The Bahamas finds itself at the bottom of a list of Latin American and Caribbean countries that have benefited from trade liberalization policies and implementation, according to a newly released Inter-American Development Bank (IDB) study that correlates trade liberalization with growth in economies and wages.
“Most countries are better off, but some showed losses in welfare (Barbados, Belize, Bolivia, Haiti, The Bahamas, and Venezuela) and real wages (Haiti and The Bahamas),” the report reveals.
“These are, for the most part, countries whose MFN (most favored nation) or preferential rates barely changed or even increased at the end of the review period.”
The report explains that countries that have taken an aggressive stance toward trade liberalization have shown positive growth, though openness in trade did not turn out to be “the silver bullet that put us in the same growth leagues as some top-performing Asian economies”, according to the IDB’s Chief Economist Eric Parrado.
“However, trade has clearly been a positive contribution for the region’s wellbeing and development and we should resist temptations to return to our closed economic policies of decades past,” he said in an IDB press release about the report.
The report’s graphic on the impact of trade liberalization on trade-to-gross domestic product ratios shows The Bahamas and Haiti at the bottom of the scale, with The Bahamas being the only country with only negative results.
“While liberalization is positive for the economy, it does have winners and losers, with special interest groups linked to import competing sectors often blocking trade reforms,” the IDB release states.
“The report provides an in-depth look at trade policymaking processes in the region and the type of institutional architecture that is more likely to lead to good policy outcomes.”