impact of trade liberalization has been reduced by the large number of exemptions from the common tariff reduction scheme. free movement of labour so far has been limited to a small group of employment categories though further progress in this area is on the cards ; agreement on the liberalization of trade in services has been slow in coming and there have been problems in implementing the rights of establishment which is pivotal to unlocking the potential of the regional private sector. but the csme faces other challenges. the implementation of the programme is going to require considerable financial resources, the exact quantum of which has not yet been determined. funds need to be found for financing new regional institutions : to fund compensatory mechanisms : to finance national and regional public infrastructure and to finance the activities of the regional private sector, which ultimately will be the engine of growth and development. while many of the regional institutions are being funded from contributions made by existing member states, there is some concern that many governments, face an acute insufficiency of fiscal resources and will be hard pressed to take on new commitments. moreover, the willingness of the region ’ s traditional bilateral and multilateral partners to go beyond current funding levels is uncertain. to say the least, the desirability of depending on extra - regional bilateral donors to fund regional institutions is a delicate matter. the caribbean development bank has played a pivotal role over the years in financing infrastructural development and social programmes in the region. a significant increase in the bank ’ s resources will be required if the development thrust envisaged by the single economy programme is to be attained. it is widely accepted that the benefits of regional integration are often asymmetrically distributed among participating countries. this inevitable outcome therefore requires that compensatory and / or corrective mechanisms form a necessary and prominent feature of the csme. a regional development fund is envisaged to be part of these compensating arrangements. the current proposal is for a fund of us $ 250 million – us $ 120 million of which is to be contributed by member states with the remainder being sought from the region ’ s development partners. this will be another financing gap that needs to be filled. and finally, regional development in the context of the csme will require new and expanded private sector financing mechanisms. over the past several years we have seen increasing integration of the regional financial system. much of this integration has come through cross - border ownership of financial institutions. however, by and large, despite ample

in a concerted push to improve productivity. it is not easy to measure productivity for the economy as a whole. however, notwithstanding the measurement problems, various estimates for the caribbean economies show gains in productivity in the 1980s, followed by a sharp decline ( in productivity ) in the 1990s. one apparent reason for the decline in the 1990 ’ s is the lower productivity of both public and private investments ( which, in the smaller economies, have been concentrated in the declining agriculture sector, or in tourism, a sector which is now in a mature phase and likely to produce smaller productivity gains ). a second factor that could have led to declining productivity is migration. the economics of migration is a complicated phenomenon. at one stage of our history, we saw migration as a safety valve against possible social explosion arising from high unemployment. migration has also benefitted our economies to the extent that remittances have become a major contributor to foreign exchange receipts in the region. in contrast to these positives, however, the evidence suggests that caribbean migration has represented a brain drain which has weakened the skills base and capacity of regional economies. the excessive emigration of skilled labor not only creates immediate gaps in the labour force, which affects productivity, but also means that resources invested in education and training do not benefit the region as intended. the third challenge that, in my view, regional economies will need to address in the quest for self - sustaining growth and development is the need to deal with chronic fiscal imbalances. for many countries in the region, these imbalances, which have largely resulted from excessive government spending, have led to a build - up in public debt to unsustainable levels. according to imf data, seven ( 7 ) caribbean countries are among the ten ( 10 ) most indebted countries in the world. in general, public debt to gdp ratios of 50 to 60 percent of gdp are considered high. however, six caribbean countries ( st kitts and nevis, jamaica, dominica, antigua and barbuda, grenada, belize and guyana ) have debt ratios between 95 and 160 percent of gdp. guyana is one of the world ’ s highly indebted countries, identified by the multilateral institutions for special treatment under the hipc programme. in the last two years, two of the regional countries – dominica and grenada have needed external debt restructuring. a third, belize – is in the process of debt restructuring. high public debt hurts growth as resources that should be devoted to productive