Economic Challenges of Caribbean Essay Example

a producer of bulk rums to higher value branded products. Until recently, the Caribbean had hoped to gradually shift from agriculture towards services and, specifically, knowledge and skill-based industries such as tourism, financial services, informatics, and entertainment. However, the global economic recession has put increasing pressure on the tourism industry.

Visitors are opting to cancel or postpone their trips or choose cheaper warm weather destinations due to emerging global and alternative warm water destinations, which poses a fundamental challenge to the travel industry. Additionally, the industry faces pressure from environmental taxes levied on aviation in the United Kingdom, such as the significant increase in Air Passenger Duty in November. This tax applies to all UK airline ticket buyers traveling to the Caribbean or other destinations and varies based on their journey length and travel class.

Over the next two years, there will be a gradual increase in tax. At that time, a European scheme will join, which aims to incorporate aviation into the EU Emissions Trading Scheme. This involves purchasing licenses for all air transport operations for emitting carbon. Additionally, the offshore industry is being threatened by OECD nations, led by the US with President Obama's support, to limit their activities. The reason is that tax havens can weaken regulatory control and taxation on banks and their customers. Hence, this can undermine financial systems. Furthermore, while trade liberalization continues moving forward through bilateral negotiations or multilateralism at the WTO, these challenges persist.

The Caribbean is currently faced with the challenge of opening its markets to external competition from Europe, Canada, and potentially all nations if the WTO process proceeds. This is due to the region's relatively immature

economic integration process. Both Europe and Cariforum are struggling to implement an Economic Partnership Agreement that prioritizes investment and the export of manufactured goods and services, which will in turn reduce tariff-based revenue for governments. While development support from Europe is expected to aid in the adjustment process, the European Commission's involvement has been slow. The region's small and vulnerable developing nations are facing numerous economic challenges simultaneously, with little external awareness of the upcoming difficulties.