Dynamic Trade Policy for Small Island Developing States: Lessons for the Pacific from the Caribbean

Small island developing states (SIDS) have common economic challenges and are faced with high costs for energy, infrastructure, transportation, trade logistics and public administration. These challenges are increasingly undergirded by new concerns such as the high incidence of chronic non-communicable diseases, demographic transitions, high levels of outward migration, and the rising cost of adapting to climate change. There is therefore an increased need for small states to pursue a multifaceted, innovation driven growth agenda and for development agencies to rethink development options and strategies. From a trade standpoint, these countries are now required to break out of the commodity and low value-added traps that have historically affected the agriculture, manufacturing, tourism and wider service sectors. This has become particularly urgent in the context of anaemic growth among traditional trade partners in the developed market economies. As such, the issue of how SIDS can enhance productive capacity, export diversification and global competitiveness by moving up global value chains needs to be considered. This paper aims to examine the growth and trade performance of the Caribbean and Pacific regions and evaluates the trade policy framework and its scope for economic transformation.