Towards a Caribbean Developmental State Framework: The Challenge of the East Asian Strategic Approach
Karagiannis, Nikolaos, Ibero-americana
The political economy of development in the Caribbean is characterised by trade relations that take place in a highly monopolised global market; policy issues which serve the interests of transnational corporations and are influenced by multilateral agencies; a lack of focus and clear policies; and, "pork barrel" policies and interference by the political directorates. Foreign capital controls the islands' productive structures, and particularly the most dynamic sectors of their economies, repatriates a high volume of profits, and benefits very narrow sectors and activities. Technological-industrial dependence has been consolidated, and export production is determined by demand from the main hegemonic centres. Foreign financing has become necessary in two forms: to cover the existing deficits, and to "finance" development by means of loans. Caribbean nations encounter unyielding domestic obstacles to their self-determined self-sustained growth, which lead to the accumulation of deficits.
Against this general background, the tourism industry is being seen not just as an economic activity capable of creating income and jobs for the islands' inhabitants and earning important foreign exchange, but as one of the most promising sectors for their future economic growth. However, tourism has further subjected Caribbean nations to outside dependence. The result of this dependence makes Caribbean economies vulnerable and more susceptible to external shocks, as well as more dependent on foreign exchange (Higgins 1994: 5).
The argument of this paper is as follows. The first part summarises past development efforts in the Caribbean. The second main section charts a "Caribbean" Developmental State framework: an institutional system which appears to have been used with enormous success in East Asia but, unfortunately, has been neglected in the region. The final main part of the paper identifies key strategic requirements and offers alternative policy recommendations, which the Developmental State approach implies and suggests.
II. PAST CARIBBEAN DEVELOPMENT EFFORTS
This section discerns four broad phases in Caribbean development since the end of World War II. The first phase, the 1950s and 1960s, was characterised by the advocacy of the modernising potential of industrialisation and economic diversification as a means of overcoming the traditional Caribbean problem of dependence on agriculture, and created expectations that other economic benefits would also follow. In some countries, the emergence of modern export industries in the mineral sector was a strong sign of this development thrust.
The theoretical insights underpinning this strategy were provided by W. Arthur Lewis who saw industrialisation as an essential part of a programme for agricultural progress by providing new jobs.1 From this point of departure, Lewis sought to set out a policy of industrialisation for the Caribbean designed to overcome the dual problems of markets and resources: the region was short of capital, industrial power was expensive and the available raw material base limited, but wage rates were low by the standards of the developed world. Many favourable industries were based not on the use of local raw materials but on the processing of imported inputs. Yet, the small size of individual domestic markets necessitated the establishment of a regional customs union as an essential prelude to any vigorous policy of industrialisation (Payne and Sutton 2001: 3).
For Lewis, industrialisation was like a "snowball": once started, it would move of its own momentum and get bigger and bigger as it went along. But regional import substitution would account for only a small part of the industrial output necessary to generate full employment; export-oriented industrialisation was the main requirement. To attract foreign manufacturers (and therefore get the snowball rolling), Lewis recommended the implementation of a package of investment incentives modelled upon the Puerto Rican experience. …