Over the years, there has been significant controversy on whether globalization should be viewed as an advantage to the Caribbean, or perceived with aggression, as it has the ability to increase inequality amongst nations. It has had a significant impact on the countries’ economies throughout the years, and it continues to because of the rapid pace of technological advancements in today’s world.
Evidence demonstrates that the economic growth has been declining in the Caribbean over the past 10 years by 2% annually, leaving some countries with negative growth (Hassan, 2007). For instance, Trinidad and Tobago, like any other developing nation, has not gained the maximum benefit of globalization but instead, has been experiencing …show more content…
The first benefit of globalization is trade liberalization. According to Stimpson & Singh (2008), “Trade Liberalization is the process of achieving freer international trade with fewer and fewer restrictions” (p. 70). It can result in additional access to capital flows, technology plus human capital, cheaper imports and greater export markets (International Monetary Fund, 2002). Providing a virtual market for oversea firms allows consumers to have a wider assortment available to them at a cheaper cost due to heightened competition (see Disadvantages).
Furthermore, manufacturers of Trinidad and Tobago that also have the advantage of free trade are exposed to a more extensive export market. This allows them to conduct sales in a variety of other countries, causing them to enhance proficiency since they are competing with global rivals. In response, this can provoke growth and development whilst reaping the rewards of economies of scale.
Additionally, CARICOM Single Market Economy (CSME) was established in 1989 to liberalize trade among its members including Trinidad and Tobago (Stimpson & Singh, 2008). However, exchange rate control policies have been implemented to limit free trade out of the Caribbean …show more content…
Loss of Output
Another threat is the decline in productivity and again, labour from the local businesses that cannot compete effectively with imported goods. Case in point, there has been a decrease in the local milk production of Trinidad and Tobago (one of CARICOM’s largest dairy producers) by 25% from the year 2000-2010, with one of the contributing factors being globalization (Agritrade, 2012).
Additionally, decline in imports are possible if there are conflicts between Trinidad and Tobago and other states that may disrupt the flow of globalization. For example, it was alleged a disagreement concerning the importation of oil occurred between Grenada and Trinidad and Tobago. However, Grenada subsequently declared that it was a false allegation (Caribbean Journal, 2012). If in fact this was the case, Trinidad and Tobago would have lost their investment.
3. Increased Competition
As discussed formerly, globalization requires every nation to participate in a worldwide competition, hence putting underdeveloped ones like Trinidad and Tobago, behind those that are actually developed. These companies then struggle to compete globally due to increased rivalry. ‘Infant Industries’ in particular, may find it impossible to survive the fight against existing importers, which will hinder their domestic growth (Stimpson & Singh,