Development imperatives for the new global order

The CEO of the Small Business Association of Barbados recently addressed the Curacao business community under the theme, The Urgency of Now – Development Imperatives for the New Global Order.

Similar to Barbados and the Eastern Caribbean, businesses in the southern part of the region are also being challenged with the need to consider new business models for future growth. It is evident that the dismantling of the post-WWII global order is in train.

The literature described the period following World War II as the Age of Capitalism, led by Western Europe and the US. The Bretton Woods System was established to facilitate international trade and financial cooperation, contributing to global economic stability. Several institutions were established which worked in tandem to create a rules-based approach to development and to promote universally accepted standards.

During this period was the decolonisation of Caribbean countries with many trying to find a suitable development model after a long period of enslavement.

The Cold War ended in 1991, and the modern wave of globalisation began. The World Trade Organisation was created in the 1990s and the manufacturing giant China emerged bringing a new era of unfair trade practices.

For years, global institutions preached the virtues of free markets, competition, and trade liberalisation, rules often written and enforced by Western powers. Yet, as China rose by subsidising nearly every sector of its economy, the response from the so-called custodians of the rules was muted. Beijing was not held to the same fire that scorched smaller economies who tried to protect their own industries. Now, in a striking reversal, the United States itself is deploying industrial policy at scale and massive clean energy subsidies prioritising domestic production and national resilience over pure market ideology.

The literature suggests that in 2000 the US, Japan and the EU accounted respectively for 31 per cent, 14 per cent and 26 per cent of world GDP, while China, the Association of Southeast Asian Nations (ASEAN), and Latin America and the Caribbean accounted for 3.7 per cent, 1.5 per cent and 6.6 per cent, respectively. Figures for share of world exports were similar. In contrast, by 2023 the US, Japan and EU’s share of global trade had shrunk to 26.47 per cent, 4 per cent and 18 per cent of world GDP, while China, ASEAN and LAC grew to 19 per cent, 3.6 per cent and 7.18 per cent respectively.

From its entry into the WTO in 2001 until 2023, China’s GDP increased from $1.3 trillion to $18 trillion in nominal terms. In a short period, China became the world’s largest goods exporter.

The Bretton Woods institutions, while initially aimed at post-war reconstruction and development, evolved into a global behemoth often imposing policies on developing countries that hindered progress, resulting in structural adjustment programmes which inflicted austerity and market liberalisation thus stifling growth. These were often under the guise of promoting globalisation and international economic cooperation, designed to help countries integrate into the global economy.

The result has been anaemic growth in the Caribbean with an average of 2.1 per cent per year since 2000, with tourism-intensive Caribbean economies growing by only 1.6 per cent annually (0.8 per cent in per capita terms) and commodity exporters growing a bit faster with an annual rate of 3.7 per cent based on research.

The reality is that the global playing field was never truly level, and in this new fragmented order, it may never be. Small, open economies must therefore stop waiting for fairness and start designing strategies of self-preservation and transformation, centered not on outdated orthodoxy, but on pragmatism, technology, and regional strength.

The new imperatives for the region must begin with a hard pivot, away from dependency, and toward capability. Away from the false security of legacy models, and towards a new industrial identity built on two pillars: technology and regional cooperation.

1. Reindustrialisation through technology

Technology is not merely a tool, it is the new battleground of sovereignty. Those who control innovation control influence. We must therefore automate our agricultural sector to improve yields and reduce imports – consider precision farming, where instead of relying on manual harvesting farmers can now use drones, sensors, and data to increase output with fewer hands and less guesswork in a manner that redefines the value of human labour in higher-skilled, better-paying roles.

Within several countries of the region labour is not cheap and electricity is far from stable or affordable. Mechanisation offers a buffer. By reducing manual dependency in key sectors, we can improve productivity while insulating our businesses from wage and energy shocks.

2. Deepening trade integration

CARICOM is one of the region’s most important trade initiatives. Advancement of the planned single market and economy would lead to further increase in trade. This integration project must, however, extend to the wider Caribbean. As posited by Dr Matthew Bishop, in his article Situating the Caribbean within the new Global Political Economy of Development, 2015, interregional integration can be facilitated by new trade agreements and leveraging current agreements more effectively. Other recommendations included the granting of legal space, whether through a supranational Commission or otherwise, to implement decisions taken by the Heads of Government; the pooling of sovereignty; the creation of a single CARICOM Embassy in one location on an experimental basis to discern how limited diplomatic capacity could be leveraged by pooling together, to name a few.

Dr Bishop further opined that it has become increasingly clear that the neoliberal approaches to trade, since the 1980s, have instead produced a great amount of divergence, both between and within countries, rather than a rising tide that lifts all boats, along with a plethora of troubling global imbalances of all kinds. In sum, not only has no country ever developed under conditions of genuinely free trade, none has ever done so without some kind of activist, interventionist state. Today, China continues to subsidise its private sector.

The cost of inaction for the Caribbean is steep. We must therefore:

• Invest in national digital infrastructure

• Incentivise innovation and protect local IP

• Ignite regional trade alliances that prioritise shared industrial goals

The Small Business Association of Barbados (www.sba.bb) is the non-profit representative body for micro, small and medium enterprises (MSMEs).