Consider This | Threats to economic development, pt. 2
“One of the greatest threats to our economic development is the archaic educational system to which we subject many thousands of Bahamians.”
Two weeks ago, in part one of this series, I noted that, for a recent address to the Rotary Club of New Providence, I was invited to speak on the club’s theme for the month of October, “Economic and Community Development”.
Judging by the questions and answers that followed that speech, and the post-meeting discussions, this author thought it would be appropriate to share the highlights of that address with the readers of this column. Therefore, this week, in part two of this series, we would like to continue to consider this — what are some of the threats to economic development in The Bahamas?
In part one, we defined “economic development” as the process by which the economic well being and quality of life of a nation, region or local community are improved. We differentiated between economic development, which relates to policy intervention endeavors that aim to improve the well being of people, and economic growth, a phenomenon of market productivity that is usually measured in terms of key performance indicators of the national economy.
We then examined several examples of threats to economic development in The Bahamas, namely a poor savings rate, lack of access to both capital and reliable, empirical data and, finally, the spirit of independence.
This week we will examine several other important threats to economic development in The Bahamas.
Government bureaucracy and red tape
There is simply too much bureaucratic red tape that frustrates budding Bahamian entrepreneurs and foreign investors. Persons wishing to establish a new business enterprise or expand their business are often halted in their tracks because they cannot get the necessary government approvals on a timely basis.
This is not a new phenomenon, but one that has been with us for many decades but must urgently be addressed if we are going to diminish this threat.
Unfortunately, capital hates a vacuum and always finds a home. If an entrepreneur is unable to easily navigate through the red tape with which he is often confronted, he will either be discouraged from developing the business enterprise or will look for another jurisdiction in which to park his investment capital. This process has been significantly facilitated by two important recent developments.
First, the increased ease with which capital freely flows across national borders has greatly facilitated the ability of an investor to move investment capital from one place to another.
Secondly, many businesses that exist today were non-existent two decades ago. Therefore, the modern entrepreneurs tend to move into markets where their access is unimpeded by bureaucratic or governmental hassles.
Today’s modern entrepreneur has no time to wait around for mindless bureaucrats to make decisions or unnecessarily thwart their development efforts. It is too easy for the modern entrepreneur to go elsewhere.
Therefore, governments, like private sector service providers, must be more responsive to the end-users; otherwise, prospective businesses will quietly die, suffocated by the overload of bureaucracy and the inertia of red tape.
Lack of planning
Economic development is also thwarted by the lack of planning by budding and seasoned entrepreneurs.
Effective planning wears many faces and begins with clearly understanding the business you are in. A classic example of this was the realization that Ray Kroc, founder of McDonald’s, arrived at when speaking to his business adviser. His adviser informed Ray, “You have it all wrong. You are not in the food or restaurant business; you are in the real estate business.”
From that single epiphany, McDonald’s business expanded exponentially. Therefore, the first rule of economic planning is to fully understand what business or industry you are in.
The prominent Bahamian architect, poet, musician and generally recognized by many as a “Renaissance man”, Pat Rahming, frequently reminds Bahamians that for so many years we have gotten it wrong.
He maintains that, despite our insistence on the oft-repeated fallacy, we are not in the hotel industry. In fact, Pat laments that there is no such thing as a hotel industry. Rather, the greatest economic engine that drives The Bahamas’ ship of state is the tourism industry and even that is a sector that many Bahamians neither fully understand nor optimize its potential.
This leads to another critical threat to economic development: we simply do not take the time to plan our economic development at the micro or macro level.
In the case of micro-economic development, too many businesses attempt to commence without performing the oft-painstaking task of preparing a business plan. In addition, many persons who plan to start a business often do so without the advice or consultation of professionals who can assist them.
One of the greatest threats to our economic development is the inadequate and archaic educational system to which we subject many thousands of Bahamians.
While there is no doubt that we need the rudimentary foundational platform for a sound educational base, we have to radically review our educational system to make it more relevant to the enormous changes that are confronting us in the 21st Century.
The changes in our country and the world are considerable. Unless we embrace these changes with a new perspective, The Bahamas would not only be unable to face and keep pace with developmental challenges; we would be left behind.
The only way that we can compete in a global world is to obtain the education needed to effectively do so. Bahamians are receiving First World educational and vocational preparation in many distant lands, but how many of them will return to contribute to our national development? The imminent brain drain is yet another threat to economic development in The Bahamas.
The next wave
The next wave of economic development will be more challenging than at any other time in the existence of Homo sapiens. There are four areas that will require our urgent attention, both at the individual and national level, if we are going to remain competitive in a globalized world.
Those areas are (1) information and biotechnology, (2) blockchain technology, (3) digital or cryptocurrency and (4) artificial intelligence. In the years ahead, and sooner than we think, each of these areas will affect our daily lives in ways that most people on the planet cannot even vaguely imagine.
If we are going to embrace and optimize the next wave, we must prepare ourselves with greater urgency in these four areas than we have for any other socio-economic movement in our lifetime.
As we observed in the first part of this series, in order to foster a healthy, vibrant economic development in our society, we must first recognize these threats.
We must then craft solutions to thwart the dangers posed by these threats to our national well being so that we can implement dynamic strategies for the economic development that we need and that our children deserve for a consistent improvement in our quality of life and our ongoing well-being.
• Philip C. Galanis is the managing partner of HLB Galanis and Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament. Please send your comments to firstname.lastname@example.org.