A Framework for Studying Caribbean Industrial Policy

Abstract

Like much of the Third World, Caribbean countries have in recent years aggressively pursued an industrial policy that seeks to attract foreign industrialists to produce for export. Researchers, although frequently lacking evidence for key variables and their interrelationships, have rendered an unwarranted final judgment that the current development model is negative for the Caribbean. In response, this paper develops a broad framework for understanding the constraints on, and the potential of, Caribbean industrial policy. The framework (1) situates the prevailing industrial policy among interrelated issues, such as Caribbean development strategy, debt, trade, race, gender, and technology; (2) highlights important concerns for which we thus far lack details, such as the performance of domestic manufacturers and the full costs of industrial policy; and (3) provides an organizational tool for empirically informed research on industrial policy in developing countries. The framework offers a pessimistic interim evaluation of Caribbean industrial policy, suggesting many reasons why it is unlikely to repay host societies with social development. It leaves open the possibility, however, that further empirically informed analysis will find that the prospects are more favorable in some countries, and for more specific goals, such as expanded industrial export opportunities, economic diversification, and the acquisition of managerial skills.

Key words:

• industrial policy
• export processing zones
• dependency
• Third World
• Caribbean