Moving Barbados Forward

MOVING BARBADOS FORWARD Abstract Jay R. Mandle More than forty years ago, Simon Kuznets on the occasion of receiving the Nobel Prize in Economics, distinguished between economic expansion based on the exploitation of natural resources and the process he described as "modern economic growth." The latter involved expansion based on continuous technological change, structural transformation, and institutional adjustment. The former required only natural resource exploitation. Barbados' current fiscal crisis is rooted in the fact that its high per capita income is dependent on sand, sea, and sun - its well-developed tourism industry. But it did not develop the ability to innovate. As a result its economic future is problematic. That smallness of size is not an impenetrable obstacle to its becoming dynamic is illustrated by Iceland, a country with a comparable population size but a technologically progressive economy. Barbados needs to break with its policies of the past and adopt those that will as allow it to achieve modern economic growth.