Thursday 6th March, 2008

 
 

Barbados getting it right

 
 
 
 
 
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There are many people who have marveled at Barbados’ resilience over the years as far as its economic policies are concerned, and that country’s ability to maintain its $2 exchange rate to the US dollar. When one compares this to T&T, with all its oil and gas wealth, Barbados must be doing something right and so it may not be necessary to look as far away as Singapore, Iceland, Finland or Ireland, (where economic comparisons seem to be continually made) for a best practices model.

If one examines the global competition it simply fortifies the view that this northeasterly neighbour our size is blazing a trail worthy of note. According to Report 2007-2008, published by the World Economic Forum (WEF), competitiveness is measured by the WEF as “the set of institutions, policies and factors that determine the level of productivity of a country.”

Competitiveness has been divided into 12 pillars including institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation. The WEF also combines this scientific approach with a perception survey.

The forum further divides the countries into different stages of development (based on Michael Porter’s model); thus if countries are at different stages of development, different pillars will affect them differently. For instance, the best way for St Lucia to improve its competitiveness would not be the same for Zimbabwe.

A simple comparison of T&T to Barbados finds the latter scores higher in all pillars but two—macroeconomic stability and market size. Why is it that Barbados’ overall “global competitiveness index” ranking is 50 and T&T’s 84? Even Jamaica’s is at 78.

More worrying may be the ranking of some of the pillars that make up the overall rating. Here are some examples. In the “institutions” area, Barbados ranks 25th in the world and T&T an extremely poor 92.

How is it that with no oil money Barbados’ “infrastructure” ranking is 29 and T&T’s is way lower at 69? And in “health and primary education,” Barbados is 9th; while T&T is 62nd. This in spite of our “macroeconomic stability” ranking coming in at 16 and Barbados’ at 105.

Everyone knows that education is the key to pulling oneself out of the doldrums, and again Barbados has a strong ranking in the area of “higher education and training” with its ranking of 32. T&T is 70.

With all its oil and gas industries, one would have thought that T&T would get a good ranking in the “technological readiness” category. But, here again, Barbados’ ranking of 34th in the world, far exceeds T&T’s 66.

On the private sector side, we fare no better. While Barbados ranks 66th in “business sophistication,” T&T is at 77. In the area of “innovation” Barbados is at 56, again out-pointing T&T, which is at 82.

In the overall “Business Competitiveness Index” T&T’s ranking has fallen from 35 in 2001 to 74 in 2007, compared with Barbados at 41 in 2007.

These are enviable but very worrying statistics and should not just be dismissed at the flick of a wrist, without detailed analysis. The index paints a very bleak picture of T&T and unless we sit up and analyse why this is so and take appropriate action to reverse this direction, we will find that the slip in ratings turns into a slide, one that may not be too simple to halt, much less reverse.

If that happens we could have real difficulty in addressing the main issues, especially without the present day oil and gas revenues.

 

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