Prime Minister and Minister of Finance the Rt. Hon. Hubert Ingraham, second from right, receives the Golden Star of the Caribbean 2007 award during the Plenary Dinner at 31st Caribbean Basin Conference in Miami, Florida Wednesday, December 5, 2007. From left during the presentation are Jose Perez Jones, Seaboard Marine; Rick Murrell, Tropical Shipping; Prime Minister Ingraham; and Manuel Rosales, Caribbean Central American Action. (Photo/Tim Aylen)
MIAMI, Florida – Prime Minister and Minister of Finance the Rt. Hon. Hubert Ingraham was presented the Star of the Caribbean Award from the Caribbean Central American Action (CCAA) at the 31st Miami Conference on the Caribbean Basin on December 5, 2007 in Miami, Florida.
According to the CCAA, the Star of the Caribbean Award is given in recognition of “distinguished service and committed efforts to improve the economic well being of the people of the Caribbean Basin.”
The CCAA added that Prime Minister Ingraham has consistently called for honest, open, transparent and accountable government and his terms in government have been marked by deliberate reductions in the size of government and the promotion of private sector led economic development, both local and international. He and his government were credited with the revitalization of The Bahamas economy since 1992, most particularly in its tourism and financial services sectors.
Past recipients of the Star of the Caribbean Award include President Ricardo Maduro of Honduras, Prime Minister Patrick Manning of Trinidad & Tobago, Prime Minister Owen Arthur of Barbados, President Leonel Fernandez of the Dominican Republic, U.S. Senator Robert Graham, as well as other influential Presidents, Prime Ministers, and private sector leaders of the region, the CCAA said.
CCAA is a non-governmental organization that promotes private sector-led economic development in the Caribbean Basin. Its Miami Conference remains the only forum that focuses specific attention on the smaller economies of the Caribbean and Central America.
Remarks by Prime Minister Hubert Ingraham:
THE PRIME MINISTER: I wish at the outset to record our appreciation to the organizers of this Conference for their dedication to a high level dialogue on the small economies of this region. This 31st Annual Conference is clearly an encouraging continuation of this Forum, and I am particularly pleased to participate in it.
As the world continues its unprecedented globalization process, we are convinced that the multi-faceted transformation taking place offers enormous potential benefits for all national economies.
We are equally convinced, however, that the revolutionary changes imbedded in this process have created and continue to create considerable unease, doubts and challenges for the agents that operate in them.
While this is true for many in the developed world, it is especially so for small vulnerable economies that experience a disproportionate effect from global changes, no matter how small they may appear. In many instances, these small economies are highly dependent on global economic circumstances and are therefore subject to the vagaries of the same; a fact made more manifest by increased economic integration.
It is important, therefore, that open dialogue at the highest policy levels, embracing Government, businesses and civil society across the region remains focused on the issues which so profoundly influence the course of our social and economic development.
The Bahamas early on recognized that the successful development of its economy was heavily dependent on a substantial inflow of foreign direct investment and this in turn depended upon the stability of its economic and social environment and its general attractiveness to the potential investor.
Our economy in The Bahamas has always been characterized by its extreme openness. By way of illustration I note that my country’s GDP in 2006 amounted to some $6.1 billion. The import of goods and services constitutes more than 70% of the Country’s GDP ($4.5 billion), while the export of goods and services, including tourism and international financial services, accounts for 50% of GDP at some $3.1 billion.
Aggregate trade amounting to $7.6 billion in 2006 was therefore more than 20% greater than the country’s economy. In this regard, the economy has traditionally enjoyed a considerable level of integration into the global economy. We do not expect any significant changes in these proportions and so we continue to pursue policies designed to ensure the competitiveness of The Bahamas in a highly integrated global environment.
Historically, The Bahamas has enjoyed phenomenal economic growth. Its statistics for GDP growth, employment levels, per capita income, national debt and price stability are among the best in the region.
And so, we rightly applaud the benefits to be derived from this integration of the world’s economies. However, we also believe it wise to acknowledge in a meaningful way the tensions which arise from this globalization process.
It must not be forgotten that the principal reason why any government would engage itself in attracting foreign direct investment is, and must be, its desire to achieve high levels of sustainable economic growth and development for its country resulting in job creation, entrepreneurial and social opportunity for its citizens.
