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WHAT MATTERS MOST: Growing private sector the key


DR CLYDE MASCOLL, [email protected]

WHAT MATTERS MOST: Growing private sector the key

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THERE IS A SILLY NOTION, especially among the supporters of the ruling party, that nothing can be done to rescue the economy.

Yet the Government has been trying to do something for the last eight years, but to no avail. The repeated failure has to do with the initial policy reaction to the economic circumstances in 2008/09.

Having responded so poorly, it became strategic to blame the resulting economic misery on the international environment. Notwithstanding the evidence, there is still hope that the same strategy will work again.

Once an alternative perspective is advanced that things can change through local policy initiatives, the focus turns on the one offering such hope. This is achieved by suggesting that there are several other Barbadians who understand what is happening but are simply helpless in providing solutions.  

This kind of thinking then leads to the view that we are all helpless, so we search for solutions on call-in programmes. There are several intelligent suggestions put forward in such a forum, but to believe that major solutions will come without full investigation of the data and evidence is a myth. At best, it is a cruel attempt at diminishing the value of the country’s professionals in their respective areas of endeavour.

Here is a perspective.

The best way to inform public policy is to have a long-term view of where Barbados has to go. The view must zero in on the critical size of the public sector. This is as essential to the management of a Caribbean economy as the legal system is to the maintenance of law and order.      

The key to maintaining a critical size for the public sector is to pursue a medium- to long-term strategy of growing the private sector. This does not mean that there will be no short-term challenges in pursuing the strategy. It means that the reaction will not be haphazard as happened in 2008/09.

When the economy grows through private sector initiatives, the Government earns revenue that pays for its expenditure without having to increase tax rates. Economic growth is therefore the most sustainable way of keeping the public sector intact.

The idea that every time there is a challenge the public sector has to be downsized is based on the failure to plan for short-term economic fluctuations. In the early 1990s, Barbados was forced to reduce the size of its public sector mainly to assist in correcting its shortage of foreign exchange.

In the years that followed, the public sector got bigger in absolute terms because of the sustained economic growth that was achieved. However, the relative size of the public sector fell, which is consistent with expanding the private sector. This has to be the long-term objective of any government. It does not compromise the ability of the public sector to deliver essential goods and services to Barbadians in any way.

In the presence of such a clearly identified growth strategy, Barbadians would be more than aware of one of the most critical objectives that a government must identify and recognise in its agenda for sustainable development.

In the future, short-term economic challenges would be addressed by adequate leadership and management. The kind that is informed by identifiable principles and vision. The current rudderless Government of Barbados spent the last eight years looking for ways to survive in the short term rather than finding policies to grow and develop Barbados in the medium to long term. It has succeeded in undermining the quality of life of both the current and future generations of Barbadians.

To avoid compromising Barbados’ development, there is a need for a clear set of principles and vision to share with Barbadians. They must offer hope and be wide-ranging in scope. From a purely economic perspective, the hope must start with an understanding of the size and nature of the public sector that the national income can carry. Its size must be a function of the economy’s capacity to grow. Once the principles and vision are shared, they will influence decision-making among businesses and households. The public sector must be seen more as the consequence, not the cause of economic growth and development.

The recent attempts at right-sizing the public sector revolved around fixing numbers rather than understanding the sector’s role in the development of Barbados. This explains why the country has stumbled in the two most critical areas of education and health.  

Dr Clyde Mascoll is an economist and Opposition Barbados Labour Party advisor on the economy. Email: [email protected]

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