The Scourge of Dependency and Globalization in the Caribbean

Historically, the Caribbean countries developed under the tutelage of different European empires, and more recently under North American dominance. As a result, the Caribbean came to be a classic area of plantation society as there is a certain unity to the region’s development and in its patterns of historical evolution. Furthermore, the plantation economy models emphasized the historical continuity of Caribbean dependence from the slave plantation to modification following emancipation, to further modification in the post-colonial era. Political independence established national sovereignty (i.e., “flag independence”) in older and newer nations of the Commonwealth Caribbean, when both groups were integrated into the international system. Consequently, the political process of national independence converted states, societies and nations that had evolved as integral parts of the global system. The effect was to legitimize their autonomy based on concepts of self-determination.

In the case of the newer nations, independence coincided with the beginning of a new era that was defined by the decline of the old great powers and the rise of two superpowers with antagonistic ideologies and strategic interests: the United States of America and the Soviet Union. The main features of the post-World War II global capitalist economy (the creation of a post-World War II global socialist economy was also undertaken by the Soviet Union) were the emergence of the monetary regime of Bretton Woods, with global institutions at its core (the International Monetary Fund and the International Bank for Reconstruction and Development, now known as the World Bank) that were designed to facilitate the incorporation of the so-called developing nations into the global capitalist system via the shaping of the macroeconomic policy of the South; a dramatic increase in the integration of national economies in terms of trade, finance and foreign direct investment; the emergence of the US dollar as the dominant international currency, which reflected the USA’s hegemonic role in the global capitalist economy; and the rise of a “cooperative-security” organization (NATO) under the aegis of the US, whose mission was to protect western capitalism from the perceived threat of Soviet communism.

During the last five decades or so, the region has tried different development models, ranging from industrialization based on imported inputs and technology, to models of structural change that prioritized tourism and other services, to open regionalism blending regional integration with efforts to boost the export competitiveness of tradable goods and services. However, the main Caribbean trajectory has relied on metropolitan initiatives in investment, technology and marketing, and on continued metropolitan ownership and control of the region’s main means of production and domestic demand. Evidently, the political independence of Caribbean nations has not been accompanied by any significant advancement of their national economies: unbalanced economic structures; international specialization based on unequal exchange; excessive foreign financial and technological penetration; chronic current account deficits and a dependent monetary system, are among the outstanding features of the Caribbean “blocked development” or “underdevelopment.” Thus, Caribbean economies have been seriously challenged by a lack of local industrial capacity and export competitiveness, which are among the main factors needed for the achievement of sustained growth and endogenous development. Foreign decisions largely determine the growth prospects of Caribbean economies while most local resources, natural, human and technological, remain basically underdeveloped.

The last phase of Caribbean development efforts, from the 1990s and onward, has been characterized by what might be called the consolidation of the neoliberal revolution, tempered only by the realization that more policy attention had to be paid to human resource development if the new technological imperatives of a globalizing economy were not to pass the region by. Development was seen as a market-driven, private sector-led process. The role of the state should be to meet the demands for “good governance” based on efficiency considerations and imposed by the international financial institutions, thereby fashioned to submissively serve the logic of deregulated competitive markets and integrated global production, led and directed by powerful transnational corporations.

Indeed, under the influence of the neoliberal narrative, the belief that emerged throughout the developing world by the 1990s, including the Caribbean, was that national economic growth could be significantly enhanced via links with major international economic actors such as multinational corporations, by encouraging foreign direct investment and privatization projects. In this undertaking, the role of the state was essential in facilitating the process for greater economic integration and for securing the emergence of a socioeconomic order in which the market itself functioned as a form of social regulation – the ultimate goal of the neoliberal vision.

An Alternative Model for the Caribbean

If we were to consider the present state of orthodox and “New Right” economics, we would find that there has been little of worth contributed to framing rational strategies to cope with those complex problems that center on developing the productive forces of the small, open, dependent and underdeveloped economies of the Caribbean. In these analyses, geographical determinism seeks to explain underdevelopment as a product of the limitations of the physical environment (in terms of soil, natural resources and climate), while cultural notions may also be taken into consideration. Consequently, little attention has been paid to developing thorough planning frameworks to deal with the multi-dimensional problems of underdevelopment and material exploitation in the specific context of the small dependent economies of the Caribbean region. More specifically, neoclassical and neoliberal theories of growth, characterized by a vexing absence of historical understanding and awareness (i.e., the poverty of orthodox analysis), do not place emphasis on designing development strategies for transforming small dependent economies, which must undergo this transformation during the present neocolonial era.

