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Regional & Global Business Environment
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Regional & Global Business Environment
Karissa Pile
CARICOM
Caribbean Organizations
CARICOM's aim to facilitate growth of trade & improved international competitiveness to improve organization & enhance production, productivity & achieve full employment in all aspects of production. They also aim to promote sustainable economic development & improved living standards & to boost functional co-operation, encouraging greater understanding among its people.
Caricom States:
States
- Antigua & Barbuda
- Jamaica
- St. Kitts & Nevis
- St. Vincent & the Grenadines
- Barbados
- St. Lucia
- Trinidad & Tobago
- Dominica
- Belize
- The Bahamas
- Haiti
- Grenada
- Guyana
- Suriname
CARICOM Single Market Economy
CSME
- Free movement of goods & services
- Right of establishment
- A common external staff
- Free movement of capital
- Free movement of labour
Long-term measures:
- Harmonization of Laws
- Monetary policy measures
- Fiscal Policy measures
Caribbean Development Bank
CDB
The main functions of the CBD are to aid in the development of countries & increase output and commerce, to promote investment, to support the local & regional financial sector & to offer technical guidance to borrowing countries.
Organization of Eastern Caribbean States
OECS
The OECS use a single currency called Eastern Caribbean Dollar, which is supervised by the Eastern Caribbean Central Bank. The main function is to encourage co-operation and economic integration among member countries and to foster cohesion in the formulation of foreign policy and collective positions on international issues.
Caribbean Countries part of OECS
Countries
- Antigua & Barbuda
- Commonwealth of Dominica
- Grenada
- Monsterrat
- St. Kitts & Nevis
- St. Lucia
- St. Vincent
Anguilla & the Bristish Virgin Islands are Associate Members of the OECS.
The Association of Caribbean States
The main functions of the ACS are to enhance regional integration, to preserce the environment & to encourage sustainable development.
ACS
Members of ACS
- St. Lucia
- Suriname
- Trinidad & Tobago
- Venezuela
Members
- Antigua & Barbuda
- Bahamas
- Barbados
- Belize
- Colombia
- Costa Rica
- Cuba
- Dominica
- Dominican Republic
- El Salvador
- Grenada
- Guatemala
- Guyana
- Haiti
- Honduras
- Jamaica
- Mexico
- Nicaragua
- Panama
- St. Kitts & Nevis
Associate Members of ACS
Associate Members
- Aruba
- Curacao
- France (on behalf of Guiana, Saint Barthelemy and Saint Martin)
- Guadeloupe
- Martinique
- Saint Maarten
- The Netherlands (on behalf of Bonaire, Saba & Saint Esuatius)
Inter-American Development Bank
Caribbean Relationships with Others
The aim is working towards improving the lives of people in the Caribbean & Latin America. The IADB's stated functions are to decrease poverty and social inequalities, to encourage private sector growth, to deal with issues relating to renewable energy, climate change & the environment & to encourage regional co-operation & integration.
Economic Commission for Latin American & the Caribbean
ECLAC
ECLAC's objective is to encourage economic & social development of the region by strenthening economic relationships within the region & with other countries outside the region as well. Its main function is to plan, implement & evaluate projects relevant to development.
Caribbean Basin Initiative
CBI
A collection of trade initiatives that are geared towards promoting economic development & export diversification of Caribbean Basin economies. It involves perferential trad & tax benefits for Caribbean territories with respect to trading with the US.
- Netherlands
- Panama
- St. Kitts & Nevis
- St. Lucia
- St. Vincent & the Gren.
- Trinidad & Tobago
- Antigua & Barbuda
- Aruba
- Bahamas
- Barbados
- Belize
- British Virgin Islands
- Costa Rica
- Dominica
- Grenada
- Guyana
- Haiti
- Jamaica
- Monsterrat
Countries
The Caribbean-Canada Trade Agreement
CARIBCAN
CARIBCAN refers to trade policies between Canada & Commonwealth Caribbean countries whereby most types of goods & services imported by Canada are duty free. The purpose of this arrangement is to encourage trade, exports and economic development in the Caribbean.
- SVG
- Tnt
- Turks & Caicos Islands
- Anguilla
- Antigua & Barbuda
- Bahamas
- Barbados
- Belize
- Bermuda
- British Virgin Islands
- Cayman Islands
- Dominica
- Grenada
- Guyana
- Jamaica
- Monsterrat
- St. Kitts & Nevis
- St. Lucia
Member Countries
World Bank
The functions are to offfer monetary & technical aid to developing countries, to reduce poverty & to encourage development. They achieve these goals through low-interest loans & grants geared towards improvements in education, health, infastructure, agriculture, environment & natural resource management, etc.