Success in the attraction of foreign direct investment is not of itself a sufficient objective and so it may be somewhat inane to boast of levels of foreign direct investment in our economies if it is not put in the context of economic growth and development; indeed, broad benefits for our people.
It follows then that the types of investment projects we attract are equally as important as the levels of foreign direct investment we achieve. It follows too that the ultimate success is to be measured by the levels of economic growth achieved and the consequent economic and social empowerment resulting therefrom.
The global economy is making it possible for the wealthy of the world to travel and live wherever they choose. The desire and ability to build and own multiple homes has changed the nature of tourism dramatically. Look at Miami. The consequence for small economies is an increased demand for a range of skills to accommodate the demand caused by such demographic shifts. There is a compelling urgency to generate development along with growth and commensurate social enhancement.
It is a reasonable conclusion, I believe, that small developing economies are likely to suffer more from the tensions resulting from globalization both because of our underdevelopment which offers less cushioning from the effect of the transition process, and because the transition process itself is very likely to demand a greater proportion of our entire economic resources.
This is especially true for those adjustment problems related to trade liberalization where the benefits of preferential concessions enabled an industry to survive – an industry which might easily constitute 50% or more of a national economy. This is the reality of a number of our small Caribbean economies long dependant upon exports on preferential terms of a single product, be it bananas or sugar for example.
It may not be possible in these circumstances to persuade the nationals of such countries of the long-term benefits of free trade. It might likewise be difficult under such circumstances to persuade a government to choose free trade as a policy.
It seems then, that if small vulnerable economies are to be persuaded to more assertively embrace globalization and its attendant free trade movement, then their further economic growth and development outcomes must be more clearly defined and their citizenry must also be able to see the benefits clearly.
Another source of tension arising from global economic integration relates to the added premium it places on education and skills training and the consequential distinction it strikes between the prospects for the highly skilled and educated and the unskilled and poorly educated.
This unevenness is accentuated by the increased mobility which globalization creates for the highly skilled and the well educated. That is itself a considerable challenge to small developing countries that are often unable to create the opportunities necessary to keep their best trained nationals at home. Hence, we are faced with the continuing problem of ‘brain drain’ away from small, developing countries.
The need for our economies to shape the available global technology to generate greater value added in our countries will directly affect our investment in human capital to increase productivity across industry.
And so the importance of education and skills training in facilitating the globalization process must be given greater prominence by all of us in the Caribbean and Central American region.
The indispensability of an educated and trained work force to a productive economy cannot be overstated. It is important that we recognize that improved standards will require collaboration and cooperation across the spectrum of government, business and civil society. A culture of learning cannot be legislated or dictated; but it can be nurtured and supported.
As important is the recognition of the centrality of the efficient use of information and communication technology (ICT) to our success in a globalized world economy.
Trade and the financing of trade, the tracking of exports and of imports, scheduling of air and sea traffic to and from our ports, all depend upon efficient, cost effective use of ICTs.
The world has shrunk, and if we in the Caribbean and Central America are to keep pace, compete and succeed we must ensure that efficient ICTs are available in our jurisdictions and that our public entities adopt best practices in the use of ICT.
Of course the availability of efficient ICT requires significant investment in infrastructure and network technologies. Such investments are increasingly beyond the capacity of the region alone. And so, if we are to achieve our goals with respect to ICT, public-private partnership will be of critical importance. Ladies and Gentlemen:
For our part, the Bahamian economy is dominated by trade in services. For fifty years, The Bahamas has competed, and competed successfully in tourism and financial services.
During this period we moved deliberately away from a concentration on the production and export of primary products and entered the new arena of services – first in tourism and then, in international finance.
It is remarkable that this occurred at a time when most of our competitors today did not recognize service as an industry at all. The Bahamas soon became the trend-setter in the provision of services and has maintained its position as a leader, notwithstanding growing competition from other countries both within the Caribbean and, more recently, beyond.
That we have been economically successful is evident by the fact that we have, for many years, enjoyed the third highest per capita income among independent States in the Western Hemisphere, following only the United States and Canada.
Still, we would be ostriches if we contented ourselves with past success as the basis for future performance.
