Thursday, February 24, 2005

The Rebuilding of Montserrat, 6:
Rebuilding Productivity
GEM 05:02:23

Economists often talk of the importance of balance between the supply and the demand sides in a healthy economy: production and consumption.

For, plainly, goods and services have to be produced and paid for if they are to be consumed. In turn, this requires savings and investment to maintain and further build the productive base of the economy so that we can enjoy a better standard of living in the future. Also, as the sad contrast of Jamaica and Barbados over the past forty years or so clearly shows: if an economy is heavily dependent on imports to sustain a desirable level of consumption, in the end it has to produce and sell an abundance of desirable and globally competitive exportable goods and services; in a stable, law-abiding community.

So, as we look to the rebuilding of Montserrat, this two-sided view highlights a major (and, indeed, longstanding) challenge. For, while we indeed currently enjoy the benefits of a relatively comfortable level of consumption, agriculture, industry and value-added services clearly lag behind. As a direct consequence, over the past several years, it has been UK Government transfers, a few high profile -- and volatile -- investments, aid money and/or remittances that have been largely driving the local economy. (In witness of this, the injection of ash-cleaning money made a big difference since 2003, and when it tailed off about a year ago, the drying up effect was also just as evident.)

This brings several current issues to focus:

1] The major industry in which the Caribbean is currently globally competitive is Tourism, which accounts for perhaps 25% of employment and national income across the region. In our case, we have a drive-in active volcano as a major potential attraction, but we currently lack the major infrastructure to support a sustainable tourism sector. Thus, the importance of the ongoing development of our air- and sea- ports and the Little Bay Newtown.

2] Traditionally, Agriculture has been the backbone of the region’s economies, however this has in many cases now sunk to less than 10% of the economy. Opportunities in this industry now seem to lie in specialist niches with high-value products that can be produced efficiently on a relatively small scale. For instance, we could try neutraceuticals (such as herbal medicines) and foods that are certified as organically grown. Sea Island cotton, perhaps, is another possibility.

3] Similarly, Information and Communication Technologies [ICTs] and a cluster of related cultural and artistic creative services materials have unlimited potential, and require more of brainpower, creativity and skill than of capital equipment. The success of Arrow, the Leas, and others shows some of what can be done.

4] There are many other possibilities, but for them to work out, we need to develop a body of effective entrepreneurs, backed up by astutely targetted financing and facility and management support services. For this, the Business Incubator concept is a tested strategy that has a global track record of improving the five-year survival rate for new small businesses from a dismal 20 - 25% to in excess of 80%.

5] Most of all, we need a skilled, healthy, motivated workforce and a functioning community if we are to create and sustain such industries. Thus, we see the critical importance of education (especially the new community college), independent and transparent media, effective governance and community-based institutions. That in turn requires that we need to work hard on our community-based organisations and government sectors.

We could go on with the list, but the above is enough to show that we need more than merely an injection of infrastructure through the creation of improved ports and a Newtown. Further development of the Community College (perhaps integrating it with a Business incubator that embeds a financing facility) may help. Improvements in governance, transparency and the media may be helpful. So would be the creation of a subscription-based community development foundation that could catalyse community-based initiatives.

But in the end, the key issue is spiritual: are we (as individuals, families, staffs and communities) willing work together under God, to make the sustained, diligent changes of heart, life- and work- styles that will be required for efforts such as the above to succeed? For, except the Lord builds the house, we work in vain.

So, now, let’s talk . . . AMEN

1 comment:

Gordon said...

Test comment, thanks