Owen Arthur touts the new economy
Published:Sunday | July 19, 2015 | 12:00 AMNeville Graham
Former Prime Minister of Barbados Owen Arthur is warning of the urgent need to adjust to the new realities of the Caribbean economy.
He said the question facing Caribbean governments is how fast they can allow an economy based on a new paradigm to grow as the old economy that depended on production and labour declines.
Arthur, addressing a Gleaner Editors' Forum held last Friday at the company's Kingston office, said the days when an economy could be planned on the three pillars of land, labour and capital are well and truly behind the region.
"The old economy was based on the paradigm that the factors of production are land, labour and capital. A new economy is slowly evolving based upon technology, entrepreneurship and innovation," Arthur said. "And you will find that in that new paradigm people will find niches in the global economy in a way that might bring back a form of highly specialised manufacturing called niche manufacturing."
He noted that the construct of the new economy offers particular challenges in that the arrangement of social partnerships will have to be reoriented to take into account the fact that the small to medium enterprise sector is growing fast in addition to those persons who are now or will in the future do business from their homes.
Arthur recommended that is the best direction given the advent of the new economy in the Caribbean.
In calling on Caribbean players to wake up to this new reality the former prime minister emphasised that the present Caribbean economies are no longer the most attractive prospect when it comes to investment for manufacturing.
"There was a time in our history when we were the entities in the developing world that were relatively more open to capital flows. In the 70s we didn't have to worry about China (because it was) a closed economy... China is now an open (and) liberalised economy and a lot of the industrial capital that would have come to the Caribbean is now going to China," the former Barbados prime minister said.
He also said that there was a similar story for the knowledge industries where software development, informatics and information processing have found their way to India with the opening of that economy.
He urged that, given such a reality, now is the time to realise that what existed before in terms of economic arrangements no longer obtains and that the reality of a WTO-managed world economy posed a separate set of challenges.
"Production in the Caribbean is affected by international trade law and we haven't grown our manufacturing sector historically because there exists prevailing international trade law enabling countries to pursue import substitution using tariff and non-tariff barriers to ban goods and the like. Most Caribbean countries effectively flourished because of the movement clause. This meant that you could do certain things in these countries," Arthur said.
He added: "Now with the coming of the WTO (World Trade Organization), Caribbean countries can no longer use protectionist devices."
Arthur noted that, as a result of the new arrangements, Caribbean countries have had to face competition in their home markets; not only in countries like Jamaica but in the rest of the Caribbean. He said this has narrowed the potential for import substitution or manufacturing