Central Bank of Barbados Governor, Dr. DeLisle Worrell, has criticised research produced by regional economists “nowadays”, saying it was leaving policy makers and the public “puzzled and apprehensive”.
At a time when the economy is concern number one for Barbadians and other Caribbean nationals, the respected economist who established the Central Bank’s Research Department in 1972, said all economists needed to do research “of a more technical and academic kind”.
But Worrell noted “it should always be in search of insights that we can incorporate into practical guidance for policy”. He voiced his concern this morning at the Radisson Aquatica Resort during the official opening of his organisation’s 33rd Annual Review Seminar on the topic Economic Research as a Practical Guide to Policy.
“If I have a criticism of much of economic research in the Caribbean nowadays, it is that it is too derivative, an unthinking application of imported theories and methodologies to Caribbean data, often accompanied by econometric pyrotechnics which anyone with mathematical training can very easily see through,” Worrell said.
“At the end of the day this kind of research leaves the policy maker with little guidance, and the general public puzzled and apprehensive.
“Our academic research needs to be indepth and grounded in Caribbean realities. That requires deep understanding of the theory, careful observation of Caribbean experience and economic behaviour, and painstaking analysis of the data.
“You also need to read widely on the topic, and set aside time for thoughtful reflection, as you proceed with the research. The reward will be genuine insight and useful contributions to our understanding of how our economies work,” he asserted. The economist identified “a need, in Barbados, in the Caribbean, and indeed in the wider world, for economics that people can understand”.
“The economy is no more than a convenient way of thinking about all the commercial transactions that take place in the national space in the course of a day or a month or a year,” he stated..
The varying nature of these transactions, and the relationship between them, are mind-bendingly complex, and the economic theories we offer in explanation are pitifully oversimplistic by comparison.
“Good economics consists of essaying a theory that seems to fit the circumstance under investigation, observing the outcome, making adjustments, and repeating. It is a process that of necessity involves the people who are doing the transactions that produce the observed result. If they are mystified about what you’re doing and why, chances are you will not get the expected result,” Worrell added.
The Central Bank boss said this was why “it is always most effective to end with economics that people can understand, whatever your theoretical starting point”.
“At Central Bank we do academic research to deepen our understanding of economic processes, but it is always with a view to coming up with better policies and prescriptions, whether it is with respect to taxation, fiscal policy, tourism development strategy, import substitution or the many other burning issues that we must address from time to time,” he noted.
Worrell, who told the audience he became “an accidental central banker”, giving up his pursuance of an academic career after then Governor Sir Courtney Blackman “actively sought me out at UWI Mona”, said the decision had been rewarding.
“I quickly discovered that the Central Bank can be the most rewarding career for an economist, because at the central bank you can bridge the gap between academics and policy making that affects the lives and welfare of real people,” he stated.
“Practicality has been the hallmark of all my economic research, and my motivation continues to be the desire to better understand why people undertake commercial transactions, so that policy makers may guide us towards transactions that uplift the community, and away from actions that are self-defeating.
“This bias towards research that captures deep economic insights, and is practical, intuitive and that may be applied to the issues of the day, is manifest in much of the research you will find published on the Central Bank of Barbados website.” (SC)