Wednesday, April 17, 2024

AS I SEE THINGS: Changing consumption patterns


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LIKE MANY ADVANCES CAPITAL ECONOMIES, countries in the Caribbean have undergone structural transformation in a broad sense, moving essentially into tourism and other services as the mainstay of their economic growth and development thrust. This approach to transforming their economic landscapes is consistent with the historical stages or patterns of development for which the American economist Walt Rostow is famous.

In Rostow’s set-up, countries that place significant attention to agriculture as a driver of economic activity are considered economically backward. Those countries in which services and mass consumption dominate are deemed to have fostered the enhancement of modern economies. A quick glance at the national accounts data for Caribbean countries would reveal in no uncertain terms that with a few exceptions such as Belize and Guyana, agriculture is fast becoming a dying area of economic activity in our part of the world.

Tourism and other services now account for most of the GDP we report from year to year. While this feature of our development is entirely consistent with Rostow’s theory, it does, nonetheless, present a real challenge for us because too much of what we consume, particularly food, is imported. When our food import bill is added to that of oil, a worrying image emerges that ought to be tackled head-on in order for us to ensure that our transformative process can be sustained into the future.

In short, therefore, we in the Caribbean must begin immediately to change our consumption patterns to protect the gains we have made thus far, economically. Specifically, one way in which we can change is by buying locally grown foods. This simple structural change in our eating/buying habits will inter alia reduce our import bill, save foreign exchange and reduce any deficits on the current side of the balance of payments; stimulate local agricultural production, increase farmers’ incomes and enhance job creation in our agricultural industries; and encourage rural development which would lead to more even development of all regions of the country (less lopsided economic development within the country means less negative demographic changes like large internal migrations and the emergence and growth of urban slums).

All of these benefits means stimulating greater inter-sectoral linkages, as the vastly increased agricultural output to meet greater domestic demand/consumption of local foods also provides more raw materials for expanding the agro-processing sector and can in turn lead to greater use of local foods in the tourism industry. The growth in inter-sectoral linkages would also imply a greater multiplier effect (increase in income and hence additional spending that arise from the expansion of economic activity within the country) and hence less leakage of foreign exchange out of the country, greater job creation and incomes, and much more government revenue without any increases in marginal tax rates or the introduction of new taxes.

Clearly, therefore, changing our consumption patterns alone through the simple act of buying more locally produced foods can turn out to be an incredibly transformational act of structural change that has the potential to redound to the benefit of the economy and hence for the lives of all citizens. Doesn’t this behavioural change deserve a change if only for the good of our economies and people?



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