Economist Prof Roger Hosein has warned that strengthening ties between the Trinidad and Tobago Government and the Caribbean Community (Caricom) is not “merely diplomatic but economically necessary”.
In an interview with Express Business, Hosein said deeper Caricom integration, when aligned with certain structural conditions, represents a credible pathway for further export diversification and macroeconomic stability.
Economist Prof Roger Hosein
He said strengthening this relationship is therefore economically necessary to ensure regional integration delivers its full developmental and macroeconomic benefits.
According to Hosein, trade complementarity measures the extent to which the export structure of one country aligns with the import demand of another, providing a framework to assess how well trading partners “fit” each other economically.
“It is computed as a weighted sum across products, where export shares are matched with import shares, and then scaled by the inverse of each product’s share in world trade, giving greater importance to relatively scarce goods,” he said.
He noted that while the index has no strict upper limit, its interpretation is anchored around a benchmark value of one.
“A value equal to one indicates a neutral case in which export supply and import demand are aligned exactly in proportion to global trade patterns. Values greater than one imply above-average complementarity. Values below one indicate weak alignment,” Hosein said.
According to his analysis, most Caricom economies recorded trade complementarity values above one with T&T, signalling a strong alignment between this country’s export structure and regional import demand.
“In analytical terms, this reflects a strong structural congruence between T&T’s sectoral supply composition and the expenditure patterns of partner economies. This indicates that T&T’s production mix is concentrated in goods for which regional demand shares are disproportionately high,” he said.
Hosein linked this outcome to what economists describe as the “natural trading partner logic”.
“Two countries are natural trading partners if they have high complementarity and low trade costs, ensuring that bilateral trade expansion reflects underlying comparative advantage rather than policy distortions,” he said.
Hosein said from a macroeconomic perspective this alignment reduces the efficiency losses typically associated with preferential trade agreements.
“In effect, welfare losses are contained because the price gap between T&T and alternative international suppliers is relatively narrow for a subset of goods,” he said.
He pointed to countries such as Jamaica, Suriname and Guyana as examples where high complementarity suggests strong potential for expanding trade.
“Empirically, the high complementarity values observed indicate a strong alignment between T&T’s export specialisation and partner import demand, pointing to substantial scope for both deepening existing trade relationships and expanding into related product lines,” Hosein said.
He explained that this expansion can occur in two ways: increasing volumes and consistency in existing exports, and diversifying into closely related goods.
“Deepening can occur along the intensive margin while the existing demand structure provides a platform for expansion along the extensive margin,” he said.
“This process is underpinned by product relatedness, whereby capabilities accumulated in existing export sectors can be redeployed into adjacent activities with minimal adjustment costs.”
Hosein added that this reflects a broader pattern of economic transformation.
“In economic terms, this reflects a path dependent process of structural transformation. Diversification is not random but follows a predictable trajectory shaped by existing productive capabilities,” he said.
While the outlook within Caricom remains strong, Hosein cautioned that extra regional markets present a more mixed picture.
He said countries such as Chile show moderate complementarity but face higher trade costs, limiting actual trade flows.
Meanwhile, Panama and Ghana exhibit weaker structural compatibility.
“Panama and Ghana, with complementarity values at or below unity, exhibit weak structural compatibility, implying lower expected trade intensity and relatively limited scope for sustained export expansion,” he said.
However, he identified Curaçao as a notable exception, with relatively strong complementarity that could be further leveraged as trade costs decline.
“The introduction of the Don Andres maritime service represents a meaningful reduction in effective transport costs, improving connectivity and strengthening the mechanism through which complementarity is converted into actual trade outcomes,” Hosein said.
Despite these favourable structural conditions, Hosein warned that the full benefits of regional trade depend on stable and cooperative policy relationships.
“Deeper Caricom integration represents a credible pathway for further export diversification and macroeconomic stability. However, this outcome is now partly contingent on resolving ongoing tensions between the Government of T&T and Caricom,” he said.
He said without policy clarity and institutional alignment, even strong economic fundamentals may not translate into real gains.
In March, Prime Minister Kamla Persad-Bissessar said she does not support the reappointment of Caricom Secretary-General Dr Carla Barnett and that T&T will be reducing its financial contribution to the regional group.
Since then, concerns from the business community about the future of regional exports have arisen. Major business groups acknowledged the Prime Minister’s stance but emphasised the importance of regional trade.