COMMENTARY: End the imports, BVI way better off feeding itself
By Dickson Igwe, Contributor
Self-sufficient economies are good for national security, national health, and economic growth. Non-self-sufficient economies are slave economies, dependent on foreign powers, for their existence.
Now, countries that feed their populations from their own geography and natural resources are better off economically and socially than countries that depend on foreign imports to exist. And one of the ‘economic curses’ of Caribbean countries, including the Virgin Islands is the possession of import oriented economies that destroy local markets, local agriculture, and consequently local prosperity.
Continuous balance of payments imbalances caused by importation have the effect of gutting an economy. Essential skills that drive productivity migrate overseas. The economy becomes a monoculture sourced in an alien land. The import economy is managed by salesmen, and not producers that make stuff.
Spiv economy
Another term is ‘spiv’ economy: a black economy develops, dependent on the goodwill of foreign investors, and foreign powers to exist.
Trade imbalances, caused by import cultures, take currency out the economy. This reduces the quantity and velocity of cash in a territory. The reduction of cash within a local market reduces economic productivity. It reduces business profitability, business investment, and causes a rise in inflation.
Businesses cut back on investment and hiring, internal productivity declines. The preceding is never good for economic growth. There are fiscal implications when an economy is import oriented.
Historically, countries that are net importers possess higher annual budget deficits. The reason is that productive capacity from internal markets is replaced by retail services. The pull of revenue is from inside out not outside in. When a country buys from another country it decreases its GDP. The exporting country on the other increases its GDP.
Export-oriented economies the way to go
With export-oriented economies, the centre of gravity is home markets, not foreign shores. There is more opportunity for government to raise tax revenues and invest when products and services are sourced on home ground. Government has greater fiscal control. The country will also be able to grow its GDP at a more substantial level than an import-oriented economy.
Countries that rely on tertiary services, and that depend on cheap imports to exist, furthermore, run up external debt levels at a greater rate than countries with healthy balance of payments. This is owing to weak internal productive capacity. But why is this? Well, the outflow of currency from the domestic market to foreign markets decreases foreign reserves, and increases debt, as tax revenue is lost to foreign countries.
Imported goods also incur importation and production costs borne by the consumer in the home market of the importing country. The banks that handle international trading are happy to see a country import more than it exports, as these banks earn valuable interest by managing these transactions.
This further drives up the importing country’s balance of payments deficit. The same is true when the movement of cash is in the opposite direction. Greater exports drive favourable balances of payments, building foreign reserves that derive from tax receipts.
As cash is paid into the receiving account the cash flow of the exporting business is strengthened. The importing country on the other hand pays the transportation and production costs. This is good for the balance sheet of the exporter and producing nation. Self sufficient countries protect their economies and perform better economically.
Eat what we grow, grow what we eat
Countries that produce what they consume protect their economies from wastage and cash frequently disappearing down the proverbial hole.
Exporting nations possess stronger internal markets in both terms of labor and productive capacity. A country with a growing GDP, driven by local production, is viewed favorably by global banks, and is able to borrow more cheaply on world money markets. This further strengthens its fiscal position.
The same is true with domestic banking. Banks like to see a resilient revenue source from retail banking customers. Consequently for economies such as the Virgin Islands and Caribbean Economies that follow a monoculture, import narrative, economic policy, must address the anomaly.
Transparent, accountable and appropriate investment policies in agriculture and fishing are not an option: investment in food and drink sufficiency is good economics. Then, investment in infrastructure that drives tourists to spend cash locally is critical: tourism is an export industry for the Caribbean.
However, greater revenues from tourism must benefit local markets, and not foreign multinationals. Strengthening local internal markets requires innovation and ‘’out of the box thinking.’’ Innovation and out of the box thinking is something the Caribbean lacks.
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In an academic utopia this would be lovely. In reality, for a large portion of countries, this is an impossibility. The key goal is the balance your trade deficits as best you can based on the geography of your country.
In the BVI this is a near impossible goal to achieve due to finite land, start up costs, and labour resources.
