The effects of a global economy

Mar 23, 2014 Editorial

The global economic conditions hurt many countries and forced a change in economic policies in many countries. Government bailed out banks, bought out important companies that threatened to fold, and bailed out major concerns, charging them an interest of course.
In some European countries, the government actually bought up banks. At the same time people found that they could not hold on to their homes which they bought under conditions that appeared favourable but which paper proved burdensome when the crunch came.
It was a bad time in the world and to this day the effects are being felt. Guyana was not immune to the problems although its economy was relatively well protected. This country had not been investing heavily in foreign companies, and it therefore escaped some of the harshness.
But there were companies that did not escape because they relied on investment overseas if they were to pay profits to their depositors. Clico (Guyana) invested in its sister organizations who in turn invested in American companies. Clico lost money. It was the same with some other local companies like Hand in Hand Insurance company.
However, while Guyana escaped the harsh effects of the global economic crisis, other countries in the region, particularly those in CARICOM, could not say the same thing. The end result is that they have had to cut back on their contributions to the operations of the CARICOM Community. From the start of the Community the various countries pledged a percentage of their Gross Domestic Product toward funding the Community.
It was this money that formed a part of the budget. It enabled CARICOM to undertake operations designed to aid in the smooth functioning of the body. It paid the rentals for the Community, helped in the functioning of the Caribbean Court of Justice, paid salaries and funded the operations of the various departments within CARICOM.
Now that there is going to be a reduced CARICOM budget, the Community is going to have to cut back on its operations. There is no increase on foreign funding although CARICOM has established relationships with extra-regional countries and agencies.
The Regional heads are now meeting in Grenada and high on their agenda is the impact of the reduced budget. They are going to have to think long and hard about what programmes they would have to scale back. They are also going to have to discuss staff cuts because once programmes are going to be cut then the staff recruited for those programmes would have to be let go.
One must assume that CARICOM, before it introduced programmes, would have thought long and hard about these. For example, its Regional Security Network would have only been fashioned after some serious discussions of the various threats that face the region.
For example, crime is an area that would demand a concerted effort. It is common to every CARICOM country. Fighting it at the regional level is always going to be costly. There are the drug dealers who are in partnership with international drug producers with tons of money. For the region to fight them would cost a tidy sum especially since there would be need to fashion programmes that would remove the temptation from the potential drug runners.
It has long been the belief that the weak regional economies help facilitate the drug trade. People go after the returns because they recognize that their physical needs can be easier met through the drug trade than by the efforts of their governments.
CARICOM was therefore called on to devise policies and programmes to thwart the move by people to drugs. Whether CARICOM will be able to sustain these programmes in the face of the reduced budget is left to be seen.
Other social programmes, health programmes and the like would be cut or scaled back with some adverse consequences.
It merely follows that when the big countries get hurt, the smaller ones suffer more. And the big countries lament at the extent of our outward migration which benefits them anyhow.

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The effects of a global economy

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