A significant policy divergence has emerged in Barbados as Professor Don Marshall, Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES), has raised substantive concerns regarding the government’s newly passed Economic Diversification and Growth Fund Bill. The legislation, approved by the House of Assembly last Friday, establishes a dedicated fund with an initial allocation of $225 million from the Consolidated Fund, distributed in $75 million annual installments over three years, supplemented by parliamentary resolutions and external grants.
The fund’s stated objective is to provide financial support to selected companies aiming to enhance employment opportunities, increase foreign exchange earnings, and stimulate overall economic growth. However, Professor Marshall contends that subsequent clarifications by Prime Minister Mia Mottley reveal the bill primarily focuses on adjusting tax rates for foreign corporations seeking investment opportunities in Barbados, creating a fundamental misalignment with its purported diversification goals.
The political economist emphasized that effective economic diversification legislation typically anchors foreign investment incentives within a comprehensive industrial policy framework. He noted the current bill conspicuously lacks critical elements including innovation mechanisms, value-added intentions, or clearly delineated target sectors for capital development. This absence of strategic direction, Marshall argues, undermines the legislation’s capacity to achieve genuine economic transformation.
Drawing from three decades of economic data, Marshall demonstrated that previous foreign direct investment inflows have predominantly reinforced Barbados’ commercial dealing economy rather than driving diversification. Most investments have concentrated in real estate speculation and import distribution networks, generating temporary employment spikes during construction phases but ultimately straining foreign reserves through substantial import dependencies for project components and maintenance.
The academic proposed that tax rate adjustments could be more appropriately addressed through amendments to existing international business legislation rather than conflating them with diversification initiatives. He emphasized that successful economic transformation depends less on tax incentives and more on strategic state posture, including negotiated relationships with investors, ministerial capacity, civil society engagement, and government steering mechanisms toward priority sectors.
The legislation defines qualifying companies as those maintaining substantial economic presence outside Barbados while engaging in, or intending to engage in, significant economic activities within the country.