International Organisations Outside the Caribbean
Organisation of American States
OAS
Established to promote peace, judicial fairness, unity & collaboration among its 35 independent states & to look after their territorial honour & independence. Its main pillars are democracy, human rights, security & development. The main stated functions of OAS are to facilitate political dialouge & co-operation among members & to influence domestic law & evaluate progress of policies implemented by members.
The European Union
Has evolved to include not only economic but also a political, social & cultural matters encompassing environmental & human right issues & policy development. People can travel freely within most of Europe, making it easier to migrate & work within Europe. Economic growth is driven because of the single market as most goods, services and capital also move freely throughout Europe.
EU
World Trade Organization
WTO
The sole international organization dealing with trade rules. The goal is to help producers, exporters & importers in their operations so that trade can flow freely throughout the globe.
WTO's stated aims are to engage in trade negotiations on key issues relating to goods, services & intellectual property & trade barriers & to settle disputes.
Organisation of Petroleum Exporting Countries
OPEC
The main purpose is to harmonise the petroleum policies of its members & ensure stability of oil markets so that supply of oil is controlled to ensure a steady & healthy source of income to its producers.
Members
- Islamic Republic of Iran
- Iraq
- Kuwait
- Saudi Arabia
- Venezuela
- Qatar
- Libyz
- United Arab Emirates
- Slgeria
- Nigeria
- Ecuador
- Angola
Free Trade of the Americas
The intended purpose of the FTAA is to widen market access to increase exports, increase foreign direct investment to stimulate growth, allow for transfer of technology & facilitate labour mobility.
FTAA
Underemployment
Economic Problems
A major macroeconomic problem facing Caribbean countries. Unemployment refers to the proportion of the total labour force in a country who are actively seeking jobs & are unsuccessful in doing so.
Typically this involves people between the ages of 16-65 years, who are no institutionalised or in ful-time education. Institutionalised people include those in mental institutions & prisons.
Structural Unemployment
Occurs when there is an incompatibility between the skills demanded by employers and the skills job seekers possess. this can occur when there is a change in the structure of the economy such that there is a shift in the economic contribution of an industry or a change in the demand of labour.
Main Types of Unemployment
Cyclical Unemployment
Occurs whenever there is a decline in economic activity such as in a slump in the business cycle.
When there is a fall in the demand for goods, there is less production & therefore fewer workers are needed.
Cyclical Unemployment
Frictional Unemployment
Occurs when people are entering the workforce for the first time or when employees are moving from one job to another. Put simply, it is the time period between jobs when a worker is searching for, or transitioning from, one job to another. Frictional unemployment is acutally desirable in an economy since it usually represents progression in one's career.
Frictional Unemployment
Population Density
Refers to the # of people living in a particular area of land & is usually measured as the # of individuals per square km. Population density can be high, moderate or low.
Population
Density
Factors Influencing Population Density:
- Transport Network
- Farming: High Population Densities
- Industry: High Population densities
- Land: Lowland areas - high population densities
- Steep Land - low population densities
Factors
High Population Density
High & Low
- Often problems of increased traffic congestion
- Overcrowding
- Higher cost of rent & housing - as a result there is often squatting or slums on the outskirts of major cities & towns. These are characterised by low quality residences & low living standards & increased crime rates.
Low Population Density
- Limited Access to G&S
- Difficult for business development
- Slow Infrastructural development
- Transportation issues
Low
Migration
Migration occurs when people move from one area to live, Internal migration refers to migration within a country and international migration refers to migration between countries.
Am emigrant is a person who leaves the place they are from to go live elsewhere.
An immigrant is a person who settles in a new place, having resided somewhere else before such has their native land.
Push Factors: Discrimination, Unemployment, low income, limited opportunities for personal growth.
Pull Factors: Freedom, jobs, high income, opportunities for personal growth
Factors
Employment
Employment
Many people have migrted (temporarily & permanently) to London, NY & Canada especially from the Caribbeann region, in search of job opportunities. People with tertiary education migrate from the Caribbean region because of a lack of jobs generally in their country or lack of relevant jobs leading to underemployment of graduate students
Higher Income
In other countries there is also the attraction of higher incomes for the same job. The difference in the value of the local currency relative to the foreign currency.
Higher Income
Lifestyle
There may also be a desire for a different life filled with the appeals of living in a big city such as different forms of entertainment, transportation, greater opportunities for sightseeing, etc.
