AS I SEE THINGS: Economic management strategy
For as long as anyone can remember, the Caribbean has always been faced with challenges of an economic nature brought about either by weak domestic policies, driven to some extent by external shocks like those associated with the recent global financial and economic meltdown, or a combination of those two factors. As expected, the responses by our various governments have been as varied as the issues faced.
If truth be told, in many instances, the approach adopted by our various governments to resolve the economic crises we face as a people often rely on political and economic philosophies that sometimes generate reasonable outcomes, while at other times create more problems than solutions.
For example, in responding to the 2008/2009 global recession, some Caribbean countries undertook massive stimulus programmes with the hope of restoring economic growth and maintaining internal and external macroeconomic stability. Those efforts failed largely because most of the spending was directed at consumption as opposed to capital accumulation.
Hence, despite the nature and extent of the measures implemented by various governments across the region, it is fair to conclude that many of the problems we tried to resolve still continue to plague us today. These problems include, inter alia, unsustainable fiscal and debt positions, high unemployment, low economic growth rates and increasing cost of living. Worse, yet, at the functional level, the challenges facing Caribbean countries only intensify in areas such as education, health, the provision of other social services and infrastructural development.
With these continuing problems to grapple with, a major question that arises is: what kind of economic management strategy can Caribbean countries adopt in order to address sensibly the economic challenges we face? One of the issues that has been debated for some time now in the region is the roles to be played in economic development by the public and private sectors.
Some pundits have argued that governments in the region are too big and therefore should reduce their involvement in the management of our countries’ affairs. Others have suggested that the private sector should be the engine of growth with the government providing the right incentives to foster the expansion of businesses. While there are clearly some merits in both arguments, the effective management of Caribbean countries cannot proceed along strict ideological lines as the evidence of our economic performances overwhelmingly confirms.
Hence, a sensible economic management strategy to adopt going forward is for each country in the region to determine from among all the issues and challenges faced, which ones can best be solved by the government, what solutions are best left to the private sector, and in which areas of activities can public-private partnerships play the most meaningful role.
For example, should the Government go it alone in the construction of a new national stadium in Barbados or should that project be undertake jointly with the private sector?
As simple as it may appear, that strategy will clearly define the respective roles of government and the private sector in the transformation of our economies, eliminating in the process strict ideological interpretations. And that, in my opinion, ought to be the way forward for our small, open economies!
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