Financing growth in the 1990s: New challenges for OECS countries

Abstract

Abstract This article argues that the world as we know it is becoming increasingly integrated and that the traditional providers of foreign assistance for infrastructure and other purposes, are about to increase the demand that poorer nations like the OECS countries must do more for themselves during the process of social development. The article admits that poorer countries like the OECS have developed revenue raising structures that facilitate indigenous development but the post‐Cold War reality intensifies the need for countries like the OECS to do more for themselves than ever before. The reasons for this occurrence have been stated largely as being attributed to financial, economic, attitudinal changes in major industrial countries, particularly in North America. These changes suggest difficult limes for industrial countries in the future and are likely to have serious impacts on countries like the Organization of Eastern Caribbean States (OECS). The article offers a specific approach to dealing with this anticipated demand from donor countries to do more for themselves. The author advocates the following: (1) expand the existing revenue structure of the OECS countries to include specific revenue instruments to finance new growth and development in these countries; (2) broaden the concept and practice of ‘pay‐as‐you‐go’ to ‘pay‐as‐you‐grow;’ (3) require new growth to pay its own way or at a minimum, to shoulder a large proportion of the cost; (4) let those who primarily benefit from new growth pay for it. ‘Impact’ or ‘development’ fees have been suggested to be a new method of financing growth, particularly in countries that are experiencing new levels of growth. The author argues that this method will not be unusual to developers‐foreign investors from North America, or OECS nationals who may be returning temporarily or otherwise to their home country. This discussion on pay‐as‐you‐grow, it is hoped, will contribute to the growing literature on Caribbean public finance.

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