The government of Grenada has been very involved in attempts to foster and increase foreign direct investment (FDI), resulting in highly varying outcomes as demonstrated by a roller-coaster FDI since the 1970’s (WTO, 2011). Policy instruments, aimed at reducing the time and effort it takes to trade across Grenada’s boarders, have resulted in Grenada being ranked well below the regional average and comparatively sized markets (Grenada ranked 40 in ease as compared to the regional average of 87 and Jamaica at 97 out of 187 countries) (IMF, 2012). The government of Grenada has also instituted strong foreign investor protections, placing it 29th out of 187 nations (IMF, 2012). The protection of foreign investors has not gone unnoticed by some citizens of the island with a number of reporters calling to question the motivations of government officials and crying a foul (Benjamin, 2013) (Ferguson, 2009). Due to the limited resources of the government, most FDI instruments since 2009 have been restricted to reduction in construction permit complexity (ranked 11th globally), access to electricity (ranked 39th) and reducing hurdles to staring business (ranked 60th), some of the largest hurdles include registering property (154th), enforcing contracts (162nd) and resolving insolvency (119th).
Regional Economic Integration in Grenada
As a member of CAIRCOM, Grenada is strongly tied to regional economic interest in the Caribbean. Although not as strong other regional economic bodies (such as the EU), CAIRCOM has embarked on a multi decade development strategy to work toward greater food security, combat non communicable diseases and reduce crime, all the while increasing trade and reducing barriers to travel (CARICOM, 2012). Grenada has been instrumental in calling for the free movement of labor within the CARICOM nations and the removal of alien landholding taxes within CARICOM, which it sees as a mechanism to increase non domestic (but regional) investment, especially from Trinidad & Tobago, which is less than an hour away by air (Lord, 2013). In addition, the government of Grenada has been, since late 2005, exploring oil and gas collaboration with Trinidad & Tobago, resources which it has neither the infrastructure nor expertise to develop by its self (EC, 2013). Grenada Integration with foreign markets
Integration in Europe
The Grenadian economy interacts with the European Union thought a series of agreements stretching back 3 decades (EC, 2013). In 2008 an updated Economic Partnership Agreement (EPA) between the EU and CARIFORUM (a consortium of CARICOM and other central and South American nations) aimed to govern the trade of regional products with the goal of increasing food security and developing preferential treatment for products of CARIFORUM states, including Grenada. Specifically covered under the agreement are the trade of bananas, rum, rice and sugar at preferred rates (EU, 2008). Of these, rice is the only product not produced at any commercially viable scale in Grenada. Additionally, the agreement outlines support from the EU for emerging market development and has been instrumental in liberalizing tourism services (Section 7, article 110) (EU, 2008). Even in spite of these increased trade preferences, trade between the EU and Grenada has been on the decline since 2008, both in exports from Grenada to the EU and total trade value (EU, 2013).
Integration in the Americas
Of the export trade conducted by Grenada in 2009, 83.9% was directed towards countries in the Americas (WTO, 2010). More specifically, four countries in the American bought the majority of exports, Dominica (16.4%), the United States (16.3%), Saint Lucia (11.2%) and Barbados (9.4%) (WTO, 2010). The primary exports were agricultural goods (58.6%) and manufacturing (41.1%) which was comprised mainly of food and beverages, textiles and some light assembly (WTO, 2010). Grenada imports heavily from its American neighbors, especially the United States ($87 million USD in 2009) and Trinidad & Tobago ($70 million USD in 2009) (WTO, 2010) which contributes to its large global trade deficit.
Integration in Asia
The Grenadian economy has been dynamically tied to many Asian nations, primarily as a result of development loans taken out by the government and totaling in the tens of millions of US dollars (Wikinson, 2012). In a case of global political infighting, Taiwan, who loaned Grenada over 30 million US during the 1990’s for development work. Later (2005), the government of Grenada reversed its allegiance recognizing China’s assertion that Taiwan was breakoff colony in an effort to secure China funding for the development of a stadium for the world cup of cricket. Taiwan required repayment of the loan as retaliation and, given the economic condition of Grenada in the wake of hurricane Ivan, the county defaulted on its obligation. This resulted in additional economic impacts as Taiwan garnished fees, collected in the US, which the island of Grenada charged cruise ships to dock. These funds, a significant component of the Grenadian budget, have become very contentious and resulted in a host of legal battles (Wikinson, 2012). To further complicate issues, Grenada has been involved in a multiple donor request from China ($8.7 million in 2013) while owing large sums to the Export-Import Bank of China ($32 million) (Caribbean 360, 2013) (CNN, 2013). Of the countries in Asia, the only appreciable export market for 2008 was Japan with a goods value of $1.1 million USD (WTO, 2011).
Integration in the Middle East and Africa
Grenadian exports to the Middle East and Africa represent less than 1% of Grenada’s exports from 2002 to 2010 (WTO, 2011). One notable spike occurred in 2009, with 15.44% of exports going to the Middle East, comprised primarily of agricultural raw materials (WTO, 2011).