WHAT constitutes growth in an economy? There will always be that nebulous concept called growth about which we shall continue to squabble because nobody really knows for certain what part areas like the underground play or do not play in the expanding or otherwise of the economy.
Since way back in 1962 the Wild Coot has been trying to understand what constitutes growth, like when the International Monetary Fund (IMF) states growth as a target. Whose growth? What if growth is not even? Is it still called growth?
Therefore, the spat that is emerging between different elements in the newspapers, to me is really a non-issue.
No, wild coot! The IMF has laid down the condition that future help depends on achieving a three per cent “growth” and a six per cent growth. So there must be something called growth.
The main players in the market are the Government, the business private sector and “We”. The Government gives and takes (mostly takes). It can take and it can take away before and after it “tek way”. It can give tax breaks and it can add back what it has taken in another form of tax take.
This affects people according to their dependence on things in which the Government is involved or on businesses that depend on Government. Where the Government provides to the person, then withdrawing that employment can affect “growth”.
For example, the Government in the last Budget did not say to what extent it had to reduce expenditure, especially to the statutory corporations so they would be in conformity with funds and requirement expected of them.
I suspect that this situation will result in the statutory corporations operating under strict guidelines and with a reduced number of people.
So all the brouhaha about lack of growth or impending percentage of growth needs to be seen as an incomplete equation. The contradiction is in expanding in an IMF situation that requires deflation. “Combating deflation requires a change in consumer attitude and firms’ behaviour, so it is a more complex process than it appears” (Linda Yueh—What Would The Great Economists D?).
Ralph Jemmott’s critique on the subject of growth in the Daily Nation of April 24, presents a sober look on the issue.
“It is, however, a bit unfair to suggest, as Brandford does, that nothing has happened since May 24, 2018.
In fact, former governor of the Central Bank Winston Cox credits the new Barbados Labour Party Government with ‘efficiency in administration’.”
I have to agree with the former educator, as while I agree with the points that Mr Brandford has been making, I do not share in his highlighting only the negatives. It is obvious that the lowliest will bear the brunt of the adjustment as even a small tweak affects them.
There was and is need for a change of direction in which we in Barbados are going. Unfortunately, because we are in a capitalist society, it will always be the poorest that will feel any adjustment more.
Then comparisons like those of Mr Brandford will emerge.
But is it not miraculous that our debt to GDP has been reduced from 175 per cent to 125 per cent and descending in less than a year?
Minister of Energy and Water Resources Wilfred Abrahams has stemmed the stench to our tourism and businesses that threatened to doom us; we have restored free higher education; we have attempted to repay Government tax debt to people; it is said that bus fare should have risen to $5, and I can go on.
All in an IMF programme that we had to undertake because we were broke.
There is a huge contradiction in the way in which we are following the outside world. Guyana had its Forbes Burnham, and Jamaica had its Michael Manley, but through it all those countries were able to feed themselves—especially the poor. We, through thoughtlessness (maybe selfishness) are more and more dependent on Trinidad for food instead of being able to feed ourselves.
“The historical growth record of contemporary developed nations reveals a third important characteristic: the high rate of structural and sectoral change inherent in the growth process.
“Some of the major components of this structural change include the gradual shift away from agricultural to non-agricultural activities and, recently, away from industry to service; . . . and finally a corresponding shift in the spatial location and occupational status of the labour force away from rural agriculture, and related non-agricultural activities towards urban-oriented manufacturing and service pursuits.” (Economic Development in the Third World, Michael P Todaro).
But, are we in Barbados able to follow developed nations?
• Raffique Shah returns next week