Prime Minister Dr. Denzil Douglas aptly addressed the difficulties posed by globalisation on the economies of small island states like our Federation and outlined ways in which he thought they should respond when he delivered his welcome address at the Commonwealth Finance Ministers Meeting.
Yes, like our counterparts of the Organisation of Eastern Caribbean States (OECS) our economies continue to be at the mercy of global issues beyond our control – natural or manmade. They have shown us that try as we may we cannot dodge the consequences that come with them. We as small states have no choice but to bend or face being broken. To ensure our survival as nations we have no choice in the matter but to do whatever it takes to survive.
Just take a look at the drop in our revenue base, in the aftermath of 9/11 and the devastating effects Hurricane Georges had on our economy here in the Federation. Some may argue that this event has gone and should no longer be repeatedly used as an excuse for the poor showing these catastrophic events had on the economy, but why should they not?
Consider our relatively open economies. Like many of the other islands of the OECS, the volumes of trade, investment and tourist arrivals which have swayed back and forth in response to the uncertainties and gyrations in the international economy, especially in the US economy. Also, there is the lack of assistance from the new trading regimes including the WTO, and the FTAA to aid us in combating these problems. PM Douglas contends that these organisations have adversely affected our export prospects and threaten to undermine the already slender revenue base of the islands’ economies.
These problems are exacerbated by the fact that the OECS currency is pegged to the US dollar and the misalignment of major currencies in recent years has been a major source of concern for the OECS.
According to PM Douglas, the geological climate and the impact of terrorism have high explicit and implicit costs for small countries. Among the costs are potential negative impacts on the islands’ tourism industry, the major foreign exchange earner, and the increase in the price of oil, their major import commodity. We have all seen evidence of this.
There is also the cost of increasing the level of security at their airports and harbours and of putting regulations in place to combat terrorist financing and money laundering, all serve to increase huge burden that small islands states must bear.
Of course, though it can be argued that all countries large and small must incur such costs, these costs include a huge fixed component that does not vary with the size of the country, so that the burden borne by small states is grossly disproportionate to size and population.
In fact, globalisation has resulted in a large number of international standards and codes, which are very costly to implement and which severely test the very limited technical and financial resources of small states that must implement such standards. They must be implemented expeditiously or run the risk of being isolated or “blacklisted” – something we in the Federation are no strangers to. We have tasted the bitter pill. Our small countries are often forced to implement standards that developed countries have no intention of implementing in their own jurisdictions.
In the final analysis there are only two avenues opened to the OECS and other developing countries. The transformation through political and social consensus on the major issues both national and international, which affect the interests of the country. This must be complemented by an appropriate and effective domestic and international economic relations policy framework and stance that set out clearly the development objectives of the country consistent with the Millennium Development Goals (MDG)s and the specific fiscal, monetary, trade and structural policies which will achieve these goals.
This would mean that countries would need to create the institutional, administrative and technical capacity to successfully pursue their objectives.
Secondly, the countries must establish collaborative arrangements on common issues with developing countries with common interests. These common interests revolve around the effective transfer of resources in various forms to developing countries to accelerate their development, a more democratic framework for the resolution of global issues and a more effective system of rules that are equally binding on large and small countries. One can only hope that those who hold positions of authority throughout the OECS get the point and act accordingly for the sake of our survival as small island states. We all will be doomed, swallowed up in a globalised world if we do not take heed and prepare for the future that’s not so far away.