Caribbean Diversification and Development

Small Island Developing States generally adopt diversification as their primary development strategy, often with little success. Nevertheless, there is no empirical study specifically focusing on the pattern of diversification of these countries in relation to their development. The objective of this paper was to study the export diversification pattern by the intensive (a more equally spread export basket) and extensive (an increase in new export lines) product margin of 21 Caribbean countries in relation to their level of development using panel data. The results show that despite their limited ability to diversify, Caribbean countries, as has been found for other parts of the world, first diversify and subsequently respecialise though at a substantially lower level of income than other countries and that the intensive margin plays a greater role in this process