The Caribbean people are well used to hearing about the current economic woes facing their countries: the heavy dependence on tourism in a global recession; the vulnerability of small economies to global impacts like the oil price; the high levels of debt which makes stimulus packages out of range; and the competitive challenges of a global economy. As if that was not difficult enough, the region continues to face a range of natural disasters, and high levels of violence. For the average man and woman in the street the daily reality is about the increasing difficulty of making ends meet, and keeping the family out of harm’s way. Were it not for the renowned spirit of the Caribbean people, such an outlook would at best constitute a glass half empty.
Ten years ago in Sub-Saharan Africa a glass half empty would have been an aspiration. The region faced chronic levels of poverty and economic stagnation. Today there is a groundswell of optimism about a filling glass (albeit from a low level). Most countries there have had annual economic growth of 4% or above over the decade. Significantly, though the region was hit hard by the current global recession, growth has rebounded and there is now a broad-based recovery with 5% growth expected this year. That is not to say that there are not still major challenges, such as sustainability (and major exceptions like Zimbabwe), but overall I have recently felt a palpable sense of real progress there. How has this come about? And is there any relevance for the Caribbean?
Any comparison between regions is complicated and always fraught with risk. First, neither region is homogenous. And between them the size of the countries and populations is generally of a different magnitude. Most of the Caribbean is described as “middle income” and the pockets of poverty that do exist do not equate to the situation in Sub-Saharan Africa. And with the current economic situation, Sub-Saharan Africa has largely been a beneficiary of higher commodity prices, which has stimulated significant foreign investment in mining in some countries. In the Caribbean, only Trinidad and Guyana have benefited from such price rises (with Guyana it is a two-edged sword, because of the high oil imports), and most have suffered.
But there is something else happening in Sub-Saharan Africa, that is making a profound difference there. Resource poor countries in Sub-Saharan Africa have also attained high levels of growth, and even a number of the resource rich countries seem to be avoiding the familiar “resource curse” and developing sustainably. Current analysis points to strong policy making and implementation driving the economic growth, and poverty alleviation, of Sub-Saharan Africa. This includes economic management that has shifted from an emphasis on control to facilitation; an emphasis on removing demand constraints; an improved business environment; and increased de-centralisation of decision-making and community participation, to facilitate innovation and local initiative.
One example is Rwanda. Land-locked and with few resources, it is the most densely populated country in Africa, and is still recovering from the ethnic genocide of 1994. But steady progress on market-oriented reform has made it one of the strongest economic performers (an average of 8% annual growth over the last 10 years). For example in the 2010 Doing Business report Rwanda came 67 out of 183 countries, a phenomenal achievement, and it now has a thriving service sector. Another example is Mauritius. Again a country with major challenges, that was previously viewed as poor, remote from world markets, commodity dependent, and with ethnic tension. The transformation has been extraordinary. Significant economic growth and consistent reductions in inequality have been achieved through an export-oriented approach combined with a liberalisation of the economy that was sequenced and tailored to Mauritius’ competitive advantage; a nation-building strategy that has resulted in partnership between the ethnic groups; and investment in human development that has secured the country’s competitiveness. And Ghana, which was considered a basket-case in the 1980s (I know, I was there and witnessed it!), and is now experiencing unprecedented economic success. In agriculture for example it is now rated as one of the best 5 performers in the world, again facilitated by improvements in the investment climate and the creation of market incentives.
What does any of this mean for the Caribbean? If countries in far worse circumstances can achieve significant economic growth and reduce poverty, even in the face of a global recession, just think what is possible in the Caribbean. If the countries of the Caribbean can adopt policies that promote openness and innovation, the future is clearly bright. Such policies will be indigenous to the region, but I suggest they will be characterised as in Sub-Saharan Africa by the leadership of governments as facilitators and not controllers, orientation towards the global market place, and the un-tapping of innovation among the people through de-centralisation, real consultation, and the building of national cohesion. Closer integration would give the region more clout (though sadly that seems further away than ever). The other side of the coin is that without such approaches, the risk of the Caribbean being left behind is very high.
Such a re-think for the countries of the Caribbean would be particularly timely, not just because of the current economic challenges they are facing, but because a new type of future global economic growth is inevitable. If “developing” countries adopt the current high carbon model of growth that has to date characterised development, the result will be catastrophic (even if the “developed” countries reduce their emissions to zero!) with increasingly extreme climatic events, food and water insecurity, and increased disease. In such a scenario the development challenges of the future will far outweigh those of today.
So how can the countries of the Caribbean attain the national development they rightly aspire to and deserve, that is sustainable. For sure the developed world has an important role to play in facilitating that goal. But I suggest the real question for policy leaders is how can the Caribbean countries acquire competitive advantage in new low carbon development; and how can they attract international investment including technology transfer to support this? The region has many advantages, for example in potential for renewable energy, and I believe this is certainly attainable. Guyana has taken a lead within the region with its low carbon development strategy (with which I was closely involved). If that and other progressive initiatives in the region can be linked to the sort of policy environment that has proved so successful in Sub-Saharan Africa, the region can get ahead of the curve.
So the region would not need to depend on the spirit of its people to see the glass half-full, it will be real and visibly filling. The right leadership and broad-based participation can make it happen. It would sit well with the world class attributes of the region’s beauty and the warmth and resourcefulness of its people. The combination would constitute the ultimate lime.
The author was the former British High Commissioner to Guyana, and Ambassador to CARICOM and Suriname. He is now a Development Consultant. He can be reached on fraserwheeler@hotmail.co.uk.