I Don’t Have a Crystal Ball
By Gayle Alleyne
For all his economic research, academic success and professional accolades, there’s one thing Professor Andrew S. Downes is ‘lacking’ to help him make a prognosis on the current financial meltdown gripping the world – a crystal ball!
Seated among piles of papers, books and files in his office at the Cave Hill Campus of The University of the West Indies, this Professor of Economics chuckled as he pondered the question at hand – what does he forecast for the Caribbean island-states amid the ongoing recession. “I don’t have a crystal ball,” he said smiling, a concession that even as one of the region’s respected brains, he cannot fathom the scope of this global nosedive.
However, the Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) offered the next best thing, outlining a series of strategies to counter the “very challenging, almost daunting” business climate pervading the tropical archipelago. “We need to find ways of strengthening our economies by identifying sectors that can sustain economic growth and development. We’ve been too mono-sectoral over the years; whether it’s (been) oil, bananas, sugar, tourism. We need to diversify – if not nationally certainly at the regional level. That will allow us to build economic resilience to help minimize the fall-out from any major shock, like what we are experiencing now,” said Professor Downes, lamenting the Caribbean’s tendency to be heavily dependent on the services sector. This strategy, he asserted, could be propelled via the CARICOM Single Market and Economy (CSME). His view is that the plan could involve sectoral diversification “in such a way that it allows countries to expand their production. For example, in agriculture, rather than Barbados trying to do everything on its own, it would do it in collaboration with another country. The concept is based on what economists call ‘a region of public goods’ where you identify a particular good that several countries would be able to benefit from in the whole process.”
Additionally, he noted the importance of ensuring a “negative relationship” between sectors so that when one sector is adversely affected, other sectors won’t suffer likewise but can continue to grow and be positive.” The second area of building resilience, he elaborated, would be that of human-resource development linked to a science and technology platform. “We are weak in those areas. We need to build a stronger base in the region and we can draw on the Diaspora, which we have not done, to help strengthen our human-resource base.”
Thirdly, focusing on macro-economic policy Caribbean wide, the economics professor stressed the need to “hold strain in the short term and ensure that fiscal deficits do not get out of hand.” “When we engage in public expenditure, we must ensure that we have the corresponding revenue to do so and that we don’t accumulate major debt in the process. That would create further problems because the servicing of public debt over the years – and data bears this out – has been taking an increasing toll on government revenue. The opportunity cost of that can be high, especially when you’re using the debt for things that you should not be using it for,” he concluded.