An Investigation Into CARICOM Export Potential In East Asian Markets

Individually limited in resources,increasing debt levels,reduced financing options,and increasing trade deficits are some of the realities of the CARICOM countries,annually.Conditions when coupled with adverse global events,cripple efforts to return to any sustainable growth path.Yet,as a coordinated community of geographically linked countries,CARICOM continues to operate out of unison,overlooking 'simple' and cost-effective measures capable of enhancing the region's income streams.Favouring of trade relationships based on historical reasoning is no longer a significant element in development strategies.The WTO's push for global amalgamation assures greater trade revenues from increased diversification in international partners.But,CARICOM remains largely focused on pre-existing relations with its western counterparts;overlooking the possibilities which may lie beyond the traditional.At least 60%of the world consumer market remains largely outside CARICOM's focus.From the critical questions addressed:Statistically,do the EA13 countries indicate positives regarding CARICOM exports and therefore warrants negotiations on further trade arrangement?What are the region's changes,based on international competitiveness,of expanding and capitalizing on available untapped revenues?Under current realities and enhanced integration(a trade agreement),what are the estimated value of export possibilities available to CARICOM exporters?And,which industries are the true beneficiaries?This study,highlights EA13 as a natural exporting market for CARICOM,shows that widening export market option through increased integration,would eliminate misconceptions of the region's export abilities,and proves non-traditional markets translate into untapped export potential.Using an augmented structured gravity model influenced by the works of Anderson(1979),Melitz(2003)and Baier and Bergstrand(2009),this research identified the most efficient estimator to address the prepositions outlaid.Following the PPML estimation technique,initial evaluations and projections on export between the CARICOM and selected EA partners were derived.Coupled with statistical estimates of competitive factors,which impact global market share,comprehensive insight into reaching untapped potentials are explained.Findings reveal possibilities for expanding exports by-way of the East Asian countries;with added benefits via the formation of free trade partnerships.Results indicate the primary trade cost to CARICOM's exports into East Asia relates to border duties;significantly larger than the popularly discussed transport cost.This contradicts instantiated fears regarding distance and cultural differences.The forging of greater alliances through flexible FT As based on individual country concerns(productively viable industries)will provide a further boost to the exports levels.Notably,nontariff elements from trade agreements have resulted in significant unilateral gains for CARICOM exporters.Available potential varies substantially across countries and product industries,reaching significant additional gains relative to current export levels.By sheer market value,China,Indonesia,South Korea and Singapore offer the largest export revenue potential.These results are,however,affected by declining international competitiveness trends in tangible exports,and if continues hampers all possibilities for CARICOM,reducing future potentials.From an industry level evaluation,the numerous complementarities,export advantages offer some validity to the benefits of promoting greater CARICOM and EA trade integration.Buttress by significant export intensities,such negotiations are expected to lead to longer-term gains for the productive industries,while improving sector efficiencies.Growing in importance,the more valued sectors include Animal Agriculture,Foods,Minerals,Fuels and Chemicals;suggesting specialization and great export opportunities for the region vis-a-vis EA13.However,only a concentrated number of industries provides positive estimates for potential export expansion.These industries complement largely with the demand in China,Japan,Lao,Philippines,Singapore,and Thailand.This study posits that continued historical ties,coupled with various protectionist policies and special entry rights into main trading partner markets are responsible,in part,for CARICOM's less than efficient export strategies.Initially seen as an extension of time for the region's infant businesses to enter the international area at more competitive capacity,ended with a paradigm shift in development strategies away from commodity exports towards the more intangible.Albeit,a more rewarding approach will be to incorporate positives from all sectors,as the production and exports of commodity indicate increasing neglect.A large volume of literature elaborates on greater positive externalities and exponential effects on growth offered through the production and export of commodities;preferably exceeding imports.As a less financial demanding sector,improving returns for commodity industries also provide complementary benefits to service industries.And,capitalizing on potentials from across the global consumer markets provide a lower cost financing option.However,the likelihood of a country's ability to reach projected export maximum hinges on the enhancement of various factors at the macro and micro levels.Current realities challenge the longevity of noted export possibilities across new or existing partner-countries.The over-reliance unfounded expectations from services trade could result in further deterioration of these economies.However,supporting economic strategies with a dynamically innovative commodities industry spanning its exports across more diverse markets ignite more positive returns.The proven importance of the commodity sector requires that CARICOM countries act hastily to capitalize on all potential exports within East Asia,and other non-traditional markets for additional sources of development revenue.Proven in this research,increase integration into less traditional markets,in industries with evidence of positive returns and flexibility within agreements will assure increases to CARICOM's export.revenue intake.Key to this is the improvement of numerous industry level factors greatly limiting the region's efforts.Increase technology,innovation and productivity are crucial to the development of the commodity industries.Further identification of profitable non-traditional markets and the development of a united export strategy that builds on the competitive strengths of a collective region would prove advantageous.