Restructure tourism industry, economist urges

There’s no need to ditch the tourism industry as Barbados moves to diversify the economy, said one of the country’s leading economists on Tuesday, but he insisted the industry is in urgent need of restructuring.

President of the Barbados Economic Society (BES) Simon Naitram urged the authorities to develop a “lifestyle model” tourism in which visitors can experience more authentic Barbadian ways of life.

Naitram said: “At this point what we need is structural and institutional change to make significant differences.

“Even if tourism returns tomorrow, that puts us back where we were six months ago and it doesn’t make a significant change in the trajectory of where we were going and then it leaves us back in the place of a deficit of genuine long run economic growth.”

He was a panellist at the Central Bank of Barbados’ 40th annual review seminar – The Impact of COVID-19 in the Region: Current Challenges, Future Outlook and Policy Recommendation.

Naitram continued: “If we have an industry that we want to act as our intake industry, we want it to generate spill-overs to the rest of the economy to sort of jumpstart economic activity in the rest of the economy.

“Tourism, that accommodation and food services sector group, was around 25 per cent in the last decade and the rest of the economy shrunk by about three per cent.

“So if this is the driver of our economy it is not doing a great job. You can almost think of it as your engine working and firing away and yet the car is only rolling very slowly forward. So it seems as if tourism doesn’t do all the things we want it to do. Is this a feature of tourism that we can’t fix or is Barbados’ tourism sector poorly structured?”

In a candid presentation, Naitram argued that ownership in the sector was highly concentrated and becoming increasingly foreign.

The current tourism product is expensive, but “in reality it is not that luxurious”, paid some of the lowest wages and provided volatile jobs, he said.

The BES present complained also that “a lot of the value added happen outside Barbados” although a lot of it could be done locally.

Naitram told the seminar: “All that seems to happen in Barbados is the actual sitting in a hotel room, sitting on a beach or next to a pool. Our tourism sector tries to ringfence itself from the rest of the Barbadian economy. It is naturally a low-tech industry and quite a seasonal industry.

“I firmly believe tourism needs to be restructured. I think there is no question about it. We will always have a competitive advantage in tourism so in my mind there is no actual need to ditch the tourism industry. Instead, I think we need to think of a tourism that is not really tourism at all.

“We need to think of a tourism that deeply embeds itself in the heart of Barbadian society and so generate spill-overs to the rest of the Barbadian economy. I call this a lifestyle tourism.”

Pointing out that the sector continued to face various shocks relating to lockdowns, restrictions and protocols associated with the COVID-19 pandemic, Naitram said there were also the worrisome closure of businesses that were not good for the already vulnerable Barbadian economy.

“These business exits or firm failures will cause permanent losses in economic activity. They are not temporary because if they exit the market they don’t reopen when the restrictions are all gone,” he said.

He said the current circumstances called for “out of the box thinking” and greater use of technology.

Naitram warned: ‘”At this point we can’t afford to say that any idea is a bad idea because we need that innovation and investment in technology to be able to survive this supply shock, and it is crucial that we don’t think that the supply shock is about to end.”

He also touted the notion of import substitution without protectionist policy, pointing out that traditional policy instruments were not going to make a huge effect.

“In effect import substitution boils to a decision of make or buy – do we want to make these things or buy them from somebody else?” he said, adding: “We are living in a new generation where we care and have to care about where and how a product is made and who makes it.

“Barbadians need to shift the value creation process to Barbados. To think about what value can we create here, rather than asking what can I import? This calls for significant change in mindset from what Barbados has been doing for the past 300 years”. 
marlonmadden@barbadostoday.bb