The Caribbean Single The Caribbean Single Market EconomyMarket Economy

Understanding the impact of the free movement of labor on the people of St. Lucia

Kevin Stapleton, Graduate StudentCommunity Development and Applied EconomicsThe University of Vermont

Short term goal:Short term goal: To understand the strengths, weaknesses, similarities To understand the strengths, weaknesses, similarities and differences between the economies of CSME and differences between the economies of CSME nations nations

Long-term Project Goals:Long-term Project Goals: 1. To assess the impact of the free movement of labor 1. To assess the impact of the free movement of labor on the people of St Lucia.on the people of St Lucia.2. To help develop strategies for St Lucia to maximize 2. To help develop strategies for St Lucia to maximize its benefit from free movement of laborits benefit from free movement of labor

Project Goals

Project PartnersProject Partners

Lisa Louis Philip, PMPCommerce and Industry OfficerMinistry of Commerce, Investment and Consumer Affairs

Titus PrevilleDeputy Permanent SecretaryMinistry of Commerce, Investment and Consumer Affairs

How do economies grow?How do economies grow?

Capital (K)

– Land

– Natural resources

– Built environment Technology (T)

– Changes in productivity Labor (L)

– Size of the labor force

– Skills of the labor force

All changes in the real size of an economy are a resultof 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

Gross Domestic Product per capita (PPP)

0

2000

4000

6000

8000

10000

12000

14000

Saint KittAntigua

Trinidad & Tobago

GrenadaBelize

SurinameSaint Vincent

St LuciaDominicaGuyana Jamaica

GDP (PPP, US$)

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

Factor 2: TechnologyFactor 2: Technology “Technology” encompasses any

change that increases production without adding capital or labor. Anything that increases productivity is considered technology.

Perhaps the most important technological improvement in the past 25 years is internet access.

St Lucia has 336 internet users for every 1,000 people. This is well above the CSME average of 223.

Factor 3: LaborFactor 3: Labor

Components

Size

Education

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Antigua Barbados

Trinidad & Tobago

Grenada

Saint Vincent

BelizeDominica St Lucia

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.

Size of the labor force

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Trinidad &Tobago

Guyana SaintVincent

St Lucia Suriname Jamaica Barbados Belize

% of total population

2004 2015

The CSME as a whole will benefit from the increasing size of the labor force.

Saint Lucia’s poverty rate is below average, while its unemployment is above average.

0

10

20

30

40

50

60

70

Percent

DominicaSaint Vincent

St LuciaGrenadaJamaica

Trinidad & Tobago

BelizeSuriname

AntiguaSaint Kitts

Poverty and Unemployment

Unemployment rate (% of labor force, 2002 or 2003) Poverty rate

Percent of Children reaching grade 5

100

91

90

90

88

87

84

78

64

0 10 20 30 40 50 60 70 80 90 100

Trinidad & Tobago

Belize

St Lucia

Jamaica

Saint Vincent

Saint Kitt

Dominica

Grenada

GuyanaMedian: 88

Saint Lucia is among the highest achievers in this category, which should serve it well in the future. Percent of the population that graduated secondary school and percent of the population with tertiary education would be very helpful information.

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

Barbados DominicaBelize

Saint Kitt Jamaica St Lucia Guyana Grenada SurinameAntigua

Saint Vincent

Trinidad & Tobago

% enrolled

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.

Lucian economy will be negative as skilled labor moves to higher wage areas.

The long-term impact of CSME on the St Lucian economy will be positive, primarily because of increased trade, economies of scale and access to skilled labor.

While the long term benefit will be positive, it could have negative impacts on distribution.

Resources and ReferencesResources and References Mcintyre, A. (2000). Caricom and the WTO. Social and Economic Studies.

49,1, 83-112

A Time to Choose: Caribbean Development in the 21st Century (2005) Caribbean Country Management Unit, The World Bank.

Freckleton, M. & Karagiannis, F. (2004). Development Policy Options for Caricom in an Era of Free Trade. The Caribbean Economies in an Era of Free Trade.

Coppin, A. (1994). The Demand for Labor in the Caribbean Community. The Review of Black Political Economy, 23(2),39.

Griffith, W.H. (2002). A Tale of Four Caricom Countries. Journal of Economic Issues. 36 (1) 79

Bernal, R.L. (2003). The Caribbean’s Future is not What it Was. Social and Economic Studies. 52(1)

Questions or comments?Questions or comments?

Contact information:Kevin Stapleton

Department of Community Development and Applied Economics

The University of Vermont

104 Morrill Hall, Burlington VT 05401

Kevin.stapleton@uvm.edu