Caribbean Basin Initiative:

Need for More Reliable Data on Business Activity Resulting From the Initiative

NSIAD-86-201BR: Published: Aug 29, 1986. Publicly Released: Sep 15, 1986.

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In response to a congressional request, GAO surveyed 285 new businesses in the Caribbean Basin region regarding their operations in Central America and the Caribbean, specifically: (1) how the Department of Commerce developed its list of businesses; (2) the data Commerce obtained on the businesses; and (3) the results of GAO conversations with some of the businesses.

GAO found that: (1) the Commerce list is not a reliable indicator of business investments made as a result of the Caribbean Basin Initiative (CBI) and is useless in measuring the program's effectiveness; (2) the list lacked information on businesses' addresses, phone numbers, and commencement of operation dates; (3) publicized information on successful ventures could inform and encourage potential investors; (4) Commerce's data should differentiate among proposed and actual investments, new firms opened and expanded due to CBI trade provisions, and new business activities indirectly related to CBI, to lessen the risk of misinterpreted or misrepresented information; (5) some firms on the list were not related to CBI trade provisions; and (6) 37 of the 106 firms contacted said CBI had greatly influenced their decisions to establish operations in the Caribbean Basin, while 39 said CBI had not been a factor in their decisions.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Commerce accepted this recommendation and plans to implement it in a study of CBI-related investments, which began in early 1987. In coordination with the Agency for International Development, Commerce developed a methodology for the study, which has been approved by the Office of Management and Budget. The study was published and sent to Congress on November 28, 1988.

    Recommendation: The Secretary of Commerce should ensure that the planned 1986 survey of CBI-related business activity develops reliable data. At a minimum, the data should be: (1) screened to avoid double-counting of firms and to exclude firms that have no relationship to CBI; (2) verified to ensure completeness and accuracy; and (3) analyzed to determine each business' operational status and relationship to CBI.

    Agency Affected: Department of Commerce


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