Tuesday, January 05, 2010

How emigration made Barbados rich

The Caribbean Sea's islands are perfect arenas for the study of the interactions between populations and economies. The Caribbean Sea's integration into the world economy in the 15th and 16th centuries saw complete replacement of the pre-Columbian population by vast numbers of migrants, voluntary and otherwise, from Africa and Europe, these migrants forming slavery-based plantation societies which played critical roles in sustaining Old World economies. The decline of these economies over the 19th and 20th centuries, as slavery's abolition diminished the superexploitation of local labour forces and competitors arose on continental mainlands, triggered new waves of migration, as contract labourers came from parts of the world as distant as India and Indonesia and, later, as relatively and absolutely large numbers of migrants left for colonial and quasi-colonial metropoles: the United States, Canada, Britain, France. Even as large and historically prosperous a country as Cuba has seen massive emigration, of such a volume that like its neighbour Jamaica its population is projected to decline over the next few decades. The generally small and relatively isolated economies of the Caribbean islands, along with continued strong ties to metropoles, is sure to encourage large-scale emigration and sustained underdevelopment.

Barbados, however, is an exception. A high-income economy that has helped Barbados become a prosperous regional centre for banking and tourism, Barbados is a relatively small island state that has managed to beat the odds. How? Over at his excellent blog, Noel Maurer has written a four-part examination (1, 2, 3, 4) of the question of how Barbados, a century ago a neglected British colonial basket case on the verge of state failure, managed to escape this. It turns out that the mass recruitment of Barbadian workers to work on the Panama Canal may have been key.

By 1913, the Isthmian Canal Commission had brought in 19,900 Barbadians, not including the many women who followed their husbands and a continuing (if less well-recorded) migration as construction work continued after the Panama Canal’s offical opening in 1914. In fact, the Canal would not be fully open to commercial traffic until 1920.

The ultimate migration turned out to be much bigger than 19,900. In 1901, Barbados had a population of 195,558. In 1921, it had a population of only 156,744. Extrapolating from existing birth and death rates, the population of the island should have been 220,412 in 1921, implying a net outmigration of 64,000 people.

The departure of so many workers had the effect of boosting wages in for the workers remaining in Barbados, while the remittances sent back by the helped transform the country.

First, it bolstered the growth of smallholders. In 1897, an estimated 8,500 small proprietors held a bit less than 10,000 acres. By 1912, 13,152 smallholders owned plots. Assuming that the average size of holding remained constant, this represented an increase in smallholder ownership of 5500 acres, or over 22 square kilometers, five percent of the land area of Barbados. By 1929, the number of smallholding households had further increased to 17,731. Land ownership on the island remained astoundingly concentrated, but the percentage of Barbadians who owned property rose from 18% in 1897 to 40% by 1929.

Second, it supercharged the Barbadian banking system. Barbadians opened 16,094 new accounts in government savings banks between 1906 and 1913, and deposits increased 88%. In 1920, deposits per person surpassed $11. That was a level of financial penetration about half of contemporary Spain and two-thirds of Italy; very high for a country as poor as Barbados. It prefigured the island’s emergence as a regional banking center a half-century later.

Third, it prompted the emergence of a Barbadian social insurance state. The “friendly society” served as a form of insurance pool. For a weekly fee of 10 to 12 pence, the societies provided their members with sickness insurance, unemployment insurance, death benefits, free scholarships to household members, and an annual “bonus.” In 1901, there were 101 societies; between 1907 and 1910 a further 110 were founded, peaking at 260 in 1920. Their membership grew from 13,933 in 1904 to 46,207 in 1920. The 1921 census found that 156,312 people lived in households belonging to a friendly society. That was 94 percent of the population. Alongside the friendlies were the “landships,” which provided similar services along with ceremonial drills and uniforms modeled on the Royal Navy. Infant mortality continued to lag the rest of the Caribbean until the 1950s, but the societies aided a huge increase in literacy, to 93 percent by 1946.

With a more egalitarian distribution of property and wealth, and increasing economic and social capital generally, Barbados was able to prosper in a way that its once-peer Jamaica could not. After Barbados became independent, sound macroeconomic policies helped the country continue to develop, and incidentally develop the demographic profile of a developed society.

In the past, emigration played a large role in stabilizing Barbados' population. From the end of World War II until the 1970s, Barbados exported its unemployed, as did the Windward Islands. Between 1946 and 1980, its rate of population growth was diminished by one-third because of emigration to Britain. The United States replaced Britain as the primary destination of emigrants in the 1960s because of Britain's restriction on West Indian immigration.

In spite of continued emigration, Barbados began to experience a net inflow of workers in 1970, most coming from other Eastern Caribbean islands. By 1980 demographic figures began to stabilize because migration to Barbados had lessened, probably for economic reasons, and a relatively small natural population growth rate had been achieved. By the mid-1980s, expected real growth rates, adjusted for migration, remained below 1 percent.

Barbados' example is a fascinating one, inasmuch as it demonstrate the potential of migration to transform its sending society. A century ago, Barbados was a poor island overpopulated relative to its economic capacity; now, the legacies of a mass migration have helped the country become a rich, desirable destination, transcending the insular status that would have hampered its growth. I think it's accurate to say that in an ideal world, one marked by the unhindered mobility of labour between sending and receiving countries, Barbados' example could be replicated around the world. By definition, after all, migrant-sending countries and regions are sources of immigrants because they lack opportunities for their workers, and certainly the prospects of labour shortages in those countries well advanced in the demographic transition could create gaps. Again judging by Barbados' example, it's probably those relatively small countries and regions with relatively close and positive ties to migrant-receiving countries that will prosper the most. Perhaps Moldova and Albania will manage to rocket into the First World quickly after all.


Unknown said...

Barbados has a population of less than 300,000 people. Even Albania and Moldova can't replicate its success despite having less than 10 times Barbados' population. Neither Turks and Algerians despite them being overrepresented among Muslim immigrants in Europe. Never mind sub Saharan Africa with its exploding population of hundreds of millions

Randy McDonald said...

True, it's not generally applicable to larger countries, but notwithstanding their larger size Moldova and Albania also have double-digit percentages of their population working abroad, sending remittances back to the homeland. In Albania's case, there has been a substantial amount of economic growth partly as a result.

Barbados is also an extreme example, but many of the benefits that Barbados got can also be enjoyed by larger countries, if to a lesser degree.

Unknown said...

I think that what's actually happening is that both Moldova and Albania and other countries in Eastern Europe are in danger of collapse because of their pool of young generation being fast depleted by the demographic vampirism of the West. Albania itself was recently reported having hit on the TFR of 1.3 as so many young people have emigrated. Maybe for countries like Algeria and Morocco such emigration can be beneficial, but across Eastern Europe it's a demographic disaster about to happen.

Unknown said...
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Anonymous said...

After 70 years of immigration Barbados got better. Brilliant

Anonymous said...

Barbados is hit by fewer hurricanes than most of the other islands. Quite possibly this has had some benefits in terms of its economic growth.


Anonymous said...

It is also America's nearest Switzerland.