BUSINESS MONDAY: Durant: Be more competitive and innovative

IF Barbados is to build back better, it has to address the issue of export concentration on a single export sector.

That warning has been sounded by Economist, Ian Durant, during a presentation at a recent Central Bank of Barbados function.

Durant, who is Director of Economics at the Caribbean Development Bank, said that sustained economic growth is very critical to the Barbados economy and unless that takes place, the economy will have its challenges.

He said further that the same goes for sustained improvements in the standard of living of Barbadians, since these two achievements have to be led by sustained export growth.

Durant was at the time participating in the Central Bank of Barbados annual review conference, which discussed the topic: “Rebuilding Economies for the Future: Opportunities for Resilience through Diversification”.

However, the CDB Economist maintained that building back better demands that this country and others in the region have to go beyond export concentration.

Caribbean economies, Durant insisted, are so highly concentrated in one export because of a lack of competitiveness, that it limits their exports to a good or service to which these countries have a natural endowment.

“In order to diversify exports beyond those based on natural endowment, the economy becomes competitive,” Durant pointed out.

“So when we speak about building back better, we are talking about making our economies more competitive and innovative, so that they can achieve export diversifi-cation, become more resilient to external shocks, and enjoy sustained growth and improvement in living standards.”

He said that a lot of what is consumed in countries like Barbados is imported, given the fact that consumption and production tend to create a demand for imports which have to be purchased with foreign exchange.

“So if GDP growth is not led or accompanied by export growth, this will result in a depletion of foreign reserves, thereby forcing the Government to reduce domestic demand through austerity,” Durant told the discussion.

“Alternatively, if there is a shock that negatively affects export earnings, aggregate demand has to be adjusted downwards to match the now lower level of export earnings,” the CDB official remarked.

The Economist pointed out that the COVID-19 pandemic has resulted in a significant decline in tourism earnings. He reasoned that earnings from tourism contribute approximately half of the foreign exchange inflows of Barbados and other Caribbean countries.

According to him, this impact caused double-digit declines in GDP in about 13 of the CDB’s Borrowing Member Countries (BMCs) including Barbados.