NEVER SAY NEVER – WORK ON HAVING AN OPEN MIND FOR THE FUTURE GROWTH FOR AND OF THE BVI SUCCESS.
That was an open minded statement! How about you come up with a suggestion as to what would work rather than a comment devoid of suggestions? I’d love to hear suggestions on how the BVI can have a sustainable and balanced trade.
Where have you been – I second your powerful statement especially when one recently in power is speaking about having a conversation about self reliance – I say what does our lovely BVI at this time have to offer because you say truth to power – The Island import EVERYTHING – that us SAD – We grow nothing for export or produce any kind of manufacturing goods – No nothing.
The conversation should be where can we began to think and talk about exporting – exporting – create – create some kind of manufacturing jobs and not only rely on tourism and the boating industry – yes it has worked with the help of other outside support. BVI was looking great and going in a growth driven direction but 2017 took another route of struggles. The BVI as we know it had a place along other Caribbean islands. Now we are working hard as we have done to be Strong Stronger for the future of the BVI Again.
Have the conversation what we want Export – Export for stability in the BVI Region.
Legalize the thing man! Supply on demand, and consume and export Hi Grade Quality Green! It will surely lower the unemployment rate in the Territory and give the youth something to be proud of producing other than sitting around on the corners and life just passing them by! You don’t need to go to HL Stout School to figure that out!
Well my friend I don’t see self sufficiency in the cards. We never had it and never will. But I do see us saving a few dollars and eating more healthy by growing some of our food and animals. It is well worth it!!!
What we had was a robust supplemental agricultural environment. Most people grew something and had fruit trees and many people had animals. Some of the surplus went to St Thomas….etc…But we came back with with staples like rice, oil, flour, milk, butter, soft drinks, beer etc…
Boy I used to kill that powdered milk hard to lie when you get caught with that white face….LOL I also remember cleaning out the fowl pen, getting the eggs, going to the boat or truck for fish. On the weekend head up to Myers for beef. Also somebody was always butchering a goat or pig.
It’s a good thought but I think the BVI topography and size plus its growing population will limit self sustaining agriculture.
Dickson, good read! My $0.02 and perhaps a diffrent take——Ideally, it would be in the national interest if the BVI could feed itself. Growing more food locally would reduce the food import bill, create a multiplier effect in the economy by keeping more money local, provide fresher/healthier food, provide employment and enhance food security. Nonetheless, a growing population, coupled with limited arable land, shifting once arable to other uses, ie, housing….etc, poor water supply, competition from imports, growing disinterest in agriculture (working ground is done by others; residents get agri products mostly from supermarkets now, not the traditional Central Market)……etc present obstacles to the VI feeding itself.
The VI is an import nation; it has a balance of payments deficit (it imports more than its exports). This import trend will continue for a while with the BVI having to import almost everything that it needs.
Further, free and voluntary trade is a win-win for trading partners. Nonetheless, in some cases even if a country has an absolute advantage in producing a good(s), it often may let another country produce it. Countries typically lean towards producing a good(s) that it has a comparative advantage ( lower opportunity cost)in. For example, the US may have the absolute advanage over a developing country in producing T-shirts but it may have a greater opportunity cost than the developing country so it lets the developing country(s) produce them. Countries typically produce what they have a comparative advantage in and import the rest of what it needs.
I like when this guy say what he want say in short order and make a lot of sense! Thanks; It is about time you learn to be straight to the point and let the chips fall where they may, who the cap fit let them wear it. That is why I never like when people talk about Shakespeare just a lot of boring Imperialism BS
@Billfargo, true some commentaries and blogs are lengthy but do we want to sacrifice clarity for brevity? The fast food mentality being adopted by the BVI is ruining it. IMO we must invest the time to read, digest data/information, make informed decision…….etc. Texting, the new popular and prefereed mode of communicating, is not helping this outlook. Virgin Islanders at a critical mass level must have the currency to hold conversations at any level (formal, colloquial) and write at a an effective level.
And I rest my case! Too much Truth!