WALTER G. HODGE MEMORIAL LECTURE

FIRST ANNUAL ANGUILLA DAY LECTURE SPONSORED BY THE SOCIAL SECURITY BOARD

June 1, 1999

HOUSE OF CHANDELIERS, SOUTH HILL, ANGUILLA.

 

TOPIC: "ANGUILLA AT THE DAWN OF THE 21ST CENTURY: CHALLENGES AND OPPORTUNITIES".

 

The topic on which I have chosen to speak this evening is entitled "Anguilla at the Dawn of the 21st Century: Challenges and Opportunities". By "challenges" I am referring to those situations or conditions facing Anguilla which pose difficulties or present hindrances to the achievement of sustainable economic and social development. When I refer to "opportunities", I mean those favourable events, situations and conditions which facilitate and are helpful to the efforts and process of promoting and pursuing sustainable development over the long run.

The purpose of my presentation is to:

    1. outline the nature and concept of development that I am using in this presentation;
    2. survey the present state of development in Anguilla;
    3. identify some of the major weaknesses in the present economy and society, which constitute critical hindrances to the achievement of long term sustainable development for Anguilla;
    4. identify key indicators of long term sustainability; and
    5. identify some of the most important challenges and opportunities facing Anguilla at this time.

The end of the 20th Century and the beginning of the 21st, as with all endings and beginnings, afford us a most opportune period in which to "reminisce on our historical existence", as the theme for the 1999 Anguilla Day Celebrations states in part. I hope that we will respond to the call of the theme and that we will review the past 32 years, in order to see what lessons they have for us as we face a fast changing, complex, uncertain, demanding but exciting future.

The 1999 Anguilla Day Celebrations theme also speaks of "looking forward to the new millennium". Well, a millennium is an extremely long time in recorded history. For that matter a century also represents several generations. So I am satisfied to limit my historic telescope to peering into the beginning years of the 21st Century and to try and see if I cannot discern the outline, the shape of things to come in Anguilla in the first two to three decades of the next century.

I wish to spend some time discussing development, as it is important to understand it in its broader aspects. Human social development is such a complex process, that it has come to be accepted, among those who study the phenomenon, that a multi-disciplinary approach is necessary and increasingly so. It has also become increasingly accepted that the end results of the economic development process need not always generate net gains and benefits for the society experiencing the economic development process. This point of view is particularly strong among some social scientists in the Third World, in particular those from the Caribbean and Latin America who have developed a model of Dependent Development and a notion of the development of underdevelopment.

One writer, George Beckford of Jamaica, has argued that the process of development in the Caribbean as well as in other former plantation slavery economies and regions in North, Central and South America, results in the maintenance of a state of "persistent poverty", for the majority of the citizens of these countries and regions. In addressing the challenges and opportunities facing Anguilla at the dawn of the 21st Century, it is therefore wise not to make the assumption that our development efforts in the coming years added to those of the recent past, will lead over the long run to net gains and net benefits for the people of Anguilla. If George Beckford is correct, then we cannot look forward to long term sustainable prosperity, improved standards of living and an enhanced quality of life for all.

I do not believe that George Beckford is correct. I believe that we can achieve sustainable development, despite the odds, despite the challenges facing us. The question is whether we recognize the challenges and whether we are equal to them. We must also identify our opportunities and try our very best to capitalize on them.

Sustainable human development at the least should encompass the following dimensions:

Development therefore is more than economic development, although more attention has been directed at understanding economic development than development in general. Given my economics background, I am most familiar with definitions of economic development. I attempted in a study undertaken some years ago, in which I considered the theoretical problems of economic development in small countries, to fuse the notion of economic development with that of social (including cultural) development.

Economic development is defined for that study as:

"the complex social process involving principally the productive forces and the structural and class relations of production, whereby society as a whole progressively improves the technique of providing for its material needs for survival and reproduction. The improvement in the ability of society to reproduce the material basis of its existence and the application of technological knowledge to production and distribution lead to changes in the social relations of production such as to facilitate progressive expansion in the economy. As a continuous process of quantitative and qualitative change, economic development potentially enables more and more members of society to develop their creative abilities and provides the conditions for the eradication of poverty, ignorance and disease from the midst of society."

