Globalization and Saint Globalization and Saint Lucia Lucia Adapted from Kevin Stapleton (CDAE grad Adapted from Kevin Stapleton (CDAE grad student) student)
Dec 14, 2015
Globalization and Saint LuciaGlobalization and Saint Lucia
Adapted from Kevin Stapleton (CDAE grad student)Adapted from Kevin Stapleton (CDAE grad student)
Why would globalization be Why would globalization be good?good?• Economic growth means improved livelihoods and Economic growth means improved livelihoods and
reduces povertyreduces poverty
• Access to food and educationAccess to food and education• Access to technology- Diamond: remote poor access Access to technology- Diamond: remote poor access
to informationto information• Access to more thingsAccess to more things
• The more growth we have the better off we all areThe more growth we have the better off we all are
• It will trickle downIt will trickle down
Why would globalization be Why would globalization be bad?bad?
• Economies of scale – not diversified Economies of scale – not diversified (subject to outside forces)(subject to outside forces)
• National autonomy – tourismNational autonomy – tourism
• Ecological impactEcological impact
• Distribution Distribution
• An agreement between 12 lesser-An agreement between 12 lesser-developed countries in the developed countries in the Caribbean, Latin America and South Caribbean, Latin America and South AmericaAmerica
• The aim is to create a single The aim is to create a single economic space within which all economic space within which all factors of production will move freely factors of production will move freely and common economic policy will and common economic policy will applyapply
Caribbean Single Market Caribbean Single Market Economy (CSME) - 1996Economy (CSME) - 1996
St Lucia, St Kitts and Nevis, Suriname, Belize, St Lucia, St Kitts and Nevis, Suriname, Belize, Jamaica, Antigua and Barbuda, Montserrat, Jamaica, Antigua and Barbuda, Montserrat, Grenada, Dominica, St Vincent and Grenadines and Grenada, Dominica, St Vincent and Grenadines and Trinidad and TobagoTrinidad and Tobago
How do economies grow?How do economies grow?
• Capital (K)Capital (K)– LandLand– Natural resourcesNatural resources– Built environmentBuilt environment
• Technology (T)Technology (T)– Changes in productivityChanges in productivity
• Labor (L)Labor (L)– Size of the labor forceSize of the labor force– Skills of the labor forceSkills of the labor force
All changes in the real size of an economy are All changes in the real size of an economy are a resulta result
of one or more of these factors.of one or more of these factors.
Y = f (K,T,L)
Factor 1: CapitalFactor 1: Capital
•Gross Domestic Product (GDP)
•Components of GDP
•Limitations of GDP
“The total value of goods and services produced by a nation”
Ecological: “GNP counts special locks for our doors and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm, and missiles and nuclear warheads…” – Senator Robert Kennedy
Distribution: Is GDP/GNP an indicator of how well everyone is doing? -
Gross Domestic Product per capita (PPP)
0
2000
4000
6000
8000
10000
12000
14000
Saint K
itt
Antig
ua
Trinidad
& To
bago
Grena
da
Beliz
e
Surin
ame
Saint V
ince
nt
St Luc
ia
Dominica
Guyan
a
Jam
aica
GD
P (
PP
P, U
S$)
CSME Median: $6600 CSME Average: $7,726
Saint Lucia’s Per Capita GDP is just below the median among CSME nations, but well below the average.
GDP per capita annual growth rate (%), 1990-2004
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5
St Lucia
Antigua
Trinidad & Tobago
Saint Vincent
Saint Kitts
Belize
Dominica
Grenada
Guyana
Jamaica
St Lucia’s growth in the past 15 years has been well below the CSME average of 2.0%.
Dollar value contributions to per capita GDP
0 2000 4000 6000 8000 10000 12000 14000
Jamaica
Guyana
Dominica
St Lucia
Saint Vincent
Suriname
Belize
Grenada
Trinidad & Tobago
Antigua
Barbados
Service Agriculture Industry
Like most Caricom nations, St. Lucia is heavily dependent on the service sector.
“GNP counts special locks for our doors and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm, and missiles and nuclear warheads…”
-Senator Robert Kennedy
Factor 2: TechnologyFactor 2: Technology• ““Technology” encompasses any Technology” encompasses any
change that increases production change that increases production without adding capital or labor. without adding capital or labor. Anything that increases Anything that increases productivity is considered productivity is considered technology.technology.
• Perhaps the most important Perhaps the most important technological improvement in the technological improvement in the past 25 years is internet access.past 25 years is internet access.
• St Lucia has 336 internet users for St Lucia has 336 internet users for every 1,000 people. This is well every 1,000 people. This is well above the CSME average of 223. above the CSME average of 223.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Antig
ua
Barb
ados
Trinidad
& To
bago
Grena
da
Saint V
ince
nt
Beliz
e
Dominica
St Luc
ia
Components of the Labor Force
Services Agriculture Commercial/Industrial
Saint Lucia can benefit from its more diverse labor force. A study to find the percent of each labor force that is “skilled” according to CSME would be very beneficial.
Saint Lucia’s poverty rate is below average, while its unemployment is above average.
0
10
20
30
40
50
60
70P
erc
en
t
Poverty and Unemployment
Unemployment rate (% of labor force, 2002 or 2003) Poverty rate
76% of school-age children are currently enrolled in Saint Lucia, which is the average among CSME nations
Combined gross enrollment
0
10
20
30
40
50
60
70
80
90
100
% e
nro
lled
CSME average: 76
The importance of education: Correlating Education and GDP
Average years of education
Per capita GDP
12
Hypotheses for long-term Hypotheses for long-term goals:goals:• The short-term impact of the CSME on the St. The short-term impact of the CSME on the St.
Lucian economy will be negative as skilled Lucian economy will be negative as skilled labor moves to higher wage areas.labor moves to higher wage areas.
• The long-term impact of CSME on the St The long-term impact of CSME on the St Lucian economy will be positive, primarily Lucian economy will be positive, primarily because of increased trade, economies of because of increased trade, economies of scale and access to skilled labor.scale and access to skilled labor.
• While the long term benefit will be positive, it While the long term benefit will be positive, it could have negative impacts on distribution could have negative impacts on distribution and the environment.and the environment.
What do you think about What do you think about globalization?globalization?
• Incorporate values of ecosystem Incorporate values of ecosystem servicesservices
• Better distribution Better distribution
• Can we have more economic growth Can we have more economic growth and incorporate ecological sustainability and incorporate ecological sustainability and social equality? and social equality?
QuestionsQuestions• Limitations of using GDP/GNP as indicator Limitations of using GDP/GNP as indicator
of overall human well-beingof overall human well-being
• Briefly describe the 2 components of Briefly describe the 2 components of Caribbean Single Market Economy (CSME)Caribbean Single Market Economy (CSME)
• 3 Factors that predict economic growth3 Factors that predict economic growth
• Predicted short-term and long-term Predicted short-term and long-term impacts of CSME & St. Lucia’s economyimpacts of CSME & St. Lucia’s economy