Value Chains and Connectivity in the Caribbean

This paper examines global value chain (GVC) activity in the Caribbean, through the lens of newly assembled data on value added trade. It finds that GVC participation is quite weak by world standards. Moreover, connections with the large regional markets of the USA and Canada are sometimes stronger than connections within the Caribbean. The paper then examines data that could help explain these findings, focusing on bilateral trade costs and transport connectivity, as influenced by non-traditional trade policies like regulatory barriers. It concludes that there is considerable scope for the Caribbean to promote value chain integration by improving connectivity in all its dimensions, especially air.