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HOW DO YOU PROCURE ECONOMIC DEVELOPMENT IN A SMALL, RESOURCE POOR ISLAND?

Caldwell Taylor

What viable alternatives to dependence on foreign investment are available to Caribbean microstates with little or no natural
resources, negative rates of savings and puny internal markets?

The dependence -on –foreign- investment option bespeaks what is often disparagingly called the “Puerto Rican model”,
also known as the Commonwealth model; or in the colourful language of the late Lloyd Best, the “industrialization by
invitation” model.

Puerto Rico’s capital import model offered foreign businesses a range of attractive inducements to set up shop on the island:
These inducements and incentives included factory buildings, low cost loans, cheap labour and tax exemptions, initially for
10 years.

Led by Munoz Marin and Theodoro Moscoso, the Puerto Rican experiment got going in the 1940s and it achieved some
‘spectacular results’.

In constant dollars, Puerto Rican per capita income increased fourfold between 1954-1973.

Between 1950 and 1973 the island’s GDP rose by a little more than 300 per cent. Lamentably, this phenomenal rate of
growth did little to cure Puerto Rico’s chronic unemployment.

Even so, Puerto Rico remained an attractive option and in the late fifties and early sixties Trinidad and Tobago, Barbados and
Jamaica created Industrial development corporations, which sought to replicate Puerto Rico’s successes.

Dr Eric Williams, the Trinidadian economic historian who lived and worked in Puerto Rico for many years during the forties
and fifties-was sold on the Puerto Rico model and following his entry into Trinidadian politics (1955) and his party’s
electoral victory in 1956, Williams brought in the Puerto Rican miracle worker, Moscoso, to show Trinidad how to run things.

But Williams soon lost faith in the idea. By 1961 he was lamenting the fact that the model was able to rack up stunning
successes while leaving unemployment virtually unchanged.

Williams’s ‘new thinking’ might have been influenced by CLR “Nello” James (1901-1989), the Marxist theoretician who
edited the Nation , theoretical organ of Williams’s People’s National Movement (PNM): James edited the Nation from
1958 to 1961.

James was a very effective helmsman at the Nation; perhaps his greatest achievement was his campaign (conducted in the
pages of the Nation) for a black captain of the West Indies team. The West Indies Cricket Board finally capitulated and
Frank Worrell was appointed in 1961. Worrell was himself a strong campaigner against racism and colourism in The West
Indies; fed –up with the twin evils in his native Barbados, Frank relocated to Jamaica. Some Bajans never forgave
Frank’s “treachery”.

The Puerto Rican model ran into very heavy weather in the late sixties; it was eventually toppled by the economic
recession of 1973.

It is worth noting that the idea of economic development and industrialization in the British West had been laughed off by
the economists in the British Colonial Office until the painstaking scholarship of a young Arthur Lewis literally forced them to change their minds.

Lewis challenged the Moyne Commission’s endorsement of economic views contained in the 1897 Report of the West
Indian Royal Commission: The commission opined that “there was no prospect for manufactured industries being established on any considerable scale in the West Indies”

Lewis, who won a PhD at age 25, was also in Puerto Rico in the forties, where, like Eric Williams, he worked for the Anglo-
American Commission, later the Caribbean Commission.

Borrowing heavily from the Puerto Rican model, Lewis would eventually come up came up with a plan to secure the
industrialization of the British West Indies, and this was first published in 1949.

Lewis was economic advisor to Ghana’s Kwame Nkrumah in the late 1950s: Nkrumah broke down and cried when Lewis informed him that there was no money in his Treasury.  This situation arose as Nkrumah disregarded the advice dispensed by Lewis. Nkrumah would say to the young economist:” I know you’re right, but I am a politician; I have to deliver the goods”.

It was Nkrumah who said: "Seek ye first the political kingdom and all else shall be added onto you”: he soon found out
that securing the political kingdom was the easiest part.

Let’s return to the big question: What are the viable alternatives to dependence on foreign investment?

The editors of BIGDRUMNATION invite your constructive comments, criticisms and ideas

             

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