GOVERNMENT AND THE POLITICAL SYSTEM IN THE BVI.
Introduction
1. A
History of Government and the Political System
1.1
The Pre-Slavery Governments and the Political System
1.2
Slavery period Governments and the Political System
1.3
Post-Emancipation period Governments and the Political System
2.
The Present Day Government and the Political System
2.1 The
Legal basis of the present Government
2.2 The Ministerial
System of Government
2.3 The
Political System and the Ministerial System
2.4
The evolving roles and functions of present Governments
2.5 Salient changes in
BVI Politics
2.6
Domestic Politics and the External Environment
3. The
Economic and Financial impact of Government
3.1 The present
overall Development Policy
3.2 A Decade of Fiscal
Expansion
3.3
Government’s contribution to Employment and GDP
4.
Other Impacts or Influences of Government and the Political System
4.1 Impact on Social Services
4.2 Impact on People
and Ordinary Life
4.3 Impact on Development
References
Introduction
This paper provides an overview of some of the major trends in the
historical development of government and the political system in the
British Virgin Islands (BVI). The scope of this presentation ranges from
early habitation to the end of the 20th century. Historically,
government and the political system in the BVI have been transformed
from transient independent Chiefdoms during occupation by the
first settlers, to a peculiar variant of British colonialism that
endures until today. One aim of this exercise is to provide a better
understanding of the relationships between the colonial state, civil
society, and the economy within the context of Virgin Islands
development. The main purpose however, is not to provide in depth
analysis of historical developments, but rather, to document significant
changes in political development, with limited treatment of economic
trends during the late 20th century.
The history of the Virgin Islands can be divided into four major
political epochs. The first epoch, which spanned the period between 1080
and 1492, was marked by settlement and displacement between ethnic
groups comprising the early settlers. Although information about the
BVI's pre-Columbian history is limited, there is sufficient correlation
regionally that lends important insights into the political organization
of early settlers locally. The second epoch, which was introduced by
European invasion in 1493, was characterized by mercantilism as the
dominant trading system, supported by slavery as the dominant mode of
production. Political development during this epoch was relatively
stagnant due to unstable government, the autocratic tendencies displayed
by an emerging colonial state, and resistance posed by the anti-slavery
movement. The third epoch was introduced by emancipation and
characterized by economic stagnation, increased migration, and political
marginalization. This epoch spanned the period from 1834 to 1949. The
fourth epoch began with 're- localization' of legislative authority in
1950, and evolved into a multi-party political system operating under
the aegis of colonial rule, with a notable degree of democratic
privileges. In contrast to its pre-1950 variants, the post 1950
bifurcated colonial state has managed to deliver significant economic
growth and limited development, despite increasing internal tensions
during the last decade of the 20th century.
Section 1 highlights political developments during the first three
epochs, covering the historical period between 1080 and 1949. Section 2
highlights the foundations of the fourth political epoch by defining the
political arrangements adopted between 1950 and 1976. It also
illuminates the importance of domestic and external relations vis-ŕ-vis
economic development. Section 3 provides analysis of the more 'modern'
approach to economic development that characterized the fourth epoch.
Finally, Section 4 highlights the salient features of economic
development during the fourth epoch. Overall, this paper covers the
historical breadth of BVI political development, offering insights into
the role of government and the political system in the process of
economic development.
1. A
History of Government and the Political System
Government and political system are two key concepts
applied in this paper. The term government is used here to describe the
institutional organization and concentration of political power, on the
basis of accepted rules that have been established to serve specific
interests and achieve certain aims. Thus, government defines the
organization of political authority in managing national resources. The term
political system speaks to the broader socially embedded structure
of organized power, which essentially links government to civil
society and economic actors. In analyzing the transformation and
evolution of these concepts in BVI political development, three distinct
phases - namely pre-slavery, slavery, and post-emancipation - have been
identified over the first three historical epochs.
1.1
The Pre-Slavery Governments and the Political System
The first inhabitants of the Virgin Islands were the Ciboneys, the
Arawaks, and the Caribs, whose presence date back to the 11th century.
Political leadership within all three groups was hereditary and vested
in the personage of a Chief. In larger communities, Chiefs
consulted with, and were assisted by Nobles and Priests in
managing the nation's affairs. Both of the latter groups usually
comprised of older males whose primary roles included external
relations, border management, and establishment of customs. The
socio-political organization of the Caribs in particular, included
military leaders as a permanent and important part of their community.
Although the socio-political organization of Amerindian settlers
survived in the Virgin Islands for over four centuries, it proved
incapable of resisting the force, coercion, and deception of European
imperialism.
1.2
Slavery period Governments and the Political System
The Amerindians were eliminated and driven out by Europeans who first
arrived during the late 15th century. Characterized throughout the 16th
century by transient occupation between competing European powers, the
Virgin Islands were not settled until 1672 on behalf of the British. A
British plantocracy emerged during the 18th and 19th centuries, which
was connected to the imperialist 'core' by an international mercantilist
trading system. This was supported locally by plantation slavery as the
dominant mode of production. Between 1672 and 1834, British imperialism
in the Virgin Islands climaxed and declined, while the colonial state
emerged as the main instrument of economic exploitation, geared for the
most part toward increasing accumulation and consumption at the 'core.'
