James Paul & The People’s Blog

Published in The Nation Centre Page, Nov 13, 2007

Can we compete internationally or are the odds stacked against us?

The current thinking behind modern competitiveness theories lies in neo liberal economic theory which embraces the view that markets left to regulate themselves represent the most efficient way to allocate economic resources. The objective is to allocate resources in the most efficient manner that would provide great benefits in the form of profits to the owners of the resources. Competition in such an environment benefits the owners of capital which in a globalised world poses tremendous challenges for small island states like Barbados. These states are characterised by low resource capacity and wealth concentration in the hands of a few. There is an over reliance on foreign investment rather than local capital and ingenuity to drive the economy.

It is believed that firms in this environment must be allowed to function freely; in fact the firm becomes the centre and major beneficiary of economic policy. These firms are powerful business units and comprise partially the private sector in addition they exercise inordinate influence, this characteristic reveals the fundamental weakness of the neo liberal approach to economic development. In addition, in any discussion about the ability of countries to be competitive in a free trade environment, the question must always be asked. Who are the competitors? Is it the state or the firm or for that matter the private sector, the answer to the question reveals the idiosyncrasies that seem to be a part of modern intellectual thinking. There are those willing to venture into areas of intellectual thought that are not grounded in any firm philosophical perspectives. In fact these approaches lack any moral grounding and do not recognise any underlying social responsibility by firms to those most vulnerable sections of society.

Much of modern competitive theory gives preeminence to the firm and consequently does not answer the need for a more development oriented approach to resolving the difficult economic issues facing developing countries. Very often firms in developing countries are dominated by a minority with a high incidence of interlocking directorships. This makes mockery of the idea of competitiveness; in addition, these firms have international relationships guaranteeing themselves pivotal positions to exploit market liberalization. In addition, there international connections allow them to strategically position themselves to take advantage of new opportunities, leaving crumbs fro the rest.

Businesses in developing countries must be encouraged through a more development oriented economic policy to create and/or establish viable and sustainable commercial relationships along the various product chains. This would assist in preventing the underdeveloped countries like Barbados from being swamped by products originating from the metropolitan countries. The continued insistence by more developed countries that tariffs be lowered is merely to facilitate market penetration. This process of trade liberalization through tariff reduction results in the undermining of the productive sectors. This occurs because the commodity chains for the distribution of locally produced goods are undeveloped and needs to undergo a major overhaul if they are to survive in a globalised environment.

It is the stated objective of Barbados to achieve developed country status by the year 2020; however, it is fallacious to believe that just stating the view would result in the productive sectors being able to survive. Our states are compromising our national sovereignty yielding to the neo liberal agenda. The facts speak for themselves competition is merely a buzz word with very little substance when looking at its track record in the developing world. The odds are stacked against us.

Posted on July 27th, 2008 by jamesd
Filed under: Articles