"Strictly speaking economic development cannot be separated from the process of social development, of which it is a basic part. Economic development helps to determine overall social development in a fundamental way, but is itself influenced by cultural, political and historic(al) factors."

It is necessary for me to try and explain what is a long definition and one couched in social science jargon for the purposes of satisfying university degree requirements. The gist of the definition is that development is social in nature. It involves all aspects of society and impacts the members of society in measurable ways. These can be gauged by using various economic and social indicators, such as per capita income, levels of education, access to other social services, use of durable consumer goods, access to the arts and cultural resources. Economics is inextricably interwoven with politics, is influenced by it and significantly influences politics.

The quality of life and the overall social welfare of the community, often expressed narrowly as the standard of living are part and parcel of the development process. Quality of life or welfare issues bring into consideration, the way of life or culture of the people of a country, their values, beliefs, ethics, art and lifestyle, knowledge and intellectual resources, technological and scientific and also involves the arts and humanities.

At the economic level, two aspects are discernible when the development process takes place.

    1. The first aspect is that there is an expansion in production. This is brought about primarily as a result of the introduction of new and improved ways of producing goods and services, including in particular the establishment of completely new productive sectors or subsectors, as well as the expansion of existing sectors to take advantage of improved techniques or to put unutilized or underutilized resources to work. In other words, through the employment of improved technology and/or through the increased utilization of current technology, output is increased, particularly average output, thus making it possible for higher revenue to be earned from production. The increased average output can be distributed to owners, management and labour at higher rates, resulting in increased income.
    2. The second aspect is that the use of new technologies and methods and the introduction of new industries into society (even if using current technologies) inevitably require changes in the ways in which production is organized and in the knowledge and skill sets required of employees, including management. This leads to changes in the structure of business and in the way businesses and particularly employees are managed. The relations between management and labour comprise the class relations of production. Thus change and transformation of the relations between management and labour and between employee and employee, no matter how small, eventually bring about overall changes in the society. These changes are reflected in changes in attitudes, ways of relating in the wider society. They impact civil society and the wider community in profound ways.

Economic development and indeed social development takes place both at the micro-level, that is at the level of the individual members of society and at the macro-level, that is at the level of the society as a whole. If the individual members of society, in the majority, do not gain more from the process than they lose in the process, no development takes place. Instead underdevelopment is the ultimate outcome. For the society as a whole to gain in relative terms, it is necessary for the majority of its members to gain more than they lose.

The fact is that there are costs that accompany the development process, not just benefits. And the costs can outweigh the benefits at particular periods of a country’s history or at certain stages of the process. There is nothing automatic about achieving economic and social development.

Key notions to bear in mind are "technological change", "innovation", "structural transformation", "economic expansion" and "class relations of production".

Economic development takes place when there is not only a quantitative increase in the per person value of output in the society, but also a qualitative and positive change in the conditions of production involving a more equitable distribution of income and improved quality of life in the work place and in the larger society. The impact of both is to increase opportunities for the people of the country to develop and realize their creative potential and as a result improve the living standards for the population as a whole.

The pursuit of development must therefore involve political decision making to determine the direction and the strategy of development for a country or a people. Some refer to this as the political economy of development. The issue of decision-making brings into focus the issue of constitutional and political self determination. Put another way it raises the question of the degree of independence or political autonomy of the state government directly or indirectly from the control of any other state. Two very basic questions that need to be asked are:

    1. Who determines the development goals and objectives for a country? and
    2. How is the decision arrived at?

These are political questions requiring us to think about the role of the government and politics.

