The Caribbean Single Market Economy Understanding the impact of the free movement of labor on the people of St. Lucia Kevin Stapleton, Graduate Student Community Development and Applied Economics The University of Vermont

Short term goal: To understand the strengths, weaknesses, similarities and differences between the economies of CSME nations Long-term Project Goals: 1. To assess the impact of the free movement of labor on the people of St Lucia. 2. To help develop strategies for St Lucia to maximize its benefit from free movement of labor Project Goals

Project Partners Lisa Louis Philip, PMP Commerce and Industry Officer Ministry of Commerce, Investment and Consumer Affairs Titus Preville Deputy Permanent Secretary Ministry 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 result of one or more of these factors. Y = f (K,T,L)

Factor 1: Capital Gross Domestic Product (GDP) Components of GDP Limitations of GDP

Saint Lucia’s Per Capita GDP is just below the median among CSME nations, but well below the average.

St Lucia’s growth in the past 15 years has been well below the CSME average of 2.0%.

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: 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: Labor Components Size Education

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.

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.

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

The importance of education: Correlating Education and GDP Average years of education Per capita GDP 12

Hypotheses for long-term 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 References Mcintyre, A. (2000). Caricom and the WTO. Social and Economic Studies. 49,1, 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? Contact information: Kevin Stapleton Department of Community Development and Applied Economics The University of Vermont 104 Morrill Hall, Burlington VT