Many Caribbean economies have not only been steadily declining relative to other small economies but currently face unstable macroeconomic imbalances. Hence face the need for stabilisation cum reform policy. Just like Estragon muttering “nothing to be done” in Beckett’s play one policy option, probably less painful upfront, is to wait it out. That is to wait for a world recovery and hope that such a recovery will pull the countries out of the doldrums.
The Caribbean policy makers would not be an exception in preferring this option. History is littered with this the “let it be” option. It is often the preferred option by policy makers and one that has characterized Caribbean policy during the last decade or so. Accumulated world-wide evidence suggests stabilization and structural reform are more likely to occur in periods of crisis, the longer has been a period of instability, presidential rather than parliamentary political systems, at the beginning of a government’s term of office, and where the executive faces fewer constraints. Constraints that often are relaxed by having a large majority in parliament. Multilaterals including the IMF appear to have little effect on timing.
The recent World Economic Outlook by the IMF suggests that the world economic recovery is expected to pull up growth in the Caribbean. The Caribbean six (The Bahamas, Barbados, Jamaica, Guyana, Suriname, and Trinidad and Tobago) are expected to shift from an average yearly growth of 1.1% (2009-13) to2.5% (2014-18); the average for the tourist countries (The Bahamas , Barbados and Jamaica) from 2.6% to 3.6%, and from -0.3 to 1.4% for the commodity exporters. The countries with the best growth prospects are Suriname and Guyana, with average projected GDP growth of 4.4 percent for 2014-18.
Leaving aside the downside risks the relative improvements in near-term prospects of the Caribbean’s trading partners may result in a decrease sense of urgency of stabilization and reform. The “let it be” option implies economic recovery without upfront economic and political costs. However, this “benign neglect” also implies a continuation of relative decline. Kicking the can down the road is not good.
While I accept that “let it be” may be the reality in the Caribbean, I think the cause may not rest with our leaders, as might be thought. The sad fact is that, as researchers and policy advisers, we have not yet found a way to energize new ideas with the popular support needed for major shifts. Take for example the suggestion in the recent UNCTAD 2013 Report, that countries like ours should begin to focus more on our domestic markets for our growth. As far as I know this issue has not even arisen in our public discussion. One weakness we have is that we are not as proactive as we need to be. We get serious only when a crisis is upon us. Except this attitude changes, “let it be” never will.