The Inter-American Development Bank has released its Country Strategy Paper (CSP), articulating its strategy with The Bahamas for the 2003-2007 period.
Conditions for Growth
The IDB says that in view of the comparative advantages of The Bahamas, the present structure and characteristics of the economy, and ongoing developments, the most important sources of economic growth over the medium to long term are likely to be the tourism industry, financial services sector, transshipment services, and other services.
The challenge, according to the Paper's authors, is to ensure that the conditions for growth, particularly in the leading tourism and financial sectors, are as conducive as possible.
Factors listed as conducive to sustained growth in The Bahamas, include:
- The country is very close to and accessible from the largest market in the world.
- It possesses outstanding natural beauty that underpins a strong comparative advantage in tourism services.
- The Bahamas has a long tradition of political stability and high levels of social capital.
- Similarly, it has a track record of macroeconomic stability and has established a favorable climate for private sector investment.
- It has a relatively well-educated labor force and linguistic and time-zone affinities with major markets.
The Paper also points out that The Bahamas is currently enjoying a favorable demographic phase – there are nearly two Bahamians of working age for every dependent (individuals aged 0-15 or over 65). The dependency ratio is likely to remain low for the next 13 years, thereby providing the country with a "demographic window of opportunity".
The country’s small size and its location make it vulnerable to external shocks – both economic and natural, however, and predictions are that The Bahamas is confronting or will confront in the near to medium term some significant development challenges.
Enhancing the environment for private sector-led economic growth will require the public provision of necessary "public goods" and an appropriate framework for private sector development. These key public goods are macroeconomic stability, an enabling policy environment that fosters competitiveness, and physical infrastructure.
Hence, the IDB's principal areas of strategic focus will be:
(i) sustained economic growth and private sector development;
(ii) social development and equity;
(iii) environmental management; and
(iv) public sector modernization.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.