Many countries in the region share similar economic characteristics. They are small economies, very open to international trade, and highly exposed to natural disasters and economic shocks. The Caribbean is one of the most disaster-prone regions in the world.
This paper presents background on Caribbean small states as context for the main paper, “Macroeconomic Issues in Small States and Implications for Fund Engagement.” It draws on recent analytical work presented at a conference for policy makers in September 2012, in Trinidad and Tobago.3 Caribbean small states, while sharing many features of other small states (size-related macroeconomic vulnerabilities, lack of economies of scale, and capacity constraints) have specific characteristics which merit attention.
To varying degrees and with some exceptions, Caribbean small states are facing extreme versions of the problems described in the main paper—low growth, high debt, significant vulnerabilities, and limited resilience to shocks. Many Caribbean small states are at a critical juncture and bold strategies to address the challenges are essential.