As part of Nobel Laureate Week, Dr. Andrew S. Downes of the University of the West Indies gave the Inaugural Sir Arthur Lewis Memorial Lecture. His lecture, which was rather interesting, discussed the works of Sir Arthur in the field of industrial development. Dr. Downes’s lecture had me thinking about the banana crisis in St. Lucia, the need for economic renewal, and subsequently, the need for a new economic strategy to take us into the year 2000. Can we really apply Dr. Lewis’s ideas developed in the 1960s? What do we do about bananas? What sustainable industries can we attract? What indigenous industries can we nurture? What ought to be the new economy? Is it a revitalized two-sector (bananas and tourism) economy? Should the economy be completely different? Do we maintain the status quo? I have heard many people suggest that we ought to embark on an industrialization drive and continue to expand the agricultural and tourism sectors.If we are going to look at the industrialization as an imperative, we should be tempted to examine Dr. Lewis’s ideas in that field. Aptly, Dr. Lewis’s industrialization strategy was export-focused. Local and regional markets were much too small to sustain the economy, and exports would bring in much needed foreign exchange. Also, Dr. Lewis’s ideas sought to exploit the labor surplus in LDCs. In his view, this cheap labor supply accorded multi-nationals the opportunity to compete on the basis of price.
Unfortunately, however, the labor advantage for manufacturing in LDCs have diminished considerably since the 1960s for several reasons. Among the several causes, in my mind, four are very crucial. 1) the cost of fuel is significantly more expensive now than it was in the 1960’s, consequently, the cost of production using costly and inefficient power in LDCs and the cost of freight have become quite exorbitant, 2) advances in materials science have made it possible to synthesize materials very cheaply. This has had the net effect of reducing the urgency for cost savings in direct production costs, 3) advances in robotic-technology have made it quite easy to have unmanned factories running mass production labor-intensive systems, and 4) market demands around quality have made it necessary to reduce the human element in production processes. These four factors were not predicted when Sir Arthur developed his ideas. One other factor which is often over-looked, but to my mind is extremely relevant for countries which are predominantly African in population, is the race question. In the context of an export-based industrial strategy, where North America and Europe are the markets, one cannot ignore the race dimension. I submit to you that a European would buy a widget from a Japanese before buying it from an African.
At the risk of sounding cliché, we in St. Lucia are faced with the challenge of renewing and re-orienting our economy. On the industrialization front, we need a strategy that is cognizant of the following facts among others: 1) increased protectionism in export markets; 2) most new industries are highly technology oriented; 3) labor surplus is no longer of major advantage to multinationals, tax incentives still are however, 4) declining disposable incomes in domestic and foreign markets; 5) increasing unemployment world wide; 6) escalating national debt in "developed" countries leading to economic decline; 7) increasing global competition, 8) shorter life-cycles for products leading to quick market maturity and product obsolescence; 9) St. Lucia’s lack of well-trained technical people, and 10) the lack of and support for indigenous research. In short, we are up a creek! Our record on industrialization through foreign investment is less than satisfactory. Many greedy foreign "investors" who have come for the incentives, have left us several empty factory shells. I believe that our main hope lies in nurturing an indigenous manufacturing sector with both a domestic and external focus. Part of the strategy must include import substitution. While Sir Arthur was able to list a host of suitable industries based on a number of criteria, I am somewhat at a lost to do the same given our climate today. What we have to offer haven’t changed much, unskilled-labor, what industry needs, have changed considerably - science, technology, highly-skilled labor, innovation, efficiency, sophisticated telecommunication networks, research etc.
On the agricultural front, it has been said over an over again, that we need an alternative to bananas. We have yet to come up with a widely accepted alternative. I am of the opinion, that the government should run an competition on the question "what is the alternative to bananas?" and award a $5,000 prize to the best idea(s). Unless we can produce a purple banana with an orange inside and market it to the Yuppies in Europe and North America, bananas like sugar, will soon become a dead crop. Banana is an undifferentiated product. Taste and colour are not enough to give us the competitive edge in the world market - only price, quality, and perhaps shelf-life. Our competitors do well on all three elements. So how is our fruit differentiated? Is it on its name 5 Isles? Perhaps a new marketing strategy might help. We can market tourism and bananas jointly - visit these beautiful isles, the 5 isles of bananas.
I am of the opinion that the new agricultural frontier is in the careful farming and marketing of herbs for international consumption, particularly those herbs with medicinal benefits: cocom coolie, gros pompom, gwen umbas feille, etc. The health foods market is a growth market all around Europe, North America, and even the Caribbean. Such an industry has great low cost/high yield potential.
While I have mixed feelings about tourism, in the absence of a viable alternative to bananas, I am reminded of the African proverb which states "do not tell the man that is carrying you he stinks." On that note, I will only say that we must do all that is possible to ensure that the industry is viable without selling the virtue of our people.
Finally, answering the question of St. Lucia’s economic survival is not the sole responsibility of politicians. Every St. Lucian must become actively engaged in answering the question, while our politicians must become actively engaged in listening. Can we make the break? Where should our economy be heading? Talk about it and send your ideas to your parliamentary representative.
