Part 1: Introduction
Carl More in an article in the Sunday Sun of 22 December lamented the fact that even after many years of trying he is still unable to get his hand around the concept of “economic growth”. I submit that he is in very good company; for the most part, our economists have not been able to explain to the public in simple terms what it is let alone how to achieve it. But I want to use this occasion to comment on yet another economic concept that is bandied about every time someone talks about the current economic situation in Barbados and the further afield in the Caribbean. I refer to the concept of “structural adjustment”.
As my title suggests, I wish to address structural adjustment from the perspective of the so-called “lifeblood of our (Barbados’) economy”, namely, foreign exchange. I accept, however, that we have short-term, medium-term and long-term problems. The short-term problems have more to do with revenue and expenditure balancing issues. The dismissal of some 3000 to 5000 workers is designed to deal with expenditure side issues. There are a myriad of other issues such as financing of student fees at the UW, health care etc. that require both short term and longer-term adjustments.
However, the position of this article is that for the long-term, serious structural adjustments will have to be made to the Barbadian economy and that these alternatives should focused more on foreign exchange management than on growth; growth, it is argued will follow from skilful management of foreign exchange.