Chapter 1. Corporate Governance, Emerging Markets and Development: The Commonwealth Caribbean

• Pages: 7-42

CHAPTER 1

CORPORATE GOVERNANCE, EMERGING MARKETS

AND DEVELOPMENT

The Commonwealth Caribbean

J D

INTRODUCTION

When I was invited to write a chapter in Commonwealth Caribbean Corporate Governance,

I was hopeful that the situation that I depicted in Companies, International Trade and

Human Rights1 would be healthier. In some ways, I argue, it is, and on the other hand it

is worse. It is better because many people understand what is happening although they

are not able to change the situation easily. It is worse because of the debt situation in

some Caribbean countries.2 There is a proliferation of Bilateral Investment Treaties

(BITs) and Multilateral Investment Treaties (MITs) involving the Caribbean countries.

The grip of the neo-liberal economic paradigm is pervasive as shown by the interfer-

ence of the International Monetary Fund (IMF).

The brief of this chapter was to update some of the chapters in the 2005 book

especially as far the Caribbean countries were touched on. This is an ambitious brief

because the Caribbean area is enormous with about 7,000 islands,3 di erent political

systems, di erent cultures, histories and corporate governance regimes.4 The remit of

this chapter is narrower because the book only includes the Commonwealth Carib-

bean countries;5 however, it is a large task and inevitably I will only be able to touch on

1 J Dine, Companies, International Trade and Human Rights (Cambridge University Press, 2005).

2 For example, in Jamaica the GDP–debt ratio is 140% and in 2013 the IMF approved a

$932million four-year ‘Extended Fund Facility’, their conditions. The rate of unemployment is

16.5%. See The World Fact Book, ‘Central America and Caribbean: Jamaica’ <https://www.cia.

gov/library/publications/the-world-factbook/geos/jm.html>, accessed 9 November 2014.

3 Worldatlas, ‘Caribbean’ <http://www.worldatlas.com/webimage/countrys/carib.htm>

accessed 9 October 2014.

4 R Antoine, Commonwealth Caribbean Law and Legal Systems (2nd edn, Routledge-Cavendish, 2008).

See also A Foxley, Groundwork for Inclusive Development, Responses to Emergent Challenges for Latin American

and Caribbean Economies (Center for Latin American and Latino Studies, American University,

2014): ‘in late 2012, 20 countries already had per capita incomes of more than US$10,000, and in

four of them (Antigua and Barbuda, Argentina, Chile, and Trinidad and Tobago) the fi gure was

close to US$20,000. At the same time, another 11 economies are struggling to enter the middle

income group, with very unequal performances, ranging from Haiti to countries like Jamaica and

the Dominican Republic, which will have crossed the US$10,000 threshold by 2015.’

5 This is di cult because there are di erent defi nitions of ‘The Caribbean Commonwealth’. See

The Commonwealth, ‘Member Countries’ <http://thecommonwealth.org/member-countries>

accessed 9 October 2014 and ‘Members of the Commonwealth Federation’ <http://www.

tntisland.com/countries.html>, accessed 9 October 2009. My understanding is that it extends

to Antigua and Barbuda; Bahamas; Barbados; Belize; Dominica; Guyana; Jamaica; St Lucia;

StKitts and Nevis; St Vincent and Grenadines; Trinidad and Tobago.

8 Commonwealth Caribbean Corporate Governance

a few countries in any detail.6 However, I am sad that the preface that I wrote in 2005

is still resoundingly true and I am still angry about the inequality between individuals

and countries. I wrote:

This book is written from a perspective shared with Thomas Pogge; We, the a uent

countries and their citizens, continue to impose a global economic order under which

millions avoidably die each year from poverty-related causes. We would regard it as a

grave injustice if such an economic order were imposed within a national society. We

must regard our imposition of the present global order as a grave injustice unless we

have a plausible rationale for a suitable double standard. We do not have such a plau-

sible rationale.7

First I must defi ne the parameters of the chapter. Why is the chapter talking about

‘corporate governance’ while considering international trade treaties, the international

fi nancial institutions, economic theories, inequality and climate change? For this I will

go back to an earlier text, The Governance of Company Groups8 where I wrote:

My colleagues have commentated frequently on my propensity to see company law

illustration for (nearly) discussion, accusing me of expecting company law to ‘take over

the world’. This is the book where I discover that not company law but companies have

all but done so and confront us with the frightening reality of polarisation of incomes

and the globalisation of poverty.9

I have now broadened the focus because of the prevalence of the recent phenom-

enon of ‘corporate governance’ a term that cannot be easily defi ned:

One would think that the issue of cor porate governance would be a purely technical

and slightly legalistic one falling within the ambit of what we defi ne rather strictly as

company law. Therefore, the issue in question would fall within the interests of mainly

academics or corporate lawyers. The truth however is very di erent. Corporate gov-

ernance found itself at the very centre of a debate that relates to the very cultural iden-

tity and basic political choices made on the part of societies. The fact that corporate

governance has provoked a debate, which e ectively touched upon the fundamental

ideological choices of the societies in question, clearly revealed the true parameters

of the issue and its far-reaching e ect. The reason behind the debate that has gener-

ated hundreds of academic articles and books,10 a very lively exchange of ideas and

6 There has been e orts to promote an economic integration in the region, the latest agreement is

the CSME, Caribbean, Single Market and Economy, 2006 but it is faltering. See Curtis Reynold,

‘The Political Economy of Caribbean Regionalism in the Twenty-First Century: Rebirth or

Resuscitation?’ (2012) <http://ssrn.com/abstract=2297556> accessed 23 October 2014.