Nevertheless, “smallness” is not the cause, but the spatial, demographic, and resource context in which sociopolitical relations are formed and developed, and the mode of production is organized. In other words, smallness can be simply interpreted as constituting, in a certain sense, an additional aspect of underdevelopment: of the nature of the structural dependence of small underdeveloped economies on international capitalism. As a consequence, the strength of indigenous political, social, cultural and economic forces and institutions vis-à-vis international capitalism is vastly inferior. Besides, the conjunction of production relations and productive forces in the region is of such a character and is organized in such a way that Caribbean communities have internalized through their social relations of production and the use of their productive forces a pattern of consumption that does not represent the needs of the community, and a pattern of production that is not oriented to either local consumption or domestic needs. In fact, international trade and capital flows can penetrate deeper into the workings of the dependent small island economies of the Caribbean, affecting their production structures in general, and income distribution, job creation, and productivity growth in particular. Therefore, the notion of smallness has to be seen within a “holistic development” perspective, which allows for dynamic changes in population, resources, output, technology, competency and institutions.

Also, most Caribbean countries’ output and exports rely heavily on one or two industries (e.g., tourism in the services sector, energy-related products in the manufacturing sector, and bananas or sugar in the agricultural sector). But despite the relatively high per capita incomes for a number of Caribbean countries, many have substantial social development problems, such as high poverty rates, income inequality, unemployment, underemployment and susceptibility to external forces (including weather, US economic fluctuations and changes in global commodity prices).

Between the early 1960s and the early 1980s, the majority of Britain’s Caribbean colonies gained independence, and even though the colonial power had formally departed, it left in place political institutions and norms based on Britain’s Westminster model of government. However, while the state has survived as a democratic institution (largely so), it lost a great deal of its effectiveness as a development tool because it was transformed into a mechanism for winning elections and meeting populist demands. Because of the “winner-takes-all syndrome” in Caribbean territories, the state became an instrument of disintegration rather than an institution around which society could cohere to deal with the development challenges. In a small society, the state is a large institution as an employer and dispenser of resources – hence the intense desire by various groups, not just special interests, to capture it. Still, fiscal budgets in the Caribbean via the political process often reflect the view of the political parties in power, and the class and interest group biases are usually maintained. In fact, although this deliberate policy is used, the politicization of the budgetary process in Caribbean states highlights programs and policies akin to what is called “pork barrel policies.” This process has a great deal of importance in shaping fiscal policies of Caribbean governments.

Since the 2000s, orthodox development policy proposals by international organizations (e.g., US International Trade Commission, UN-ECLAC, IMF) and local economists have been offered as modern economic solutions to the region’s complex problems. However, these orthodox policy recommendations – which by and large focus on total factor productivity, market-conforming suggestions and more effective governance – have not resulted in significant socioeconomic development, local industrial growth, endogenous competency and competitiveness. While conducive macroeconomic policies can contribute much toward enhancing the performance of Caribbean economies, such policies can only deal with the “symptoms” of economic problems. Evidently, the general concept of a developmental role for the state is rather alien to the general economic and political culture in the Caribbean. However, in contrast to state interventions which are consonant with the market failure analysis, a state attempting to actively boost industrial growth needs to have a dominant developmental orientation. For these reasons, and perhaps for others, the construction of a production-based approach to economic development and a much sharper focus on strategic industrial policy should be important parts of a “Caribbean-type” developmental state approach, are seen to be necessary to resolve structural problems and offer concrete alternative solutions to Caribbean economies. Indeed, strategic industrial policy targets and centers around key strategic sectors, which can be expected to fuel diversification and self-sustained economic growth. By recognizing differentiation of new and promising activities, particular branches and industrial sectors, thorough technically proficient policy can take care of the necessary human, material and financial requisites and thus become effective.

In some sectors, the region already has a strong basis on which to build (tourism and hospitality, entertainment, agro-processing and food production). These sectors, as well as modern activities of high potential – like those based on alternative or renewable forms of energy – require significant investment, rejuvenation and repositioning and have to address a number of serious economic, social and environmental issues simultaneously. Provided that the immediate problems are solved, the targeted sectors are clearly capable of considerable further expansion. In fact, the mutually beneficial relationship between different types of tourism and planned industrial activities of high-growth potential and achievability can provide the foundation on which alternative endogenous development strategies can build. Once the priorities are right, and with effective “policy spillovers,” resources will increasingly be allocated efficiently; production, productivity and profitability will increase, and the propulsive and dynamic sectors will become increasingly attractive to the private sector.

In addition, the approach used here seeks to link the process of growth and change in various sectors with that in the economy as a whole. The growth process in conjunction with higher levels of tourist arrivals are expected to lead to a widening of local markets, which in turn can bring about better transportation and communications systems. After resources have been developed and/or put to use, better industrial capabilities will broaden the Caribbean production base, will anchor the growth of domestic knowledge and technological capacity, and will provide sufficient stimulus to the mobilization of resources of all kinds and the inducement to invest. But domestic industrial capabilities formation (which encompasses knowledge, financial and technical supporting institutions) is a sequential and cumulative process that flourishes in an environment of macroeconomic and political stability.

