Friday, April 12, 2024

Seven steps to economic growth


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Innovation, entrepreneurship and their link to economic growth is an issue that Barbados has been grappling with. So, too, are members of the Organisation of Eastern Caribbean States.

Eastern Caribbean Central Bank Governor Sir Dwight Venner addressed these and related issues in a recent speech in Grenada, part of which we publish this week.

THE CHALLENGE for us is: how do we break out of the current low output/high debt scenario and choose between the four outcomes which could confront us in the future? These are: failed states, barebones survival, moderate growth, and socio-economic transformation.

To achieve the preferred outcome, which is socio-economic transformation, requires a rate of growth ranging between five per cent and seven per cent, which is not attainable with the current economic policies and the existing economic resource base.

Socio-economic transformation requires the creation of a dynamic private sector which is export oriented and internationally competitive. This will require an efficient and effective state and a transformed financial sector as supporting and complementary institutions. Of major importance, however, will be what we refer to at the Eastern Caribbean Central Bank as the seven great modernisations which represent the fundamental platform for achieving our goals.

Treaty of Basseterre

The seven are energy, transportation, the environment, education and skills training, research and development, information and communication technology and governance. The first three require a significant engineering input and specialisation in the hard sciences. A cadre of engineers will be required to investigate and develop projects to enhance the infrastructure in these areas.

The second three are the essential knowledge-based areas where human capital is critical to increase productivity through innovation. The final one, governance, is the over-arching platform which coordinates and guides, establishing the institutional framework for making and executing policies with regard to the first six.

For the OECS/ECCU countries, the new Treaty of Basseterre is the legal framework under which governance and policy making will be organised. This, under the present constitutional arrangements, will form what can be termed a dual system of government and governance, incorporating and coordinating the policies, programmes and projects which will facilitate the development of the member countries.

The creation of a single financial and economic space will provide a more conducive domain for our development. The more specific challenges relate to the nurturing of entrepreneurship and the development of an innovative outward-looking private sector which is a medium to long term project, but must be started immediately.

Starting point

The beginning of this project involves the updating of the work done in St. Lucia with the census of the private sector and continuing this work in all of the OEC countries. This would be the starting point for a diagnostic process to identify the structure of the private sector in each country, the activities in which they are engaged, the difficulties they have as a private sector generally, and the specific impediments to operating in the export sector.

This would also involve the use of the Doing Business Survey carried out by the World Bank and a more targeted survey with the OECS environment as its base. The next step would be to identify actual and potential sources for entrepreneurs in the OECS domain.

The following are suggested: the transformation of some of the traditional trading firms by providing incentives for them to enter the export sector; citizens of the OECS in various diasporas involved in business ventures who may be enticed back to their countries, or more appropriately, to the single economic and financial space.

They need not move completely, but have a branch of their business in the space as an outpost of the original business. Middle level professionals who have good networks, local and regional knowledge, and business acumen who could be incentivised into becoming entrepreneurs.

Two forms of organisation are available to them, namely, production cooperatives and investment clubs. These are critical in small societies which require joint activities to establish the critical mass necessary to ensure success.

Another potential source would be the excess workers in the public and banking sectors who have the regulatory and organisational skills to participate in entrepreneurial projects.

The key factor would be the use of separation packages, which provide funding, training in business development and management, a menu of projects carefully developed to identify the areas in which we have a comparative advantage which can be leveraged into a competitive advantage, and the establishment of clusters of export-oriented activities which have the critical mass to attract complementary and supporting functions which are commercially viable, such as research facilities.

Finally, a robust investment in encouraging young people in primary and secondary schools and recent school leavers to become entrepreneurs through targeted programmes. Examples of these could be the widespread establishment of science clubs, savings clubs, 4H clubs, and the Junior Achievement programme. A very important exercise would be the identification of focal points in each country where scientific activities are being conducted.

In the educational system our community colleges must be identified as thought leaders in spurring an interest in scientific activities which facilitate the creation of a new scientifically oriented class of entrepreneurs.


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