Find new areas for growth in stagnated Barbados

Officials in Barbados are being told not to look to tourism for future growth of the economy.

What is more, W. Bradford Wiley Professor of Economics, Emeritus Jay Mandle, is blaming the bureaucracy in the public sector for the stagnation in the development of more black-owned businesses in Barbados.

He made the observations recently while presenting a paper at the University of the West Indies, Cave Hill Campus titled The Beckles Hypothesis.

According to Mandle since the global economic crisis of 2007/2008 the Barbados economy had stagnated, resulting in the International Monetary Fund (IMF) programme.

In seeking to explain one of the reasons for the country’s unsatisfactory economic performance, Mandle pointed out that while the economy remained dominated by tourism, that sector was “a drag on the economy’s productivity”.

He explained that while tourism’s share of the island’s tradable sectors increased between 2012 and 2017, labour productivity in that sector remained slightly below that of the overall economy.

“As currently structured, it is hard to see how Barbados can escape the slow growth pattern that has created its current crisis,” he said.

“Tourism’s growth in the past is largely responsible for the prosperity it experienced. But it is not a sector that will result in transformative growth in the future. Only to a limited extent are the services it provides amenable to the introduction of productivity-raising new technologies,” he posited.

Mandle said there was need for investments in new projects that yield high private and social returns in order for economic diversification to take place.

He also pointed to the need for the public sector to play a “progressive role” in encouraging economic development.

However, he said, for this to take place, the public sector must possess “technical competence, autonomy and a high level of professional intimacy” with members of the private sector.

“What all of this suggests is that the stagnation in productivity that has occurred in Barbados may be the product of the government’s failure to close the gap between private and social returns. That failure may be caused by the public sector bureaucracy’s inadequate technical competence or its insufficient embeddedness with the private sector,” he said.

Questioning why the dysfunction of the public sector persisted despite several efforts over the years, Mandle said it suggested that the root of the problem are “deep in the country’s social structure”.

In this regard, he referred to sections of the 2004 publication by Hilary McD Beckles – the Chattel Blues – stating that “Beckles’ argument is that the white population’s dominance in the ownership and management of the country’s private sector stifles Barbados’ economic development potential”.

“There is in Barbados, a division of labour which says that the black community will occupy and control the politics and the white elite will control the economy,” he said, adding that what remains in place was an “ethic division of labour that is obsolete, regressive and subversive of the nation-building project”.

However, Mandle said as far as he was aware no data had ever been collected to measure the “division of labour” that Beckles described, though pointing out that very few commentators doubted its existence.

Pointing to International Labour Organisation (ILO) data, Mandle said this was proof that employers in Barbados constituted an unusually small percentage of its workforce with only 0.9 per cent of employed Barbadians filling that status.

“In contrast, employers constitute 3.9 per cent in high income countries and 3.6 per cent in middle income nations,” he pointed out.

“In other small nations, the percentage of employers range from 2.1 per cent in Jamaica to 7.8 per cent in Costa Rica. Iceland, a nation whose population size closely approximates Barbados’, records 3.8 per cent of its workforce as employers, almost four times the percentage in Barbados,” said Mandle.

Describing Barbados as a nation with an undersupply of entrepreneurs and an oversupply of attorneys, Mandle said this suggested that a process of “entrepreneurial crowding-out” has been experienced.

“What seems to have happened is that a substantial number of well-educated Barbadians have chosen the law in response to their perception that barriers prevent their reaching the upper levels of private sector management. To the extent that this dynamic is operative, the country’s economic development prospects are damaged,” he warned.

“The conditions for a developmental state that could facilitate economic development are not satisfied in contemporary Barbados. The social contract that assigns the economy predominantly to white Barbadians, leaving the political realm to black Barbadians, results in a truncated entrepreneurial class and a public sector bureaucracy with limited business experience,” he added.

The retired professor said for Barbados to develop economically the entrepreneurial class would have to welcome many more entrants “from the now marginalized population”.

“When that occurs, both the private and public sectors will better be able to contribute to the country’s development,” he said.

“Beckles’ hypothesis is important. To restore prosperity, the people of Barbados will have to engage in public dialogue on what is admittedly a fraught subject . . . Only after an extensive period of debate and deliberation will it be possible to form a consensus not only on the need to reconstruct Barbados’ social contract in order to achieve economic development but also agreement on how to achieve that objective,” he said.