OECS Economies too small to grow in isolation
Monday, March 27, 2017 — The biggest impediment to growth of the economies of the OECS is their small size and scale of production, and the lack of a unified regional approach to development. That’s the view of Dr. Vanus James, Economist, Statistician and regional Academic. He made the remarks at the OECS Economic Growth Forum in Grenada on Friday March 17, 2017. Citing tertiary education as one of the growth sectors with the greatest potential for growth, Dr. James singled-out Grenada (St. Georges University) as well as Antigua, as leading in Tertiary Education in the OECS. He believes that model must now be replicated across the OECS, in other growth sectors such as the Creative Industries and the ICT Sector, identifying skills gaps and helping to attract foreign investment through a regional approach.
The Grenada Forum was the final in the Public Education Forum Series – Vini Koze – which engaged citizens of the OECS on key development issues such as Education, Climate Change, Agriculture, Youth Empowerment, and Regional Integration.
Vanus James, who has worked as a Senior Policy Advisor to the United Nations Development Programme (UNDP), says with very slow growth in large economies such as the United States, Canada and Europe, which are major source markets for our tourism industry as well as buyers of our exports, the region is at a critical juncture in terms of its economic fortunes. He says these developed countries and traditional allies, are all threatening to close their economies and reduce imports from the region, a factor he says can “negatively affect our ability to increase our exports, which is what we need as small countries, in order to raise our rate of growth.”
Dr. James surmised that “for the first time, countries of the Eastern Caribbean are at a juncture where they are confronted with the challenge of how to diversify their economies away from tourism, in the context of slow growth and falling imports in the North Atlantic.”
“At this moment in our history, we must create new types of exports by building our domestic capital sector. That’s the most historic challenge we’ve ever faced, from Slavery to now. How to do we create capital with our own capabilities. In that regard, we need new thinking about how to grow our economies.”
Dr. James feels very strongly that as a region, we need to return to the growth strategies we used before globalisation. He explained: “We import most of the assets we use to produce, but if you want to engage the world, you have to build domestic capability, to create demand in the world for the things we export. We must build-up our domestic capital sector. The fundamental problem we have in the Caribbean, is that our domestic sector is too small. We’re not doing enough with the Creative Industries. We’re not doing enough with ICT as exports. And we’re not doing enough with Tertiary Education as an export. To engage with the changing world, we must change the type of exports we offer by building our domestic capital sector.”
Dr. James is adamant that in order to build the domestic capital sector, “we have to confront the historical inequalities in our societies, including the unequal access to power.” He asserts that the people who get access to power and who shape policy in the region, are a select few who have always had access to the levers of power, and who have not invested well in our domestic capabilities. Consequently, he recommended major reform in governance in the OECS and the wider Caribbean. He called for participatory budgeting at the national level and joint policy-making, both of which would ensure more people involvement and people participation in governance.
Hon. Oliver Joseph, Minister for Economic Development, says the Government of Grenada is taking steps to ensure more citizen engagement in national budgeting. He explained: “In the preparation of our National Budget in Grenada, we have consultations where we go throughout the island to get the views of farmers, the youth, and all stakeholders, to hear what they would like to see in the budget and what initiatives they would like the Government to pursue at the community and national level.”
Grenada has just come to the end of a homegrown Structural Adjustment Programme from which it received a passing grade from the International Monetary Fund (IMF), following a recent Country Assessment with significant reduction in its Debt to GDP ratio from 60 percent to 40 percent. Minister Joseph contends: “The only reason we have been so successful is because we continue to listen to our social partners in shaping and implementing national policy. The success we have achieved is because of the participation and ‘buy-in’ we have had from the people.”
In relation to the issue of rising youth unemployment in OECS Member States, Minister Joseph says the era of government being the largest employer is coming to an end. He says the approach should be for government to give incentives to the private sector and seek to attract foreign direct investment to create jobs. Minister Joseph disclosed that in 2016, Grenada spent EC $30 million on Training of young persons through the Grenada Training Institute, where they attained Caricom Vocational Qualification (CVQ) in various skilled areas. He says this training is designed to provide young persons with the tools to create their own employment or to secure jobs in the specialized areas in which they are trained. As it relates to diversifying Grenada’s economy, Minister Joseph says the Economic Commission for Latin America and the Caribbean (ECLAC) has just completed a Study of the Non-Tourism Services Sector which will guide Government policy as it relates to the incentives and skills needed to grow these sectors.
President of the St. Lucia Hotel & Tourism Association, Sanovnik Destang, believes there is scope to expand the contribution of tourism to the economies of the OECS. He told the Forum: “The tourism sector has seen tremendous growth in recent years. We had some rough years in 2008, 2009, and 2010, but we’ve seen steady growth since then. ”
Destang believes the time has come to broaden the contribution of Tourism to GDP beyond arrival figures. He notes that visitor expenditure has a major trickle-down effect in the local economy, and there are millions of dollars to be gained from strengthening linkages between tourism and other sectors such as agriculture. On the home front, the SLHTA has teamed up with local farmers in setting-up a Virtual Agriculture Clearing House (VACH). Destang says this initiative has seen a significant increase in the purchase and use of local produce by hotels in Saint Lucia. He says the system is so advanced, that an App has been developed to forecast the production cycles of farmers to match demand from the hotels.
The Public Education Forum Series is part of the public education component of the Economic Integration and Trade Programme of the OECS region, funded by the 10th European Development Fund. It is being produced by ElShaFord Productions on behalf of the OECS Commission. The series will be edited for broadcast across all OECS Member States, the wider Caribbean, and the West Indian diaspora in the UK, the USA, and Canada.