Politically, the Virgin Islands fell within the ambit
of British colonial rule over the Lesser Antilles sub-region during the
second political epoch. The colonial system designated the British King
as Head of State, represented sub-regionally by a Governor-in-Chief for
the Leeward Islands. The Governor, consulted with two administrative and
regulatory bodies, namely Councils and Assemblies. Council members were
appointed directly by the Governor, and usually comprised of prominent
merchants and planters. Two important functions of Councils were to act
as senior Law-making Bodies and Courts of Appeal. Chief Justices and
Magistrates were occasional special appointments by the British
Monarchy.
Only 'freeholders' with sufficient property were
eligible to elect members of the Assembly. Although Africans imported to
work as slaves made up the majority of the population, they were
considered property or physical assets, used primarily for production.
This group was denied all civic, political, economic, and human rights
although they represented the engine of political and economic life.
From this perspective, the main purpose of the colonial system prior to
1834 was to protect the institution of slavery in order to serve
primarily the interests of British imperialism, and secondarily, the
interests of wealthy planters and merchants domestically and abroad.
1.3
Post-Emancipation period Governments and the Political System
Increasing social, economic, and political pressures ultimately led
to a crisis of 18th century European imperialism. The failure to create
an amicable balance between metropolitan expropriation and domestic
development, coupled with pressures from anti-slavery resistance led to
the abolition of slavery through the Abolition Act of 1833, which marked
the onset of the third political epoch. This crisis struck a major blow
to British imperialism, accelerating the need for political
restructuring regionally. The Constitutional Ordinance of 1867 abolished
the House of Assembly in the Virgin Islands and began a process of
political restructuring. This restructuring process eventually
undermined legislative authority locally, and by 1902 local legislative
authority was rescinded and vested in the Federal Legislative Council,
under the authority of the Governor of the Leeward Islands.
Under the mandate of the federal legislature, the
Virgin Islands faced increasing political and financial marginalization.
This was due in large part to the relatively 'small size' of the economy
and the absence of a politically sophisticated land-owning class. These
factors produced three major features of Virgin Islands national
identity. Firstly, massive "white flight" and the absence of
large-scale importation of indentured labourers led to an extremely
homogeneous population. Secondly, emigration of the land- owning class
effectively disrupted the plantocracy and created property relations
whereby African 'peasants' eventually became primary landowners.
Thirdly, political and economic marginalization experienced by the
Virgin Islands within the Leeward Islands federal system promoted local
distrust of regional imperatives, thereby undermining any significant
local interest in subsequent efforts aimed at regional integration.
Regional insularity coupled with U.S. expansion in
the sub-region effectively solidified an economic and political
worldview in the Virgin Islands that was decisively 'pro-western.'
Familial, political and economic links between the United States Virgin
Islands (USVI) and British Virgin Islands (BVI) strengthened over time,
as labour became the BVI's main export to the region. Increased exposure
fostered by external trade became the catalyst for development of a
domestic monetary system. Hence, the BVI became officially dollarized in
1967. The most important feature of the third political epoch however,
may have been the emergence of a more sophisticated land-owning class
with capitalist ideals, capable of articulating its collective position
and galvanizing social action with sufficient influence to effect
political change. This important social transition produced the critical
historical moment referred to as the Freedom March of 1949, which led to
restoration of a locally elected Legislative Council, and eventually,
designation of the Virgin Islands as a single constituency under Great
Britain.
2.
The Present Day Government and the Political System
The third political epoch was pivotal to the process of political
maturation in the Virgin Islands, and effectively created adequate
conditions for the political and economic transitions during the fourth
political epoch. Hence, the fourth political epoch of BVI development
has been the most effective to date in facilitating economic growth and
development. The foundation of this period was laid in 1950, further
refined in 1954, and concretized with the introduction of the
Ministerial System in 1967. Crucial constitutional amendments also
transpired in 1976 and 1993. The emergence of a somewhat democratic
multi-party political system during this epoch greatly informs our
understanding of political power in the Virgin Islands.
2.1
The Legal basis of the present Government
The fourth epoch of political development was ushered in with passage of
the Virgin Islands Constitution Act of 1950. This act allowed four (4)
elected members and five (5) non-elected members to serve in the
Legislative Council (LEGCO). Clearly, the balance of voting power
facilitated by this arrangement was in favour of the Crown. The
Administrator presided as Chairman of LEGCO, while the Governor of the
Leeward Islands carried out his mandate from Antigua. This in essence
introduced a new framework for colonial government in the BVI.
The most important function of the Constitutional Act of 1950 was that
it provided an institutional framework for democratic government
locally, which directly addressed the discontent caused by
marginalization of the territory under the Leeward Islands federal
framework. Although this arrangement restored a greater sense of
self-determination in Virgin Islanders, income and property
qualifications attached to representation undermined its ability to
foster an inclusive political process. These weaknesses led to the
Constitutional and Elections Ordinance of 1954, which increased the
number of elected members from four (4) to six (6), while holding the
number of non-elected members at five (5). Hence, the 1954 reforms
shifted the balance of voting power within the legislature back to the
electorate and removed income and property conditions introduced in
1950. These latest reforms divided the Presidency into five (5)
electoral districts. Boundaries Commissions appointed in 1966, 1976, and
1998 ultimately increased the number of electoral districts to nine (9).
