GDP Outa-Style!

THE President of the Caribbean Development Bank (CDB), Dr Hyginus ‘Gene’ Leon, says measurement of development by the traditional Gross Domestic Product (GDP) yardstick is out-of-date and insufficient today and it simply makes no sense for regional states to continue striving to annually qualify by that measure.

Dr Leon on June 20 invited Governors of CDB member-states attending the 53rd CDB Annual General Meeting (AGM) in Saint Lucia to consider that in these new times, new yardsticks are needed to measure development, if the Caribbean is to recover at the rate needed to overcome current challenges of current global financial and economic realities.

Delivering his address at the Sandals Grande Saint Lucian Beach Resort and Spa, he continued offering prescriptions for evolving changes affecting and facing the bank’s borrowing member-states.

Following-up on his previous messages in 2021 and 2022 — that the region’s primary development bank needs to reinvent its approaches to problem-solving in these new times — he said much more needs to be done, more quickly, to enhance the region’s ability to adapt to new realities by using new strategies.

Describing COVID-19 as “a once-in-100-years event” that “disrupted” regional economies with “erosive shocks” that slowed-down progress towards achievement of the United Nations Special Development Goals (SDGs), he said it also resulted in “increasing poverty, lower earnings, increasing costs of food and energy, plus exposure to international cross-border risks” that can overcome the region’s economic vulnerabilities and worsen already burdensome crises.

President Leon said the “new difficulties increase the region’s development challenges” and offered a ‘Regional Economic Response’, identifying several areas where the bank had scored successes, as in climate change initiatives, an adaptation plan, new partnerships, interventions and increases in loans and grants.

He said he that bank was “also cognisant that headwinds remain” — like more hurricanes and new financial strictures — but “we will remain steadfast to close the gaps to help achieve SDGs and rebuild internal resilience capacity.”

He offered a ‘Trilogy’ of solutions that conclude that “Social Development is too important to be exclusive” and thus should be a shared goal of developed and developing nations through “financial partnerships” for new initiatives like Green Energy that go beyond national and regional boundaries and both compliment and complement the likes of new partnerships between private and public sectors.

President Leon also recommended that “We can use technology to bridge skills gaps and create new skills sets for youth and stop or slow-down the migration rate of regional skills,” adding that new approaches will require “creating new policies and instruments for change based on human needs and not only on GDP…”
He also urged delegates to “Let’s agree that we need a new suite” of investments and resource allocations to make the region better for the common good of all.

The CDB President noted that “use of GDP as a proxy for development is insufficient… and continuing to build on that basis “will also be insufficient…”
He urged instead, more use of related human development indexes “that aid in social development and achievement of SDGs.”
The President also advocated more be done to “create the architecture to assess Loss and Damage” from Climate Change, as agreed to at the 2022 Climate Change Summit (COP 27) at Sharm-el-Sheik in Egypt.

He said the CDB, as the region’s development bank, “will relentlessly pursue the policies outlined with continued responsiveness…”
The CDB president concluded saying “The fate of the region and the bank is also ours” and urged governors and member-states to work together to address common challenges, “lest we are forced to answer in the future for not doing what we can do now and together!”

The CDB President’s recommendation that GDP be revisited and reconsidered did not draw immediate responses from the bank’s gathered governors, who might not have expected his bold submission.
But all cannot but agree with his underlying argument that (to use a popular Caribbean phrase) GDP has ‘Gone Outa-Style’ as far as being a reliable yardstick for measuring development of poor and small -island developing nations with small territories, populations and economies vulnerable to all earthly ills.

Medicine is never sweet and the CDB President’s tabling of a prescription for a brand-new prescription for regional economic development might frown some foreheads in banking and finance sectors, but hopefully it will eventually be seen as an early warning signal that early admission of full effect is better than late regret.

Caribbean and other small and more-vulnerable developing countries have, for more than two decades, been complaining that changes in the yardsticks used by United Nations (UN) and other international agencies to measure development have been at our disadvantage.
The CDB President’s tabling of the hard truth and his prescription for tough medicine must be taken seriously, because while we are discussing GDP as an accurate yardstick, the reality is that its measurements no longer (or probably never did) reflect African Caribbean and Pacific (ACP) realities.

It’s not a new argument, as many other small nations have expressed the same view: that the new yardsticks graduate (some say ‘kick’) many countries still in need out of the qualifying bracket for much-needed aid.
The President didn’t offer any direct recommendations and it’s to be hoped, if not expected, that his warning signal will be heeded like the very-real red flag it represents.

The opening session was held under the broad theme of Marshalling Resources for Sustainable Regional Development and Access to Affordable Financing, but here again, the region has a chance to take a stitch in time to avoid another costly embarrassment of fighting to place in an ever-losing race.

And like always, time will tell, today and tomorrow, whether – like the CDB President suggested – we’ll seize the time and act now, or be held accountable, before or after we’re gone, for not grasping that every challenge brings opportunities – in this case, to accept a bitter truth too-long treated like candy floss. (ends)