There is no need for vast bureaucratic machinery and procedure because the approach is clearly entrepreneurial. Such a radical approach needs to: emphasize substantive national development goals while being mindful of the constraints that the international political economy imposes; consider key relevant aspects of the East Asian trajectory toward boosting production expansion while making the necessary modifications to reflect Caribbean history, culture, social psychology and politico-institutional arrangements; acknowledge the importance of authoritative and focused government agencies in overseeing the course of Caribbean industrial resurrection; and determine the quality and impact of policy intervention. A successful implementation, however, will require wide consultation, broad consensus, government intervention of high quality, determination, realism, commitment and special emphasis on production-oriented growth.

The proposed framework takes into account dynamic relations among a number of “stylized facts”: local resources, capital, social structure, technology and skills, scale and scope, institutions, history, culture and social psychology. Such a pragmatic policy approach can successfully contribute to long-term, supply-side initiatives aimed at creating or promoting selected sectors and prioritized activities, and can create economies of scale and scope, conditions and opportunities conducive to faster growth of existing and incoming enterprises (a “big push”).

Economies of scale and learning will bring about multiple effects on, and changes in, the structure of local economies. The object, of course, would be to increase value-added to the sectors and strengthen forward and backward linkages, which would then be capable of spilling their expansionary forces into other sectors and activities: The support and development of indigenous resources, firms and industries; the maximum utilization of investment (mainly in relevant R&D, innovation and skills to support new distinctively Caribbean industries); the removal of constraints on both the demand and supply sides, which are imposed by the narrow size of the local markets and poor manufacturing base of Caribbean nations; an improvement in the range of services available to people and to industry (e.g., transportation, information, communication); the exploitation of economies of scale and scope; the application of productivity-enhancing production methods and techniques so as to raise industrial efficiency and competitiveness (foreign market creation or export promotion); the rejuvenation, restructuring, diversification and global repositioning of Caribbean economic activity; and, the capacity to correct the Caribbean tendency toward external disequilibrium and high dependency on foreign economic activity, and withstand the effects of future structural changes and cyclical downswings.

Specifically, the following sets of policy and reforms are deemed to be necessary:

1. Modern aggregate demand and aggregate supply interaction along “functional finance” lines;

2. Egalitarian socially-sensitive policies (as important causal components of economic growth) to address real, basic needs of large population segments of Caribbean societies;

3. The need for national strategic planning systems in place (Foreign Direct Investments would have to be positioned within such planning frameworks);

4. Thorough, technically proficient industrial growth strategies;

5. Mixture of domestic and competitive developmentalism (with a more inward focus in the first instance and export promotion coming as an extension);

6. Selective incentives, disincentives and planned investments on the modern factors of local growth and competency;

7. Greater emphasis on production and operations quality;

8. Enabling political, economic and other social institutions; necessary politico-institutional reforms and enhanced democratic participation

Culturally, the idea of underdevelopment can be seen as a “mental structure” (to paraphrase Wolfgang Sachs), where the underdeveloped nations desire to be like the developed ones. However, the Western lifestyle may neither be a realistic nor a desirable goal for the Caribbean population, as “externally endorsed” development can exacerbate underdevelopment and may result in a loss of a country’s culture, people’s perception of themselves and modes of life. Besides, things like notions of poverty are very culturally embedded and can differ a lot among cultures. As the institutes that voice concern over underdevelopment are very Western-oriented, genuine, distinctively Caribbean national development efforts call for a broader cultural involvement in development thinking, and propose a vision of society that removes itself from the ideas and social psychology that currently dominate it. Such a holistic development approach for the region is interested instead in local culture and knowledge, a critical view against established sciences and the promotion of local grassroots movements. In addition, social change is absolutely vital in order to reach solidarity, reciprocity, and a larger involvement in local knowledge enhancement.

Needless to say, any hope for a shift in economic and social policy away from the neoliberal project mandates the radicalization of popular struggles. Challenging neoliberalism at the intellectual and ideological level alone is hardly sufficient for compelling policymakers to confront the deadly shortcomings of the dominant socioeconomic policies and embarking in turn on development strategies that help improve the overall conditions of Caribbean societies. What is required within each particular nation is the spread of a social movement that believes in an alternative future, but relies on its own national experience to overcome underdevelopment economic pressures and social injustice while building bridges of international solidarity with other like-minded movements and governments.

Challenging neoliberal globalization does not imply a rejection of globalization itself, but reflects a project that calls into question the nature of the economic, social and cultural interconnectedness that define the contemporary world. Social movements and activists bent on weakening or even overthrowing neoliberal policies in their respective territories should study the contemporary history of antiglobalization struggles for useful insights and appropriate strategies. As recent experience in several Latin American and Asian countries has demonstrated, an alternative future to “barbaric neoliberalism” is very much possible.