7 Thomas Pogge, World Poverty and Human Rights (2nd edn, Polity, 2007) 109.

8 Cambridge University Press, 2000.

9 Dine, Gover nance of Company Groups (Cambridge University Press, 2000) preface, xix.

10 A Riley, ‘Understanding and Regulating the Corporation’ (1995) 58(4) Modern Law Review 595,

595; JE Stiglitz, ‘Multinational Corporations: Balancing Rights and Responsibilities’ (2007) 101

Proceedings of the Annual Meeting (American Society of International Law); D Attenborough,

‘Giving Purpose to the Corporate Purpose Debate: An Equitable Maximisation and Viability

Principle’ (2012) 32(1) Legal Studies 4; JE Parkinson, Corporate Power and Responsibility: Issues in

the Theory of Company Law (Clarendon Press, 1993) 237; A Keyes, The Corporate Objective (Edward

Elgar, 2011); B Che ns, Company Law: Theor y, Structure and Operation (Clarendon Press, 1997)

1999; S Bottomley, The Constitutional Corporation (Ashgate, 2007).

Chapter 1: Corporate governance, emerging markets & development 9

opinions on the part of politicians, industry and society and sometimes a rather overt

confrontation between important parts of the society such as the employees and the

employers is the fact that corporate governance requires the e ective engagement of

actors that lie at the heart of the most important issues for humanity. To consider ‘Cor-

porate Governance’ is also to consider competing models of capitalism and competing

global economic models.11

The history and therefore the culture of the Caribbean countries are imbued

by the tragic events around the transatlantic slave trade.12 There is more and more

research and evidence of the disastrous legacy13 of the trade on people in the Carib-

bean countries and also in the black communities in the United States and in Europe

ranging from hypertension in black individuals to the lack of confi dence with makes

some people whiten their skins.14 Other colonised people have recognised ‘cultural

cringe’,15 a lack of confi dence in their cultural heritage. These issues are wide ranging

so this chapter will focus on the ‘modern colonisation’ of small ‘developing’ countries

and emerging markets and what this means in the Caribbean. Ha-Joon Chang power-

fully illustrates the way that rich nations are bullying less advantaged countries by a

web of legal treaties which assumes that the only way that countries can develop is by

opening their markets, which is the neo-liberal orthodoxy. This posits a free market,

deregulation, a small state and privatisation.16 Although Chang does not believe that

there is a deliberate conspiracy to stop poorer countries developing, this is what is

happening because of the rhetoric and implementation of the neo-liberal experiment

aided by the international fi nancial institutions, the ‘Unholy Trinity’,17 the IMF, the

World Bank (WB) and the World Trade Organization (WTO). Chang’s thesis is that

all of the developed nations historically used a set of instruments, which promoted

‘infant industries’ either by protecting those industries or by subjecting other countries

by means of war s, colonisation and unfair trade practices. When the victorious, devel-

oped countries are ready they will open their borders because they are able to trade

with other parties using their advanced technology.18 Since the International Financial

11 J Dine and M Koutsias, The Nature of Corporate Governance; the Signifi cance of National Cultural Identity

(Edward Elgar, 2013).

12 JE Inikori and SL Engerman (eds), T he Atlantic Slave Trade; E ects on Economics, Societies, and Peoples

in Africa, the Americas, and Europe (Duke University Press, 1992).

13 See forthcoming Fernne Brennan, Race Rights, Reparations, Institutional Racism and the Law (Ashgate,

2015).

14 Fernne Brennan and John Packer (eds), Colonisation, Slavery, Reparations and Trade; Remedying the

‘Past’ (Routledge, 2013); CE Grim, ‘The Possible Relationship between the Transatlantic Slave

and Hypertension in Blacks Today’ in Inikori and Engerman (eds), The Atlantic Slave Trade (Duke

University Press, 1992) 239.

15 I am indebted to my colleague Richard Cornes for this term coined when we were researching

whether the British Virgin Island (BVI) should build a Commercial Court. See Richard Cornes

(Project Leader), Steve Anderman, Janet Dine, Lisa Jack, Paul Webster QC and William Wood

QC, The Judicial System of the Virgin Islands; Options for Reform (Essex University, 2006).

16 Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (1st edn, Anthem

Press, 2003) and Bad Samaritans (Random House Business, 2007).

17 Ha-Joon Chang, Bad Samaritans (Random House Business, 2007) 36.

18 Ha-Joon Chang, Kicking Away the Ladder (1st edn, Anthem Press, 2003) and Bad Samaritans (Random

House Business, 2007) and see also Ha-Joon Chang, Economics; The User’s Guide (Pelican, 2014).