. the status of the oecs, therefore, lies somewhere between a common market and an economic union. the situation, therefore, is that if the impediments to the creation of the single financial space are removed, and freedom of movement of labour is legislated, then the oecs countries would have created a new economic entity with command over more natural resources, and having a larger collective market size. coordination and peer pressure would result in better policies, other things being equal. negotiating capacity would be increased and the attraction of both private capital and loans on much better terms would be real possibilities. the concept of such a new entity would require a notion of a domain which had distinctive qualities. the objectives set by the oecs heads of government in 2002 of growth, 6 percent ; unemployment of less than 6 per cent ; poverty of less than 6 per cent ; the maintenance and improvement of the human development indices and economic transformation could be placed in the context of individual targets by each country. the economic union as an identifiable entity could then establish the range of policy instruments that would facilitate the achievement of these objectives. these would span the areas of monetary, fiscal, trade, international economic relations, income, structural, social and environmental. all these policies require coordination with each other in order to be effective. new political arrangements will be required in the economic union and single financial space for the realisation of our economic goals. economic transformation is the major objective, and this will require at both the country and union level, a convergence of policies. at both levels, an improved allocation of resources will be essential for increased output. the establishment of an economic union, and the creation of a single financial space create a viable option for st kitts and nevis, and the other countries of the oecs. the enlargement of the economic space, which adds significantly to output and domestic market size, and locks in the convergence and coordination of policies, will provide a better platform for economic transformation than the current circumstances permit. the trajectory that one could see unfolding would be the consolidation of the tourism industry as the lead sector across the economic union with multidestination tourism being a critical element of the tourism strategy. the tourism sector would create linkages across the economic union with agriculture, light manufacturing and handicrafts being the major beneficiaries. information and communication technology would be a critical element of the strategy both as a supporter of other industries and a dynamic sector in its

regional movements, and sought to incorporate them or actively solicit their cooperation. article 2 ( 4 ) states “ any other states or territories in the caribbean region may apply to become full or associate members and shall be admitted as such by a unanimous decision of the authority. the nature and extent of the rights and obligations of associate members shall be determined by the authority. ” this clause applies to any caribbean state, which could include barbados, trinidad and tobago, guyana and jamaica. it is not a discriminatory clause. let us speculate that the current oecs members decided collectively to undergo a radical adjustment and transformation process and achieved a 10 per cent per annum real compounded growth rate over the next five years, while the csme and other regional arrangements made no progress. would this dazzling growth performance influence barbados, and trinidad and tobago to apply for membership in the oecs, or to have some closer arrangement on a bilateral basis? this shocking speculation is made simply to assert that there may be, other things being equal, a potential growth dynamic within a collective oecs economic union, which could accelerate the current rate of economic growth and transformation of the individual economies. this may place the oecs and the rest of caricom in a much stronger economic position. the fact of the matter is that the eccu has achieved some basic economic objectives which can provide a platform for growth and development. in the monetary sphere they have achieved a stable currency, low inflation, and a safe and sound banking system. a programme of money and capital market development is now seeking to put in place institutions and markets to create a single financial space. the issue of economic union is now being addressed and this will be a fundamental advancement when placed in conjunction with the single financial space. economic union is at the upper levels in the hierarchy of integration arrangements. the literature sets the following levels in this hierarchy : • a free trade area where goods are not subject to restrictions between member countries ; • a customs union in which the members apply a common external tariff to third countries ; • a common market in which there is the free movement of the factors of production ; • economic union in which there is the coordination of economic policies ; • full political union which could either be a unitary state or a federation. the oecs countries have virtually free movement of goods, and virtually free movement of capital through the ecse and the rgsm, a common currency and central bank, which implies the coordination of monetary policy