ON THE RIGHT: No future without private sector buy-in
THE TRUTH is that we have to look very carefully at what are all of the factors that have been holding back the industrial sector and what modalities of development can we look to for the future to enable the manufacturing sector to be able to be a major contributor to national development.
The manufacturing sector in Barbados has now to effectively reinvent itself not just in terms of performance but reinvent the strategy that will drive manufacturing to the future.
The manufacturing sector in Barbados existed because of the [Sir Arthur] Lewis industrialisation by invitation model; that model has run its course. The manufacturing sector in Barbados, historically, depended upon trade preferences and the use of protectionist devices. That model has run its course.
The manufacturing sector in Barbados depended upon the use of incentives and promotions by the [Barbados Investment and Development Corporation]. That model has run its course.
Our manufacturing sector existed in the past and flourished because the economies of the south, especially China and the countries in the east, were not open for industrial capital. That model has run its course.
There are now new modalities by which industrial capital flows from country to country, industrial capital is now not driven by incentives or state-led investment promotions. There are things called global supply and value chains and unless the country taps into a global supply and value chain, no matter what the Investment Development Corporation is doing, the country will not be part of industrial development.
The notion of industrial development as a state promoted activity has died and the reality is we can only have industrialisation in Barbados in the future if the private sector itself has a concept of private sector growth central to which is fitting the Barbadian private sector into the global supply and value chains.
Our industrial sector existed in the ’70s, ’80s and ’90s when there was prevailing trade law arising from the Tokyo Round, called the enabling clause, that allowed countries like Barbados to protect their manufacturing sector by tariffs and quotas.
There was, for example, a time when Barbados used to produce televisions and that was because international trade law at the time said you could ban other people’s televisions. You can’t do that now. Barbados can no longer contemplate having an Intel as we had in the past because that age has passed.
International trade law, therefore, with the coming into existence of the Uruguay Round in 1994, has stopped us from being able to use tariffs, quotas and other protectionist measures to build a manufacturing sector. We now have to build a manufacturing sector competitively from the ground up. The rise of the South, especially the rise of India and China, and their superior attributes to attract industrial capital, has hurt Barbados. We have now to factor into our strategies for industrial development the fact that there is now competition from the south such as there was not before.
The methodologies therefore used by the [Barbados Investment and Development Corporation], not just the buildings, are outmoded, and new modalities for industrial development have to be brought into existence.
Economist Owen Arthur is also a former Minister of Finance. He made these comments last week as the House of Assembly debated and approved an amendment to the Barbados Investment and Development Corporation Act.