Issues of poverty reduction and the eradication of disease and ignorance are essentially concerned with what is regarded as the social development aspects of the process. An element of this, which has come to the fore in recent years, concerns what is called a human rights-based approach to social development. This involves the rights enshrined in the constitution and universally recognized in the United Nations Declarations and Conventions on human, political, civil and economic rights. The twin to this approach is of course the more traditional needs-based approach to social development. So even as we plan for increased per capita incomes, we must also plan to deal with the undesirable effects of economic transformation. We must also make use of the opportunities created by economic development to effect improvements in the quality of life that reflect a net gain for society, that is the achievement of social development in the broadest sense.

The economic, political, social and cultural processes that together characterize development take place for any society, within a defined geographical area, with a particular ecosystem. The ecosystem provides the natural resources that are available to the people to utilize, either directly for their own benefit or indirectly, by producing goods and services for export to other countries, and using the income so derived to fulfill their needs. Thus the discussion of development must take into account environmental considerations.

Development is also impacted by the historical experiences of the people of a country, which shape their national and social consciousness or lack thereof, as well as their existing culture and their economic and social structures. It is often said that it is difficult for a people to escape their history. I say, a people’s history should hold important lessons for them, which they should apply as they seek to follow a path of development in these times. So is the case with Anguilla in 1999, on the eve of the end of the 20th Century and the dawn of the 21st.

Development today, that is, overall human social development is complex, transforming, expansionary and beneficial. It is chaotic and unsettling to a greater or lesser extent. All social change is not developmental. It is the net situation that counts, that is development takes place where more benefits and gains are accrued than costs and losses are suffered by the society.

Permit me at this time to turn attention to the present state of Anguilla from a development perspective. In doing so I will comment on the economic, the political, social and cultural, environmental and historical aspects of the present state of our development. I will identify the major challenges facing us, as well as the most significant opportunities available for us to achieve sustainable development.

This year marks the 32nd anniversary of the Anguilla Revolution, not a long time in the life of a nation or a people. The Revolution at heart was about development, about building a brand new Anguilla for the generation of the 1960’s and those to come. It focused initially on the need to secure separation and secession from the constitutional relationship with St. Kitts-Nevis. It has been focused over the last 32 years on pursuing the development of Anguillian society economically, socially, culturally and politically, with overwhelming emphasis on economic development.

For 13 years the quest was to win constitutional separation, achieved in 1980. Since then the strategy of emphasizing economic development has resulted in a quite remarkable transformation of the Anguillian economy, from one based largely on subsistence production and remittances, to a modern commercial market driven economy with a strong and growing private sector. The engine of the economic miracle, that is Anguilla over the last 20 years, has been the tourism industry. Over the period, Anguilla has experienced average growth rates in the region of 10 per cent per annum in the 1980’s and 6 percent in the 1990’s. Today per capita Gross Domestic Product is approximately EC$20,000.00 or US$7,500.00. The standard of living has improved dramatically as measured by access to telephones, electricity, motor cars, home appliances, health care, education sports and recreation. Unemployment levels remain low; the inflation rate is low, as import prices have been increasing around 3 per cent per annum leading to a similar increase in the domestic retail price index.

Anguilla has experienced one of the fastest rates of economic expansion of its productive sectors in the northeast Caribbean. Structural transformation has also been achieved, as many new jobs have opened up, reversing outward migration, putting an end to the subsistence and remittance economy and creating an inward flow of migrants looking for jobs or to invest primarily in the tourist industry. Of particular significance was the generation of many job opportunities for women, especially in the tourism sector. This has brought about the transformation of the family and household situation from one where most women, especially mothers were not employed and stayed at home doing domestic work and raising children to a situation where most women are employed outside the home in the hotels, in teaching, in the banks, supermarkets and stores. This is a crucial change which has impacted negatively to a very great extent on the social fabric of Anguilla especially in the raising of children. The society has to develop an appropriate response to this transformation so as to mitigate its negative impacts.

The company and other corporate forms of business organization have become the norm in the private sector. The business sector has come to be dominated in some areas by foreign investors. However Anguillian businesses maintain a dominant or substantial presence in most of the sectors. The expansion of the economy has also led to the development of domestic financial services and the transformation of the attitude of Anguillians from an aversion to borrowing to one where credit is a normal part of the existence of most of the population, both native born and immigrant members. This has in turn impacted the saving habits of the population with more and more individuals becoming net borrowers, reducing the average saving rate for the population as a whole.

