Alan Greenspan, former chairman of the US Federal Reserve, told the Caribbean government and business representatives gathered for the Annual Caribbean Tourism Summit in Washington, D.C. that the rule of law is the most important element in attracting investors to the region.
“When I look beyond a three, four or five-year period for forecasting purposes, I found that the most useful way of determining who is going to prosper, is not looking at demographics, potential trends in investment and productivity, but asking where the rule of law is most stable. What history tells us is that time and time again, capital moves to those areas that are safe. This means where you can get your money out quickly,” he said.
Greenspan highlighted the fact that areas where there are strong property rights attract capital. “You need to assure investors that property rights will be respected. You need to communicate to investors that they will get back the capital they have invested in facilities, and will get a reasonably good return.”
Greenspan said that education is “secondary.” Rule of the law is the historically most important factor for attracting investment, he said.
He suggested that the Caribbean should avoid skipping the normal stages of development, and accelerate them instead. He said that the Caribbean has the extraordinary advantage of being near a large population to the north that considers them valuable. “The true potential of the Caribbean has not yet been tapped,” he said.