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IS BARBADOS DEVELOPING? Barbados as a model nation for the Caribbean Some Perspective World Bank Measure of Economy Barbados: Uppermiddle income Jamaica, Guyana, and Dominican Republic: Lower-middle income Haiti: Lower income (according to 1998 GNP per capita) • ICT At a Glance— Barbados (2000) *GDP Growth %Barbados—3.6 Latin America and the Caribbean—2.5 *International Telecommunication (outgoing traffic—min/subscriber) Barbados—391 Latin America and the Caribbean--106 Seers’ Model of Development Indicators Development takes into account economic criteria Poverty Unemployment Inequality In order to successfully measure development, “It might be argued that some numbers called national income series are at least available, whereas data on poverty, unemployment and inequality are very scrappy. This is, however, the result not so much of basic differences in estimation possibilities as of the attitudes of development. The type of data collected reflects priorities. What work is done by a statistical office depends in practice partly on what its own government demands, partly on the advice it receives from carious U.N. agencies, especially the U.N. Statistical Office. As a realization of the importance of social problems spreads, statistical offices will put less weight on nation income estimation, more on preparing appropriate social indicators.” Seers (27) Our Indicators of Development in Barbados 1. 2. 3. 4. 5. 6. Economy Health Education Unemployment Insurance Public Transportation Housing Conditions Economic Development The Diversification of Barbados’ Industry Structural Adjustment Programs History of the Structural Adjustment Program *Began structural adjustments under the IMF and World Bank in the early 1990s. *The program called for cuts in wages, increases in taxes and user fees, and trade and tariff reform. *The adjustment initially worked as Barbados was able to provide the highly trained and skilled workers to man the expanding manufacturing and service sectors. -Eventually the SAP’s called for cuts in the education and service programs and those skilled laborers began to disappear. *When the domestic market opened up to regional competition and the addition of an external tariff as part of CARICOM common market efforts, the manufacturing sector declined, dropping from comprising 12.8% of the GDP to 9.6%. Sectoral Distribution of GDP 1975-1998 % Sector 1975 1980 1985 1990 1995 1998 Agriculture: Sugar Non-sugar 9.5 3.8 7.18 3.12 5.39 4.19 3.35 4.04 1.93 4.29 2.13 3.46 Mining and Quarrying 0.2 0.53 0.93 0.74 0.86 0.96 Manufacturing 10.3 11.82 10.39 9.98 9.87 9.82 Electricity, Gas, Water 1.5 2.09 2.72 2.99 3.54 3.55 Construction 6.6 7.03 6.34 6.82 6.69 7.84 Wholesale/Retail Trade 18.2 19.52 19.58 19.52 29.22 20.21 Tourism 9.3 13.83 11.51 14.42 15.19 14.96 Transport/Storage/Communication 7.2 6.19 7.46 7.14 8.17 8.14 Business/General Services 14.2 15.96 17.89 17.19 17.16 16.85 Government Services 15.0 12.71 13.58 13.67 13.18 12.06 100.0 100.00 100.00 100.00 100.00 100.00 Other Total Agriculture 1) 2) Decrease in Sugar Cane production—in the 1950s sugar production took place in 34 factories, today there are only 3 factories in operation The government has given support to the sugar industry despite its inefficiency for two reasons: The sugar industry employs 4000 workers Sugar exports are also an important source of foreign exchange Increasing # of livestock, vegetable, and other food crops Self-sufficiency in milk, onions, carrots, potatoes, & poultry Manufacturing Diversification of Products Government encouraged the growth of the manufacturing sector to promote economic diversity This would reduce the country’s vulnerability to external shocks Manufacturing Cont’d There are 13 major industries in Barbados In the 60s, the sector’s contribution to total value added was only 5.8% but this number almost doubled in the 70s, exceeding the growth rate of the economy as a whole By the end of the 80s, the sector had lost most of its vitality By the end of the 90s, the manufacturing sector’s contribution to GDP was at 9.6% compared with 12.8% during its peak years More Manufacturing The sector employs 9% of Barbadians or 9700 persons concentrated in: food