is a high degree of diversity in comparative advantage and export specialisation between different countries in CARICOM and between CARICOM and the rest of the Caribbean. Whilst this diversity means that neither the CARICOM nor the Caribbean is a homogeneous entity in terms of international trade there also remains sufficient similarities to suggest that there is indeed common ground between Caribbean countries. Conclusions are drawn about the prospects for welfare gains arising from regional integration in the Caribbean. In particular, the finding of diversity of common elements, which is suggestive of competitive force, provides grounds for some cautious optimism.

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