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Email this citationCIAO DATE: 7/00
Caribbean Basin Economic Development and the Section 936 Tax Credit
Richard L.Bernal
Stephen E. Lamar
North South Center
University of Miami
December, 1996
Abstract
This paper examines the operation of Section 936 as it has functioned to the benefit of the Caribbean and to the benefit of U.S. interests in the region. Specifically, the first section outlines the parameters of the general debate over the Section 936 tax credit. The second section describes the rationale for the Section 936 loan program as an essential complement to the original Caribbean Basin Initiative (CBI). The third section explains the working of the program, and the fourth section identifies ways in which the program has stimulated economic development and promoted regional stability. The final section reviews policy recommendations to preserve Caribbean and U.S. economic development in light of the demise of the Section 936 Caribbean loan program.
The term "Section 936" refers either to a provision in the U.S. tax code or to the credit contained in that provision. The Caribbean loan program is the mechanism through which loans, sometimes referred to as 936 loans, are made available to eligible Caribbean Basin countries. This program is also known as the Caribbean lending program or the Caribbean Development Program, the latter of which is the official name given by the Puerto Rican government.
