The Hurricane of Debt Hammering International Trade of Selective CARICOM Member States: Why the Region Needs Structural Reform of Official Development Assistance

Abstract

This study sought to examine the effects of public debt and official development assistance (ODA) on the balance of trade in
selected Caribbean Community (CARICOM) member states. The goal was to provide actionable policy insights that could help enhance regional economic stability. This study created a hybrid methodology that combined a panel ordinary least squares model with a deep residual network model and used it to examine data from seven Caribbean countries over the 2013–2022 period. The results indicated a significant negative dependence between public debt and trade balance, with a corresponding coefficient of −0.6153 indicating that a 1% rise in public debt was associated with a 0.62% decline in the trade balance. Additionally, ODA was found to have a positive impact, which was reflected by a 1% increase in ODA corresponding with a 1.95% improvement in the logarithmic value of the trade balance. Due to these results, this study lobbies in favor of the implementation of debt-for-climate swaps as a policy mechanism to alleviate debt burdens while facilitating the allocation of resources to climate-resilient infrastructure. This strategy seeks to facilitate long-term economic resilience in the region by addressing both fiscal sustainability and environmental challenges. A limitation of this study is that due to limitations of data, all 15 CARICOM full member states and 5 associate member states were not included. Nevertheless, the findings of this study remain valuable, as they justify the need for debt relief in the region.

Received: 18 March 2025 | Revised: 14 May 2025 | Accepted: 28 May 2025

Conflicts of Interest

The author declares that he has no conflicts of interest to this work.

Data Availability Statement

The data that support the findings of this study are openly available at https://github.com/doncharles005/POLS-ResNet.

Author Contribution Statement

Don Charles: Conceptualization, Methodology, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing – original draft, Writing – review & editing, Visualization, Supervision, Project administration.