Latin America and the Caribbean in the World Economy: 2005 Trends

The study recently published by the Division of International Trade and Integration of ECLAC considers that 2005 will be a good year for trade in the countries of the region. Despite a favourable international context, there are still serious problems of competitiveness. The region needs to increase productivity, promote technological innovation and take a proactive part in worldwide networks. The conclusions of the study include the need to update integration; to take a strategic view of the links to be constructed with China and the countries of the Pacific; to manage free-trade agreements so as to increase and diversify exports; to step up the pace of work and improve coordination with the developing countries on the Doha Round, and to gradually incorporate the demands of security into competitiveness policies, ensuring that they do not become protectionist barriers (traceability, food safety and maritime and port security).

Latin America and the middle-income trap

Includes bibliography.

Access to international capital markets: recent developments in Central America and the Caribbean

The objective of this report is to analyze the impact of recent global financial trends on the access to private external financing by Central American and Caribbean (CAC) economies, as well as their performance in international capital markets in recent years. The CAC economies, like many other countries in the world, were not immune to the negative consequences of the global economic and financial crisis of 2008. In fact, their openness, export driven growth and linkages to advanced economies, particularly to the U.S., as well as size, made them more vulnerable than other Latin American countries to the negative effects of the crisis. In addition, their recovery was hindered by their weak linkages to the larger emerging market countries that drove global growth in the post-crisis recovery. As China and other emerging market economies begin to slowdown, however, and the U.S. and other advanced economies show signs of a strengthening recovery, the linkages to advanced economies may once again become a source of strength.

An assessment of the economic impact of climate change on the Agriculture, Energy and Health sectors in Trinidad and Tobago

This report analyses the agriculture, energy, and health sectors in Trinidad and Tobago to assess the potential economic impacts of climate change on the sectors. The fundamental aim of this report is to assist with the development of strategies to deal with the potential impact of climate change on Trinidad and Tobago. It also has the potential to provide essential input for identifying and preparing policies and strategies to help advance the Caribbean subregion closer to solving problems associated with climate change and attaining individual and regional sustainable development goals. Some of the key anticipated impacts of climate change for the Caribbean include elevated air and sea-surface temperatures, sea-level rise, possible changes in extreme events and a reduction in freshwater resources. The economic impact of climate change on the three sectors was estimated for the A2 and B2 IPCC scenarios until 2050. An exploration of various adaptation strategies was also undertaken for each sector using standard evaluation techniques. The study of the impact of climate change on the agriculture sector focused on root crops, green vegetables and fisheries. For these sectors combined, the cumulative loss under the A2 scenario is calculated as approximately B$2.24 and approximately B$1.72 under the B2 scenario by 2050. This is equivalent to 1.37% and 1.05% of the 2008 GDP under the A2 and B2 scenarios, respectively. Given the potential for significant damage to the agriculture sector a large number of potential adaptation measures were considered. Out of these a short-list of 10 potential options were selected by applying 10 evaluation criteria. All of the adaptation strategies showed positive benefits. The analysis indicate that the options with the highest net benefits are: (1) Building on-farm water storage, (2) Mainstreaming climate change issues into agricultural management and (3) Using drip irrigation. Other attractive options include water harvesting. The policy decisions by governments should include these assessments, the omitted intangible benefits, as well as the provision of other social goals such as employment. The analysis of the energy sector has shown that the economic impact of climate change during 2011-2050 is similar under the A2 (US$142.88 million) and B2 (US$134.83 million) scenarios with A2 scenario having a slightly higher cost (0.737% of 2009 GDP) than the B2 scenario (0.695% of 2009 GDP) for the period. On the supply side, analyses indicate that Trinidad and Tobago’s energy sector will be susceptible to the climate change policies of major energy-importing countries (the United States of America and China), and especially to their renewable energy strategies. Implementation of foreign oil substitution policy by the United States of America will result in a decline in Trinidad and Tobago’s Liquefied Natural Gas (LNG) export (equivalent to 2.2% reduction in 2009 GDP) unless an alternative market is secured for the lost United States of America market. China, with its rapid economic growth and the highest population in the world, offers a potential replacement market for Trinidad and Tobago’s LNG export. In this context the A2 scenario will offer the best option for Trinidad and Tobago’s energy sector. The cost-benefit analysis undertaken on selected adaptation strategies reveal that the benefit-cost ratio of replacing electric water heaters with solar water heaters is the most cost-effective. It was also found that the introduction of Compact Fluorescent Light (CFL) and Variable Refrigerant Volume (VRV) air conditioners surpasses the projected cost of increased electricity consumption due to climate change, and provides an economic rationale for the adoption of these adaptation options even in a situation of increased electricity consumption occasioned by climate change. Finally, the conversion of motor fleets to Compressed Natural Gas (CNG) is a cost-effective adaptation option for the transport sector, although it has a high initial cost of implementation and the highest per capita among the four adaptation options evaluated. To investigate the effect of climate change on the health sector dengue fever, leptospirosis, food borne illnesses, and gastroenteritis were examined. The total number of new dengue cases for the period 2008 to 2050 was 204,786 for BAU, 153,725 for A2 and 131,890 for the B2 scenario. With regard to the results for leptospirosis, A2 and B2 seem to be following a similar path with total number of new cases in the A2 scenario being 9,727 and 9,218 cases under the B2 scenario. Although incidence levels in the BAU scenario coincided with those of A2 and B2 prior to 2020, they are somewhat lower post 2020. A similar picture emerges for the scenarios as they relate to food-borne illnesses and to gastroenteritis. Specifically for food-borne illnesses, the BAU scenario recorded 27,537 cases, the A2 recorded 28,568 cases and the B2 recorded 28,679 cases. The focus on the selected sources of morbidity in the health sector has highlighted the fact that the vulnerability of the country’s health sector to climate change does not depend solely on exogenously derived impacts, but also on the behaviour and practices among the population. It is clear that the vulnerability which became evident in the analysis of the impacts on dengue fever, leptospirosis and food-borne illnesses is not restricted solely to climate or other external factors. The most important adaptation strategy being recommended targets lifestyle, behaviour and attitude changes. The population needs to be encouraged to alter their behaviours and practices so as to minimise their exposure to harmful outcomes as it relates to the incidence of these diseases.