2.2 The
Ministerial System of Government
In 1956 the Virgin Islands' request for singular linkage to Britain was
granted, and the territory was recognized as a single colony directly
under the authority of the Crown. This led to annual commemorations of
Colony Day (later known as Territory Day), which formalized and
strengthened British loyalty within the territory. Later in 1960, the
office of Leeward Islands Governor was abolished and authority for
British Dependencies was transferred from the Crown to British
Parliament (Her Majesty in Council) under the West Indies Act of 1962.
During the 1960s, political debate climaxed about the most appropriate
institutional form that local government should take. This on-going
debate and the aforementioned political changes were the catalyst of the
"Proudfoot Report" in 1965. The political response generated
by this report led to further constitutional reforms. Following the
constitutional conference of 1966, reforms were granted through the
Virgin Islands Constitutional Order of 1967. This transition was pivotal
to the extent that it increased the Legislative and Executive authority
exercised by local government through the assignment of Ministerial
portfolios under the designation of a Chief Minister and two Ministers.
By 2000, the number of Ministerial portfolios increased to five (5). The
1967 reforms also changed the post of Administrator to Governor, with
areas of responsibility and roles vis-ŕ-vis the Legislative and
Executive Councils being more clearly defined. The post of Chief
Secretary was also changed to Deputy Governor and a Public Service
Commission was established to advise the Governor on administrative
issues related to the Public Service.
In 1972 the Governor commuted a death sentence
against the wishes of LEGCO. This unpopular action led to a resolution
in Council calling for constitutional review, which led to the Deverell/DaCosta
Constitutional Commission of 1973. These were the catalysts of the
Constitutional Order of 1976. The most notable changes coming out of the
1976 reforms were the designation of Finance under the portfolio of the
Chief Minister, broadening of the political franchise by lowering the
required age for voting from 21 to 18, and the designation of eight (8)
categories of immigration status. These changes and the addition of two
(2) seats to Legislative Council represent the substance of the 1976
constitutional reforms. Another seventeen (17) years passed before there
were further constitutional reforms.
In 1993, the Wallace/Fergus/Penn Constitutional
Commissioners Report recommended that the number of members in the
Legislative Council be increased to thirteen (13), with the addition of
four (4) At-Large or Territorial Seats. It was also recommended that
proxy voting be abolished. While these recommendations were immediately
enacted prior to the 1995 elections, some thirty-one (31) additional
recommendations were specified for further action by both the British
Government and the BVI Government. It was envisaged that once these
recommendations were executed, a new constitutional order would be
passed.
2.3
The Political System and the Ministerial System
Constitutional reforms directly affected the organization of government
and invariably, the organization, concentration, and expression of power
within the political system. In terms of organization, the dominant form
of political power has gradually changed from 'random decentralized
activism' prior to 1950, to a 'formal democratic multi-party system'
after 1950. It is important to note however, that although 'random
decentralized activism' has declined in frequency, it remains an
important reactionary force in influencing the 'formal democratic
multi-party system' at critical historical moments. This was illustrated
by the impact of the Positive Action Movement (PAM) in 1968, and more
recently, the Domestic Violence Protest of 2000.
Although limited signs of collective political
positioning and organization emerged during the 1950s in the form of the
Progressive League, the United Three, and the United Two, bona-fide
political parties as a dominant feature of the political landscape did
not materialize until the late 1960s. In 1967 and 1971, the United Party
(UP) and the Virgin Islands Party (VIP) respectively, emerged as
dominant and more fully developed models of earlier experiments,
realizing unprecedented longevity despite their transient forms. Some
precarious variants also surfaced, such as the BVI Democratic Party and
the People's Own Party (POP) during the 1960s, and the Concerned
Citizens Movement (CCM) during the 1990s. Conversely, the emergence of
the National Democratic Party (NDP) in 1998 and its rapid ascension as
the minority party during the 1999 general elections has apparently
introduced another bona-fide contender for political power in the BVI.
Whether or not the NDP will sustain prominence over time and avoid the
transient tendencies of its predecessors remains to be seen.
Notwithstanding, its emergence has certainly raised the standard and
level of political organization and financing in the BVI.
2.4
The evolving roles and functions of present Governments
External to the colonial context, the role of government usually refers
to the role of the state as a whole or various elements of the state at
the federal, state, provincial, or district levels. In the BVI however,
the colonial state is divided into two arms, namely the Government of
the BVI (GBVI) and Her Majesty's Government (HMG). In this autocratic
relationship, not only is GBVI subject to the powers of the HMG, but
only the former is democratically accountable to the BVI electorate.
From this perspective, assessing the evolving roles and functions of
government in the BVI must take account of the bifurcated nature of the
BVI’s colonial state.
