delisle worrell : challenges facing caribbean economists opening remarks by dr delisle worrell, governor of the central bank of barbados, at the annual monetary conference, bridgetown, 15 november 2011. * * * the annual monetary studies conference ( amsc ) is now well established. it is the leading conference of caribbean economists and economists working on the caribbean. the quality of research and presentation at this conference is uniformly high, and the meeting offers the best opportunity caribbean economists have for networking. the journal of banking finance and economics in emerging economies, the journal of the caribbean centre for money and finance, offers swift publication of the best papers from this conference. so we can say that amsc is no longer aspirational but a fixture of the caribbean economic landscape. the conference is now challenged to push to the next level. there are 2 aspects of the challenge facing caribbean economists that i would like to see this conference tackle : the need for new ways of conceptualising our economies, and the need to do research that points the way more clearly for policy makers and the public. why do we need new concepts? the conventional analysis gives counter intuitive answers to many of the questions that are of ongoing interest : conventional economics says that flexible exchange rates are better, but the countries with fixed exchange rates are more prosperous ; conventional economics teaches that it is good policy for the central bank to speak out publicly against bad fiscal policy, but in truth public disagreement destroys the credibility of both parties ; conventional economics recommends that to reduce inflation you should raise interest rates, even though higher interest drives up costs ; conventional economics suggests that stock exchanges are a good way to fund investment, even though new issues to fund capital formation have become a rarity. at the moment our research looks pretty much like any other. we used to argue that caribbean circumstances were different, that small open economies ( soes ) were different, and that resource rich and resource poor countries were different. nowadays we use the same models, the same specifications, similar data and the same tests. if you use these methods and you get the same result for barbados, with an economy the size of a small county in an obscure us state, as you get for the entire us, shouldn ’ t you be sceptical? the truth is that economies are so diverse in so many ways that the notion of universal theory is problematic. the simplifications which are the essence of modelling will make sense only if they mirror the essential features of each economy. we need

on the application of ground rules which are based on giving the best candidate the job – especially where in today ’ s environment, that candidate may not be a barbadian national. however, we have always had to deal with these issues, so this is not new. my only advice is that the most important challenge facing barbados is to improve its competitiveness. i believe that if employers and hr professionals focus on this they will get the desired responses from their employees. in some organisations the development of pay - for - performance appraisals are being considered. this may, at first, appear to have nothing to do with csme. however, it has to do with motivation, hence it has to do with getting the best, getting the best employees means improving our competitiveness – so we are back to what is good for us in order to flourish within cmse – improved competitiveness. we will all need to put systems in place that will ensure that our employees aim for high levels of productivity, this will include reducing work stoppages, reducing absenteeism and a closer control of wage costs. this, coupled with the nurturing of a culture of greater entrepreneurship, will be the key to getting the best out of csme. already, given the reduction in the rate of tax from $ 40, 000 to $ 37, 500 and other tax related concessions, there is likely to be a significant increase in disposable incomes. last year, there was a tremendous surge in spending. net domestic assets of the banking system, which comprise credit to government and credit to the private sector, rose by 50 %. we are looking at a situation where disposable incomes will rise even further in 2005 because of the tax benefits that have been given. ask yourselves “ is there really scope for giving wage increases on top of that? what will happen to disposable incomes? what will happen to spending? ” i hesitate to incur the wrath of the unions, but i am an economist and the numbers stare me in the face. i suggest that you put in to your employees that we put barbados first and that competitiveness is very important – for the good of themselves and future generations. conclusion in conclusion, there are several steps still to be taken to ensure hat csme becomes the opportunity which we are convinced it can be for barbadians. however, not all of these initiatives are in the laps of the officials. yes, the further liberalisation of the external capital