Jamaica's future lies in lessons of the past

by John Rapley

IMF head Christine Lagarde's warning last week that the world risked repeating the errors of the 1930s, and sinking into a Great Depression, could hardly have lifted the gloom facing Jamaica as it heads to the polls. As I wrote last week, the prognosis for the world economy is bleak, and unlikely to improve anytime soon.

There are some brighter spots here and there. While Britain and the European Union seem headed for trouble, Canada is so far holding up, and the US is showing modest signs of renewal. Still, as everyone knows, whoever wins Jamaica's December 29 election will be given a menu with little choice, other than perhaps the garnish on the side of the plate.

But that does not mean we have to be fatalistic about the longer term. As I mentioned in last week's column, one thing small economies have going for them is that, by flying below the radar and targeting niche markets, they have cards they can play, even in bad times. Mauritius got itself on to a growth path in the punishing decade of the 1970s, and has been growing ever since.

Greater productivity

Of course, the coming years may prove even harsher than the 1970s. What Jamaica has going for it is a great deal of pent-up productivity that has resulted from four decades of stagnation. But releasing it will be far more difficult than probably any politician will want to say on the hustings.

In Jamaica, as elsewhere, there has been a long debate between those who say freeing the market will bring growth, and those who say the State must spearhead the process. This debate is found in most countries. As a rule, private-sector interests favour the former course, while academics and public servants line up behind the state-led option - which is pretty much what one would expect, given where respective loaves of bread are buttered.

But as my friend Ian Boyne has been hammering on, feeling no doubt like a Cassandra at times, the research is clear that macroeconomic stability and a free market alone seldom induce a growth take-off. An effective government role is vital.

Yet, what that role should be is far from clear. In recent years, I have heard some colleagues wax eloquent about the Asian model, in which the government targets aid to growth sectors and 'picks winners'. Having studied the Asian model at length back in the '90s, I am a big fan of it. But I'm also aware it's not easy to import.

Highly specific conditions are required to make the so-called developmental state work. Key among these is a highly skilled technocratic bureaucracy that is sheltered from political meddling by powerful ministers. You see, the hard fact is that if you're going to get into the business of picking winners, you have to pick losers too.

Don Wehby once joked to me that in Jamaica, our idea of picking winners is to identify the losers, then pump them full of money in the hopes they get back into the race. Jamaica's politicians love to meddle, and our bureaucrats are seldom up to the task. But that may point to where a government could make a big difference to the economy.

Do things better

Jamaica's public-sector productivity is not great, as any visit to most government offices makes clear. If the next government were able to devise a strategy to boost it, it would create positive spin-offs in the economy. Say, teachers started raising the quality of their pupils' education. With added skills, those pupils then headed to colleges or universities, where lecturers gave them degrees closer to the cutting edge. Those graduates emerged into an economy where investors, deprived of opportunities abroad, were looking for productive labour.

That is a big part of how the Singaporeans did it. That is how the Finns, and other small countries did it. It is simple, but not easy. The key challenge of Jamaica's immediate future is not to figure out what the State isn't now doing that it should do. It is to figure out how it can do what it is currently doing better.

Whoever can answer that riddle deserves to form the next government.

John Rapley is a research associate at the International Growth Centre, London School of Economics and Political Science. Email feedback to columns@gleanerjm.com and rapley.john@gmail.com.