The role of local government in the post 1950 era was
predicated upon the desire for greater political self-determination and
economic growth. At the national level, devolution of legislative powers
through localization of legislative authority effectively rendered LEGCO
a political instrument in fostering economic progress. In order to
realize this, local governments have had to carefully manage the
relationship with HMG in a manner conducive to realizing a positive net
resource transfer from a hostile and sometimes volatile international
political economy.
In striving to achieve this aim, GBVI generally performs two broad-based
functions. The first major function of local government has been that of
a regulator. As a regulator, the emphasis over the past fifty (50) years
has been placed on creating an environment conducive to a service-based,
labour- intensive model of capitalist development. A major feature of
this model, which was initiated with the enactment of the first Hotel
Aid Ordinance of 1953 and buttressed by the International Business
Companies (IBC) Act of 1984, has been its extreme dependence on
attracting foreign capital. Functioning primarily as a law-making
institution, LEGCO has been instrumental in enacting legislation
consistent with economic objectives, simultaneously attempting to
preserve certain notions of BVI national identity.
The second broad-based function that local government
has performed has been to act as a facilitator. In performing this
function, Executive Council (EXCO) has been the key institution,
continually tasked with executing policies, plans, projects, and
programmes that meet stated objectives and command support from the
majority of the electorate. The thrust of these efforts toward improving
the standard of living through political, economic, and social
development has also made local government a major economic agent
employing 30% of the national workforce, and expenditure accounting for
approximately 21% of GDP in 1999. Section 3 further explores the role of
government in managing BVI economic growth, while Section 4 explores the
issue of development.
2.5 Salient changes
in BVI Politics
Although the most recognized change in BVI politics during the post 1950
era was the emergence of the Ministerial System in 1967, the underlying
socio-political dynamics have proven most informative. The transition
from 'random decentralized activism' toward 'formal democratic multi-partyism'
signified a shift in the concentration and expression of political
power. The dominant features that characterized the early political
system, have for the most part, been re-situated within the party
system, reducing over time their socio-political impact. For example,
the commissioning of electoral boundaries and electoral districts has
for the most part diminished previously strong 'urban-rural' tensions as
a dominant feature of institutionalized electoral politics.
In addition, the increasingly divergent interests
spurred by rapid population growth and greater political maturity has to
some extent reduced the impact of nepotism in political life. In
essence, the ascension of democratic multi-partyism has allowed
otherwise disparate tendencies to be absorbed and rationalized more
formally, within a democratic political system. It is important to
realize however, that the extent to which these and other tendencies
remain prevalent is inversely related to the extent to which political
parties are inclusive, democratic, and principle-oriented. Conversely,
political exclusion and insufficient democratization have only
contributed to elitist and transient tendencies within the political
system.
The most salient feature of BVI politics over the
last fifty years however, has been the ascension of a politically
influential private sector that has played a pivotal role in managing
the economy. The challenges a small government faces with economically
powerful private capital have been well documented in the crisis
surrounding the Bates-Hill Agreement in 1968, and more recently, during
the 1980s when a Minister had his portfolio revoked due to alleged
bribery charges. An influential private sector may also be a valuable
asset to political development, as the public-private partnership
approach to development of the Financial Services Sector and the H.L.
Stoutt Community College (HLSCC) has thus far demonstrated. From both
perspectives, the common denominator has been the increasing importance
of international trade to economic and political growth and development.
Hence, the ability to manage the external environment, both politically
and economically, has increasingly become a crucial factor affecting
prospects for sustainable development in the BVI.
2.6
Domestic Politics and the External Environment
Domestic and external economic and political factors have always played
a major role in BVI development. For example, prior to 1834 the
orientation and thrust of the colonial state as an instrument of British
imperialism dictated the domestic political agenda and largely
determined the terms of trade. Also, between 1838 and 1950, the
unwillingness and inability of the state to obtain and enforce its
legitimacy provided sufficient political space for disgruntled social
forces domestically to ascend politically. This counter-movement was
strategically linked to the external environment, since close links
between the USVI and the BVI were pivotal in shaping the ideas,
expectations, and strategies employed by BVIslanders who were organized
locally in articulating their dissatisfaction. These efforts, which were
championed by groups such as the Progressive League and other
organizations comprising the BVI's diasporic community in the United
States, played a crucial role in shaping public opinion and interest
locally.
Governance during the post 1950 era has revealed
somewhat divergent paths between the two arms of government within the
colonial state when it comes to international relations. Although
"External Affairs" has been explicitly mandated the
responsibility of the Governor on behalf of the Crown since enactment of
the 1967 constitution, local government has been increasingly 'active,'
though to a limited degree, both politically and economically in
external relations. Although as a practical measure, the Governor must
sanction local government's ascending role in this area, there has been
a notable trend developing that suggests divergent interests. On one
hand, local government's efforts in external relations have been focused
within the region, most prominent in shaping relations with the USVI,
the Organization of Eastern Caribbean States (OECS), and to a lesser
degree CARICOM. These relations have been shaped according to perceived
national interests. On the other hand, except for negotiations in 1982
vis-ŕ-vis the United Kingdom (UK)/USA Double Taxation Agreement with
respect to its impact on the BVI, international relations external to
the region have fallen within the purview and prerogative of HMG. The
main emphasis of HMG in this respect has not necessarily been to promote
the political and economic interests of the BVI, but rather, to assume a
more disciplinary posture focused on protecting the UK from contingent
liability vis-ŕ-vis its responsibilities as a party of international
treaties and conventions. This was the general thrust of the
"Partnership for Progress and Prosperity" of 1999, which
proposed a particular model for ‘modern’ relations between Britain
and the Overseas Territories. Furthermore, these divergent interests are
highly visible in the on-going negotiations surrounding the Organization
for Economic Co-operation and Development (OECD) Harmful Taxation
Initiative.
