– regional integration processes
The degree of economic integration of the Latin American and Caribbean Community (CARICOM) lags behind other well integrated regions. Divergence of key macroeconomic variables across the region has fallen over time, but the fall has slowed down, or even been reversed, in some instances, partly reflecting the different impacts of external shocks on tourism-driven economies in CARICOM versus commodities-exporting member States (IMF/WP, 2019).
The slow pace of regional integration reflects a combination of economic, institutional, and political economy factors and capacity constraints. While financial integration appeared to have proceeded at a faster pace, with tightly inter-connected financial systems, capital markets remain underdeveloped and fragmented. No Caribbean-wide capital market exists, and most activities are concentrated in a few countries through cross-listing of securities (IMF/WP, 2019).
The contemporary global political economy is characterised by synergies and dichotomies between globalism and regionalism. These phenomena have taken on added currency in recent years, with intensification of globalisation and liberalisation (Grenade,2007). As such, regional integration is both necessary and problematic, especially for the developing world. Particularly, global forces have generated renewed urgency for integration in the South (Grenade, 2007).
Further, in view of the fact that the COVID-19 pandemic has greatly worsened economic conditions in Latin America and the Caribbean, the regional economy is projected to contract by 7.2 percent in 2020; which is a much steeper decline than during the global financial crisis, and reflects the impact of the measures necessary to slow or contain the spread of the pandemic, and in turn the significant deterioration of financing conditions, commodity prices, and spillovers from a global recession (Ch.3: Global Economic Prospects, 2020). It is against these backgrounds that a renewed approach to advance regional growth post-COVID is now deemed to be more paramount than ever before.
In addressing the threats, challenges and opportunities induced in particular by the COVID-19 pandemic, rethinking development strategies and the ways in which LAC countries integrate into the global economy, especially in the aftermath of the COVID-19 pandemic, needs to be treated with paramount importance.
It is worthwhile to note that, given the great uncertainty surrounding the pandemic: as to its end and to restoring some degree of normalcy to life, it would appear that the COVID-19 might be around for another two years, and therefore it becomes necessary to think of sustainable, creative, and scientific solutions so that the way in which people conduct their lives and firms conduct business would be compatible with the presence of COVID-19.
This would be the greatest challenge for policymakers globally, and of course it needs to be at the forefront of the agenda insofar as the future growth of the region and the workings of regional integration processes from a policy standpoint are concerned.
Montoute (2014), in his paper on a “new paradigm, greater collaboration? The Caribbean and Latin America in a globalizing world”, posited that in engaging with the RIC (Russia, India and China) countries, the objectives of CELAC must always be at the forefront. To this end, the objective is to pursue deeper integration between Latin America and the Caribbean. As such, cooperation with emerging economies is important in this regard, as these emerging and powerful players could potentially foster wider South-South cooperation arrangements which could serve, albeit organically, to bring the Caribbean and Latin America closer. Emerging economies could help build the necessary physical and social infrastructure to facilitate deeper integration.
It is important, therefore, for the Caribbean and LAC to present a unified position on what to accomplish as a regional grouping in order to advance this agenda. In this respect, the group can then strategise on how to exploit the benefits of RIC engagement as a collective, and thus minimise the threat of countries seeking these benefits bilaterally, which could weaken the group to some degree. If this can be successfully achieved, the group would then become less vulnerable to external domination.
In terms of policy interventions, LAC, as an emerging powerful regional grouping, needs to reorient its role towards becoming an implementative institution; and it needs to be granted the political and legal space to so do, as well as the machinery and quality of leadership. Secondly, space should be made for greater participation in regional fora. The private sector can have a more significant impact on regional integration by developing within LAC clusters of industries with complementary interests, particularly in offensive extra- regional export industries.
Thirdly, stakeholders should be pressured to develop infrastructure and policy frameworks for industries which fit the productive capabilities of different countries in the region; for example, in agriculture and food security. And fourthly, there should be a push to help develop upgraded regional infrastructure, such as in communications and transport.