Globalization and Saint LuciaGlobalization and Saint Lucia

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

“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

• 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”

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

World GDP and CO2

$1

$10

$100

$1,000

$10,000

$100,000

1000

CLIMATE DAMAGE

Distribution-Grow out of Distribution-Grow out of poverty?poverty?Poverty rate vs. GDP per Capita (1996$)

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

8%

10%

12%

14%

16%

18%

20%

per capita GDP (1996$) poverty rate

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.

Factor 3: LaborFactor 3: Labor

• ComponentsComponents

• SizeSize

• EducationEducation

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 servicesIncorporate values of ecosystem services

• Better distribution Better distribution

• Can we have more economic growth and Can we have more economic growth and incorporate ecological sustainability and incorporate ecological sustainability and social equality? - Walmartsocial equality? - Walmart