Thursday, April 18, 2024

RIGHT OF CENTRE: Is there still a demand?


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My motivation for writing this article is to invite every progressive Barbadian to consciously take part in the discussion on the impact which the Four Seasons Project will have on the economy. The impact will be huge!
For too long foreign private investment (FPI) has escaped the rigour of analysis because our leaders have somehow managed to convince us of its sacredness in the contribution of economic growth and development.
The widespread view is that foreign exchange is the mysterious missing link that is obviating workers’ progress, therefore we must pay whatever it costs to get foreigners to invest here.
This view also has a corollary that is even more appealing to the initiated: that the economic growth which foreign investors perpetuate improves the well-being of all citizens – this game is as old as empire-building.
However, it has taken on new and terrifying dimensions during this time of globalization.
However, recent evidence has revealed that this view is fallacious or at best only partially conclusive. There is tangible evidence in countries where FPIs are enormously successful that the outcome of the benefits is biased towards a very small section of the population.
Moreover, what makes the situation more precarious is the recognition that it has the capacity to exaggerate tensions between the few who benefit and the rest of the population.
The perception is reinforced that Barbados is run like a corporate welfare state: the debts of businesses are socialized and the benefits privatized.
Also, there is now a steady accumulation of evidence supporting the view that many of the captains of FPI are motivated by greed that manifects itself in the propensity to be corrupt.
When people are motivated by and expected to be rewarded on this principle, the development process tends to become unbalanced; the majority of people lose their initiative to be productive and become subservient to the foreign investors.
This gives foreign investors the muscle to secure even greater concessions from Government to satisfy their glutinous appetite.
These are the conditions that set the parameters for discussion on the request for Government’s backing of $270 million to kick-start the Four Seasons Project.
Proposed benefits to the economy are: 1 200 construction jobs, 400 permanent operating jobs, and $200 million foreign exchange.
On the downside, the risk is enormous.
It seems to me that Government is asked to underwrite the upfront capital cost.         Only if the venture succeeds in its entirety will Government be relieved of its indebtedness.
It is important to recall that the project began as a commercial venture – that means there was sufficient demand for the product to make it viable, in which case commercial banks would have been the source of finance.
What has happened to cause commercial banks to lose interest?
This is the fundamental question that must be answered before the Government puts more taxpayers’ money in the project.
It is not whether Four Seasons has the capacity to complete the construction once upfront financing is secured;?rather, the important proposition is whether there is effective demand for its products during the investment window.
It seems to me that projected demand has fallen below the level required for the project to earn the cash that would make it viable.
With the experience of GEMS as our guide, Government must proceed with extreme caution.


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