EDITORIAL: In search of a new model
SINCE the onset of the global economic crisis and the prolonged recession Barbados has endured from that situation, there continues to be calls for the country to fashion a new economic model. That crisis, building on what has been taking place since the early 1990s, has reinforced the view that yes there is a need for a new economic model that would allow this country to earn foreign exchange, and grow its economy while maintaining the high standards of living to which Barbadians are accustomed.
Quite recently, the Minister of Industry and International Business, Donville Inniss, said that while the model Barbados pursued over the last 50 years had served the country well, it is becoming obsolete. Therefore, something else is required to replace it.
He explained that Barbados’ growth and development was built around preferential access to markets in Europe and the USA for commodities produced here. That was almost identical to a number of other countries in Africa and the Pacific, since ties to their former colonial powers made sure that the colonies did not go bust, even after independence. However, the writing was on the wall for that policy of trade preferences ever since the collapse of Communism in Eastern Europe in 1989; the subsequent end to the East-West Tensions; the coming into being of the World Trade Organisation in the early 1990s promoting free trade; and the move by the World Bank to deny concessionary financing to these countries on the grounds that the per capita incomes of countries like Barbados, Trinidad and Tobago, Jamaica and others, made them ineligible for that kind of financing.
So in a nutshell, there was the need for an unfolding paradigm on the way forward. Events of the past did give our policymakers something to chew on and to recognise that the world had changed and small states had to fend for themselves. So while it is necessary to lament the fact that the development model has served its purpose, we have to come up with a new strategy to take our countries forward. At the time the sugar and banana industries of the Caribbean were being undermined, came recommendations that this region had to restructure their economies. Therefore, the partial demise of our commodities was followed by international business and financial services, which became the next best option. That has mushroomed over the past 20 years or so to the point that it helped Barbados and some regional countries amass adequate inflows of capital, which would have made up for the earnings from commodities. Lo and behold international business has become a target for the OECD and the countries that it represents. They have damaged these islands to the point that they refer to them as tax havens indulging in harmful taxation practices.
So where do they go from here? Former Prime Minister Owen Arthur has said that there is a need for development where innovation, technology and entrepreneurship become the key drivers of economic and social activity.
He has labelled these as the fourth industrial revolution, while cautioning that failure to embrace what he calls the model would create difficulties for Barbados. It seems to be a project for everyone who has an interest in the future of this country. There is a role for everyone and we must not shirk our responsibility.