“DELIVERED OR DENIED The Dividends of Integration” LECTURE BY THE HON. DR. KENNY D. ANTHONY PRIME MINISTER OF SAINT LUCIA & MINISTER FOR FINANCE, ECONOMIC AFFAIRS, PLANNING & SOCIAL SECURITY AT THE DAAGA AUDITORIUM UNIVERSITY OF THE WEST INDIES ST. AUGUSTINE CAMPUS TRINIDAD AND TOBAGO MONDAY, MARCH 3, 2015, 6:00PM
St. Lucia’s Prime Minister Hon. Dr. Kenny Anthony on Tuesday delivered a “Distinguished Open Lecture” on the topic, “Delivered or Denied: The Dividends of Integration” at the University of the West Indies, St. Augustine Campus.
The lecture was a part of UWI St. Augustine’s CARICOM Leaders Lecture Series, focusing on the usefulness of CARICOM to the region and its future.
Secretary-General of CARICOM Ambassador Irwin LaRocque launched the series in October 2013 with a lecture on the status of the regional integration process and his vision for the future of CARICOM. Since then, UWI St. Augustine has hosted Hon. Perry Christie, Prime Minister of The Bahamas, as well as Hon. Dr. Ralph Gonsalves, Prime Minister of St. Vincent and the Grenadines.(Government of St. Lucia)
PART ONE
The Post-Federation Potential When the founding fathers, Barrow, Burnham,Manley and Williams first signed the Treaty of Chaguaramas on July 4 1973, they were, according to the preamble of that landmark document,determined to:
“…consolidate and strengthen the bonds which have historically existed… [and]… fulfill the hopes and aspirations of their peoples for full
employment and improved standards of work and living”
Moreover, they were convinced that these objectives would most rapidly be attained through the “…optimum utilisation of available human and natural resources of the Region… [and]… by accelerated, coordinated and sustained economic development.”
It is against these objectives then that we begin our discourse on the delivery of the integration dividend and whether CARICOM, as a single economic space,and as a central construct of our continued development strategy, still promises the dividends that were first imagined.\Let us note at the outset, that for several reasons, this is not a subject to be lightly approached. Nor should this be received as an unbridled critique of an institution which has served us reasonably well for several decades. It is however, an examination of what needs to change if the ideal of a unified Caribbean is to be realized through the various institutions we have created in the name of regionalism.
Also, we must acknowledge and set aside any discomfort we may have with such routine stocktaking. Most of us (politicians being no exception) view such assessments as unwanted interruptions in the normal traffic of life.
But we also know that critical evaluation is both useful and necessary, as it provides the valuable insight we need for survival in this global climate of rapid and irrevocable change. Moreover, as we pursue the illusive imperative of growth, we must objectively question, challenge, gather and assess information as a basis for future action.
Secondly, I ask that you bear in mind that this is not a Ph.D. thesis, and that this particular survey of the subject matter cannot be xhaustive given the time allowed. Nevertheless we will be as rigorous as we can given the importance of the issues at hand. So let us press on knowing full well that time and
circumstance are already upon us and if we are not vigilant we invite all manner of mayhem and mishap on our own heads.
At the Crossroads of Indecision Ladies and Gentlemen, it is my view and I am not alone in this, that the Caribbean is, and has for too long, been stalled at a crossroads of indecision;stalled for so long that we are in danger of becoming anachronistic – literally out of time – and out of step with the rest of the world.
Several indicators suggest that we have reached a point in our evolution as countries where the old assumptions are out of sync with reality. They may not be entirely degraded, but they have passed their sell-by date.
A quick overview of economic performance will confirm that half a century after independence, we are still engaged in major battles against the region’s worst enemies: poverty, ignorance, crime, disease and debt.
We do not lay this crisis at the feet of any one institution nor will it profit us to pretend that there is any single cause. On the contrary, where we are today is the result of several factors that have conspired to temper both our resilience and our resolve.
