Is Barbados’ economy globally competitive when it’s stacked up against other islands in the Caribbean?
A new study authored by Central Bank of Barbados governor Dr DeLisle Worrell and one of the institution’s economists, Shane Lowe has answered yes to that question.
But despite having competitive strengths in the markets where it owns most foreign exchange – tourism, and international business and financial services as well as agro-processing, “inefficient government bureaucracy, difficulties in accessing financing, and a poor work ethic that constrains private sector growth” are areas of concern.
In their January 2014 paper Barbados’ International Competitiveness, the duo “investigates the competitiveness of the Barbadian economy relative to its regional counterparts”.
“Data and analysis presented in this study show that Barbados has competitive strengths in the markets where it earns most foreign exchange, that is, tourism, [international business and financial services] and agro-processing. The Global Competitiveness Report 2013-2014 shows that Barbados is competitive with its Caribbean neighbours, and with emerging economies globally,” the report said.
“The country has institutions, infrastructure, health and primary and higher level education levels, labour market efficiency, financial market development, technological readiness, business sophistication and innovation which exceed those of its regional peers. Nevertheless, there is room for improvement, and inefficient government bureaucracy, difficulties in accessing financing, and a poor work ethic represent constraints to growth for the private sector.”
The report also found that Barbados “has been able to maintain its market share relative to the Caribbean in its key foreign exchange earning sectors, while overall productivity has increased in line with unit labour costs”.
“The island’s external price competitiveness, based on appropriate measures, has been improving in recent times. The focus for improving external competitiveness will continue to be increased productivity, improved product quality, product enrichment, and the development of new products and services,” Worrell and Lowe said.
They added that the island’s medium-term growth and development strategy would “emphasise sectoral growth and adjustment strategies for tourism, [international business and financial services], agriculture, manufacturing, [small and medium enterprises], cultural and sports activities, and non-traditional services, initiatives for competitiveness, productivity and service excellence, promotion of the green economy, labour market, public sector and institutional reform, [human resource] development, and improvements in business facilitation”.
In their paper, the economists incorporated the relative rankings of the Global Competitiveness Report 2013-2014, relative market shares and productivity gains, as well as a novel price competitiveness index produced by Central Bank economists, including Worrell, last year.
“The results suggest that Barbados is competitive both regionally and globally, ranking ahead of its peers in key areas such as the strength of its institutions and the quality of its health care and primary and higher education. In addition, despite some declines in tourism post-crisis, the island has maintained market share in most of its key foreign exchange earning sectors, while seeing improved price competitiveness of its internationally traded goods and services over the past decade,” the report said.
