Elizabeth Morgan | Seeking sustained economic recovery in CARICOM
The Sir Arthur Lewis Institute of Social and Economic Studies (SALESIS) hosted its distinguished lecture on Tuesday, April 26, which was delivered by CARICOM Secretary General Dr Carla Barnett. Her topic was ‘Sustained Economic Recovery Post-Pandemic – The Lewis Model’.
We have been addressing sustained economic recovery for the last two years using the phrase ‘building back better’. It has been addressed by the CARICOM heads, and proposals are on the table. The 54th Session of the CARICOM Council for Trade and Economic Development (COTED) met on April 28 and 29, and should have continued work on the process to achieving sustained economic recovery. I cannot speak to the COTED deliberations because, as usual, this is not known to those who were not in attendance.
Also, as COVID variants are still floating around in the region and cases are increasing in some countries, we really are not in a post-pandemic phase. I would say that we are living with the pandemic and in a situation in which vaccination rates have stalled.
The Secretary General, in her Sir Arthur Lewis lecture, addressed the known situation in CARICOM, which was challenging prior to the COVID pandemic. As Dr Barnett pointed out, there was the prevailing high debt cycle which worsened after the 2008 global financial crisis and was exacerbated by natural disasters.
There were structural vulnerabilities of limited economic diversification in a narrow economic base; high structural unemployment; and dependence on foreign capital and international trade for both consumption and production.
She also noted that the pandemic amplified the existing challenges, as measures to address it saw CARICOM countries, except Guyana, experiencing significant GDP losses in 2020 and 2021. Private capital inflows declined considerably and government revenue was depleted. The public-sector financing gap and external debt have grown beyond sustainable levels.
Difficulties are compounded by new COVID variants, and the Russia-Ukraine conflict has now added new challenges, further amplifying prevailing economic risks and uncertainties, including increasing inflation; financial stress; fragmentation of trade, investment and financial networks; and cybersecurity risks. CARICOM has to be managing multiple risks to mitigate their impact.
The measures to achieve sustained economic recovery, to build back better, are also not new, as the Secretary General outlined in the following insights from the Lewis model, which she saw as relevant to CARICOM development:
1. Proactive role of regional integration in building self-sufficiency and resilience;
2. Importance of harnessing technology to modernise the agriculture sector and the rescaling up of agri-food production to ensure food security;
3. The critical role of capital, both foreign and domestic, in driving growth and enhancing structural transformation;
4. The importance of increasing domestic savings to finance investment and, by extension, the importance of enhancing regional resource mobilisation;
5. The State as a direct participant in economic activity and as a facilitator, i.e., the importance of state capacity; and
6. Creating a highly skilled labour force to drive productivity.
These include proposals and policies which are already on the table – implementing the CSME, establishing the single digital space, attracting financing, improving regional transportation, promoting food security, encouraging economic diversification, development of a multidimensional vulnerability index; implementing the Human Resource Development 2030 Strategy, institutional capacity building, and implementing the Sustainable Development Goals.
There is the report of the Commission on the Economy and proposals from the regional private sector, now the CARICOM Private Sector Organization, which are before the council.
The challenges confronting the region, countries and institutions, in a continuing pandemic and a situation exacerbated by geopolitical uncertainties, is how to collaborate effectively to keep CARICOM economies afloat. How do they make real progress in advancing the CSME?
I am therefore interested in hearing the outcome from the 54th COTED, especially following the restructuring in the CARICOM Secretariat. Since January, the directorate dealing with Trade and Economic Integration has been divided into the Economic Integration, Innovation and Development, led by Assistant Secretary General Joseph Cox, and CARICOM Single Market and Trade, led by Assistant Secretary General, Ambassador Wayne McCook. Both work programmes are addressed in COTED.
I note that in an address to the opening of the 54th COTED, ASG Cox, like Secretary General Barnett, reviewed the region’s challenges, stating that the current situation calls for heightened collaboration and partnership with all stakeholders, with the emphasis on CSME implementation and enhancing the responsiveness of the private sector to opportunities arising.
The ASG stated that this was no time for reticence or procrastination, but to redouble efforts in achieving regional integration. He sees the region faced with urgency, requiring immediate action.
Let’s see whether CARICOM members and stakeholders will now move from their customary procrastination and complacency to action. In today’s very uncertain world, failing to act could be detrimental to the region’s economic recovery.
Elizabeth Morgan is a specialist in international trade policy and international politics. Email feedback to firstname.lastname@example.org.