The divergence between the two arms of government has
become more apparent with the acceleration of globalization,
highlighting one of the major limitations imposed on BVI development by
the bifurcated colonial state. One of the major sources of this
occasional conflict of interest within the state is the constitutional
designation of finance as the responsibility of the Chief Minister,
because within the context of increased globalization and the degree of
‘openness’ characterized by the BVI economy, it is extremely
difficult for the Minister of Finance to ascertain sustainable national
financial viability without a significant level of authority and
latitude in conducting foreign affairs. The designation of finance as
GBVI’s responsibility brings to the fore the important role of
government in generating economic growth.
3. The
Economic and Financial impact of Government
This section takes a closer look at the role of government during the
period of modern economic growth during the fourth epoch of political
development. The foundation for modern economic growth was laid in 1953
with passage of the first Hotel Aid Ordinance. Before the impact of this
legislation was felt some nine years later, agriculture and fishing were
the mainstay of the BVI economy, with migratory labour being the main
export. The Hotel Aid Ordinance was instrumental in creating attractive
conditions for foreign direct investment (FDI) in the BVI tourism
industry, but more importantly, it reflected the direction and emphasis
of the BVI’s overall development policy for the next forty years.
3.1 The
present overall Development Policy
Since 1953, the BVI’s development model has hinged mainly on export
promotion in services, significant importation of labour, direct foreign
investment, and a maximalist role for local government in investment and
employment. During the early post 1950 era, tourism was the only major
source of foreign earnings in the BVI. Since 1984 however, offshore
financial services has emerged as a formidable export sector, ultimately
becoming the main contributor of direct revenues to government finances.
Overall, the shift in emphasis from commodity production to service
exports can be linked to the relation of political interests
domestically, and the absence of a push to industrialize the economy on
the basis of primary or value added production.
Another emphasis of the BVI’s overall development
model has been significant importation of labour. This has become such a
salient feature of the BVI that by 1999 some 70% of the total workforce
and 51 % of the population was comprised of non-nationals. There are two
main reasons why the BVI has become a net importer of labour. First of
all, economic growth has outpaced the country’s overall natural rate
of population increase. Secondly, there has been a persistent lag in the
rate at which new areas of economic activity have been embarked upon and
the rate at which the domestic labour force has been adequately trained
and re-skilled to participate in these areas. These factors have led to
a persistent shortage of skilled domestic labour, thereby necessitating
massive importation of labour.
The third component of the BVI’s overall
development policy has been an emphasis on attracting foreign capital,
through both foreign direct and portfolio investments. Although this has
been effective in generating economic growth, there are some limitations
that should be noted. The preponderance of foreign direct investment (FDI)
in the BVI economy contributes to a negative balance on the capital
account of the balance of payments. Although this is offset by the
current account surplus for invisible trade, it presents a notable
paradox in which significant portions of the country’s ability to
generate earnings are either owned or controlled by ‘non-nationals’
(foreigners). The resulting leakage through capital outflows thwarts
national savings and the domestic money supply. This in turn limits the
extent to which certain policy instruments can be used to manage the
economy. More importantly, these circumstances to some extent retard the
ability of ‘nationals’ (non-foreigners) to own or control the
dominant accumulation channels, and a significant portion of the
nation’s wealth. In spite of these limitations however, extreme
dependence on the infusion of foreign capital has proven an effective
tool in generating significant economic growth.
The dominant role of foreign capital is highly
visible in tourism-related real estate activity, the yachting
sub-sector, and supplementary sectors of the offshore financial services
industry. From a macroeconomic policy perspective, the instruments of
fiscal policy are largely the only useful instruments available to local
government in managing the economy through direct intervention. The
extent to which fiscal policy instruments can be effectively utilized
remains severely limited by the BVI’s longstanding efforts to be
recognized as an international low-tax jurisdiction. This increasingly
important feature acts as a restraint on establishing a highly flexible
tax regime and has in fact created a dualistic regime of taxation
between ‘resident’ and ‘non-resident’ entities, whereby the
former absorbs the majority of the tax burden. Consequently,
expenditure-side fiscal measures are the most useful instruments in
government’s fiscal policy arsenal. The U.S. Central Bank - the
Federal Reserve - has determined monetary policy and exchange rate
policy since 1967 when the economy was formally dollarized. In the
absence of formal exchange controls, banking regulations have been the
only regulatory instruments of money supply available locally. Despite
the obvious drawbacks, these characteristics underscore the
fundamentally international nature of the BVI economy, especially its
close relational links to the U.S. economy in particular.