At the root of our dilemma is the demise of our commodity sectors which were the bedrock of our post-independence economies and which were the
main engines of employment, savings, investment and growth.
Nor has the transition to service based economies -led primarily by tourism – been much of a palliative.
Today, within CARICOM, those economies with Tourism as their lead sectors are faring worse than those with strong commodity sectors. Certainly, we are not seeing much growth potential in traditional agriculture, which for many years was ‘king.’
Virtually all our primary exports have taken a beating on the open market, changing the very fabric of our countries and altering our ability to finance the very change we needed then and still need now.
While it is true that scale of production and domestic market size will always generate diseconomies, our ability to overcome both these hurdles should have improved in a more open and globalized economy. Certainly, access to technology, ease of market entry, and the mergence
of new non-traditional markets should have encouraged us to reposition. Our hesitation to do so with our traditional commodity sector must then have something to do with how we have managed and continue to manage our regional production frontiers.
In our own case of the banana industry, which was once a million dollar a week enterprise, we failed to address in time and in entirety, the very obvious open market challenges we knew were coming.
Instead, we preferred to hope that special and exceptional arrangements would be made for us in the wake of collapsing market protection. Indeed, we created an elaborate, and some say expensive regional negotiating machinery mandated to make it so.
So convinced were we that inherent fragility would render us unable to cope, we hoped that additional aid – instead of open trade – would have helped us transition successfully. In hindsight, we must ask ourselves why we did not learn from our competitors, and expand our production frontiers beyond our own geographic limits. Instead, we shrunk our imaginations and remained insular. We declined to learn the bitter lessons of our own history.
Again, in hindsight, why did we not envisage ourselves as owners of a global industry, with decades of industry knowledge under our hats,growing bananas anywhere in the world where land, climate and other critical factors of production coincided?
Granted, shortly thereafter, the global financial crisis dashed many hopes of sustainable prosperity in a post banana world. However, it is also possible that the very things we have not addressed will continue to plague us. That is, the fragilities within our economies that have nothing to do with size: those vulnerabilities that are within our grasp to address, and which we must address regardless of the primary economic activities we choose to pursue now or in the future.
The dilemma is quite possibly one of cause and effect. Put alternatively, building more robust economies based on access to markets, capital, technology, information, knowledge and skills is something we need to do regardless of what development sectors are in the lead, or offer comparative advantage. This is not WHERE we are failing. This is WHY we are failing.
Similarly, fiscal prudence, world-class education,good governance, functional justice systems, and strong democratic institutions are critical to economic growth, and well within our reach if we would make them the budgetary priorities they should be. This we must do to protect and expand economic turf. If we do desist, we can hardly blame CARICOM or any single market for our deficiency in that regard. Our economists need to rethink our political economy.
Danger of Self Perception
There is quite possibly a similar danger of negative self-perception and equity facing Caribbean tourism today. While we accept that the sector had to be seeded with high foreign capital, we ought to be concerned that it continues to be characterized by high levels of external ownership. While many an economic strategy focuses on increasing foreign direct investment and expanding returns to labour through employment, far less emphasis is placed on growing domestic equity.
With increasing incidence of lateral and vertical integration of ownership, production, management and marketing, we are in grave danger of again becoming industry hosts rather than industry
PART THREE
A DIFFICULT LEGACY
Christine Laguard, Managing Director of the IMF,describes this scenario as a “Difficult Legacy”.Speaking in Jamaica in June last year she confirmed that:
“The Caribbean has had a tendency to get stuck in the doldrums of stagnation—low growth, high debt, low competitiveness, high unemployment…This has been especially true for the countries depending largely on tourism… In these countries, growth has averaged less than 2 percent a year since the mid-1990s.Given this legacy, the Caribbean was vulnerable going into the global financial crisis, and was hit with its full force… Six years on, output has still not returned to pre-crisis levels, and public debt is still at record highs—almost 100 percent of GDP in tourism-dependent countries.”