ARTICLE

Risk and Regeneration Considerations in Any Development Agenda for the U.S. Virgin Islands

March 6, 2019 – Lloyd Gardner

Many of the constraints on development of the U.S. Virgin Islands are structural. They present systemic risks that must, if possible, be reduced or eliminated. These include demographic changes, the small size of the Virgin Islands’ economy, the relationship with the United States of America, structural and management inefficiencies in government, and an unsure sense of person and place that result in policies and practices that undermine community cohesion and stability.

Systemic risks not only constrain the ability of the Territory to reduce risks associated with natural disasters, they amplify the impact of natural disasters.

In this context, risk reduction has to be a central theme in any development strategy for the Territory.

From a recovery and rebuilding perspective, there is an immediate need to address new sources of government revenue, revitalize potential economic growth centers, develop a vision of community and future on which to build long-term development, and implement strategies  that improve current conditions while simultaneously transforming the economy and community consistent with a new defined development path.

In that context, the description of the Territory in Governor Albert Bryan’s 2019 State of the Territory address as “…America’s Business Paradise…” is somewhat unsettling.

Framing the message for a way forward is important. That framework requires both a medium and long-term development strategy, and the medium-term strategy should be based on the concept of risk reduction and regeneration.

Suggested areas of focus:

• Strengthening the revenue generation and collection systems, with particular attention on evaluating and redesigning the tax system and incentive programs. This will require evaluating and refocusing the Economic Development Authority and subsidiary bodies.
• Mainstreaming risk reduction in public sector programming, particularly with regard to hazard management and economic decision making. The nascent territorial climate change program provides a framework for the establishment of a robust program on climate change and disaster risk reduction, and should be given immediate attention.
• Seeking new economic initiatives and revitalizing existing centers within the economy that can contribute to economic growth. In the latter instance, the two areas that come immediately to mind are the University of the Virgin Islands (UVI) and the micro and small enterprise sub-sector.

UVI was once an outward-facing institution, with its Research and Public Service component forming almost two-thirds of its programming, and focused on development of the community.

Its concept of self as an institution and its place within the community was exemplified by actions such as the development of the consumer price index, the generating of periodic economic analyses, and the providing of program/project management support to government agencies.

Today, the University has become an inward-facing institution, unable to deliver the anticipated outcomes from initiatives designed specifically to boost economic development of the Territory.

Some will disagree with the previous statement, arguing that accreditation and a doctoral program are signs of growth. The issue here is not whether UVI is strong or vulnerable, but whether it is focused on community development to the extent required by the community.

It is necessary to refocus UVI to play a greater role in supporting the strategic development goals of the Territory. This refocusing requires making changes to the Board of Directors and the executive team, as well as to the structure of the university.

The University of the Virgin Islands hosts several centers and programs that can boost economic development of the Territory over the short and long term. Of these, the Virgin Islands Experimental Program to Stimulate Competitive Research (VI-EPSCoR) presents an opportunity for immediate action. The current project, funded by the National Science Foundation, is due to end in 2019. The next project proposal should be under preparation, thus offering the opportunity to ensure that the project design reflects the economic development objectives of the EPSCoR program.

Micro and small enterprises form a large part of the local economy. Within that group, the cottage and creative industries are not as strongly connected to the rest of the economy as the enterprises that serve the tourism and financial services sectors. However, the cottage and creative industries have the potential to increase tax revenues as well as to provide more opportunities for the tourism and financial services sectors to establish backward linkages to the rest of the economy and reduce the Territory’s economic vulnerability.

A supportive enabling environment is, therefore, needed to promote growth in the cottage and creative industries sub-sectors, which would include:

• An appropriate policy framework.
• Targeted financing by the Government Development Bank.
• Increased business development support by the Small Business Development Center.
• Creation of a joint marketing platform, building on previous efforts by the Economic Development Authority (EDA), including recent efforts by the EDA-Enterprise Zone Commission.
• Links to purchasing requirements of beneficiaries of the Economic Development Commission Tax Incentive Program, as appropriate.
• Establishment of research and development support infrastructure, possibly at the University of the Virgin Islands.

These comments are intended as contributions to the discussion on the development of the U.S. Virgin Islands.

It is important that any discussion about a vision for the future of the U.S. Virgin Islands extend beyond the economy to include a focus on the role our important institutions, civil society and government must play in defining direction and bringing about the needed change to our community.