The Caribbean has been impacted by globalization in myriad ways (given 1999) posits that the effect has been deleterious both in the past and in the present day. Globalization and the need to ensure international competitiveness have come to catalyze the process of reform, forcing governments to overcome previously unpopular and politically suicidal reforms, operating against the entrenched inertia of the traditional public administration. The recent globalization process poses significant challenges to small developing economies such as those in the Caribbean. The reduction of trade barriers and the increasing openness of these economies have not led to a significant increase in intraregional trade or helped them to obtain a growing share of the extra regional export market; as a result, these countries’ growth potential has been limited.
Globalization has both fostered and brought to light a process of sectoral change in the composition of output in favour of the services sector and to the detriment of agriculture and manufacturing.
Reform-oriented Caribbean countries implemented fiscal policy reforms designed to reduce expenditures and increase revenues. At first, the decline in expenditure was mainly achieved through a decrease in capital investment, but it later took the form of a freeze on the wages of public employees, job cuts in the public sector and a reduction in government transfers to public enterprises, including public utilities. Economic reforms also included a tightening of monetary policies, mainly through decreases in public-sector credit, the abolition of controls on interest rates and the phasing out of interest-rate subsidies. Exchange-rate policies were also part of the announced reform programmes; they were generally liberalized de jure, and exchange controls were phased out. Other aspects of these economic reform programmes included policies designed to facilitate FDI. Trade reforms included tariff reductions and the elimination of...