Friday, February 22, 2008Curse or Opportunity?

Portia HarriganWill the BVI survive in a globalised economy?

For the past forty plus years, Europe in particular has been on a chase toward globalization; (the process of denationalization of markets, politics and legal systems) A process decried by many as one which will cause further impoverishment and actual economic destruction in developing nations such as those of the Caribbean, thus the BVI.

Are the protesters right? The past decade has seen the emergence of India and China as economic powerhouses, due primarily to the emergence of a global marketplace. These two countries are positioned to dominate the rest of the world in areas of production of consumer goods and technology. This is due not only to the unlimited human resources available in these countries, but more so because they recognize the need to become competitive in order to survive in this massive, flattened, globalized, corporate landscape.While China began the process of economic reform; moving to capitalism on quite a small scale initially, back in 1978, it was only when the country opened its borders to international investors, that a real increase was realized in the country’s gross domestic product. Over this almost thirty year period, China has seen the creation of over 150 million jobs for people who would have otherwise been peasants and young educated Chinese are now choosing to remain in or return to China because of the many investment and career opportunities that are now available because of a globalised market.

As for India, as much as it embraced capitalism after the 1947 independence, foreign investment was barred. Poorly paid government jobs guaranteed lifetime employment, but also ensured economic stagnation. Because India shut its doors to foreign investment, its ability to educate its people was compromised and close to 80% of its population lived and continue to live in poverty. It was not until 1991, when the economy practically collapsed that India was forced to open its doors to foreign investment. As a matter of fact, over $48 billion US dollars have been invested in India over the past fifteen years, creating millions of jobs and opportunities for otherwise impoverished Indians.

The United Arab Emirates have also sought to benefit from this global economic development. Dubai, for instance has embarked on such an economic expansion that its population has grown by more than 8% over the past seven years from 862,000 in 2000 to just over 1.029 million today. Interestingly too, is that this spurt in growth has brought the percentage of expatriates to 70% of the overall population, creating tremendous diversity, which Dubai is using to its advantage. The Emirates are all embarking on some form of expansionism in order to capitalize on the impetus of the global trade. Indeed oil remains the major source of income, but each Emirate is seeking to diversify its economy. While Dubai attempts to establish itself as the world’s leading business and tourism centre, Sharjah is fast becoming the leading shipping port of the Middle East, with some of the most advanced seaport infrastructure in the region and an airport with over 105,000 square feet of cargo space. The other Emirates meanwhile, have ventured into areas of food processing, manufacturing and aqua/agriculture.

It is no doubt that these developments are contributing to the overall quality of life for the citizens of these countries and as these countries/departments; China, India and UAE continue to capitalize on their resources; establishing themselves in foreign markets, positioning themselves to take part in this global economy, how will the Caribbean (BVI) cope. In particular, how will the region cope with the overwhelming competition in the world’s largest industry of tourism that has long been established as the cornerstone of Caribbean development?

Because globalization requires intellectual resources such as: marketing; linguistic; and engineering knowledge (in addition to human & natural resources) - is the Caribbean truly cursed? Or is this an opportunity for these developing countries to be catapulted into a state of independent economic development? Can the Caribbean become an economically viable region, without handouts from the developed world?

Most importantly, can the countries in the region go it alone; or will the demand for resources cause a unification that mandates competitive, efficient production of goods and services to the benefit of all? This is the attempt of the CSME, but to date all efforts toward unification of Caribbean markets have failed. One of the most important elements of a single market and economy - a single currency - has for the most part been abandoned. And, much like other efforts toward strengthening Caribbean ties, CARIFTA and CARICOM the CSME seems doomed, as from its inception in 1989 to date, very little has been implemented. Must then the whole concept of CSME be revisited? In the establishment of the European Union, it was realized that in order to ensure the free movement of goods, services and persons; physical, tax-related and technical frontiers had to be abolished. Contrarily, the revised treaty of Chaguaramas allows for the gradual state by state removal of barriers, to which there has been nominal adherence. Many of the issues restricting the realization of the CSME, also plagued the European Community and as these issues were resolved through the establishment of the Single European Act, formulated by businesspeople and politicians, so too must be the approach of the Caribbean.

It is indeed a challenging time for the Caribbean, for the effects of globalization have already had adverse effects on the banana and sugar trades. Not because there is no longer a demand for these products, but because even though leaders of banana and sugar producing countries were advised long before, that trade preferences would cease, there were no aggressive, bold, new initiatives to diversify the products or to find more competitive methods of production. Today, as the rest of the world explores the use of sugar for instance, in the industry of biofuels as a cleaner energy source, the Caribbean has virtually abandoned its sugar production. Will the region also see the collapse of its tourism industry for the lack of a proactive approach to further development and diversification? This industry has never been more competitive. New markets are emerging daily, with services and products far surpassing those offered in the Caribbean. Destinations with exotic names like Phuket, Jaipur and of course Dubai offer specialized tourist experiences at half the price of many Caribbean destinations and the air service is fast and efficient.

There is a silver lining however, because while there has been some adversity; there have also been some positive impacts of globalization on the Caribbean. Offshore Financial Services for instance have been a tremendous economic boost for countries such as the Virgin Islands, the Cayman Islands and Bermuda. But if the Caribbean is to become a serious player in the global marketplace; like the departments of the UAE, each country must recognize its respective strengths and a development plan devised accordingly. The Caribbean must at this point in its history begin to use its resources strategically if it is to benefit from the opportunities that globalization presents. All countries in the region may not have the resources to be business or tourism centres. There are those that can and should be developed as agricultural stations, to supply the rest of the Caribbean and specialized crops to the rest of the world. To reduce shipping costs, thus cost of goods to the region, a major shipping port can be developed in one of the larger countries, whereby goods from Asia are shipped directly to the Caribbean via the Panama Canal and dispatched via smaller vessels to the rest of the region. The oil resources available must be maximized to the economic benefit of the entire region and the processing of renewable energy explored in an effort to reduce the dependence on imported energy sources.

These achievements can only be recognized though through a truly organized and professionally managed CSME and through a major investment in human resources, particularly in the areas of education (that provides exposure to global business practices), research and development, marketing and very importantly, attitudinal change. If the leaders of the region both business and political are progressive thinkers, who take a firm, intelligent and proactive approach to the government and development of these islands from a global rather than an insular perspective, then indeed, globalization for the Caribbean will be a tremendous opportunity.

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