REGIONAL INTEGRATION AND THE COST OF TRAVELLING

BrianFrancisDespite suggestions in some quarters and from prominent persons in the region that the CSME is virtually dead, we as citizens of the various countries should do all within our powers – individually and collectively – to ensure that regional integration remains alive and well and is treated as an inevitable outcome if we are to guarantee ourselves the best chance for sustained economic growth and development.

The fact that after more than forty years of trying we in CARICOM are no further along the integration ladder than a Common Market, as a stretch, is absolutely shameful given all of the historical and cultural features that ought to truss us together.  Strangely, though, we are in no position as small and vulnerable economies to give up the fight to integrate, irrespective of those among us who wish to advocate otherwise and for whatever reasons.  Why?

First, the performances of our economies in the recent past have been dismal, to say the least.  When our best performing economy can only grow by 5% and several others are struggling to record even a 1% rate of growth, something just isn’t quite right with the policies we implement in order to promote economic progress.

Second, at a time when more and more countries around the world are recognising the importance of integration, thus leading to the evolution of quite a number of regional trading agreements and blocs, we in CARICOM cannot continue to drag our feet in the exercise of our mandate to deepen the level and extent of integration among our countries.

Third, regional integration provides a reasonable basis for our countries to take advantage of the static effects of such initiatives; distinctively, trade creation and trade diversion.

One of the most critical aspects of regional integration is the possibility of expanding free trade among the various participating countries.  Given the astonishingly relatively low volume of trade in goods, services and factors of production evident among member countries of CARICOM, there should be incessant screaming and shouting from all circles for greater integration and hence more intra-regional trade.

Economic theory teaches that free trade is good for economic growth and development particularly because of the potentially positive effects on poverty.  Although the empirical evidence in support of this hypothesis is not conclusive, there is sufficient anecdotal substantiation that our small countries can use as a basis for accepting the fundamental prediction of this theory and hence for moving forward with an agenda that seeks to aggressively promote more trade among ourselves.  But, there is a caveat in all of this theorising.




You see, one of the things that do not receive sufficient attention in this debate about the trade-development nexus is the notion that the benefits to be derived from free trade as touted in the literature rest on an important assumption: the free movement of not only goods and services but also of the factors of production. Put simply, for CARICOM countries to benefit from free trade as part of the CSME, commodities such as rice, bananas, sugar and rum; construction workers, engineers, lawyers, doctors; citizens of our various countries; financial resources; and all other critical means of production must be allowed to move freely from one country to another. Otherwise, as has been our experiences after four decades of efforts at regional integration, we will merely be spinning top in mud; so to speak!

But, there is a real problem that we in CARICOM must live with as an inescapable aspect of our reality. Unlike the United States where one can generally drive a motor vehicle from one State to another, our countries are all separated by water. Hence, transportation becomes a key determinant of trade among our islands.

Focusing only on the movement of people, for the moment, it should be clear to all and sundry by now that the preposterously and clearly unsustainable high cost of travelling from one country to the next is a huge stumbling block in the way of regional integration.  How can people move if they cannot afford the cost of travelling by plane, our only real means of transportation?

If, therefore, we in CARICOM are really serious about regional integration as we should, the single most critical issue we have to get right is the cost of travelling. We cannot continue to have to pay in excess of USD500 for a ticket to travel on LIAT from Barbados to Grenada for less than a week stay, period!

This writer firmly believes that the blame for the high prices we are presented with each time we book a ticket to travel on LIAT among CARICOM countries has to be directed to our governments. Here is why!

Let’s examine the total cost of an actual LIAT ticket from Barbados to Grenada, return; for six days during the Christmas period, two passengers. The ‘Base Fare’ is 646.00 USD.  Can you deduce the total cost of this ticket?  Here it is: 1,012.14 USD.  Why the huge difference in the base price and the actual cost of the ticket?  You guessed it right: governments’ fees, charges and taxes!

Given the illustration in the preceding paragraph, need I explicitly tell you where the blame should be directed for the high cost of travelling in the region – a phenomenon that surely hurts regional integration?

(Dr. Brian Francis, a former Permanent Secretary in the local Ministry of Finance, is currently a Senior Lecturer in the Department of Economics at the Cave Hill Campus in Barbados of the University of the West Indies)

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