Industrial development strategy needed
BARBADOS urgently needs to pursue an industrial development strategy, and this is so whether or not it has addressed the fiscal problems currently confronting the economy.
These were among views shared by Dr. Don Marshall, Director of the Sir Arthur Lewis Institute for Social and Economic Studies (SALISES), as he and a panel discussed a paper on economic recovery penned by Dr. Delisle Worrell, the former Governor of the Central Bank of Barbados.
Speaking at the session held as part of Tuesday’s annual general meeting of the Barbados Economics Society (BES), Dr. Marshall said Barbados needs to do more than just deal with its fiscal deficit. Stating that developmental issues must be tackled, he charged that Barbados’ main problem is its limited diversification. So that while this country can court the IMF as much as it wants since the IMF is about fiscal correction, that is not the main issue, he argued.
“The underbelly of the crisis is our narrow level of economic diversification,” the SALISES head reasoned.
The SALISES official remarked that the IMF agreements for Grenada, St. Kitts and Nevis, and Jamaica never provided the space for these countries to pursue an industrial policy.
In the paper, Dr. Worrell outlined a fiscal correction strategy for Barbados that includes scaling down employment numbers in the public service by 4 500 persons over a three-year period, seeking out assistance from the International Monetary Fund to finance severance for the severed employees, and improving productivity in the public sector. These measures, he said, would improve Barbados’ credit rating, allow the country to attract more investment, enhance confidence, and to return the island to foreign markets for loans.
As for investment flows, Dr. Marshall said that during the 1990s Barbados attracted a huge amount of portfolio capital for the acquisition of real estate, something that was not sustainable. Around that time there was a slowdown of foreign direct investment to developing countries and the fact that most of it went instead to China.
To this end, the flows that this country will continue to attract is for portfolio investment and not foreign direct investment.
Barbados, he stressed, is blessed with strong negotiators, and must be prepared to take on China for development assistance to boost our productive sectors.
Dr. Marshall advised therefore that this ought to be the way forward rather that accepting gifts from China for the redevelopment of the Garfield Sobers Gymnasium.
The SALISES Director insisted that China’s involvement in some developing countries has not been as many have believed. (JB)