GLOBALIZATION AND ITS IMPACT ON THE CARIBBEAN: The poverty and inequality we’ve suffered.

rich vs poor

There is no concise definition of what can be termed ‘rich’ and ‘poor,’ there are however, variances between the amount of wealth and income countries attain. This is what differentiates between the Third World and the First and Second Worlds. It must be highlighted that the terms ‘third world, ’ ‘first world,’ and ‘second world,’ have been debated as being inappropriate as it deemed a western construct and shows dominance of certain states over others. Kwame Nkrumah, former president of Ghana (1965) claimed that although former colonies have gotten their political independence they remained economically dependent on the advanced capitalist economies and increasingly on multinational corporations. Friedman (2000) defines globalization as “the dominant international system that replaced the Cold War system after the fall of the Berlin Wall”. Soros (2002) noted globalization to be the free movement of capital and the increasing domination of national economies by global financial markets and multinational corporations.  This integration of markets has had many implications for the Caribbean.

The Caribbean due its diminutive size in comparison to the ‘first world’ is at a disadvantage when it comes to globalization on the basis of economics, poverty and general inequality. According to Briguglio,1995; Crowards, 1999; Downes and Mamimgi, 2001, the Caribbean possesses a small resource base both in terms of skills and natural resources; limited institutional capability within both the public and private sectors; small domestic markets inhibiting the realization of scale economies; remoteness as it lies outside of established trading routes, making international transportation very costly; proneness to natural disasters; environmental fragility; high export dependence and particularly dependence on a small number of exports and a limited number of markets; high import dependence including, in particular, dependence on imported energy. These limitations faced by the Caribbean region makes it difficult to compete with the first world. More so, the region’s per capita GDP has increased by less than two percent per annum in the past 25 years which is not a significant amount to reduce poverty and unemployment in the region.

The Underdevelopment Theory explains that the West had actively exploited and underdeveloped the poorer countries in the 16th century in an attempt to finance their industrial revolutions and build their ascendancy.  Colonialism and neocolonialism has established unequal economic relations between the core and periphery countries. Immanuel Wallerstein argues that we now reside in a capitalist world system and it is this capitalism that empowers the process of globalization. Wallerstein viewed the first worlds – the West&Europe–  as the states with the skill and high investment production while the peripheral and semi-peripheral states are the opposite. Thus, there is a dependency syndrome of the ‘third world’ on the ‘first world’ nations. Anthony Giddens regards Wallerstein’s capitalist world system theory as a precursor of globalization theory. However, it has been noted that there is evidence to prove that ‘home-grown ‘or indigenous development is emerging in the global south and globalization is assisting tremendously in their success.

Furthermore, the West and its multinational corporations (MNCs) have been known to exploit the region of the Caribbean for their profit and these nations are experiencing extreme rates of poverty, repressed human rights, and excessive environmental damage[1].  Evidence supplied by The World Bank and the UN strongly suggests that MNCs are a key factor in the large improvement in welfare that has occurred in developing countries over the last 40 years[2]. For example, in Jamaica, banana planters and other farmers are facing a great loss in profits due to the importation of foreign goods. They also face a loss in their milk production as the population rather the imported powered milk. Additionally, many factories are being operated in the Caribbean region in which individuals are being paid below the minimum wage for their labour to produce clothing that will be exported to the West. “As a result of the establishment of the Free Trade Zone, women are exploited and subjected to sweatshop conditions.  The free zone is located in Jamaica but owned by multinational corporations such as Hanes and other American clothing companies that operate worldwide…. Wages are low and offer no guarantees.  When production becomes too expensive or can be done more cheaply somewhere else, by someone else, the companies get up and leave, often without even paying the Jamaican workers.” (Black, 2001.)


Although globalization has affected the Caribbean in a negative light it has also affected them in many positive ways such as an increase in raw material demand, related to strong economic growth in East Asia, China and India, will continue to benefit particularly regional producers of mining products – Trinidad (oil), Guyana (bauxite) and Jamaica (bauxite and alumina) . Some Latin American countries such as Chile, Brazil, Venezuela and Peru in recent years have experienced improved terms of trade, an export boom, growing trade surpluses, significantly improved current account balances and an accumulation in reserves (Gottschalk and Prates (2006).


-Nandika Ragbir

[1] World Investment Report 1999: Foreign Direct Investment and the Challenge of Development, United Nations, New York and Geneva, 1999, pp. 45–73. Bryan T. Johnson, Kim R. Holmes, and Melanie Kirkpatrick, 1999 Index of Economic Freedom, The Heritage Foundation and Wall Street Journal, 1999

[2] Human Development Report 1998, Oxford University Press, 1998, pp. 19–106. The data used by the UN comes primarily from the UN’s Children’s Fund (UNICEF), UNESCO, UNECE, and the World Bank.

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3 thoughts on “GLOBALIZATION AND ITS IMPACT ON THE CARIBBEAN: The poverty and inequality we’ve suffered.

  1. Very impressive analysis of the Caribbean and by extension the first world in terms of its economic growth and furthermore the role the first world played in suppressing the economic development of the third world.


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