Critics’ claims that the Government’s plan for growing the economy out of crisis remains obscure, is because it does not follow traditional “1970s” models, one of the top economic advisors to the Mottley administration has told business leaders.
In the keynote speech at the Barbados Chamber of Commerce and Industry breakfast discussion, Professor Avinash Persaud said that in the past, growth strategies have been led by a “tried and tired” method of Government investment in select industries.
But this time, he declared, Government would create the conditions for the private sector to lead the country back to growth.
He said: “Most people have a 1970s view of economic growth.
“The idea is that government picks a sector, it builds a factory using tax incentives that encourages the factory to produce stuff for export.
“That used to be the old development model and it has been tried and some elements of it have proven successful but in broad terms, it is tried and tired.
“We are not going to grow the economy because Government has picked sectors and built factories. We are going to grow the economy because you [the business community] invest.”
The economist pointed out although the capabilities of the private sector to invest greatly outstrips the State’s, Business has remained stifled under an old way of engendering economic growth.
Professor Persaud said: “This country has almost $9 billion of savings. In any given year, the Government can only extend around $200 million for investment and we can only grow by investment.
“So, who is better to invest? The people with the $9 billion in savings or a Government that can only spend $200 million?
“We are going to grow by mobilizing domestic savings for domestic investment.”
He further noted that due to the fast-changing pace of industrial development, Government was better off investing in people rather than production. He indicated that education is to play a major role in this thrust.
“I am thinking about the model of growth, one thing I can discern is that in 50 years the jobs that exist today won’t exist then.
“In which case, don’t have a development model based on existing jobs or existing production.
“So, we have not invested in existing production, but we have to invest in people. It is a people-centric development model.
“The only true development will take place when our people can command higher income, higher prices, higher asset values, by selling their skills to the world.”
Pointing to a number of policies under the four-year-old administration, the economic adviser continued: “When we returned to free education at the University of the West Indies, when we announced the re-organisation of tertiary institutions, those were not cheap trinkets for the political platform.
“They were a critical part of the growth strategy of a people-centric growth and development model.”
The chamber’s breakfast discussion was on the topic of Capital Market Development in the Caribbean.