Industrialisation by invitation Sir Arthur Lewis St. Lucia

Visionary work of Sir Arthur Lewis Sir Arthur Lewis is St. Lucian Born to Antiguan parents ( January 23, 1915) He holds a Bachelor of Commerce Degree from the London School of Economics PhD in Industrial Economics from the same institution. He published a series of articles as Professor at University of Manchester and later became Professor in Economics at Princeton University.

Other Achievements: Economic Adviser to the Prime Minister of Ghana (1957-1963) Deputy Managing Director of the UN Special Fund Vice-Chancellor of the University of the West Indies (1959) Knighted in 1963 Instrumental in helping to set up the Caribbean Development Bank from 1970 to 1974 where he held the position of Director of the bank In 1979 he won the Nobel Memorial Prize in Economics, becoming the first black person to win a Nobel Prize in a category other than peace. He died June 15, 1991

What is “Industrialisation by Invitation”? A study produced by St. Lucian Economist Sir Arthur Lewis in 1949, following a spate of Caribbean rebellions due to the prevailing high level of poverty in the region indicated by high employment, poor housing and a narrow sector based on sugar. Industrialisation by Invitation thesis was offered as a solution to the problems of Caribbean development, where an unlimited supply of labour is ensured which will keep wages down and thus produce cheaper commodities.

The general idea was for Caribbean governments to encourage multi- national corporations to establish industrial enterprises in the region by the provision of suitable physical plants equipped with utilities.

Reasons for I by I Agriculture had reached its limits of internal and externally profitable cultivation The growth rate of the population was faster than the growth of agriculture A manufacturing base had to be established to absorb agricultural output and to create employment opportunities

Other Key Ideas of Industrialisation by invitation Jamaica (Sugar and bauxite) MNCs such as Tate and Lyle; Kaiser invited to manufature sugar products and mine bauxite UK and American markets A country should specialise in manufactures to which its resources are most appropriate and avoid the others. "To start manufacturing in a new country is a formidable enough problem; therefore countries must seek manufacturers who are already established in the market, and try to persuade them to set up branches in the new country." These multinationals would bring with them the vital access to markets. These products could be sold to the dominant industrial markets and to nearby Latin America.

Concessions offered by Governments Freedom from US income taxes Tax- free repatriation of profits Free construction of industrial plants equipped with utilities Duty- free importation of machinery 10 -15 year tax holidays (silence on the issue of low wages paid to workers in the industrial sector)

Industrialisation by invitation Initiatives in the caribbean In 1947 Puerto Rico launched an industrial initiative called “Operation Bootstrap” (capital investment increased from $1.4 billion to $24 billion by 1979) In the 1950’s Trinidad launched its industrialisation by invitation programme (natural gas manufacturing) In the 1950’s Barbados launched “Operation Beehive” (implemented garment factories) In the 1950’s Jamaica invited North American companies such as Reynolds, Alcan and Kaiser to mine bauxite Industrialisation by invitation Initiatives in the caribbean

ADS Stimulated new investment in the region (e.g. Puerto Rico) Fuel a reduction of the high unemployment situation (e.g. Barbados garment sector) Stimulated the export sector and earn additional foreign exchange Encouraged the establishment of manufacturing industries by Caribbean entrepreneurs The industrialisation programme led to the full utilisation of physical resources. DISADS It did not create the level of employment opportunities that were envisaged. MNC’s took advantage of the long tax holidays and low- wage regimes by moving to other destinations when the holidays were over. For example the exit of Intel and Caribbean Data Services threw many workers into absolute poverty. created a dependence on North American capital in the Caribbean Problems for sustainable development Most profits were repatriated to Northern parent companies