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Mr. A. Salehizadeh, Mr. Peter Berezin, and Mr. Elcior Santana
It is typically assumed that countries in the Caribbean suffer from a lack of output and export diversification. Contrary to this popular perception, we find no evidence that output variability is higher in Caribbean countries than in larger, more diversified, developing economies. In addition, we find no evidence that export earnings are more volatile in the Caribbean economies than elsewhere. In fact, export earnings are quite stable in the Caribbean, reflecting the fact the region is rather unique in that most of its export earnings are generated from service exports, which tend to be considerably less volatile than goods exports.
Mr. A. Salehizadeh, Mr. Peter Berezin, and Mr. Elcior Santana

performance of nations is likely to be non-monotonic, first entailing a period of divergence followed by a period of convergence. 50 Initially, globalization is likely to lead to economic divergence as the forces of agglomeration shift industry toward core markets while deindustrializing “periphery” markets. Eventually, however, when transport and communications costs fall sufficiently far, the forces of agglomeration tend to weaken. At this stage, firms in core market find it profitable to relocate to periphery markets where land prices and labor costs are low. To some