The Central Bank, in its Economic Review 2012 and in its public statements, declared import substitution to be a non-viable strategy. Given the Governor’s previous advocacy of this approach, it is newsworthy but the underlying study was focused entirely on products.
It would really be advantageous to see a similar comprehensive analysis on the services we import. There is every reason to believe that the foreign exchange spent on the import of services will rank in the Top 5.
I have mentioned these service imports in other articles and in public presentations but my data has been relegated to anecdotes. Without a similar examination of service exports and the opportunities for substitution by local providers, we risk having import substitution dismissed as a viable option. Political will is often created by a well-documented business case.
This is not the first case of “misplaced priorities”, but does raise questions about how and why this occurs.
• Is this deliberate avoidance or uninformed omission? We seem to talk the game of service exports but ignore the structural elements needed to walk the talk.
• Who decides what gets studied and by whom? I have seen many studies done that failed to ask the right questions, carried out by persons with no direct experience in the identified sector. They also lacked credibility among those are directly affected.
• What is being done to re-orient traditional economic theorists to the nuances, vagaries and imperatives that flow from trading in services? Import substitution requires the identification of legitimate, credible substitutes and education of the end-users.
A visit to Wikipedia illuminates the complexities of capturing useful data concerning the export of services. It says that from an economic standpoint, services are “an intangible commodity; an intangible equivalent of economic goods”.
Services combine “skills, resources, ingenuity and experience for effecting a specific benefit”. Aside from being intangible, services are perishable and require the direct involvement of the service provider.
We are acutely aware of traditional service providers in the legal, medical and accounting professions. These, for the most part, have a captive domestic market. They export these services when foreign investors come to Barbados because they are protected by statutory requirements. Few import substitution issues or opportunities in this segment, unless you look at the defections that occur because of poor service.
International business and financial services are significant contributors to the economy and are being hampered by “red tape” from our largest service provider; the public service. The statistics are showing a decline in these sectors related to unreliable service quality.
In Barbados, the government is charged with providing a wide range of services to captive customers. If this sector’s service was consistently exemplary, it would enhance the performance of all other service providers; especially tourism.
Barbados is primarily a service-based economy. Tourism and financial services are the leading contributors to its’ GDP. The investment made in education over the years is a sound strategic decision given the paucity of other natural resources. I believe the best opportunity for Barbados’ economic transformation lies with the export of services and the delivery of service that are consistently legendary.
This combination, with the appropriate alignment of structural resources, could yield many sustainable opportunities from import substitution and create a global demand for a Barbados brand of excellence.