3.2 A Decade of Fiscal
Expansion
The BVI’s fiscal policy over the past four decades can be described as
progressively expansionary. Over the past decade in particular,
government revenues and expenditures have increased by approximately
258% and 193% respectively. On average, although revenues from the
financial services sector and tax-based revenues accounted for 40% of
recurrent revenues respectively, total receipts from the financial
services sector surpassed tax-based revenues as the main contributor to
government revenues in 1996. Since then, the offshore sector has
accounted for an annual average of approximately 45% of government’s
recurrent revenues, while tax-based revenues have accounted for an
annual average of approximately 36%. Capital expenditure has grown
approximately 197%, from $13.1 million in 1991 to $38.9 million in 2000,
while maintaining a proportional share of approximately 20% of total
expenditure.
The past decade of fiscal expansion has supported a
robust public sector investment programme. Between 1995 and 1999 alone,
local government spent in excess of $39.2 million on major projects.
Inc1uded in this massive investment programme over this period was
approximately $2.8 million on the Cane Garden Bay Sewerage System, $3.2
million on the BVI High School, $2.5 million on Drakes Highway, $4.2
million on a new Prison Building, $4.6 million on H. Lavity Stoutt
Community College (Accommodation and Marine Centre), $8.1 million on the
new Beef Island Airport Project, $3.6 million on the Little A Race
Track, and $8.2 million on land acquisition at Belmont Estate and Great
Thatch. The total expenditure on these projects between 1995 and 1999
accounted for approximately 24% of total capital expenditure between
1991 and 1999, and approximately 47% of capital expenditure between 1995
and 1999. Considering that the total cost of the on-going Beef Island
Airport Project actually exceeds $65 million, it is not difficult to
conclude that the past decade has been by far, the most robust for
public sector investment in the history of the territory. This provides
strong evidence to suggest that local government plays a maximalist role
in national investment.
Undoubtedly, this period of fiscal expansion has been
driven by the positive impact that increased globalization and
liberalization have had on tourism and offshore financial services.
Fuelled by advances in technology, transportation, communications, and
trans-national production, these complementary processes, in spite of
their risks, have created avenues and provided opportunities for the BVI
to extract significant surplus gains from the international trading
system.
3.3
Government’s contribution to Employment and GDP
The significant ‘non-national’ composition of the BVI’s population
and labour force points to the pivotal role of immigration to the BVI
economy. The large inflow of migrants to the BVI can be characterized as
primarily demand-pull immigration, driven primarily by economic growth.
This process has been the main source of labour since the 1970s.
According to official 1999 statistics, the top four industries based on
the number of employees were Public Administration & Social Security
(30%), Hotels & Restaurants (18%), Wholesale & Retail (9%), and
Construction (8%). GDP statistics between 1991 and 1999 suggest that
Government Services is only the sixth largest contributor to national
output. The trend seems to be improving however, since government’s
overall position has actually shifted from sixth to fifth between the
first half and the last half of the decade.
On average, Government Services represented approximately 3.97% of GDP
by sector over the last decade, totaling an estimated $23.1 million in
2000. Although GDP estimates for the public sector are not extremely
impressive vis-ŕ-vis inputs, it is important to remember that
government services encompass primarily public services and enabling
activities - such as creating legal frameworks, formulating policies,
national planning, implementing programmes, and facilitating private
sector activity - across various economic sectors, for which prices are
not economically significant and the economic values are not always
fully quantified. Thus, government contribution to national income may
be somewhat understated by referring only to GDP statistics.
4.
Other Impacts or Influences of Government and the Political System
This section highlights the salient features of economic development
during the fourth epoch of BVI political development. At this juncture,
it is important to make a distinction between economic growth and
economic development. On one hand, economic growth is a quantitative
measure of the size of total income generated over a specified period of
time. Economic development on the other hand, generally refers to a
qualitative measure of the standard of living enjoyed by various
segments of the population over a specified period of time. Thus,
economic development takes into consideration the needs and quality of
life concerns of the population, within the context of sustainable
development. It is significantly affected by how total income and wealth
is distributed amongst the population. While Section 3 focused on the
role of government in generating economic growth, the focus of this
section will be on the impact of government and the political system on
economic development.
4.1 Impact on Social
Services
One of the main responsibilities of government is to ensure safe and
effective delivery of public services, commonly classified as statutory
social services. These are critical services often aimed at specific
segments of the community, which cannot be left to market forces due to
incidence of market failure. From this point of view, these services are
of such basic importance to the society in general, that it is in the
public’s interest to collectively absorb their costs, enabling them to
be allocated and delivered in a manner that ensures access for those
segments of society that need them most. The delivery of adequate social
services commensurate to the population’s needs is a major challenge
for any society. It must be recognized however, that the level of state
sponsorship for social services is directly proportional to the
public’s view of the role of the state.
