CARIFORUM and UK EPA Study

prices will be lower, and the quantity supplied will increase. Reality, however, does not approximate to the two factor two country models of economic theory, and in this tariff free and quota free space, CARIFORUM exports will necessarily compete with other goods being imported into the UK, on similar terms. Additionally, other factors such as non-tariff barriers, as well as transport costs will impact on the volume and value of trade. Lui, Riley, Holland, Orazgani, Paluchowski (2013, p.51) in their study, for which one objective was “to model the long run income elasticity of import demand by product for country groups” and focusing on price sensitivity rather than income sensitivity, finds that “… differences in the parameters of the import demand relationship are more significant across product groups than across countries. In other words, in estimating price and income elasticities of import demand within the standard model it is important to take into account differences in demand for different products, but less important to take into account differences across countries” A review of the international literature (Vacu & Odhiamb, 2020) looking at factors that influence import demand, noted that for the UK, the main factors influencing import demand were, disaggregated expenditure components and relative import price. This further underscores the need to address issues of competitiveness in a context of similar levels of market access granted to various regions, including the EU.

4.8 Global Value Chains and CARIFORUM

The Inter-American Development Bank (IDB) describes Global Value Chains (GVCs) as “breaking up of the production process into different stages that take place in different countries. Alternatively, GVC can be defined as, “the sequence of all functional activities required in the process of value creation involving more than one country” (Banga, 2013). At each stage in the production process, an unfinished product gains value - added and then crosses national borders until the final product is complete.” According to the OCED 70% of world trade involves Global

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