Examine the Reasons for the Decline of the Manufacturing Business in Barbados After 1980.

Topics: Industry, Manufacturing, Recession Pages: 6 (2328 words) Published: April 10, 2013
The nation of Barbados has historically been a nation that has had its economical focus on agriculture. Through the production of sugar cane and its by-products, Barbados for decades had a stable export, but due to both internal and external factors, they needed to find an alternative to this agricultural economy as it was failing. As a result of this need, the Caribbean and Barbados began the process of industrialisation in the 1960’s and in doing so, created a successful manufacturing sector. While this sector was initially very successful, issues and cracks began to form and by the 1980’s the manufacturing business of Barbados was in decline. In this essay, I will analyse four reasons for why this manufacturing industry failed so abruptly. The ongoing economic recession of 1973 and a later global recession in 1992, the withdrawal of some of the manufacturing firms that came to Barbados, competition from inter-regional nations and the withdrawal of governmental support all helped to ensure the steady decline of the manufacturing business in Barbados after 1980.

Before we discuss why the manufacturing businesses experienced a decline, we must understand the reasons why and how Barbados turned to them .As stated previously, Barbados was predominately an agriculturally based economy. In 1946, sugar cane accounted for 33% of the country’s GDP. This was the largest single entity in the economy and awhile it was proving successful, it was subject to the price fluctuations of the sugar market. This mono-crop economy was far too fickle to be considered the main bread winner for the nation. By the 1950’s and 1960’s the monarchy of sugar cane had lost most of its market dominance to tourism and manufacturing but while tourism seemed a stable and suitable monarch to take the major market share from sugar cane, but it to was prone to external market fluctuations. This meant that Barbados had to have another suitable and reliable sector to bear the brunt of the economic load and they found this in the manufacturing industry. According to Dr. Andrew Downes, “…industrial development in the Caribbean has been largely a post World War II phenomenon.” and from as early as the 1950’s Barbados tried to generate interests from international manufacturing firms so as to stimulate industrial development. They sought to do this through a number of acts and policies which followed the Puerto Rican system known as “Operation Bootstrap”. This was a number of policies that the government of Puerto Rico had used to help stimulate industrial growth. Through the work of Sir Arthur Lewis, Barbados adopted a system which became known as “Industrialisation by invitation”; this system essentially focused on five things; surplus labour, market size, labour costs, financial investment and risk aversion. According to Lewis, Barbados and other CARICOM nations fit this bill perfectly. Barbados fit all of these criteria perfectly; there was overpopulation and thus surplus workers since the mono-crop economy could not accommodate most workers, the market size aspect represented an issue in the sense that Lewis did not think that Barbados nor the region had a population or a GDP that could support the market and so in an effort to rectify this, they focused on the international market. Barbados at the time, like many other Caribbean countries, had a relatively low cost of living and this made it easier to pay people low wages and, risk averse referred to the local capitalists who did not see any benefit in manufacturing but preferred to stick with the sugar cane market. What Lewis proposed would happen, is that the invitation of multinational co operations, and could help teach the local stubborn capitalists about the benefits of manufacturing.

Lewis’ idea for Barbados came into fruition when the government of Barbados began to implement policies that would help initiate this invitation. They began with The Pioneer Industries Act in 1951, The Pioneer...
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