Working Paper Series: Special Edition of 2016 to 2018 Interns

3.2 Openness in the ECCU: FDI and Trade Openness 3.2.1 FDI

With respect to FDI, each territory has over the years, developed its own strategy to attract foreign investments into their islands, more focused with the advent of their respective investment promotional agencies. . Notwithstanding the individual country approach to investment promotion, the strategies of these investment agencies are however relatively homogenous across the islands. For instance, all countries allow 100.0 per cent repatriation of profits and capital, waiver on import tax duties, tax exemptions and holidays. In addition to the traditional investments, these countries with the exception of St Vincent and the Grenadines, all have Citizenship by Investment (CBI) programmes that allow foreign investors to acquire economic citizenship. Under these programmes investors normally are required to pay a lump sum or invest in a real estate project approved by the government. Available statistics from 1984 ($78m) 23 show that the level of net FDI has been increasing reaching an all-time high in 2007 of $2.64b after which time a declining trend ensued in light of the 2008/09 global financial and economic crisis. Despite the fact of increasing net FDI levels, inflows to the region have been very volatile as indicated by its growth rate. The statistics showed that the United States of America (USA) has been the largest source of FDI into the ECCU over the study period. Chart 4 shows a co-movement relationship between the growth rates of the ECCU’s GDP per capita in relation to FDI inflows from the USA and the USA’s GDP per capita.

23 Figures quoted are in Eastern Caribbean Dollars (EC) unless otherwise noted.

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