To address the recurring bouts of unreasonable expectations of the domestic labour market led by unrelenting labour unions, the Central Bank Governor suggested the government seriously consider permitting more foreign labour into The Bahamas.
Speaking on the topic Economic Development and Globalisation at a one day seminar jointly hosted by the Nassau Institute and the Atlas Economic Research Foundation on Saturday, Julian Francis said the monopoly on labour currently held by the various unions need to be dismantled and suggested allowing a more free flow if foreign labour as a possible method of addressing this problem.
Seeing this as a possible barrier for the country in its attempt to compete on a more global scale, Mr Francis explained that globalisation was not an option particularly for smaller developing countries, but was instead an inevitability that countries either embraced or risk economic marginalisation. Adding The Bahamas to this picture, the Central Bank governor noted that although the country has generally been able to defend its position in its two major industries: tourism and financial services, this defence was largely dependent on an ideal geographic position along with a longstanding policy of openness governing the two major pillars.
“The policy of openness and determination to be competitive in these two industries is no doubt the result of the realisation in The Bahamas that despite the comparative advantage enjoyed in each instance, because these are global industries and cannot be easily controlled, one has to play by the rules of the growing global environment or not play at all,” Mr Francis said.
He suggested that these strides could possibly come undone by some who have not embraced the reality of the competitive global environment today and are still pining for the old days of financial services. “They do not fully understand or agree that The Bahamas alone cannot cause the industry to behave as we wish.”
Using the strides made in the country’s two major industry as a benchmark against which to compare the growth of other sectors of the economy, the Central Bank Governor explained that while to aid their expansion these two industries have remained exempt from “the closed inward looking policy”, the remainder of the country was not speared the inevitable effects of this protectionism and administrative control.
“In an open economic environment, domestic resources are like those from abroad forced to be efficient competitive participants or they would dissipate not benefiting from the protection of public policy,” he said, adding that these protectionist policies should have remained in the decade of the sixties.
He outlined some of these policies as: exchange control, the current investment policy of the country, the monopoly of public sector companies over the provision of telecommunication and electrical services, the virtual monopoly over the provision of legal services held by The Bahamas Bar as well as the immigration policy.
Mr Francis noted however that while most people agreed that the Bahamian economy would fare far better without exchange controls, it is also understood that this is something that would have to be relaxed over a period of time so as not to expose the economy to potentially devastating risks.
Another necessity advocated by the Central Bank Governor to prepare the country to meet the challenges of globalisation was the removal of politics from the investment process. He suggested the government consider allowing an independent administrative body to administer the investment policy in accordance with a strict economic principle.
“National security, environmental and reputational concerns dictates that there should be some level of approval with respect to proposed investments into the economy; however I am not at all certain that the strict management of this policy by The Bahamas Cabinet is an efficient way of managing investments into our economy today,” Mr Francis said.
Martella Matthews, The Nassau Guardian