During the post 1950 era, GBVI has played a leading role in enhancing
the level of social services offered in the BVI. Utilizing legislative
authority, various governments have enacted key pieces of legislation
over the years to facilitate the development of specific services and in
some cases supportive institutions. For example, the Public Assistance
Act of 1957 (amended 1961) was passed primarily to assist needy families
with housing and burial expenses. The Workmen’s Compensation Act of
1962 (amended in 1964) was aimed primarily at protecting the earning
potential of manual workers when impaired by injuries sustained on the
job. The Social Security Act of 1979 (amended in 1985, 1994, & 1997)
made various provisions through pensions and other benefits for women,
the elderly, and the workforce in general. Through this scheme, the
Social Security Board was also established to administer and manage the
Social Security fund. More recently, increased incidence of domestic
violence and greater concerns over its impact on both its perpetrators
and victims led to the Domestic Violence (Summary Proceedings) Act of
1996. Similarly, the negative impact of dysfunctional family life on
children led to establishment of the Rainbow Children’s Home in 1997,
to offer shelter, care, and protection for marginalized children. These
are some of the major social service initiatives that have been
facilitated through legislative authority over the years in order to
provide safety nets for particular vulnerable segments of the community.
The latter groups are deemed to need protection or support in coping
with structural or systemic risks encountered in the process of social
change.
GBVI has also provided substantial financial support
in developing social services. Between 1995 and 1999, annual funding
channeled through the Women’s Desk - later renamed the Gender Affairs
Unit - to address gender specific issues in the community has more than
doubled. Public spending on the Elderly and Disabled segments of the
community has also risen steadily. Government financial and political
support of civic and non-governmental organizations such as the Red
Cross, the Family Support Network (FSN) and the Community Agency on
Drugs and Addiction (CADA) also continues to grow. Government spending
and support for marginalized segments of the community have also
increased with establishment and recurrent financial support for
institutions such as the Sandy Lane Centre for substance abuse and
rehabilitation.
4.2 Impact on
People and Ordinary Life
Social services such as those previously mentioned play a vital role in
ensuring an optimal balance between social, political, and economic
pressures as a society develops. There are two critical services
however, that are central to the development process and people’s
ability to cope and advance as part of that process. These pivotal
services are public health and education. The public’s health may be
viewed as a barometer of the population’s ability to cope with social
changes, while the level of public education may be viewed as an
indicator of how well the population is prepared to participate in the
development process. Based on this pretext, government’s impact on
ordinary life can be measured by assessing its role in health and
education.
The Education Act of 1955 (amended in 1977) and the
Statutory Rules and Orders of 1959 created the legal foundation for
education in the BVI during the post 1950 era. Prior to 1955, the BVI
had a dual education system, in which denominational schools were
managed by various churches and financed primarily by government grants.
Expenditure on primary education was just over $9,000.00 per annum, with
just over fifty (50) students enrolled in secondary school and slightly
more than fifteen hundred (1,500) students enrolled at the primary
level. At that time, standard seven was the highest level of education
offered in the territory.
Today, the highest level of formal education that can
be achieved locally is a Masters Degree at the tertiary level. In
addition, graduate, professional, and vocational level education can
also be accessed externally, often through local funding. Between 1995
and 1999, GBVI spent an annual average of over $25 million on
pre-primary, primary, secondary, and tertiary education. In 1998
approximately 28.5% of the total population or approximately five
thousand five hundred and sixty (5,560) students were enrolled in formal
educational institutions. In addition to one (1) community college,
there are four (4) secondary schools and eighteen (18) primary schools
in the territory. As a result of massive government investment in
education after 1967, the BVI boasts an adult literacy rate of
approximately 98.2%.
In the area of health, the first public hospital was
established in 1922 with sixteen (16) beds and six (6) cots. Described
as a Cottage Hospital, this facility - later named Peebles Hospital -
was served by one resident physician, who was supported by nurses,
midwives and matrons. Given the level of poverty and the limited
resources available at that time, public health services left much to be
desired. It was this general inadequacy of quality health services that
led to the historic Freedom March of 1949.
Since 1950, there have been notable improvements in
health services. The legal framework for the health sector has been
buttressed by key pieces of legislation. Some of the most basic health
and medical legislation introduced since 1950 are the Congenital
Disabilities (Civil Liability) Act of 1976, the Nurses Registration Bill
of 1963, the Mental Health Ordinance of 1985, the Food & Environment
Protection Act of 1985, and the Medical Act of 2000. Peebles Hospital
now has a capacity of forty-four (44) beds, and is supported by seven
(7) Medical Officers and eight (8) Medical Specialists. The hospital is
supported by a comprehensive network of primary healthcare services,
which includes one (1) Health Centre in Road Town, and eight (8)
District Clinics. There are limited specialist health services in the
areas of anesthesiology, pediatrics, obstetrics and gynecology, internal
medicine, ophthalmology, and dermatology. Other public health services
are provided in Environmental Health, Mental Health, Health Education,
Dental Health, and Nutrition Services. In 1999, government actual
expenditure on health services exceeded $13 million.
The evidence presented here suggests that there have
been significant strides in education and health in the BVI over the
past four decades. GBVI has played a central role in financing and
regulating progress in these critical areas. In so far as this has
occurred, is the extent to which the political system has impacted
ordinary life. Two other areas important to ordinary life in which the
government has played an important supportive role are Crime &
Safety and Criminal Justice. Although these areas will not be expounded
upon here, it is worthwhile to mention that the criminal justice system,
in representing the ‘rule of law,’ is the glue of a developing
society. Government’s willingness to uphold and support the ‘rule of
law’ and the pursuit of social justice is an indispensable ingredient
of sustainable development.
