Industrializagtion by invitation

To what extent  can it be argued  that Sir Arthur Lewis policy of  ‘Industrialisation by Invitation’ aided  in the development of the B.W.I
By Jennine Small.

       According to  Nassur Mustapha development  is defined as, ‘the progressive process of human, cultural, political, economic and social change, which shapes people’s lives.’ The southern countries particularly the Caribbean have been classified as developing countries, which are still somewhat dependent on the metropolis which once colonized them.   Sir Arthur Lewis in the immediate post- World War II period  advocated industrialization of the British West Indies, he adopted a policy  called ‘ Industrialisation by Invitation.’  He felt that this was a step needed to be taken for the British West Indies to develop.  Sir Arthur Lewis policy aided in the development of the B.W.I but the policy itself also hindered development as well as left out major aspects of development.
           The Industrial Revolution was one of those historical events which drastically changed societies all over the world.  Despite the revolution having its roots in Europe , particularly Britain it then spread to  places like the U.S.A  and later the Caribbean.  Industrialization became the  mechanism  used  for a society to make the transition  from a traditional, labour intensive economy based on agriculture (agrarian)  to a more capital- intensive economy based on manufacturing by machines , specialized labour  and Industrial factories. Sir Arthur Lewis recognized the importance of Industrialisation but realized that the British West Indies could not do it on their own, they would need financial aid, in the form of investments which could stimulate Industrialisation.
         After Lewis studied the system known as Operation Bootstrap (policy of deliberately inviting  foreign direct investors) in Puerto Rico, he set out to adopt and implement similar in the British West Indies. The economies of the British Caribbean  were mainly agricultural  and there was a need to stimulate industrial growth  and trade in manufactured  goods, to diversify the  economic base, since these economies were mainly monocrop economies. This term not only refers to the dependence on sugar and bananas, it also characterizes the  dependence  on tourism or the oil industry. Lewis therefore proposed the strategy to invite foreign investment as a way to stimulate growth, not only in industry but also agriculture, and therefore to reduce the dependency on the export sector. He reasoned that the British West Indies  had a great abundance of unskilled labour in agriculture and amongst the unemployed. These countries did not have  much capital. Thus multinational corporations (MNCs) with  millions of dollars at their disposal were to be invited to the British West Indies where they could earn huge profits  by employing cheap surplus  labour from agriculture. They would also benefit from tax holidays for the first five or ten years of their operations, and other concessions such as subsidies. In other words incentives would be offered to encourage these corporations to invest .
              Caribbean governments  popularly adopted this policy in the 1960s. Several foreign based companies that are established today in the Caribbean are the result of Sir Lewis’ policy. This is most apparent in the tourist industry  many foreigners have invested in hotels which  employ the  majority of people.In Antigua for example, 50% of the population is employed in the tourism industry. In addition to this, infrastructure such as roads and transportation has been developed by governments to complement these  businesses.  Foreign investors have introduced the latest technologies  and influenced the improvement of  public services.
           On the contrary, the policy is very much economically based , its aim is for countries to achieve economic growth. However development also includes other aspects, there is no indication on how foreign investers may  positively impact the quality of life , welfare or education. Therefore this policy cannot be seen as aiding development in the British West Indies as a whole , as the policy was based primarily on the stimulation of economic growth. In addition, most of the money earned by these investors have been repatriated to their home  countries  thus  money is not invested in the economy, this is a grave issue with serious implications for the tourism industry.
       The policy eventually failed in the British West Indies, mainly because the Caribbean governments invited the MNCs but did not control them. When the initial period of the tax-free holidays were up they 'closed up shop' and moved on. They were mainly capital-intensive industries, virtually no provisions were  made for  training citizens to organize and run similar plants, such as the assembly of motor vehicles and small appliances. Hence no sustainable development.
        Neo-marxists  who came up with the dependency theory, also initially developed their theory in Latin America.  Andre Gunder Frank and Samir Amin were the two theorists associated with this school of thought .  Both argued that the third world countries are classified as the Peripheries and the Western/ Industrialised  capitalist countries are the core. The former being largely dependent on the latter. The development of the core countries  caused the underdevelopment  of the periphery since economic surplus  was transferred from the latter to the former for expansion purposes. These sociologists recommended that the peripheries need to break the link between them and the core in order to be self- sufficient and independent. Therefore the MNCs can be seen as detrimental  according to this perspective dependence is an undesired state and situation . It only causes, injustice, unfairness and exploitation. Following from the dependency theory, we can assert that foreign companies therefore would not be aiding development but hindering it for their metropolis benefit. They would encourage the mindset of preference for foreign goods thus maintaining dependence.
               It can be seen that the Industrialisation by Invitiation policy is indeed a controversial one when considering whether it has aided development in the Caribbean. There is no doubt that MNCs  are an important means to economic development. However in order for a country to develop, the country must have control of its own businesses and resources, move away from  traditional economic models that make them dependent on foreigners and also perpetuate the legacy of  colonialism in how the Caribbean economy is structured.

Grade Profile
Knowledge & Understanding - 7/10

Interpretation & Analysis - 7 /10

Synthesis & Evaluation – 7/10

The student demonstrates a very good understanding of the subject matter under examination.
Interpreted and evaluated the question well.
Student should have named some Companies or a company that emerged as a result of IbyI in their territory and explain the advantages and disadvantges of the policy using the 'live' example as the base.
Altogether however this was a good essay.

A few grammatical errors were noted.