Why an economic growth strategy?
BRADES, Montserrat, June 11, 2017 – Mr Raja Kadri, Montserrat’s new Chief Economist, has championed an “Economic Growth Strategy.”[1] In his June 9th Budget Speech, Hon Premier Romeo actually set as theme: “Moving Montserrat forward towards Self-Sustainability and Inclusive Economic Growth,” which clearly implies that Mr Kadri’s growth strategy approach is now a key policy commitment. So, we need to understand what such a “growth strategy” is.
In explaining what a growth strategy is, Mr Kadri used the example of Canada, with a US$ 1 trillion economy, which formerly did not have such a strategy. However, once the oil price level began to fall back towards US$50 per barrel, it worked on a long- term- plan that would identify the key areas that can drive Canada’s economy forward towards sustained growth and transformation.
Such a long-term-plan must rise above the politics of any given day, as it must arise from a national consensus. That means it must be evidence- based, must reflect sound economics principles and must be tied to a clear, accurate, sober, balanced view of the circumstances, challenges and opportunities we face. Mr Kadri then argued that such a plan will be vital for approaching potential investors, as it will give them a framework to work with and will show our credibility as investment partners.
It seems reasonable to conclude that he is right and we do need such a plan, one that builds on other plans we have done and opens up a long-term growth path for our economy. For sure, that would go a long way towards anchoring the business cases for the key “catalytic” projects we need to set in motion over the next year or two, to lay a foundation for the long term growth. The Economic Growth Strategy (EGS) to be developed must therefore reflect a carefully developed national consensus about where and how Montserrat can find resources, strategies and skills that create high productivity economic sectors.
Obviously, Tourism and Geothermal Energy development are chief candidates, but there are many other possibilities to be explored. To maintain support of the people over the long haul, the EGS must feed manifestly successful long term improvement in the well-being of our people (requiring improved employment, education, housing, health and welfare provisions), while bearing in mind the need to husband our natural resources and the environment. This instantly means that such a plan needs to reflect broad-based stakeholder participation, environmental facts, trends and concerns and must address questions of long-term sustainability. In short, the Economic Growth Strategy should reflect the approach and insights in our Sustainable Development Plan, and it should be closely tied to the creation of the next SDP, which is due from 2020 on.
The EGS must also be far more than a paper plan, it needs to set a basis for reaching out to and consulting with a critical mass of local and international investors so that the strategy will be actually put to work on the ground. If there are no investment partners involved, it simply will not work, and potential partners must be credible and committed to carrying forward viable investment projects that will develop key sectors of our economy. That is where private sector led growth will have to come from.
The first of these partners is DfID, and let us again remind ourselves about what they put on record in their 2012 MDC Business Case:
- “develop a tourism-driven capital town . . . as the principal location for new foreign direct investment, tourism, housing and civic facilities”;
- “improve physical access to Montserrat through the development of a port and breakwater . . .” ;
- “improve and sustain access through investments in air and sea access assets”
Given the challenges to the local private sector and the lack of good access and key infrastructure, they also cautioned, “[i]nitial and catalytic investments are . . . required by the public sector and these need to be properly designed and implemented.” The economic growth plan will therefore need to prioritise these “catalytic” investments, and they should be so configured as to enhance the likelihood of attracting major investment partners, especially for tourism. The best way to do that would be to develop the plan in cooperation with a set of interested, credible investors. In turn, that requires that the plan’s developers should include people in close touch with such networks.
Let’s remember, too, that other fairly obvious areas can be seen from the 2012 consultancy’s list:
- Tourism
- LB/CB development
- Spa and wellness tourism
- Educational tourism
- Renewable energy (geothermal)
- Mining and light manufacturing
- Agro-processing
- Fishing
- IT-enabled services
In order to move into these areas, we need to build capacity for the long term. This again points to education, health and appropriate welfare that creates the sort of workforce we need for the economy we plan to (or, perhaps, “must”) have down the road.
For instance, if we fail to effectively address the digital productivity challenge, we will be locked out of the already emerging global digital economy. We won’t even be able to repair our own vehicles, as something like a car already typically has in it dozens of microcontrollers in an industrial computer network.
Likewise, we must maintain a stable, just, peaceful, well governed community with minimal corruption, or no-one will wish to visit, live, study, work or invest here. That requires people who can lead such a society in the face of an ever more challenging and chaotic world. And yes, that’s a plug for our regional universities, colleges and seminaries, including faculties and departments of education, arts, law, history, government, theology, philosophy and more, not just science, technology, engineering, computing, mathematics, medicine, economics, finance, business and management. Where, that capacity-building investment in education has to be in place years ahead of when the needs become obvious. In short, our region’s no. 1 most overlooked natural resource is right between our ears. Brain-power. It’s time to get that right.
Clearly, it’s time to set aside overly harsh dismissive rhetoric so we can come together to envision and plan a good future. As we do so, let us work with Mr Kadri et al, on building a solid Economic Growth Strategy. END
[1] Raja Khadri May 4th interview with ZJB, at Radio Echo, from about 13:40: https://montserratradioecho.wordpress.com/2017/05/04/thursday-may-4-2017-herman-sargeant-interviews-raja-kadri-montserrats-new-chief-government-economist/
