Economic reckoning amidst COVID-19 pandemic

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David Jordan is a Former Director of Trade and Investment with the government of Saint Lucia and worked several years dealing with government policy. He is Chairman of Foundation Research Innovation Enterprise Entrepreneurship Training and Development in the OECS Inc. (FRIEETAD in the OECS Inc.) The head office is located in Grenada and registered in Saint Lucia. He is a UWI and US-trained economist with a focus on economic policy.

By David Jordan

I grew up in that interesting era of the ’70s and ’80s prompting my early conscientisation. That era nurtured thinking distinct to embrace tourism for several reasons inclusive of the holistic approach to promote the economic development of any developing country.

The exposure to critical thinking started through education from the early days within the Caribbean Council of Churches during “regional youth groups days of the AYM ” travelling throughout the Caribbean region. It was said then, that the exposure to liberation theology and the sessions we were part of – the pedagogy introducing us to a type of radicalism during those days. I recall because of our enlightenment, we stood for something. We focused on the causes of underdevelopment in the region and the social consequences to the host economy of tourism. There was no perceived balance, in terms of the economic benefit. The major argument then was the economic leakage which the host economy experienced, estimated then as being ninety – five percent to every dollar invested.

Tourism was seen as an industry which imported all of its needs – physical and human resource then – from architectural design, the construction materials, to the food beverage for its clients while the tourism structures were erected on our “best beaches.”  Notwithstanding the less disparaging comment in this time, in comparison to the earlier years, tourism has grown to register as much as 60-89 percent of GDP – the mainstay of many economies. While it may be argued that more of the dollar spent may be circulated in the economy this has come with major costs to the region associated. There is still evidence of weak linkages and integration with the rest of the domestic productive sectors of the economy.

In some countries, whereas linkages are sought with agriculture and manufacturing, this has proven so insignificant that most countries’ GDP includes substantial food import bills. The lamentation is, of the same song, such that there is a growing imbalance in the import and production of agriculture produce and that dreadful (trade imbalance) import bill (Saint Lucia a population of 175,000 has an Import bill of more than 350 million (2016 estimates).

There are all types of variations in tourism since its introduction and maturation in the region. There are all-inclusive, boutique and now we hear of “enclaves” all of which demand huge incentives which politicians willfully facilitate.

It is passing strange however to see how the contemporary concepts of Small Island Developing States, Climate change,  Orange economy,  Blue Economy to name a few have taken over the intellectual psyche of our countries’ thinkers, technocrats, actors and policymakers and politicians.

Rather than the embrace of the earlier focus on the Economics of Transformation (EOT) and strategies which would have drawn the nexus for wider sectoral development, there is a loose abandon in preference to a modern approach to development, void of any seeming philosophy but a greater reliance on tourism.

There is no reflection on the theories of Sir Arthur Lewis and thinkers of that era – ( sorry the list is long and includes my former lecturers, colleague students at UWI…) – the economics of transformation to guide, chart, and assist with the economic and social development in the region.

Instead, what do we witness?

The trend has gravitated towards those contemporary theories because they have the lure and mentality “grant economics “ or better “ donor economics” which focus on varying levels of conditions before we can supposedly benefit from. Interestingly, this mentality has an affinity to espouse the disgusting appendage and phrase. “Low hanging fruit.”

This to my viewpoint and many who condemn this “low hanging fruit” mentality agree, that this conjures and promotes a dependency syndrome lacking the hard work which has to be expended. Imagine the imagery of harvesting the ripened fruit from the neighbours or anybody’s fruit tree? However, it is a fruit tree you never planted except for the use of this analogy that developing countries will access low hanging fruit based on conditions from the international community.

The analogy does not lend to the process of planting the fruit tree in the first place. So why should you be the beneficiary? However, the predominant message and mentality of the “ low hanging fruit” in modern-day negotiations readily perpetuated is cause for concern, mindful of conveyed messaging of dependency.