4.3 Impact on Development
In order to assess the impact of government and the political system on
BVI development, it should first be noted that development is a process.
As an on-going process, development starts in the past, with all its
strengths and weaknesses, and ends at some unknown point in the future.
The last forty years of modern capitalist development has afforded the
BVI a high standard of living. From widespread poverty as late as the
1950s, the BVI now boasts one of the highest per capita incomes in the
Caribbean and certainly the developing world, of approximately
$33,713.00. A less misleading economic indicator however, is that the
average annual full-time income earned in the BVI during 1999 was
$18,950.00. For the same year, life expectancy in the BVI was 73.6
years. Combined with an adult literacy rate of 98.2%, the human
development index of the BVI is undoubtedly one of the highest in the
developing world.
Despite such remarkable achievements in development
over a relatively short period of time, there are some limitations and
weaknesses associated with BVI development that warrant mention.
Although the BVI has attained a high standard of living over the past
forty years, it has not managed to overcome certain tendencies toward
income inequality that are inherent to capitalist development.
Consequently, the wealthiest quintile of households earned approximately
46% of total national household income, while the poorest quintile
commanded only 5% of total income in 1991. Based on the same data,
approximately 59% of national household income was earned by foreigners,
while nationals earned approximately 41%. These disparities are
reflective of a labour market in which 53.6%, 65.1%, and 52.2% of all
Managers, Professionals, and Assistant Professional/Technicians
respectively, were expatriates. These inter-relationships between
economic and social realities demonstrate the importance of an
integrated approach to development if social harmony is to be realized.
The BVI’s rather liberal approach to development
has introduced notable financial, social, and environmental risks. For
example, limited economic diversification within and between the two
major industries, and the extent to which government finances are
dependent upon the revenues they generate, create a situation of
undesirable fiscal vulnerability to exogenous forces. This is a crucial
consideration given the maximalist role that local government has
assumed in national investment and employment. This situation coupled
with the absence of a local monetary authority to regulate and
scrutinize an increasingly complex financial sector, renders the
monetary system in general extremely vulnerable to increasingly volatile
international forces. The repercussions which potentially negative
externalities pose to fiscal stability and sovereignty are reasons for
concern.
Socially, the BVI is rapidly changing from a
relatively homogeneous society to a complex of diverse communities. Such
a powerful demographic transformation must be managed and facilitated by
carefully thought out immigration policies that have clearly defined
objectives and strategies. If massive immigration remains a distinct
feature of sustainable development in the BVI, then the general thrust
of immigration policies must be toward integration and equity,
notwithstanding GBVI’s limited authority vis-ŕ-vis HMG and
nationality status. Furthermore, the political dimension of this
important social process cannot be ignored, especially given the
emerging global shift toward a world system with a more
“euro-centric” core that will impact significantly on the UK’s
international priorities. The concomitant re-emergence of Caribbean
integration through the Single Market Economy (SME) initiative, also
presents a rare opportunity for the BVI to assume a leading role
regionally given its economic status, and coincidentally, its
demographic character, which is increasingly one of the most diverse
regionally.
Environmentally, rapid population growth that has
accompanied economic expansion has increased aggregate demand for
housing and commercial plant, while increasing the need for expansion of
the transportation infrastructure. These demands have placed enormous
pressures on the physical environment over a short period of time. The
BVI’s reputation as the yachting capital of the region has also
replicated similar pressures on the marine environment, given the
limited resources and regulatory framework currently devoted to
protecting the integrity of that area of development. Mitigation of
these threats requires greater awareness and support for conservation
and protection of the natural environment.
In the final analysis, the degree to which imbalances
will be resolved and development will realize sustainability, is a
function of political decision-making and commitment that will be
determined by the political system, if it is deemed to meet the needs of
the people. If the political system fails to satisfy collective national
aspirations or deliver an acceptable degree of social justice, then that
very system and the governments it produces will be replaced by even
greater uncertainty.
References
British Virgin Islands Report of the Constitutional Commissioners 1993,
London: HMSO.
Claypole, William and Robottom, John. (1980). Caribbean Story:
Foundations. Longman Caribbean.
Development Planning Unit. (1996). BVI National Integrated Development
Strategy (NIDS) Sector Paper on Population.
Farara, Gerard. (2000). “Constitutional and Political Development in
the Virgin Islands 1950-2000,” in Empowerment through Representation.
Penn, Ermin. (1998). The Constitutional History of the Virgin Islands.
Peters, Richard. (2000). “Involvement of the Financial Services in the
Legislative Process,” in Empowerment through Representation.
Potter, Irad. (2000) “Health Perspectives in the BVI,” in
Empowerment through Representation.
Todman-Smith, Eugenie. (2000). “Social Development,” in Empowerment
through Representation.
Wheatley, Charles. (2000). “A Brief Account of Educational Growth
1950-2000,” in Empowerment through Representation.
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