Occasional Essays
December 22, 2006

On the cusp of an economic take-off

by: C.I. Martin

The phrase “On the Cusp of a Take-off” is a felicitous one. All Vincentians have to hope that the Comrade is right when he uses it to describe the current state of affairs in S.V.G. The government is spending a lot of money on education and an educated labour force should enable all sectors of the economy to function more efficiently. The directly productive sectors are, however, agriculture, tourism and construction.

Shortage of land and labour as well as lack of international competitiveness limit the contribution agriculture can make to our transformation. The sector can supply food locally and regionally and provide some exports to niche markets further away. The Produce Division of National Properties has been selling in just these markets yet it has come in for bit of nonsensical criticism.{{more}} Last year the Division’s Manager said he was getting very little dasheen, they were all going to ‘traffickers’. What should he do? Nothing, he was told; a lot of these people are fly-by-night operators and the farmers will return to our venerable marketing organization that has been in operation for nearly 50 years. The farmers did return and now the National Properties is being accused of usurping the role of the private sector. What is not appreciated is that we have passed this way many, many times before. In fact this is why the Government originally gave itself the power to specify goods. Under this much discussed Act the Government can dictate who can deal in commodities, be it sugar or sweet potatoes. It can therefore curtail the activities of the rascals who prey on the farmers. Those who do not take the trouble to learn from their nation’s history are destined to repeat its mistakes.

The sectors on which we have to rely for rapid growth are tourism and construction. The role of tourism is fairly well understood; less so is that of construction. For there to be development there must be investment. This is basic economics, nay, plain common sense. If you are going to develop tourism then you have to invest in hotels, airports and other infrastructure. Indeed, in most economics 50 per cent of investment takes the form of construction.

There is obviously a construction boom on in St Vincent. This is clearly not only from the numerous construction sites involving airports, hotels, houses, roads, bridges but also the many oversized trucks on the roads; the recurring shortages of cement and workmen; and the speed at which the removal of sand is causing the sea to encroach on the Diamond Landfill.

The great feature about construction is that it is not merely the preparation for another form of economic activity but it is itself an important economic activity. It certainly employs a large number of persons, skilled and unskilled. An individual may build his home and be finished with major construction for the rest of his life, not so the Government nor the nation as whole. We have so much leeway to make up that it is possible that St Vincent can go for 20 years at least with construction being a lead sector. To do so however we have to get grant funds.

The problem with borrowing is that we are not certain how large the National Debt should be. Some years ago the European Union set out some guidelines. They themselves however are now ignoring their own guidelines. The erudite Dr Thompson hit the nail on the head when he pointed out that if we think SVG’s debt is out of control we should look at the rest of the OECS. Perhaps the best we can do is to try to ensure that SVG never gets to the stage where the Government borrows all the available loan funds and none is left for the private sector. Moreover we have to ensure that all Government recurrent revenue does not go to service debts with none being left to pay the public servants.

Presently, we get assistance from the European Union, Taiwan, Venezuela, Trinidad and Tobago and Cuba. The generosity of President Castro should never be underestimated. I for one am sufficiently long in the tooth to remember when St Vincent had only one vet and one or two dentists. We trained people in these fields but they were too few and too bright and stayed away. The Cubans have trained a far greater number and consequently we now have no shortage in these fields. If this were all the Cubans did, then it would be still be a very significant contribution. But we all know they have done much more.

No one can guarantee that Government’s investment, mainly in construction and education, would lead to increased output. A small island is not a world. It is not even a big country. Too many factors that can affect outcomes lie outside the control of its Government. We can but try. The ULP is undoubtedly giving it its best shot.