Can you imagine Barbados as the 11th province of Canada? Like Hawaii – the 50th state of the American union. How would life have been different had Barbados and the West Indies become politically joined with Canada? If this sounds
Can you imagine Barbados as the 11th province of Canada? Like Hawaii – the 50th state of the American union. How would life have been different had Barbados and the West Indies become politically joined with Canada? If this sounds too unbelievable, readers would be surprised to learn that three such proposals were presented and debated by the Government of Canada in the 1900’s. Political union with Canada never occurred but these two countries are so close that this was given serious consideration, a few times! This might help explain why Canada and Barbados have so much going on together in business, trade, culture and society. Barbados is the third largest destination for Canadian direct foreign investment, after the United States and England. How did we get here?
Though commerce between these two countries has flourished over several centuries, in 2008 these two long-standing trading partners celebrated the 100th anniversary of Canada’s Trade Commission in Barbados. Canadian firms are today the largest foreign investor in Barbados creating thousands of direct and indirect jobs and helping to make international business one of the largest contributors to the economy of Barbados. But has this been good for Canada and Canadian citizens? And what lies ahead over the next 100 years for these partners?
Let’s examine this. But first let’s review the “official position” of both governments:
Barbados PM David Thompson visits Canada
In May of 2008 the “newly elected” Prime Minister of Barbados, the Honourable David Thompson visited Canada to lend his support to the Annual Barbados Gala Charity Ball  held each year in Toronto. In his remarks, Prime Minister Thompson referred to the 100th Anniversary of Canada’s Trade Commissioner in Barbados, and remarked: “This Trade Commission must have given the Canadian business sector some measure of confidence in the island, as financial institutions established themselves there shortly thereafter, beginning with the Royal Bank of Canada that opened a branch in Barbados in 1911,” creating the cornerstone of international business in Barbados. International business plays a crucial role in Barbados society, contributing 63% of corporate taxes paid (2006).
PM Thompson also highlighted the contribution that Barbadians have made to life in Canada. He said: “We’ve taught and learned a lot from Canada and Canada has taught and learned a lot from Barbados. A small island such as ours with limited resources has managed to do so much and has exceeded expectations.” He was referring to a long list of Barbadians who have contributed to life in Canada including: the noted author, Austin Clarke; the Honourable Anne Clare Cools (Canadian Senator); Kevin Weekes (NHL goalie, whose parents were born in Barbados); Patrick Husbands (jockey, 2003 Canadian Triple Crown winner) and Marita Payne (2 Olympic silver medals for Canada in 1984).
Canada’s PM Stephen Harper Encourages “expansion”
Canadian Prime Minister Stephen Harper lent his support to the relationship when he visited Barbados in July 2007. To an audience of international business and governmental leaders his message was clear. Mr. Harper celebrated the 100 years of partnership between Canada and Barbados and stressed that his Government is committed to “expanding Canadian political and economic engagement in the region.” “Barbados is a key partner in the region” for Canada he said, noting that “Canada and Barbados share objectives that include economic growth and security.”
100 Years of Investment in Barbados. Is this “good” for Canada?
Barbados has great “Natural Resources” for international business and wonderful weather. But why do Canadian companies continue to invest in Barbados? Is Canada’s investment of capital and the jobs created in Barbados actually “good” for Canada?
To understand the answer to these questions we must first take a quick look at macroeconomics. Driven by nearly 2 decades of surplus budgets and sound economic management, Canada now finds itself with surpluses in fiscal budgets as well as balance of payments. Professor Walid Hejazi from the University of Toronto’s Rotman School of Management recently researched investment flows from Canada to Barbados and presented a crucial finding. Today Canada needs its companies to invest outside of Canada. Having reduced its debt has taken Canada into a very strong fiscal position as evidenced by the strength of the Canadian dollar. With these surpluses Canada needs to increase its focus outside of Canada for investment purposes.
According to Hejazi: “Canada has been transformed from an economy historically dominated by ‘foreign (direct) investors’ (FDIC) to an economy of significant direct investment abroad (CDIA). In 1970 (Figure 1) Canada 