Characteristics of Caribbean Economies in St. Vincent and the Grenadines
A Caribbean economy is an economy that has the specific benefits and certain disadvantages, such as economies of scale, which are unique to Caribbean countries. St. Vincent and the Grenadines has the characteristic of a Caribbean economy. Small economies including St. Vincent and the Grenadines are all faced with common constraints to better economic performance. These constraints include (i) geography (ii) small size of the domestic market (iii) high level of imports and (iv) high transport costs, other favorable characteristics include: (i) quantities of natural resources (ii) openness (iii) worker’s remittances. It is the first four (4) characteristics, which combine to make most small economies, like St. Vincent, vulnerable.
Geography is often identified as one factor explaining economic performance. Dimensions of this factor include climate, location in relation to surrounding countries, distance from the equator (Krugman, 1998), strategic or locational importance, whether land-locked or littoral or the presence of large inland waterways. Some countries may lie along a fault line or in the case of St. Vincent, in a hurricane zone. These unique geographical features of small countries will possess particular advantages or disadvantages.
Most Caribbean countries are small by conventional standards. As such they all face the common constraints of size including vulnerability to external shocks and natural disasters. One would expect that economic performance would be correlated with vulnerability. That is, the more vulnerable a country to external factors the worse that country is likely to perform. Vulnerability is defined as the degree of exposure to external economic forces and environmental hazards (Commonwealth Secretariat/World Bank, 1999). In St. Vincent and the Grenadines, in 2011, two natural disasters struck the island in addition to the impacts of the global slowdown and...