Two Central Bank of Barbados researchers have suggested that multi-dimensional improvements have to be made to Barbados’ manufacturing sector if it is to make a meaningful economic contribution.
According to Jason LaCorbinière and Anton Belgrave, the industry’s failure to take advantage of the myriad fiscal and other Government-sponsored incentives reveals underlying structural weaknesses affecting the sector.
“Chief among these are the sector’s relative productivity weakness and failure to benefit fully from the transfer of technology brought in by foreign firms,” they said.
Writing in the June 2011 edition of the bank’s online journal Economic Review, they said the relatively less competitive real exchange rate coupled with high transportation costs limited the extent to which Barbados could compete in price-sensitive manufactured goods.
LaCorbinière and Belgrave suggested that there needed to be greater emphasis on research and development, both at the macro and micro levels of the sector.
“For the former, research is needed to determine the broad reasons for the differences between Barbados’ productivity levels and those in other competing jurisdictions.
“At the level of the firm, it is important to understand how these differences influence decision-making and what is necessary to improve the efficiency of domestic industry,” they said.
Also, given that transportation-cost issues are likely to persist, the researchers suggested that one approach to strengthening the sector could be to focus on goods with high value-to-weight ratios that would be suited to air transportation.
LaCorbinière and Belgrave added: “As ICT processes become increasingly fundamental in manufacturing processes, Barbados’ scientific and technological absorptive capacity will have to be enhanced to attract and truly gain from the high-technology and high value-added manufacturing goods that Barbados needs to compete.”