Mind the Gaps: Caribbean Trade Patterns and the Connectivity Constraint

JaeBin Ahn, Nalisa Marieatte, Philipp-Leo Mengel, David Moore, Josefine Quast, Qingyu Tao and Hou Wang

No 2026/095, IMF Working Papers from International Monetary Fund

Abstract: This paper analyzes trade patterns across the Caribbean Community (CARICOM)—15 Caribbean countries—and makes three main contributions. First, it provides a unified empirical assessment of Caribbean external connectivity by jointly analyzing goods trade, tourism flows, and cross-border banking linkages within a consistent gravity-model framework. Second, it presents new evidence on the role of physical connectivity—shipping and air transport—in shaping both import source concentration and tourism inflows, drawing on granular bilateral trade, tourism, and flight capacity data. Third, it shows that, while financial connectivity matters in a global context, it is not the primary binding constraint for Caribbean economies; instead, limited physical connectivity emerges as the more decisive factor shaping trade patterns and external vulnerabilities.

Keywords: International and interregional trade; shipping and air connectivity; concentration; economic integration; travel demand; transportation supply; banking linkages and trade finance; trade vulnerability and resilience; goods trade; trade pattern; banking-trade nexus; trade-finance linkage; IMF working papers; CARICOM economy; Tourism; Trade balance; Trade in goods; Exports; Imports; Caribbean; Global; Sub-Saharan Africa; South America; Central America (search for similar items in EconPapers)
Pages: 46
Date: 2026-05-15
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