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The practicality of regional import substitution as a strategy for sustainable development in the Caribbean

Alleyne, Antonio and Lorde, Troy and Moore, Winston (2022): The practicality of regional import substitution as a strategy for sustainable development in the Caribbean. Published in: Trade and development issues in CARICOM: Key considerations for navigating development : pp. 56-71.

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Abstract

It has long been apparent that economic development in the Caribbean could not be sustained on the basis of traditional agricultural exports. Since the 1960s the debate has centered on what should take their place, and what mechanism should be used to achieve, at least in part, sustainable development. One reoccurring topic is the notion of import substitution. Contrary to previous literature, this study evaluates the feasibility of import substitution at the regional rather than at the country level on the basis that it is not economically feasible to supply all the goods that a country may consume on its own. To evaluate the feasibility of this approach, we use a trade database that matches imports (consumption) and exports (production capabilities) of various Caribbean countries. We then conduct counterfactual simulations of the feasibility of import substitution if all of the trade overlaps within the region are exploited. We discuss the implications that this might have for intra-regional trade, economic activity and employment. The overall feasibility of such an approach is also assessed.

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