Due to globalisation as well, many young people are looking at their prospects regionally and globally, rather than just locally.
Lifestyle
Positive Effects of Migration
Positives
- Employment opportunities within/outside the Caribean allows for career progression& bettwer quality of life for the individual.
- Remittances to family in Caribbean countries - inflow of currency into the Caribbean & better quality of life for family members.
- Returning migrants: active contributos to Caribbean countries (production, spending, economic growth)
- Freedom from circumstance: natural disasters, oppression, poverty, etc.
Negative effects of Migration
Negatives
- Poor Housing conditions - usually emigrants settle for poorer quality housing since rent & acquistion of property are more expensive in that country.
- Job dissatisfaction - migrants may have to settle for less than optimal jobs especially in the initial settlement phase.
- Loss of skilled, trained & educated workers to the country of origin. This 'brain drain' phenomenon has a negative effect on economic growth & development. People would have been trained locally at a cost to the local country, but contribute to output in foreign nations.
- Labour shortages can occur in particular industries in the Caribbean when the skilled, educated individuals leave the country.
Debt Burden
Debt Burden
Debt burden arises when government finances its public expenditure through borrowing. Public debt increases when a country continues to run a national budget deficit happens when government expenditure for the year is higher than its income for that year - the difference between the two equals the amount of deficit. Government sometimes finance infrastructural & investment projects through borrowed funds, with the knowledge that these projects will yield significant benefits for the country over the medium/long term. Debt burden can be viewed in two ain ways: the amount of money that is owed, & the interest payments that must be made on accumulated debt.
Sourcing Capital & Raw Materials
Sourcing Capital & Raw Materials
Sourcing capital refers to finding and acquiring funding for business or government projects. Capital is needed by both private & public sectors to facilitate expansion of industries & developmental work. Capitl can be sourced locally or from foreign investors.
Each Caribbean country is endowed with its own set of natural resources. These natural resources are inputs to the production process in the form of land (land space, agricultrual land, forest, oceans & rivers) and raw materials (oil, gold, fish, trees, bauxite). The existence of raw materials locally, spurs investment in related industries.
Sourcing raw materials internationally is a problem for the business sector since:
Problem
- It may be expensive to import considering exchange rate differencees, shipping costs, & trade barriers such as taxes.
- Supply may be more erratic affecting production
- Financing imports may be more difficult than financing local purchases especially if international credit arragements are needed.
- Prices may vary widely, making budgeting an arduous task and making profits highly volatile.
- It may be difficult to compete internationally, due to higher cost of inputs.
Economic Dualism
Refers to a situation where there is a traditional sector that employs 'primitive' or simple production methods and a modern or more developed sector that employs technology & intentive production processes. Both sectors coexist in an economy but there is no or little interaction between thm. This is very evident when we look at traditional farming that occurs in rural areas generally as compared to modern farms utilising technology in production.
Foreign Direct Investment
Possible Solutions to Economic Problems
Occurs when a person or company from one country makes an investment in a company or entity in a different country. Foreign direct investment may be direct such as setting up a company or branch in the country, or a merger or joint venture, or by acquiring at least 10% or more of ordinary shares/voting stock in a company.
Investment in production facilities and infrastructural work is necessary in order to drive economic growth.
Investment serves to reduce unemployment. The issues of population density, migration & economic dualism may also be addressed to some extent, if the investment occurs in a rural area rather than in an already well developed urban area.
Development of Human Resources
Development of HR
Development of human resources occurs through education, training & experience. Developement of human resources helpts to solce the problem of unemployment as individuals become more marketable and suitable for job positions.People can also choose to become entrepreneurs and employers ratheer than employees when they have been educated & trained. Entreprenerus stimulate economic activity & bring innovation in all areas. This therefore can help tackle economic problems such as:population density, migration & even economic dualism to some extent. Development of human resources leads to a bettwer quality of life for individuals and their families. I also allows for greater earning potential & a reduction in poverty.
Development of the Manufacturing Sector
Manufacturing Sector
The manufacturing sector uses raw materials from the primary sector therefore creating linage industries with the economy. The manufacturing sector contributes to increasing productivity in an economy through the application of efficient production methods geards towards producing on a large scale. Esports are then possible, which leads to an inflow of currency into the country. Many service industries emerge to fasilitate the manufacturing industry. Development of the manufacturing industry leads to significant growth is the primary, tertiary & businesses. Depending on how this business growth is scatterered throughout the country, the issues of population density, migration & economic dualism may be addressed.