AS I SEE THINGS: Economic development options
ADMITTEDLY, WHEN it comes to options facing Caribbean countries as they seek to grow and develop economically, we have definitely seen it all. In Grenada, for example, governments have moved from strategies of import substitution, industrialisation and export promotion to Marxian-style economics to heavy reliance on tourism and other services as the engine of economic growth and development.
Barbados has witnessed massive injections of resources into the development of human capital in the 1960s to the creation of important institutions (for example, the Fair Trading Commission, Urban and Rural Development Commissions) to the implementation of austerity measures aimed at curtailing a fiscal deficit that had simply gone wacky.
However one wishes to interpret the economic development strategies pursued by Caribbean governments over the past five or so decades, one thing is quite clear: the days of neo-liberal economic thinking are back with a vengeance! Some readers may very well adopt a different perspective, but in that case we simply have to agree to disagree.
You see, dating back to the 1970s and led by institutions such as the International Monetary Fund and the World Bank, all generally within the context of the “Washington Consensus”, Caribbean countries, like so many others throughout the world gladly accepted, embraced and implemented economic and financial policies consistent with broad themes such as openness, privatisation and deregulation. These neo-liberal policies were seen as the end all for our economies because there was no better alternative. Outward orientation became the dominant economic development paradigm for us in the Caribbean.
Two decades later, the precise neo-liberal ideas that were perceived as the “model” for success began to show serious cracks and the result was significant economic crises in several countries that held full confidence in market oriented economic policies as the way to reconfigure their domestic economic landscapes. To make matters worse, the economics literature points out quite clearly that “China and India, which did not comply with the Washington Consensus,
have become the most successful countries in terms of economic development.”
As is often the case with so many “benign” things, there really wasn’t a problem with neo-liberal policies. Instead, “bad institutions” in the Caribbean and other developing countries were responsible for the economic nightmares in so many of those economies that embraced this economic doctrine. And so, with the now “augmented Washington Consensus” our countries just have to undertake serious institutional modifications by enacting good governance at the economic and political levels which, along with the known recipes, will ensure our sustained growth and development.
Historically, this idea of the role of institutions in facilitating economic growth and development dates back to Marxian economics and some of the criticisms levied against his views by writers such as Rostow. As the economics literature so succinctly puts it: “Rostow was one of the first development economists to emphasise that institutions matter for economic development. This ‘institutionalist’ viewpoint was Rostow’s vehicle in constructing his stages approach as an alternative to Marx’s economic determinism.”
The economic development options for Caribbean countries are apparent: neo-liberal policies with strong institutional development. Are you buying that?