The Government sector of the economy has also enjoyed remarkable expansion benefitting from the growth of the tax base, as a result of the growth of the private sector. In 1986, the Government went off grant-in-aid from the British Government, which was used to assist with meeting the recurrent costs of running the public services of the country. Since then, an increasing percentage of Government’s Capital Budget has been financed from surpluses of recurrent revenue over recurrent expenditure. Even so the amount has represented a small percentage of total capital expenditures in the years since then.

The gap in the capital budget revenue has been filled with development aid mainly from the British Government, but also from the European Union and Canada on bilateral terms, as well as via regional aid programmes through the Organization of Eastern Caribbean States (OECS), the Caribbean Development Bank (CDB) and the Caribbean Community and Common Market (CARICOM). Government has also obtained loans mainly from the CDB and the domestic financial sector for a limited number of development projects. The overall burden of debt is substantially lower than the average for the OECS countries.

The flow of official development aid has been reduced quite drastically in recent years and Government is under increasing pressure from the British Government and from other agencies to fund the whole or by far the major percentage of its capital development needs from local budgetary surpluses. The Anguilla Government is being subtly told that it can and must achieve sustainability in public sector finances within the next two to three years.

The economic development achieved to date has been stimulated initially by the inflow of substantial foreign private sector direct investment, especially in the hotel sector. Within the limits of know how and financial capacity, Anguillians have followed the example of foreign investors by investing in the hotel sector with mixed results. Many more Anguillians have invested as small business persons in merchandising, car rentals, other transportation, apartments and recreational activities for tourists to try and catch some of the prosperity as business owners over the last two decades.

The general conclusion must be that we have achieved significant development over the past 20 years. However there is a façade of prosperity, yes a façade, meaning "false appearance". I say this, because in my view our prosperity is extremely fragile. I say this particularly because the economy and society is nowhere near to sustainability at this time and needs to strategically pursue economic and social development over the early years of the 21st Century with the objective of achieving sustainability.

The prosperity is fragile because a significant number of our business houses are not as financially robust and healthy as one would wish. Businesses that show red ink over extended periods of time may collapse or be deliberately closed if it proves extremely difficult to turn them around. The prosperity is fragile because of the high incidence of seasonality in the tourist industry, resulting in a low average annual occupancy rate of around 40 per cent. It is fragile because the tax base is not yet large enough and strong enough to support a level of government tax revenue, sufficient to fund Government’s recurrent and capital expenditures on a sustained basis, including the financing of borrowing. It is fragile because adequate infrastructure needed for sustained development is not fully in place, notably in the areas of public water supply, port facilities, airport facilities, public electricity supply and roads. It is fragile because we have not yet achieved a level of institutional development that will permit us to autonomously and effectively plan, implement, monitor and evaluate our development programme and processes. It is fragile because, the level of commitment and productivity by employees and managers in both the public and private sectors in general are not what they should be. It is fragile because the industrial relations climate is tense and greater harmony and a sense of partnership are needed.

The fragility on the economic front is paralleled on the social front by increasing social dislocation, by a gradual increase in crime and by the erosion of traditional values. It is paralleled by the weakening of the roles of traditional institutions notably the Family, the Church and the School, by a marked increase in delinquent and inappropriate behaviour and by a general coarsening of manners and the erosion of civility.

Economic development has been over-emphasized at the expense of social development with the result that the social and community service organizations are faced with substantial challenges that require resolute, proactive and innovative responses.

Present day Anguilla was born out of the political womb of 1967. The Anguilla of the 21st Century will owe much to the political behaviour and practice in which we engage at this time. Without getting into a discussion of the present political situation at this time, indeed my position as a senior public servant forbids it, permit me to say that this is a most significant moment for us politically as it relates to the kind of political culture we are fashioning, knowingly or unwittingly. Principle needs to triumph over expediency, the general good needs to be given first place to narrow individual or partisan considerations, personal ambitions for power and to wield power need to give way to the participative process of representative democracy that brings the community ever more into the day to day processes of governance. Whatever is done will have an impact on the future for good or ill. Let us hope that Anguilla is not disadvantaged as a society and as a people, made up of all the members of the community sharing this rock.

