WEALTH CREATION
WEALTH CREATION – BASIL SPRINGER COLUMN TO APPEAR IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON 15 SEPTEMBER 2008
“But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he swear unto thy fathers, as it is this day” – Deuteronomy 8:18.
Aluminium, rum, sugar, rice and bananas have traditionally been the primary Caribbean exports to Europe. Preferential access for many of these goods has been granted former colonies in previous agreements with the European Union (EU) where the EU paid the colonies higher than world market prices. Not withstanding any historical reasons which may have resulted in these preferential arrangements, the World Trade Organisation (WTO) ruled that this was unfair and ordered a regularisation of the trading arrangement.
This loss in preferential arrangements represents a sea change in the trade between Cariforum and Europe and has already had a devastating effect on Caribbean economies with a dependency on the trade of these goods which received preferential treatment. The Cariforum-EC Economic Partnership Agreement (EPA) has been negotiated in order to comply with the WTO mandate. According to Professor Norman Girvan, “The EPA is more than just a trade agreement: its scope embraces many subjects that have up to now been solely or mainly within national and regional jurisdiction. As a legally binding international instrument with elaborate implementation and enforcement provisions, it embodies a higher degree of supranational governance than the corresponding arrangements in the Caribbean Community.”
I have been very concerned about this issue of supranational governance even in the case of the “E” of the Caribbean Single Market and Economy CSM(E). Will Caribbean governments ever give up control of sovereign power and authority, albeit limited, to a supranational body? Under the existing environment, I think not. If Norman Girvan is right about the degree of supranational governance required then, in my opinion, the EPA in its purest form would not have a chance either.
Last week the mass media has been saturated with reports on the EPA discussions. As I understand it, not to sign the EPA might create further immediate devastation of the economies of the region which is a politically sensitive issue. The purists are more concerned with the long term impact of signing now without further negotiation.
The Governments, with the exception of Guyana which apparently is only willing to sign a goods agreement, have decided to sign the EPA as it has been negotiated to avoid further aggravation of immediate trade devastation and to manage the issues that have an impact on the future. Like many other things in life the solution may be found in compromise.
One of these issues is the trade in services which, in my opinion, will play a significant part in the future of the Caribbean economies. The tourism sector, a service sector, is the largest industry in the Caribbean. It appears, from all reports, that Caribbean EPA negotiators have done a good job in protecting our interests in this industry. The other potential service sector opportunities are related to knowledge, information and intellectual capital. This is the area in which I have been engaged over the last decade and my experience dealing with passionate entrepreneurs is that there is no shortage of talent in the areas of Coordination (Integrated Knowledge and Logistics Management), Financial, Tourism and Travel-Related, Film, Music, Fashion, Cultural, Sporting, Business Development, Construction, Architectural and Related Engineering, Environmental, Informatics, Media, Technology, Communications, Educational, Heath and Social services. The constraint that has impeded the path of progress has been the lack of timely access to management and financial resources to partner with the talent.
The CBET Shepherding Modelâ„¢ with its twin fund seed and venture capital concept has been designed to address this constraint and is now proposed as a national solution to the management and financial resources problem through a partnership between CBET, the sovereign government and the private sector. Interestingly enough, I have expended seven years trying to find a regional solution to this problem but to no avail probably because there is no regional government. It is instructive to note that the proposed solution lies at the national level and, to the extent that the Barbados application of the CBET model is replicated throughout the region, we may define it to be a regional solution.
The focus in the Caribbean has to be on the creation of wealth since once this is done in a sustainable fashion we can alleviate poverty and increase the socio-economic well being among the populace.
Wealth was created in the past through free slave labour and indentured labour; colonial empires were build around this. Wealth was created through cheap labour in high population communities – India and China. Wealth has been created through the vision of entrepreneurs – persons with a high degree of persistence in the face of adversity. Wealth has been created by landowners – their capital appreciates as they sleep.
We are now in an era where wealth is created through knowledge, information and intellectual capital where the distribution channels are facilitated by wonders of the global information and communications network. This is a major opportunity for the Caribbean. This is one of the issues that will have to be managed after the EPA has been signed to ensure that fair play prevails.
Remember the LORD giveth thee power to get wealth.
(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business
Enterprise Trust Inc. Columns are archived at www.cbetmodel.org)