Rebuilding the Caribbean: A Better Foundation for Sustainable Growth

Publication Date: January 1999

Publisher: Economic Policy Institute

Author(s): Robert E. Scott

Research Area: Economics; Trade

Type: Brief

Abstract:

An approach to Central American reconstruction that focuses on expanded trade benefits under the CBI is fundamentally flawed. In practice, NAFTA-like parity is likely to bring more harm than good to the Caribbean. It will disrupt agricultural markets, reduce external income flows, and set the stage for a future financial crisis. Any benefits of such a plan will expire within a few short years, leaving the region worse off than it is today after the hurricane's devastation.

Central America needs and deserves a meaningful package of development and reconstruction aid that provides the foundation for sustainable growth in the future. The essential ingredients of such a program include substantial increases in debt forgiveness and development aid in amounts much larger than those proposed by the Clinton Administration.

Any relief package also should focus on two additional priorities -- the enforcement of internationally recognized labor rights and the upgrading of environmental practices, both of which are necessary to improve the distribution of incomes and the quality of life in Central America.