Abstract

The Caribbean was severely affected by the global financial crisis in 2009 and is now experiencing a rather sluggish recovery compared with the rest of Latin America. The slow upturn is concentrated in the English-speaking Caribbean nations, where economic growth estimates in 2010 were as low as 0.6 percent, in contrast to the 2.3 percent estimate for the non-English-speaking Caribbean and to the strong recovery of 6.7 percent in the rest of LAC. This paper shows that the region’s strong linkages to the United States and other industrialized nations, in terms of investment flows, trade, and remittances, help explain why the Caribbean has been so affected and has not recovered as quickly as other LAC nations. The paper also presents the results of regression analysis that indicates that the English-speaking Caribbean countries, unlike the non-English-speaking Caribbean and some Latin American nations, are not aligned to the new growth poles in the world (such as Brazil, India, and China) but are very aligned to the United States. This result would suggest that one of the reasons behind the slow recovery is related to the English-speaking Caribbean countries’ not being able to integrate their economies into new world markets.