Region urged to restructure economies amid COVID-19

With tourism in the region crippled as a result of the COVID-19 pandemic, several economists are advising that Barbados and other Caribbean countries move with haste to diversify their economies, while at the same time forming greater unity.

The suggestion was put forward by some of Barbados’ economic development partners during the fourth edition of the Central Bank of Barbados’ Caribbean Economic Forum, which was held virtually under the topic Adjusting to the Post COVID-19 Economy.

Dillon Alleyne, Deputy Director at the Economic Commission for Latin America and the Caribbean (ECLAC), insisted that the current circumstances created an opportunity for economic restructuring within the region.

He suggested that for the region to become more competitive, countries should develop industrial policies that identify “sectors of interest” that would give “the greatest bang for the buck”, while ensuring private sector buy-in.

“One of those sectors, I would suggest, is the domestic capital sector. That is really about building local capabilities through education and training. It means reforming our school system . . . to provide the export of global services. Clearly, while tourism will be in the toss for a long time, tourism will be restructured, and health, and make these sectors export activities,” said Alleyne.

“So, there is a lot of work to do without requiring a great deal of new resources. We have to improve the investment climate and we have to do this also by expanding the entrepreneurial sectors. So, there is a lot to be done but it can’t be done just by talking about it, there has to be a clear plan,” he insisted.

Meanwhile, Deputy Division Chief in the Western Hemisphere Department of the International Monetary Fund (IMF), Dr Wendell Samuel, warned that the effects from the pandemic could be long-lasting.

Adding that it provided a “once in a lifetime opportunity for countries to restructure their economies”, he said two things would be critical – investment and regional integration.

He explained that by investing in several areas, governments would create jobs, boost local demand and “prepare the foundation for the recovery when it comes”.

Samuel suggested investment in sustainable agriculture to address food security; strengthening of infrastructure, including the building of a digital economy with greater connectivity, to improve productivity; and the investment in renewable energy to reduce dependency on fossil fuel imports and lower costs to tourism and other industries.

“Some of these initiatives will have to be pursued at the national level, but others require closer regional integration. For example, food security would require the removal of a number of trade restrictions and address regional transportation issues. One case in point would be a regional ferry to move people and goods,” he added.

Assistant Professor at Harvard University Dr Peter Blair noted that the region was also still reeling from the effects of hurricanes. He said it was critical for Caribbean governments to come up with national development strategies.

“So, I see a lot of opportunity to start from zero and build up a stronger Caribbean community,” said the Bahamian-born academic, adding that the region should “take this huge pause that COVID-19 is providing to take a deep look at how our economies are structured, what are the ways in which it is not working, and how has COVID-19 exposed some fundamental cracks in our social and economic fabrics”.

He said it would require “strategy and guts” on the part of governments to invest in other areas similarly to how they have pumped millions of dollars in the tourism sector over the years.

A quick survey of 155 respondents, between September 14 and 20 this year, found that the majority believed agriculture would best help to rebuild Caribbean economy.

This was followed by tourism, renewable energy, digitisation, financial services sector, manufacturing, the cultural industries. Almost two per cent said all of the above.

Dr Eric Strobl, Professor of Environmental and Climate Economics at the University of Bern in Switzerland, said there was still hope for the now struggling tourism industry in the region.

However, warning against taking a wait-and-see approach, he said leaders should be designing a plan for what they wanted the tourism industry to look like post COVID-19.

The panellists expressed the view that policies being developed should take into account people living with disabilities.
marlonmadden@barbadostoday.bb