Tribute by Justin Robinson
Owen Seymour Arthur became Barbados’ fifth Prime Minister on September 6th,1994 and served in that role until January 15th, 2008. Mr Arthur was famed for his economic expertise and I hope I can do some justice to his colossal economic legacy by exploring the performance of three key macroeconomic metrics during his years as Prime Minister of Barbados: (1) growth in Real Gross Domestic Product, (2) the unemployment rate and (3) the weeks of import cover.
Growth in Real Gross Domestic Product (GDP)
The annual growth rate in real GDP is arguably the most widely used measure of how well an economy is performing. The World Bank provides data on the growth in real GDP for Barbados from the year 1971, and Figure 1 below provides an overview of the annual growth rate in real GDP, with the years of Mr Arthur’s tenure as Prime Minister highlighted in red.
C. Justin Robinson
Professor of Finance
Executive Director & CEO (Ag.) Sagicor Cave Hill School of Business & Management
The University of the West Indies, Cave Hill Campus
Mr Arthur’s tenure as Prime Minister saw a sustained period of economic growth in Barbados. Since 1971, the Barbados economy has grown by approximately 56.86 per cent (see Table 1 at right) and while Mr Arthur’s term of office constituted 29 per cent of the time between 1971 and 2019, it accounted for almost two-thirds (62 per cent) of the economic growth achieved over that period. Although the data is less reliable, this record of growth has only been surpassed to date by the tenure of The Right Excellent Sir Errol Walton Barrow over the 1961 to 1975 period.
However, as impressive as Mr Arthur’s achievements were in terms of the important GDP growth variable, in some ways they pale when one examines his record in terms of unemployment and foreign exchange reserves.
During the 1994 election campaign, Mr Arthur gave the undertaking to create 30, 000 jobs. At a time when the unemployment rate was over 20 per cent, most dismissed this campaign pledge as “election talk” and many quipped as to what Mr Arthur was smoking. The World Bank provides unemployment data for Barbados from the year 1976, and Figure 2 provides an overview of that data, with the years of Mr Arthur’s tenure as Prime Minister highlighted in red.
Over Mr Arthur’s 14 years in office, the unemployment rate fell from 24.54 per cent in 1993 to 7.41 per cent in 2007, a stupendous achievement and one of the best examples of honoring an election promise. Mr Arthur’s tenure fundamentally reshaped our notions of the “natural” or “acceptable” unemployment rate in Barbados, and that may be one of his enduring economic legacies.
Weeks of import cover
As a “Small Open Economy” committed to a fixed exchange rate, the level of foreign exchange reserves, which essentially determines our capacity to defend the fixed exchange rate, is one of the most important economic variables for Barbados. In Barbados, a benchmark of 12 weeks of import cover has acquired semi-religious status among economists. The World Bank provides foreign exchange reserves data for Barbados from 1967 and Figure 3 provides an overview of the annual weeks of import cover for Barbados, with the years of Mr Arthur’s tenure as Prime Minister highlighted in red.