processing, apparel, paper products and beverages and tobacco industries This sector is the 2nd largest contributor to foreign exchange earnings in Barbados- 2nd only to Tourism Most of the firms in this sector are import substituting firms Services Government actively promoted country as center for est. of international financial & business services Relationships with International corporations 1998, an estimated 6199 offshore companies were licensed in Barbados, 91% using IBCs (international financial and business services) & FSCs (foreign sales corporations) Data processing & software development also expanded in 1990s Services – Why so much progress? Barbados Investment Development Corporation- BIDC Mission statement- To be a world-class business development agency, the most effective in the Caribbean region, noted for excellent service An industrial development agency of the Barbados government Barbados Investment Development Corporation Mainly responsible for promoting and enabling the establishment and expansion of business enterprises in Barbados, and for export promotion of the country’s goods and services The BIDC also manages the government incentive program for industry Tourism 600000 500000 400000 300000 200000 100000 1995 1985 1975 0 1966 Opening up their country to tourists while still maintaining control… Tourism in Barbados was originally a luxury export owned by foreign luxury hotels Tourism Continued Barbados has made a successful transition from an economy dependent on sugar to one more focused on tourism services Principal foreign exchange-generating sector with earnings greater than US$.5billion- contribution to GDP is approximately 12% By the 80s, the small hotels owned mostly by Barbadians provided 80% of the hotel beds This allowed retention of earnings and created local employment Tourism Domestic agriculture has also benefited as tourists love local foods The excellent relationship between tourists and locals, the stable social and political climate, and having a reputation of not being hostile to tourists has made Barbados favorable to tourism expansion and repeat visitors Labor Force Characteristics, 1965-1998 Adult population 2000 Labour force 2000 participation rate (%) unemployment rate (%) Year Both Both Male Male Female Female No % No % No % Both Male Female Both Male Female 86.2 49.2 13.0 9.0 18.0 63.1 77.2 57.2 18.0 13.0 16.3 65.9 77.5 56.0 14.5 5.7 8.8 63.7 73.7 55.2 18.7 14.2 24.0 1965 143.2 61.7 81.4 93.3 100 53.2 51.0 40.1 42.9 65.2 1970 149.8 69.1 80.7 89.8 100 53.9 60.0 35.9 39.9 59.9 1975* 164.5 75.7 88.8 1980 174.2 80.1 94.1 114.8 100 62.1 1985 177.7 82.2 95.5 113.3 100 60.6 1990 184.1 85.1 98.9 123.9 100 64.3 51.9 59.6 48.1 67.4 75.5 60.3 15.0 10.1 20.3 1995 200.7 92.8 107.9 136.8 100 69.1 50.5 67.6 49.4 68.2 74.5 62.7 19.7 16.5 22.9 1998 201.4p n.a. n.a. 136.3 100 70.3 51.8 66.0 48.4 67.7 74.0 62.0 12.3 8.4 16.4 54.1 52.7 45.9 52.7 Summary of Economic Development Barbados has made the transition from an agricultural-based economy (i.e. sugar production) to a services-based economy (i.e. tourism, financial and business services) Social Development Selected Health Indicators for Barbados 1966 & 1998 Indicator 1966 1998 Life Expectancy 69.9 72.9(m)/77.4 (f) Infant Mortality Rate (per 1,000 Births) 47.7 14.0 Child Death Rate (1-4) (per 1,000) 2.4 0.43 Birth Rate 25.9 13.6 Crude Death Rate 8.2 9.3 Health 15% of Government expenditure Impact of 1950s Health centers Protection of water supplies & food for sale, sewage & waste disposal Possible that a better literacy rate aided in facilitated health education & promotion Teenage Pregnancy The spread of AIDS The world bank has approved a US$15.5 million loan to Barbados towards HIV/AIDS prevention program ante-natal & pre-natal services at polyclinics Education The principle factor in the HDI ranking is education – Barbados has one of the only systems in the world where education is free up to and including the tertiary level for all of its nationals Free public education Private media Unemployment Insurance Introduced in 1981, it provides compensation to employees who b/c of total unemployment, layoff or short-time suffer loss of earnings. Financed by way of contributions shared equally between employee and employer & contributions currently fixed at 1.5% of insurable earnings. Max of 26 weeks Only country in the region with such an unemployment benefit scheme Public Transportation Has the most extensive road network in Caribbean Highway system Physically possible to travel from any point in the island to another in less than an hour. Public transportation from 5am to midnight, elderly travel free and subsidized fare for students in uniform. International Airport can accommodate any size aircraft & one of the few countries in the hemisphere with regular Concorde service Housing Conditions Housing Condition 1970 1980 1990 Water 60.4 82.4 92.6 Toilet: Pit Water-borne n.a n.a 52.2 43.6 32.1 66.3 Fuel: Gas Kerosene Wood n.a n.a n.a 66.4 27.2 0.6 84.6 8.0 0.2 Telephone n.a n.a 68.2 Television n.a n.a 84.8 Outer Wall: Wood Wood & Concrete Concrete Other/N.S 75.3 4.4 19.3 1.0 57.3 11.7 26.2 4.8 39.8 20.3 39.7 0.2 The Human Development Index The Human Development Index Human Development Index 2000 US (6) Barbados (31) Jamaica (86) Dominican Republic (94) Guyana (103) Haiti (146) http://hdr.undp.org/reports/global/2002/en/indicator/indicator.cfm?File=indic _283_1_1.html Why has Barbados been developing? Relationship with Britain No political unrest NGO’s Barbados can be distinguished from other CARICOM countries, as having a corrupt free government Why has Barbados been developing? Cont’d Terrain Why has Barbados been developing? Cont’d During a recession from 1990-1992, trade unions entered into an alliance with the Barbadian govt. and supported its austerity measures This alliance enabled the govt. to avoid devaluing the currency, which the IMF had instructed them to do DISCUSSION QUESTION In looking at what you’ve learned about your own countries what do you see as factors contributing to its relative lack of development? Is Barbados truly a model? Bibliography “About BIDC.” Barbados Investment and Development Corporation. Date of Access: October 31, 2002. http://www.bidc.com/aboutus.htm Griffith, Winston H. “A Tale of four CARICOM countries.” Journal of Economic Issues, March 2002 v36 il p79 (28). Date of Access: November 3, 2002. http://faculty.rmwc.edu/bbullock/335pdf/griffith.htm Lewis-Bynoe, Denny, Jennifer Griffith and Winston Moore. “Trade Liberalization and the Manufacturing Sector: the case of the small developing country.” Contemporary Economic Policy, July 2002 v20 i3 p272 (16). Date of Access: October 31, 2002. Randolph-Macon Woman’s College: Expanded Academic ASAP Bibliography “Caribbean: World Bank Approves $155 million to Support Programs to Fight HIV/AIDS Loans approved for Dominican Republic, Barbados.” The World Bank Group, June 28, 2001. Date of Access: November 3, 2002. <http://lnweb18.worldbank.org/news/pressrelease.nsf/673fa6c 5a2d50a67852565e200692a79…> “ICT At a Glance Tables: Barbados.” Development Data Group World Bank. 2001. http://www.worldbank.org/cgibin/sendoff.cgi?page=%2Fdata%2Fcountrydata%2Fict%2 Fbrb_ict.pdf&submit=Go Bibliography Downes, Andrew S. “The Impact of Structural Adjustment Policies on the Educational System in the Caribbean.” Inter-American Agency for Cooperation and Development, Organization of American States, 2002. http://www.iacd.oas.org/La%20Educa%20116/downes.htm “Economic Performance in Small, Open Economies: The Caribbean Experience, 1980-1992.” http://econ.worldbank.org/files/450_wps1544.pdf King, Kurleigh D. “Economic Growth for the 1990’s. (Barbados).” Nation’s Business, April 1990 v78 n4, 84. Bibliography “AIDS cases in 1995 lower than expected in Barbados.” AIDS Weekly Plus. March 25, 1996. P 23. Duggan, Patrice. “Sun-drenched capital. (Stockexchanges in the Caribbean).” Forbes. September 3, 1990. V146, n5. P. 84. Bulvinic, Mayra. “The costs of adolescent childbearing: evidence from Chile, Barbados, Guatemala, and Mexico. (Adolescent Reproductive Behavior in the Developing World).” Studies in Family Planning. June 1998. V29, n2. P. 201. Bibliography Griffith, Jennifer, Denny Lewis-Bynoe and Winston Moore. “Trade liberalization and the manufacturing sector: the case of the small developing country.” Contemporary Economic Policy. July 2002. V20, i3. P. 272. Gmelch, George. Double Passage: The Lives of Caribbean Migrants Abroad and Back Home. The University of Michigan, 1992.