Former Prime Minister of Barbados, Owen Arthur, believes the Caribbean region is facing its worst economic crisis since independence.
Arthur quoted former T&T Prime Minister ANR Robinson who, in 1989, said that if the economic situation did not change in the Caribbean region it could become a "backwater" place moving against the tide of liberalisation in the world.
"It is now, however, beyond dispute that the situation which the Caribbean finds itself is in every respect more dire than that which was said by ANR Robinson. In many instances, there are no domestically articulated solutions that can suffice. Compounding this is the fact that there are no regional mechanisms that countries can look to at this time of great crisis to provide effective solutions to economic problems which require immediate responses."
Arthur called the economic crisis gripping the region the worst in its history.
"The economies of the Caribbean community stand in danger of being overwhelmed by the most debilitating crisis in the region's history. To begin with, in their individual capacities the countries are experiencing the worst growth performance of any class of economies in the global arena. The typical Caribbean economy is now grappling with debt management problems which will not only evoke actions that will lead to drastic cuts in the standard of living of citizens but also compromises the capacity to finance regional institutions and to create new ones."
Arthur, who is an economist by profession, spoke on Monday night on Caribbean economies at the Distinguished Lecturer Series at the Institute of International Relations at the St Augustine campus of the University of the West Indies (UWI).
Uncompetitive economies
Arthur added that there will not be any quick solutions to the low growth and high debt of the region.
"What is more disturbing is, taken as a group, the Caribbean has under performed. It has under-performed compared to the global group of island economies on almost every major determinant of competitiveness."
He quoted from statistics and said the Caribbean's economic failures are "staggering."
"According to a recent study of the region's trade performance, the Caribbean share of world exports has declined from 0.5 per cent in 1980 to 0.2 per cent at recent count. The report also indicated that the region's integration into the global economy has been much slower than countries that have not enjoyed preferential access to some of the major markets in the world. Over the past five years many Caribbean economies have lost market share in their principal export sectors," he said.
He said as small, open economies facing a rapidly changing global environment, the Caribbean are becoming increasingly uncompetitive.
"The region's average tariff is 11.6 per cent and is higher than any region including south Asia and significantly higher than all other small island economies. Higher tariffs lead to a higher cost inputs especially for export-service industries and this results in the capacity of domestic firms to compete operating on a lower tariff regime," he said.
He said the bureaucracy and inefficiency of the region's ports have contributed to the Caribbean's backwardness.
"According to the World Bank's Trade Logistics Performing Index, the Caribbean has a lower index than any other region in the world. We have the most inefficient ports and the most inefficient customs," he said.
He said while the Caribbean region continues to do poorly on international rankings like the competitiveness reports, Singapore and other small countries located in Asia are doing well.
Arthur also said the region's economies are not competitive because of macro-economic imbalances and a "lack of fiscal space."
"The economies of the region do not have the fiscal space to stimulate growth. Jamaica's recent significant improvement on its industries measuring its competitiveness in the area of doing business is a hopeful sign for the region. It is clear that a widespread failure to adopt international best practice is proving to be bad. Tragically, this departure from international best practice determines the enterprises capacity to compete," he said.
Regional integration
Arthur argued that regional integration has come to a standstill.
"In recent years, there is abundant evidence that the regional integration movement has come to face a growing crisis and is manifested in the region's inability to put the engines of integration to work as warranted by circumstances," he said.
He said the Caricom Single Market and Economy was originally designed to create opportunities for the region and serve as the principle agency for which the regional economy would be integrated into the global economy.
"Our region for the first time in its history sought to wrest its own development by embracing economic liberalisation as an ideology. In this regard, the creation of a single market was supposed to remove constraints of movement in the region of goods and labour and served to remove the constraints of 300 years so that our people would be able to create enterprises."
He pointed out the benefits of a monetary union in the Caribbean region.
"If Barbados were part of a monetary union and we had one single currency in the Caribbean, it would save Barbados US$500 million a year."
Despite the existing problems, he said it is time to remove the "constraints" that have kept the Caribbean underdeveloped for so many years.
"There is a new Caribbean economy that is waiting to evolve. The old paradigm of domestic economies based on the use of land, labour and capital is giving way to a new paradigm of a new Caribbean economy driven by innovation, entrepreneurship, technological sophistication, and the adoption of global best practice in every field of economic endeavour. There is an embryonic entrepreneur class emerging in the creative economy which is capable of integrating in to the global economy by using ICT to create their own value chain. This class does not need protection but empowerment."
He said this new entrepreneurship class does not need regional governments to implement new tariffs for protection but it needs to be given new opportunities in the region's participation in new trade agreements internationally.
"Look at Africa. They are now finding these new agreements so effective in their own region. The Caribbean region must show that it can join the rest of the world with confidence."
Bio of Owen Arthur
?
Owen Arthur was born October 17, 1949, Barbados and served as Prime Minister (1994�2008) of Barbados. His economic policies significantly cut unemployment and won his party near-total control of the House of Assembly. He earned a bachelor's degree in economics and history (1971) at the University of the West Indies (UWI) campus in Cave Hill, Barbados, and a master's degree in economics (1974) at the University's Mona campus in Jamaica.
He began working in Jamaica in 1973, first as a research assistant at the university and later as an assistant economic planner with the government's National Planning Agency. He was promoted to chief economic planner within five years. In 1981 Arthur returned to Barbados, and, during the next five years, he worked for the Barbadian Ministry of Finance and Planning (1981�83; 1985�86) and the Institute of Social and Economic Research of the UWI Cave Hill campus (1983�85).
In 1993, Arthur was appointed the parliamentary opposition leader, and, upon his party's decisive victory in the September 1994 elections, he became Prime Minister.
Arthur instituted economic reforms that cut unemployment from more than 20 per cent in 1994 to just over 9 percent in 2000. His administration boosted the agricultural and tourism industries and retained power with the BLP's landslide victories in the 1999 and 2003 elections.
