The circus certainly came to town last week. You may think I am referring only to the Suarez Brothers Circus. I am not. The debacle that surrounded it mattered rather more. If media reports are to be believed, the problem appears to have been poor communication—or none at all—between government agencies. It was embarrassing.
I wondered how the organisers could begin advertising when, judging from later developments, the approval process was unresolved. Posters and stickers remain plastered across Barbados, despite the familiar restrictions on that practice. Then again, we routinely give politicians a pass during election season, so perhaps officials simply decided to extend the same courtesy.
From the government’s perspective, I cannot fathom how the circus was permitted to be erected on land said to sit above a sensitive aquifer. I remember driving along the Belle stretch of the ABC Highway, watching the big top go up and thinking the decision rather mad. I suspected that a show would follow, though not the one the public expected. That particular honour lies squarely with our ministers. I confess that I am still enjoying the performance.
The episode made me reflect on the business climate in Barbados. The World Bank has replaced its former Doing Business framework with Business Ready, or B-READY. I remember Donville Inniss arguing that the old system treated Barbados unfairly. Its successor may be somewhat kinder, although it is no less pointed in its assessment. Our performance is decidedly mixed.
Among the economies assessed in the inaugural 2024 report, Barbados placed within the top 40 per cent on requirements for regulatory oversight of electricity, water and internet tariffs and service quality, including mechanisms for monitoring compliance with performance standards. By contrast, it fell within the bottom 20 per cent on tax transparency and the provision of adequate notice before regulatory changes. Perhaps that explains the government’s enthusiasm for tax reform.
The organisers of the Suarez Brothers Circus would probably recognise the World Bank’s assessment of our market-competition environment. The results point to limited access to innovation, inadequate digitalisation of intellectual-property services, weak procurement regulation—particularly around best-value bids—and burdensome administrative filing processes. Funnily enough, those deficiencies might also explain the circus surrounding the circus.
But this way of thinking does not end at the government’s door. It has become cultural. We reach for slogans, blame consumers and occasionally expect policy to suspend arithmetic. Recent comments attributed to the Barbados Manufacturers’ Association provided another useful sideshow. I do not expect many people to agree with what I am about to say. In fact, it may shock a few of my friends in manufacturing. Most “Buy Local” campaigns are a farce. The BMA is, in my view, looking at only part of the problem.
That is deliberately harsh. My quarrel is not with domestic manufacturers, nor even with the institutions supporting them. It is with the economic model buried beneath the slogan. In a small island economy, placing the national flag on some packaging does not cause raw materials to appear, enlarge the home market or make economies of scale magically materialise.
We import many of the raw materials used in production, as well as machinery, technology and, in some cases, even labour. Barbadian wages may also exceed those in competing jurisdictions. Meanwhile, our small market prevents many firms from reaching the volumes needed to reduce unit costs substantially. Yet we ask consumers to choose an item because it was made here, even when it is dearer. Patriotism is being asked to compensate for what scale will not provide. It can, occasionally. It is not an industrial policy.
COVID-19 is often offered as the great defence of domestic manufacturing. To me, it demonstrated something rather different. If a factory operating here imports nearly all the inputs it needs, disrupted shipping, shortages and imported inflation can still cripple it. We may therefore attach a local label to its output while retaining most of the vulnerabilities of an importer. A factory cannot manufacture nationalism when a vital component has not arrived.
The real question is not simply where the final screw was tightened or the bottle filled. It is where the value is created. Who owns the intellectual property, the brand and the profits? Where are the logistics, administration and higher-value decisions located? Barbados can remain the home of an enterprise even if mass production occurs in a jurisdiction with a larger labour force, lower unit costs and easier access to millions of consumers.
Naturally, those overseas productive assets would need protection. Double-taxation agreements can clarify how profits are taxed, while bilateral investment treaties may offer recourse against arbitrary expropriation. I described such facilities in conversation as “economic embassies”. The phrase is more metaphor than legal proposal—economists are allowed one dramatic expression every few months—but the underlying point remains: production can travel while ownership and value remain Barbadian.
I was reminded of this while speaking recently with one of the people behind Katspraddle, the Barbadian sweet-potato vodka. It uses sweet potatoes grown here and keeps part of the value chain on the island. Meaningful growth, however, requires reaching millions of people beyond Barbados. There are simply not enough Bajans willing to drink vodka every day and, for several reasons, I rather hope that remains the case. Keeping every stage of production here makes sense only if the brand can command a sufficiently high price to overcome our scale disadvantage. Such pricing power comes from recognition and positioning, not nationality alone.
That leaves two credible models: retain ownership of the brand and intellectual property in Barbados while placing scalable production where it makes economic sense, or manufacture domestically at smaller volumes and command a genuine premium. Absent exceptional productivity or pricing power, we cannot simultaneously offer mass-market prices, pay relatively high Barbadian wages, produce in small runs, import most inputs and remain globally competitive.
Economics is about scale. We have to pick a struggle. More importantly, we have to choose an economic model. Buying local should mean capturing value at home, not asking geography to repeal arithmetic.