For some time, our failure to increase local value added in our primary economic activities has meant that we have not maximized benefits from our earlier successes for local businesses and for Bahamians. Only last year, a review of regional tourism destinations revealed that The Bahamas was amongst the countries with the highest leakage of tourism revenues.
The World Economic Forum report on competitiveness maintains that wealth is created in an economy at the microeconomic level – in the ability of firms to create valuable goods and services using efficient methods.
And so our challenge is to identify our advantages, exploit them wisely so as to ensure our competitive position in efficiency and productivity.
The Bahamas continues also, to be a low-tax jurisdiction with no taxes on incomes, wealth or inheritance. Our regulatory regime which adheres to best international practices is risk-based in its approach to supervision.
We are committed to maintaining and strengthening our position internationally. Hence, our current exercise in taking our regulatory regime to the next step of consolidation so as to improve efficiency both from the perspective of the regulator and in relation to the institutions regulated. The thrust now is to emphasize a facilitating and efficient environment, sufficiently skilled human resources and state of the art technology.
Ladies and Gentlemen:
It is a consequence of this stepped-up global integration that there is great efficiency in the transmission of threats of whatever kind across all boundaries, and one such threat directly affecting the very survival of the small island states in the region is the serious deterioration to the environment as a consequence of global warming.
It is a poignant coincidence that the United Nations High Level meeting on climate change has gotten underway half way around the world in Bali, Indonesia just as we have convened here to discuss the future of small economies in the Caribbean and Central America.
For the small states in the region, it is not possible to overestimate the threat that environmental degradation poses for their sustainability, indeed their survival.
Climate change has the potential to undermine the most vibrant, and for many, the largest economic sector in the region – that is tourism.
Tourism is for many of the small island states the primary economic activity on which their hopes for employment and foreign earnings are pinned, and tourism is hostage to the environment.
Threats to the environment include hurricanes, droughts, floods, landslides, earthquakes and tropical storms, and their occurrence has increased both in frequency and magnitude in recent years. It is beyond debate now that the environment is under threat. Clearly urgent action is required:
a) to strengthen the quality and participation levels at the international negotiations on climate change for small developing states whose ecological fragility makes them critically vulnerable to the threat; b) to get the level of sensitivity to this serious issue to the point of a consensus for action; c) to bring greater focus to the consideration of the human and economic aspects of climate change; and d) to secure support for natural disaster management in the smaller countries in the region.
The ascendancy of tourism in the region highlights both a challenge and an opportunity, especially for the more open island economies in the region.
Understandably, as these economies expand the trade imbalance widens, which is presently being aggravated by the phenomenal increase in energy costs now occurring. The import-content of tourism spending is such that the opportunity must exist for expansion of the domestic productive capacity of many of these economies without adversely impacting the competitiveness of the jurisdiction. This needs to be given careful consideration.
Reduction of the import content of tourism can of itself be a major economic policy objective of the region. The other objective which appears to have the potential for great benefit for the region is the adoption of a serious energy policy.
Just five years ago in 2001, domestic oil consumption in my country amounted to some $273 million or 15% of total merchandise imports of $1.856 billion; last year, 2006, it accounted for $706 million, or 27% of total imports of $2.621 billion.
A reversal of this trend seems unlikely, and by the end of this year, the cost of domestic consumption of oil may well be at or close to one-third of total merchandise imports. This seems to be a level where alternative sources of energy make sense, and where it is sound economic judgment to revisit the energy efficiency of our life styles generally.
Ladies and Gentlemen:
Today, more than ever, we in the Caribbean and Central America are challenged by a string of new economic realities: the liberalization of trade regimes, the requirement of highly educated and skilled workforces, the need to keep pace with the rapid development of new information and communication technologies, the extreme threat posed by climate change, and the proliferation of large and powerful trading blocks unfriendly to historic preferential trade arrangements– which create special challenges for business.
In conclusion therefore, I express belief that we can overcome these challenges. The future success of regional economies in the new globalized environment is very much tied to the ability of our governments to commit to programmes for the enhancement of institution building, infrastructural enhancement, fiscal discipline, and investment promotion.
Part and parcel of such initiatives must be a similar commitment to improvements in education and technical and vocational training, adoption of state of the art information and communications technologies (ICTs), and collaborative and cooperative public-private support for business growth and development.
I thank you.