Thesis (Ph. D.)--Purdue University, 2004. / Vita. Includes bibliographical references (leaves 320-354).

This Thesis explores the possibility of increased export and export earnings stability for Costa Rica after the implementation of the Caribbean Basin Economic Recovery Act (CBERA) or Caribbean Basin Initiative (CBI). It was expected that this policy would not only increase trade and exports for some developing nations in the Caribbean but also promote development and economic stability. An export earnings model was calculated using the deflated export earnings to the U.S. and fitting a time trend equation by OLS to calculate the residuals. These residuals were then transformed to develop a risk or instability equation which included independent variables such as the export concentration index to reflect diversification of exports, the ratios of food, manufactures and raw materials in exports and the share of total Costa Rican exports deriving from the U.S. market. A reduced risk equation was estimated using OLS. The relative effect of the policy, measured by a dummy variable for the period 1983-1987 was estimated for each of the independent variables. The results indicate that there has been a distinct effect of the policy variable upon the diversification, manufactures, raw materials and food products exported by Costa Rica to the U.S. The increase in manufactured exports is significant, at the same time, there have been decreases in the value of traditional agricultural exports such as coffee, sugar, bananas and beef. Vegetables' and fruits' share of Costa Rican exports to the U.S. has increased noticeably. Although total export earnings for Costa Rica show negative growth during the period 1981-1983, U.S. export earnings have been consistently increasing. Export earnings from the U.S. show a significant increase as detected by the share of Costa Rican total exports earnings originating in the U.S. In 1980 less than 40% of Costa Rican export earnings came from the U.S. while in 1987 the figure is just over 60%, indicating increased dependency on this market as a source of export earnings. Export earnings instability, as measured in this research, shows statistically significant reductions after 1983 leading the author to conclude that this policy is possibly increasing trade and reducing the long term instability of Costa Rican exports to the U.S., therefore having some effect on the stability of long term development, and possibly, causing changes in the country's capability to deal with its debt and development efforts. The components of instability or risk of export earnings from the U.S. market yielded interesting insight into possible causes of these variations. Statistically significant negative signs were detected for the ratio of foods in exports and the dummy variable, indicating that reducing the share of foods in exports in this market would cause increases in risk and that the policy variable has had the consequence of reducing risk. The ratio of raw materials in exports was, as expected, of limited statistical significance although it consistency exhibited a negative sign indicating similar effects as the food exports. The manufacture ratio in exports was detected to be in general statistically significant during the trial estimations however, lacking consistency. The export concentration index was not determined to be statistically significant in causing export earnings instability in this particular case, however as with all independent variables tested, it was significantly changed after 1983. These results tend to support the original intention of the CBERA for the case of Costa Rica. Increases in exports and export earnings stability appear to have ocurred. However, the research suggest some caution in relying heavily in the U.S. market as a source of export earnings and supports the view that traditional exports bring about more stability than manufactures and raw material exports. / Graduation date: 1989

Thesis (M.A. in Security Studies (Western Hemisphere))--Naval Postgraduate School, June 2009. / Thesis Advisor(s): Looney, Robert E. "June 2009." Description based on title screen as viewed on 13 July 2009. Author(s) subject terms: DR-CAFTA, Western Hemisphere regionalization, Free Trade Area of the Americas (FTAA), Central America Common Market (CACM), Caribbean Community (CARICOM), Caribbean Basin Initiative (CBI), economic restructuring, trade liberalization, nontraditional exports, Free Trade Zones (FTZs), Dominican Banking Crisis 2003-2004, niche markets Includes bibliographical references (p. 97-103). Also available in print.

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