The history, the social development process, imperfect or skewed as it may be have been unfolding in this little two bit place some of us love to call the Rock. The Rock, an environment, which over the centuries has shaped a hardy, self-reliant people, a god-fearing, loving, united, industrious, friendly and warm-hearted people. The Rock, with few natural resources and a small population, a population that dared to think in 1967 that if they took their destiny into their own hands, they could carve out a better life for themselves and their children. These same values are needed to sustain the society in the fast changing years of the 21st Century.

So today we stand on the threshold of the 21st century with an unfinished work. We are challenged to achieve sustainable economic development and economic democracy in the years ahead, marked by material prosperity, full employment, high per capita incomes, an equitable distribution of income, a high savings rate sufficient to sustain in a significant way the investment process, low inflation, significant and steady economic growth, a self-sustaining fiscal regime and an economy integrated into the global economy.

We are challenged politically to fashion our own political culture that is true to the noble qualities of our forefathers, that permit new Anguillians born or migrating here to develop a sense of pride and loyalty and patriotism, that emphasizes the value of working for the common good over and above narrow self-interest that always threatens to supersede the interest of the country.

We are challenged today and in the 21st Century to turn our attention and focus our energies not only on economics and the quest for material things, but also on the issues of the social development of the least among us, of providing opportunity for those who otherwise would fall through the cracks, of limiting the negative impacts of economic development, and recognizing the human, civil, political, economic and social rights of all the people who inhabit this Rock.

We are challenged to care for the environment, to manage it for the benefit of present generations without destroying it for the use of future generations, to ensure that physical development does not create a level of environmental degradation that ultimately makes development counterproductive for future generations and destroy the very assets on which we depend for the material and social quality of life we enjoy.

We are challenged to keep the lessons of our history before us and to be reminded from whence we came, to teach the present and future generations what it is to be Anguillian, what is the essence of traditional Anguillian character and why we need to hold on to the values that have distinguished us over the past generations.

The challenges may be daunting, but the opportunities are there to effectively and successfully address them. Firstly, we must ensure that the people of Anguilla participate fully in the achievement of economic sustainability. This means that we must promote local investment vigorously in the economy, while at the same time welcoming continued foreign investment in specific sectors and under particular conditions laid down in policy. It means that we must develop a proactive macro-economic policy that involves the private sector and all the key players interacting and working closely with Government, and not simply a public sector investment programme that focuses only on the Government sector. We have to look to improve on our saving rate especially the long term saving rate. We must maintain and expand indigenous involvement in the financial sector. We must pursue economic diversification not only in financial services but also in fishing, information technology, art, intellectual property generally and in high-value, low-volume commodities. The opportunities are there. We have to plan to take advantage of them.

The social development of Anguilla, as distinct from purely economic considerations, requires that we prepare a social development plan and involve all the social partners in the process and in its implementation: Government, the private sector, the NGO’s and the wider community. An assessment of the situation has been undertaken and it is now time for us to engage in a community wide discussion and debate followed by the preparation of a plan to address all the issues brought out in the Social Needs Assessment completed in 1998. We can learn from our neighbours while our situation is still manageable. If we do not and ignore the tendencies and budding problems that are beginning to grow out of hand we will create real difficulties for future generations.

We can avoid the environmental mistakes of others near and far. We need to insist on the open and transparent discussion of the environmental impacts of development projects especially large ones.

Our actions are not guaranteed to achieve the goals we set. We have therefore to apply strategic planning methods, our ideas and skills to ensure that we make the best use of the opportunities before us to successfully address the development challenges standing in our way and achieve sustainable development in the 21st Century.

 

Fabian M. Fahie

June 1st 1999