When I invited you to read the last International Monetary Fund (IMF) Report – St Lucia 2020 given the controversy and debate that currently ensue, I was also reminiscing in the agony and thought of recognizing the volume of material we have read on Economics of Transformation and questioned if we have learned and or retained any lessons to utilise our resources optimally and focus on the holistic form of economic development.

Academic thought has grown and I agree. New paradigms now describe the contemporary forms of development approaches such as sustainable development which has embraced environmental issues. But again I question; are these lessons being consciously applied or forgotten in the setting of modern-day government planning? What is observed is the continued promotion of an emphasis on mono-sector development by our leaders. While visible, it is the international community and friends (not our indigenous thinkers) that are highlighting the risks associated with putting the eggs of development in one basket.

I cannot cease to be perplexed; yet aware, how and why policymakers and politicians do not reveal strategies of development in the chart for the economic and social development for the region. Nevertheless, the “ low hanging fruit mentality” is so well embroiled in the thrust that tourism offers the panacea for development and growth.

The main argument and focus perennially seem all narrow to focus on the statistics tourism arrivals – by air or sea, the number of hotel employment (flagged or not) as the major benefits. But the thinking of the earlier critiques of tourism would have been on i) the volume of wastages for example in food, ii) inefficiencies because of incentives and revenue foregone, iii) costs associated with unutilized airline seats and iv) and the displacement of locals from for the beach. These and many similar concerns are preferred, not to be distilled for the consumption by the taxpayers. “Jack the Beach is Mine “ dance, music and social commentary reminds us that tourism weighs heavily with its many social ills and social displacements as the sociologists will outline and argue.

However,  the IMF as far as I could recollect has always advocated for diversification and a multi-sectoral approach to the economic development of the region and the need for a more balanced approach to its economic development. This is one of the theories espoused in the Theory of Economics of Transformation, which the politicians and technocrats should find relevant in this modern time, as it was in the past. But this does not appear to resonate with a form of modern thought. We should not have to wait after all those years to be reminded by the IMF and COVID-19 crisis of the risks associated with a policy geared to a mono-sector development and its manifested risks.

I am raising this because it appears that only when we are faced with a crisis in the region that we closely refer to our past and try to understand and respond to the vagaries of the uncertainties of “ the time of occurrence.”  It is then, we recognize that we have not been consistent in paying attention to the importance of our indigenous thinkers and the guidance of our development. Oh how we have marginalized their thinking and restrict importance and allowance to bear roots. But then, we continue to embrace the thought of what is outside, to bring about solutions to our problems. Soon after the crisis is over, we return to the adage and policy without amendments and adjustments – if only for a short time and the cycle continues.

The IMF has warned that the region from time immemorial that there is too much emphasis on a mono-sector approach to economic development and highlights the risks in maintaining that kind of structural imbalance. It takes us to that crossroad again with the COVID-19 crisis that impacts and endangers the very existence of our economies and the health of our nations for an uncertain period. 

The World Bank and IDB 2018 recently convened a different forum to help shift the mindset of decision-makers from ex-poste to ex-ante mindset in minimizing risks to vulnerabilities of climate change and other natural disasters and economic shocks. I guess it is too early to see the transition building resilience in our economies after the period long before that forum was convened.   ECLAC 2020, stressed on a theme and advocacy for grant funding for the region to be relieved of the COVID-19 pandemic crisis.

Meanwhile, the region will experience the hardships and will once again be lead via the “mentality of dependency” unable to withstand shocks, vulnerabilities to hurricanes, drought, climate change. Attempts to “blindfold” the electorate on fiscal management and planning issues while promoting more desperate circumstances.

1 COMMENT

  1. I highly recommend Mr David Jordan to consider a continued clarification contribution towards the many subjects which face our Mini Island economic Developing States, as he is a well researched (Savant) of the various subjects we face in the region.

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