Too much tourism

Economics professor dissects Barbados’ economic problems

A noted professor of economics has raised concern that Barbados’ heavy reliance on services, especially tourism, is hindering its overall development.

“The problem is that tourism’s success created a strong tendency towards Barbados’ total factor productivity dead end. Obviously it is not itself a high tech industry. But more importantly it limited the country’s productivity because it was not a source of personnel, who on the basis of their industrial experience, could bring potential new industries to life,” explained Professor of Economics at Colgate University Jay Mandle.

He pointed out that the skills learned and utilized in the tourism industry were of limited use in new sectors of economic activity.

“To make matters worse, tourism in Barbados is a mature industry. Its future growth will not replicate that of the past. With that being the case, the tourist industry will not be able in the future to fill the role of the leading sector in a growing Barbados economy like it did in the past,” he added.

Mandle, who was at the time presenting a paper on the topic Barbados Between Growth and Development, further explained that over the years productivity and economic development had been masked by economic growth; therefore it was time for the island to consider a new “economic modernization”.

“Over time, Barbados has experienced economic growth, but it has not experienced development,” said Mandle.

“The conundrum in which Barbados finds itself – a history of economic growth but productivity decline – stems from the same source, ironically, the success of tourism,” he added.

However, despite the lack of productivity, he acknowledged that tourism was responsible for the relatively high standard of living in Barbados as a result of its significant contribution to the island’s Gross Domestic Product.

Mandle was delivering the third annual lunchtime lecture put on by the Faculty of Social Science at the University of the West Indies (UWI), Cave Hill Campus this afternoon.

He said despite ranking favourably in terms of human development over the years, since 2008, the country had “suffered economically”, largely because it remained a “one-crop” tourist economy. He added it was in need of investment that was directed toward improving quality and productivity, as outlined by Governor of the Central Bank DeLisle Worrell as early as 1994.

He further stated that the tourism industry’s success “may also have produced a policy formation dynamic that militates against diversification”.

To support this argument, Mandle highlighted the Global Competitiveness Index by the World Economic Forum, pointing out that “buried in the long list of variables included in the index are issues that do impede economic diversification.

“For example, Barbados is not an easy place in which to set up new business . . . furthermore, it ranks 101 with regard both to ease of access to loans and the availability of venture capital. Beyond the difficulties firms experience in becoming financed and setting up, Barbados is listed at 130 with regard to strength of investor protection. These rankings represent formidable barriers to a restructuring process that could create a more diversified and therefore resilient Barbados economy,” said Mandle.

“Most of these are variables that are under the direct control of the Government. That these barriers are present suggests that Government policy has not yet seen the need to shift from tourism industry encouragement to industrial policy that seeks structural change,” he explained.

In order to achieve increased productivity and economic development, Mandle suggested that Barbados and other Caribbean countries could learn from Asia, in developing domestic industrial policies that suited their circumstances.

He also said the region was in need of a “state-led export-oriented strategy of development”, adding that Government would have to “dismantle the obstacles to structural change that presently exist”.

“Establishing a new business has to be made easier. Bureaucratic roadblocks to firm-creation will have to minimize. Something has to be done about the difficulty of financing, but that will just be the start,” he said.

Mandle also called on the private sector to expand beyond tourism and retail. (MM)

9 Responses to Too much tourism

  1. seagul March 25, 2016 at 8:35 am

    Over the years productivity and economic development had been masked by economic growth; therefore it was time for the island to consider a new “economic modernization. This modernization can only be in agricultural science, before its too late.
    Water Saving Low cost Greenhouse Farming.
    From the author of Deeper Soul/Ty Ajani The Caribbean’s standard of living generally would always get worst if there is no proper structural job policy. By job policy I mean is the kind that creates jobs for persons that do not have college education. It’s a third World region we’re in—tourism means service. We need a real supportive manufacturing sector to do this.

  2. Donild Trimp March 25, 2016 at 9:25 am

    For once an Economist that makes sense.

    • Sunshine Sunny Shine March 26, 2016 at 5:30 am

      Now, why would this economist make sense to you? This is nothing new. The average Joe on the street right up to a few home grown economist have expressed similar sentiments to the ‘stuck in the rut’ politicians that a service economy, dependent on one entity for growth, it is a formula that does not augur well for an economy that needed balance. For years, millions are spent in developing the best tourism product of the tunnel vision of those who believe tourism is ultimate while the services sector relied heavily on overseas investment to help grease the wheels of the other aspects that help move the economy along. At no stage did governments contemplated heavy investment in industry and even as the brown stuff hit the fan, that was not even enough to show them that diversity was a necessity that could no longer be ignored.

  3. Loretta Griffith March 25, 2016 at 10:36 am

    It is high time these unions stress productivity and loyalty to whichever government is in office.
    The time has also come for persons to be promoted on merit and not party affiliation. And the party slackers should be told that up front that if they are not prepared to be productive there is no room for them.
    I am very disappointed with the direction this Country is heading not only now under this government, but I saw this raising its ugly head under the last administration but seems to be getting worse.
    Some of these administrators are not going to be pleased with their legacy when the true history is written ( not some of what passes for history).

  4. jrsmith March 25, 2016 at 1:48 pm

    This was my point for the past 2 years, my statement Barbados politiacns is limited to understand tourism, beyond that they are in over their heads, having no ideas of Corporate structuring or form of commercial Business activity.. you have to take a serious look at the region and you see no difference..

    My take the Barbados government is hindering progress in Barbados , because of the non productive non performing various government departments, although you have a small island with a large to heavy non productive political infrastructure…

    The question should be ask of the priminister, borrowing $296 millions to build a hotel, this money should have been directed at the bruck down Barbados infrastructure, water ,roads and transport, power, shore line, refurbishing and rebuilding most of our government buildings, a medium seize hospital more centralize..bringing the security of Barbados up to international standards. This would generate jobs right now , this would get hundreds of people back to work .
    We need a cottage industry in Barbados control by bajans , but we have a government is so in over their heads , we may not see such a happening. The economy of Barbados is so damage, how could you have a 13 to 15 % increase in the tourism sector and has though nothing has happened.

  5. David March 25, 2016 at 10:08 pm

    These things were being discussed when I was at UWI many years ago. It is time that we stop the talkshop mentality and actually act to create change.

  6. James Franks March 26, 2016 at 9:01 am

    Change of government is the answer – simple.

  7. Andrew Rudder March 28, 2016 at 11:37 am

    Masses cry out change of government but that is not Nationalistic. The reasoning of Barbadians should be for the nation and not about the party in power mentality. The representatives of the people should be the voice of the people’s wants. Barbadians need to think beyond the one economy system. Pineapple production, packaged herbs and the flowers industry should be flourishing since sugar export is almost extinct! Boat manufacturing should also be stressed as a manufacturing specialty due to the close proximity of specialty woods from neighboring Guyana and Venezuela! A raw fiberglass plant can be easily put in place from which many applications can formed! My suggestion may not be the best but its out side the box mentality!

  8. Andrew Barnard March 30, 2016 at 1:07 am

    Additionally trade union hold on business paralyses labour development and flexibility in the economy. This needs deregulation to allow private equity to build wealth.


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