The United States subprime mortgage crisis and its implications for the Caribbean

The bursting of the property bubble – subprime mortgage crisis – in 2007 in the United States has engendered panic, recession fears and turmoil in the global financial system. Although the United States economy grew by 0.6 per cent in the last quarter of 2007, down from 4.9 per cent in the previous quarter, day by day worsening scenarios emerge, from escalating oil prices, to a depreciating dollar and financial institutions’ bailout by the Federal Reserve. Many economists and policy makers share the view that a subprime-led recession – i.e. two consecutive quarters with negative growth – is inevitable and will be much deeper and longer than the 2001 dot-com downturn. Moreover, the critical situation of the financial system has driven some analysts to argue that should the monetary policy response fails to restore confidence among investors, the outcome would be the worst crisis seen since the Great Depression. This pessimism is not only among specialists. Indeed, in late March 2008 the Consumer Confidence Index in the United States recorded its lowest level since February 1992. A recession in the United States will undoubtedly have an important impact on the world economy, despite the continuous rapid growth experienced by emerging economies, particularly China and India. The purpose of this article is threefold: first, to characterize the current situation in the United States economy; second, to discuss the economic policy responses; and finally, to elaborate on how Caribbean economies may be affected.

Climate change and carbon markets: implications for developing countries

While the Kyoto Protocol provided a framework for reducing the greenhouse gas emissions of industrialized nations, current climate change negotiations envisage future commitments for major co2 emitters among developing countries. This document uses an updated version of the gtap-e general equilibrium model to analyse the economic implications of reducing carbon emissions under different carbon trading scenarios. The participation of developing countries such as China and India would reduce emissions trading costs. Impacts in Latin America would depend on whether a country is an energy exporter or importer and whether the United States reduces emissions. Welfare impacts might be negative depending on the carbon trading scheme adopted and a country’s trading partners.