By Zhivargo S. Laing
Op-Ed Contributor
WHILE GOVERNMENT DEBT remains worrisome for many Caribbean and Latin American countries, socio-economic depth may be the more serious worry for sustainable growth and development in the future.
Socio-economic depth here refers to the level of achievement in economic and social areas which enhance development prospects. Areas such as economic diversification, ease of doing business, investment promotion, fiscal management, education policy, public health, infrastructure, public order, civic participation and the citizenry’s sense of hope.
High achievement in these areas creates socio-economic depth and improves growth and development prospects – lower achievement does the opposite.
Since the 1970s and 80s, Latin America has improved its debt profile both in terms of reduced Debt-to-GDP ratio and the mix of domestic and international debt. The Caribbean on the other hand has gone in the opposite direction. Both groupings, however, remain challenged in terms of socio-economic depth.
The intense global focus on debt issues, particularly since the so-called “Great Recession,” which fermented and boiled over in 2008, is understandable but somewhat shortsighted.
Elevated debt-to-GDP ratio can be a burden to a country, particularly in the current global economic malaise, so attention to the same is no surprise. However, socio-economic depth should command just as much, if not more attention.
Indeed, in the long run, it can significantly aid in debt reduction. The reality is that too many Caribbean and Latin American countries remain plagued by enduring underachievement in areas such as the diversification of the economy, leaving a number of them vulnerable to the vagaries of global fluctuations.
A weak focus on education has left many of our young men and women unable to thrive and make a more meaningful economic contribution to themselves and the state. Waning infrastructure has contributed to a lower quality of life and is a disincentive to both domestic and international investment.
Public disorder and injustice has left many citizens distrustful and discouraged; while uninspired public services administration leads to inefficiencies in conducting business; and regional transportation has inflated the cost of trade within the region.
Perhaps paying greater attention to debt, as opposed to depth, reflects both politics and pragmatism. The debt problem is decidedly simpler to track and easier to spin – socio-economic depth is less so.
Dedicated efforts to tackle the Caribbean and Latin American “depth crisis” offer infinitely more and longer term gains than tackling its “debt crisis.”
Policy development in this area has enormously more room to grow, and if tackled seriously should define and reveal the next generation of policy makers, politicians and statesmen to take the region forward.
Zhivargo S. Laing, former Minister of State for Finance with the Government of The Bahamas, is an economist, consultant and motivational speaker